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 2.50

wall street set to extend the rally across the open. fang stocks to the all time highs and amazon getting a key upgrade. >> and target boosts its outlook, shares are popping 4% in premarket, reporting stronger than expected sales for the holiday season. >> and looking out for kids, apple responding to activist pressure, the iphone maker promises new features to make the devices safer for children. >> stocks are looking to ramp up the gains for the new year and the s&p and nasdaq in the midst of a five section win streak all indexes did hit record interday highs and new higher high for fang this time yesterday. >> what can i tell you we're having now that fang the different components are outrunning the price targets now the analysts have a new reason to say i'm raising my price target amazon and it's going up because of the holiday p shopping

this is all that relative high spirits game little dangerous candidly because when does it end when someone's price target is finally reached. right now we're in the sweet spot. >> at a time where i think analysts are increasing their projections on earnings fastest rate in ten years? >> how can you not look, in the target announcement today, so bullish. they also throw in we have a big tax gain there was a time that alone would have moved stocks. the tax reform, the bill, it's still not in the stocks. as painful as that sounds for people saying wait a second we've known about it for weeks now. it doesn't matter when the earnings come out and analysts are amazed somehow -- i think it's faux amazement, and they take numbers up. when numbers go up, it's the best predictor of what will happen in stocks. >> meanwhile, we mentioned the 10-year. it's been a while cracking 2.5 has been problematic but we're going to give it another shot today highest level since i think

april or so to what degree is inflation once again being priced >> i think that when you look at the earnings so far we've had, not a lot of inflation but i think the people are saying, wait a second, this economy is far more robust. i want to get my loan before rates go up. i think there's finally some demand if new fed incoming chairman j powell were to sell the huge bonds that the fed has, you could get more inflection and that would be bullish. the long term rates are lower than the short term. history says that means a recession. there is nothing on my screen that indicates recession there's much that indicates boom >> that's going to be the big debate, guys as we look for sort of late cycle clues. this number today regarding outstanding credit, revolving credit, mostly credit cards, rising at a 13% annual rate, two-year high. third quickest pace since '07.

>> and we've said a number of times of course that the consumer seemed to be as strong as we've seen in last decade if not more when it comes to credit, there is one thing that people have been focused on as sort of a question mark which has been c and i loans and the banking industry which has not been at highs that you might expect given this pickup we've seen in the economy or certainly the nice move and momentum in the economy we've seen for some time. >> pay attention to that on a day we're getting guidance from new retailers, jim mentions amazon and piper does raise its price target from 1200 to 1400 saying the company has a significant opportunity to gain wallet share of u.s. internet users, speaking of amazon, bezos worth more than bill gates ever was. surpassing $105 billion. that's according to bloomberg's billionaire's index. jim, we saw 1200s already in the

rearview mirror. >> amazon had a great quarter. i say obviously and put that on because it's almost humorous we knew it was having a great quarter. we saw the stock blew through 1200 piper says this stock is so great, blown through a price target this is the kind of ee femoral goss mer way to buy stocks bh who's going to come out tomorrow and raise the price target i wish it was based on something new and news worthy. i'm concerned about the credit expansion. i think loan expansion went down from 3 to 2% that could come up on friday when we hear the companies talk. i want to hear the companies talk tired of the analysts talking. no analyst that wants to downgrade, they are afraid they'll be left behind by a runaway train. >> yeah. ces going to be another big story for amazon as they have nine different workshops related to alexa for developers who want to work for the echo google is ramping up their

presence as well this voice activated internet is huge. >> and only going to get more competitive as you well know, carl both reducing their prices on their key devices during the holiday season to really try to get that penetration into the home because it's so important and it's all about data for so many of the these companies as well, don't forget processing so much of that data that will come to them as a result of the voice activation that's being taken advantage of by people in their homes and then using it to cater to those very same people and understand their needs and wants. jim, we go down a road with so many of these companies and you talk about it often times when it comes to netflix knowing what you might want to watch next but the data becomes so important and the ability to garner more and more of it only enhances their ability to cater to the needs of their customer and make it an even better experience and have them buy even more. >> this is something that nordstrom once explained, amazon has the best customer service. that's ridiculous, it's just a

computer no, pause of artificial intelligence, they anticipate a lot of things we would not otherwise know that is one of the reasons why the spotify is so good yes, how can you go without mentioning nvidia where the ces conference, wong talked about artificial intelligence and the importance of trillions of bits of information instant this is happening in real time it will make an ibm main frame that was used to be a whole room, that would be like -- i don't know the brain of a ball point pen. >> it's staggering the wealth mr. bezos has and power he conceivably has as well. and -- >> sound jealous -- >> i'm not -- listen, you've got to look at him as one of the unique figures we have in the business community without a doubt, right, jim, praperhaps te most single powerful person,

given his wealth and the company which is so connected to so many people in this country, not to mention the other efforts whether it's blue origin or any other. >> "washington post" will post its second year of profitability, announcement yesterday about expanding, hiring they are going to take more office space that's an afterthought for bezos. >> complete afterthought, paid 250 million bucks for it a few years back but has like so many other things he's involved with, managed to frankly defy what critics have been concerned about and gone the other way, double down on journalism and invested in it and also helped it as a local paper by the way, where it had such incredible graph tas to begin with. >> the biggest single project out there will not be done by the u.s. government. it will be done by amazon with the second headquarters and i think this is the private sector, generating a lot of jobs simply because they've got a lot of money and they are not cash

strapped it's not like they have to have a conference and say listen, we've got to raise taxes amazon can choose a city and make that city into a glorious city with the stroke of a pen. >> yeah, we're going to wait for that announcement. latest i heard because bezos is for houston, houston has an edge. >> houston >> he spent a lot of time -- >> in florida, as -- went to school -- >> i heard it was philadelphia. >> you can make arguments, brother lives in westchester, maybe they want to go there, old school like ibm. kidding. >> jim, target moving higher in the premarkets after reporting the holiday sales, comps up and as a result raising guidance for q4 jim, they say 6 to 8 cents comes from taxes alone all five core categories were positive, were accelerating and low single digits for 2018. >> hats off to brian cornell we're going to speak to kohl's

and men's fashion was good and home was good. it was interesting target said food is good remember when food was a toxin, so afraid of amazon when they bought whole foods a lot sold target and kroger. they sold walmart. it looks like right now i don't know how big whole foods is going to be, food may be better than we think. food had been a laggard. i have to hand it to cornell he handled omny channel well i think kohl's has done a fabulous job at omani channel that doesn't mean there's not enough business for everybody. >> you saw american eagle quart are to date up eight and they reiterated back 44. street at 43 you're willing to say -- despite we had cold weather, we got consumer credit churning, but overall you think the fundamental shift in retail is happening? >> yeah, i do.

i think it's a lot more based on employment than we realize i think the people are confident about employment and getting a job. there obviously is the mall dead theory i've got children's place, a mall based store, look at that stock. it's been one of the absolute best were parts of the mall not dead. i mean, look if you go into a mall that has sears, you know, we're still doing business over here the morgue is that end there's a coroner's inquest on the sears side and the other side is pretty upbeat. >> what's so funny >> that was funny. coroner's inquest, i like that. >> you like that when you have no sleep, you're operating on a better level. >> when you're further away, not that i don't listen to every word or hang on every word when you're here, but that was funny. >> don't you think -- can we go back to bez ks os, aren't you jealous of bezos' hair, david? i mean, really

he has everything. >> are we going to walk in some morning and it's all going to be gone like bezos? >> bezos -- he and i are the same age and he's in great physical condition now he got that going for him too. i'll belt he can afford a really good trainer, maybe about ten trainers maybe more i don't know >> he uses zero, you want a zero or one he uses a zero. >> he's got nothing on you don't you worry about it you're looking fine today. >> it's a great live shot, those trees and flowers, look at that. beautiful. >> can't wait to hear more about it. >> it's all phony, i'm actually coming from where canada goose because i have them on too first time on cnbc. >> we'll hear more about your dates at icr when we come back, apple defending the smartphone practices when it comes to children using devices and one of giants in the held world, alex gorsky live from the jp

morgan health conference a 2% gain, nyse points out today whenever that's happened, the s&p ends the year with a gain 100% of the time we're back in a minute nobody's putting their money into equities. they're not investing in commodities or fixed income. what people areally 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.

apple promising to offer new features to make the devices safer for children after jana and partners called on the company to help limit how long children can use smartphones we think deeply how our products are used and impact they have on users and people around them we take this seriously and committed to meeting and exceeding our customer's expectations especially when it comes to protecting kids meantime, guys, tony fidel, one of the founders of the iphone, original released 11 years ago by steve jobs today. goes on the tweet storm the adkt diktive nature of the phone is real talks about texting and driving being a major concern to public health

apple obviously thinks it's serious enough to respond to >> oh, yeah, if you go to -- if you -- treatment centers for mental health, which is the best -- i think the most effective way at dealing with teenage depression and failure to launch, probably a quarter of them are about addiction to electronics of some form whether it be video games or cell phone most of the mental health professionals are saying, listen, it's the parents giving the kids a free ride, suddenly tim cook is in -- i guess he has to be the parent for several billion people i find it due plis tous, it's great to raise awareness for mental health, i've been involved for the last 20 years through both financial and trying to spend time on it this is a real issue but it should be much more broad than apple. apple has an easy way to make it so your kid can't do these things, settings and general and restrictions and put a code in,

boom, as long as i just took it to be able to do it. tim cook has always cared about this there are a whole host of companies that don't care at all. it is odd apple is the one who is the focus. >> when you see due plis tous, do you have larger meaning behind the use of that word? >> i think that -- it makes everybody think that apple has done nothing i regard apple as a leader in the field because they cared more about who is going -- about giving parents parental controls i think alot of the other companies that we talk about, whether it be captain morgan, facebook, trying to get as many people to look at everything i think that google has not been as responsible it is odd that apple gives the parent the way to be able to cut off the kid and tim cook is the one -- look, i like mental health awareness let's make it broader and get it out of the stock function. if i bought one share of

google -- alphabet and i start making a big stink that's fine you take a position in apple i want apple to be a better company, socially responsible. why don't you take a position in the s&p 500. there's 500 companies that should be more responsible than they are it's really unfair >> yeah, it is interesting, we talked a good deal about the motivation behind it and choice here and what seemed to be the conflicting responsibilities of social investing or at least somewhat which has done quite well in europe but really not been something that has gained a great deal of traction in our country, guys. but at the same time -- we are talking about it, right? that's a positive i would assume just a conversation itself, you have to at least give them -- >> yes, i think that we talked about it last night on mad money. how about being pro active and we think apple should help set up a fund so when your child or

teenager is addicted they can be able to go to places because there are special places that really deal with this problem and on a scholarship basis because they tend to be 30 to $50,000 a month. only wealthy people can afford t to be able to crack this addiction. to be able to say here's what tim cook could do, he ought to be part of a large fund. we've got to make it so kids who don't have enough money to get the care they need, can get it, that would have been constructive that would have been a constructive way to deal with it rather than give the impression that tim cook doesn't give a darn. >> well, it certainly has prodded others to suggest a method of fixing or helping to fix. one of fidel's ideas to have apple give us a tool that helps you manage the time spent. gives you a reminder, you've been on your phone for an hour straight. >> just to know. >> we'll get cramer's mad dash. >> if we take away, thphone, we take away the 911 look, how come no one is talking

about how many lives it saves. it saves lives as well as making it some people are addicted because parents won't take it away from them i would not let my kid go to school without it, i don't want my kids playing candy crush, but that's -- there ought to be some parental controls more than they have. >> a lot more from jim after the break. we'll get the countdown to the opening bell on this busy tuesday morning. more "squawk on the street" straight ahead what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley

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we've got about five and a half, six minutes to go before we get to the opening bell for this tuesday it's a long distance mad dash, you're going to talk carnival, aren't you, jim? >> yeah, we've got an upgrade today from credit suisse, hold the buy. this is another one of let's just say art fiss of the beginning of the year. why is obviously carnival cruise is a great company but one of the major thesis behind the upgrade, the cruise companies have fallen behind other lodger companies what you're getting is lodging is up and let's recommend cruise if cruise goes up more than lodger, someone will say wait a second, lodging should go above cruise it's a leapfrog game, i haven't seen it played since the 8 0e's and 90s. it's artificial intelligence basically except i don't know if i want to call it intelligence. >> but you're somebody who likes

the stock here around 66 bucks a share? >> yeah, it's very expensive, $78 price target i want to buy it because it's inexpensive and run well and because the bookings are good. i don't want to buy it necessary by because it falls behind other groups the whole relative game, if lodging goes down, you have to sell the ship via cruise companies, we want people to buy stocks because the companies themselves are inexpensive, less valued than the actual -- under valued in the stock market we don't want to buy a company because it's cheaper than another company. because then what happens is that company a that's cheaper, if company b goes down, you have to sell company a. we want to own stocks because the companies are good not because something has fallen behind that doesn't work when the market goes down >> got it all right, jim, stand by look at you in that warm weather. you're making me a little upset now that i focus on it -- >> it's hot here. >> we've more to focus on here ticluding that split from

alce, more numbers from t-mobile and opening bell after this

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live from the financial capital of the world, the opening bell in over a minute's time the conference season continues, jp morgan health conference and jim is at icr. record highs for the dow and s&p and nasdaq and mid caps and exports and now the 10-year at 2.5 gives us more to play with >> well, look, i think the last group is the one i want to focus on when i was on halftime yesterday, i was talking with my friend, we don't understand how some stocks can keep going up. how is it possible that the rails just keep going higher nothing has happened to make us feel like i want to pay more for the rails. freight forward is obviously fed fedex. how many days can it go up on amazon that's the group i can't figure out. it's signaling the gdp must be much faster than we think.

there's nothing fundamental driving norfolk southern or csx or union pacific >> we'll watch that for sure s&p 9.8% above the 200 day moving average to start this tuesday. there's the opening bell and s&p at the bottom of the screen. pe big boa at the big board, john hancock investment and principle financial group, sell bragt tcih transfer to the nasdaq uaa may not participate as susquehanna cuts it to neutral price target 11. says any claims they can re-establish demand in north america are off base no fundamental recovery in sight. you buy it >> i'm speaking with kohl's today and they took in under arm or i want to find out more from kohl's but there's a census developing that the company got so off the mark that it can't

return to glory. i say let's see what the quarter brings if they request clean out the inventory. but this susquehanna story is the one that people keep telling me that mark parker, ceo of nike, got tired of having his eye poked by the finger of kevin plank and he struck back and once nike awakes, there's nothing. the sleeping giant is up and he's crushing underarm our i don't know i think the stock had a big run at the end of the year it's probably not the right place to be. >> as they said in the no jim, you aa risks becoming more like reebok than nike which jack macky said is fighting words in shoe land. >> well, you've got to be careful, reebok ended up with a nice bid i don't think kevin is going to do that but yes, if it gets too bad, does it get good? kevin has a strange ownership strategy i remember when reebok was --

let's just a obliterated by nike and i'm wearing some right now you can't tell because i've got this desk. >> guys, worth mentioning, shareses of t-mobile up 1.5% this morning we did get news from the company, preannouncing better than anticipated subscriber metrics, let me give you a couple of highlights post paid phone ads for the fourth quarter were 891,000. that was versus some estimates that had them. let's call it between 750 and 800,000. post paid churn was lower than had been anticipated to 1.18 total net additions of 1.9 million, estimates around 1.65 million up for the quarter and share repurchases also perhaps a bit higher so 5 million customers added

overall for the fourth year in a row the company is saying in the announcement the stock is reacting positively, jim as you might anticipate it would. it has been sort of treading water roughly at this level and actually a bit lower for some time now. >> i'm glad you brought that up. i think it's morphing from being a takeover target to being a company that is back with earnings and revenue growth. i thing i'll call it the netflix package. a lot of people watch the ads which in some cases were better than the actual football games, struck by how much t-mobile is willing to give you. they do -- they are very aggressive remember when verizon decided enough is enough what happened? i thought verizon was in the enough is enough thing against ledger does verizon -- where are these coming from? >> that's a great question i don't know your point of course when verizon decided to offer an unlimited which they have and is out there and apparently had traction at least.

but it's a good question to ask. i don't know where they are coming from right now, jim we do know that the price competition continues to be fairly strong. and that t-mobile has consistently managed to best many of its competitors over the last few years and gain so many potential subscribers out there or at least available. we'll see when we hear from some of the other carriers, including at&t as well of course the bigger news on at&t, we're only a couple of months away give or take a week from the trial against the u.s. government jim, he's been able to take share over time. his parent company in germany has to be very happy with that i guess it sort of answers those questions in terms of at least for now the potential growth but there are still people jim who think eventually this company has to hit a wall in part in terms of capacity and any other number of issues

i don't know if that's true but that's out there as a continued concern. >> we've just presuming that th average american can't have more services or that the average american -- let's say there's a four people household. maybe there are new people -- no offense to tim cook, these are potentially dangerous things i know that now. they ought to have a tobacco type warning in other words, if you have a family of four, maybe everyone is getting a phone whereas before when they weren't doing as well, only two people i'm trying to figure out david, we can't keep adding like this unless we add more people to the country. >> yeah, you're right. or unless every single -- >> what can i say? >> you get your dog a device, i suppose we could start there carl. >> my dog's name is nvidia my dog is behind the devices >> guys, a lot of stocks today

reacting to news from stemming from tax reform. we talked about target berkshire says tax reform could increase book value by $37 billion. record high on berkshire and the airlines it's, jim, this note out of b of a, they upgrade american and spirit and cut alaska and southwest and jetblue. the bottom line, tax reform helps corporate spend even if it doesn't help the airlines which don't pay a lot in cash taxes anyway. >> i was checking while you were talking, southwest air was downgraded and i was thinking if this downgrade has any real impa impact, maybe people will take profits to the group isn't it interesting, southwest has been a remarkable story, really fabulous, you've got the best being downgraded and others going up in a really more harsh tape and environment southwest would take the whole group down it can't do it anymore, because people are bullish and looking for low price to earnings multiple names and that airline group gives them to you along

with the autos, which don't forget are the cheapest stocks in the market. >> guys, worth mentioning, a name a keep a close eye on, qualcomm, down 1.6% this morning. a wall street journal story and this is something that i've been hearing about as well. they have on the record here two large chinese smartphone manufactures, who together represent about 10% of the $22 billion in annual revenue. basically say, they think a qualcomm broadcom merger would squeeze profits and they are against it that's important they are against it. also apparently reported by the journal to have reservations about tie-up between broadcom and qualcomm as well qualcomm as you know repeatedly raised questions about the antitrust regulatory path for a potential deal broadcom offered right now 70

bucks a share, 60 in cash, 10 in its own stock. we are anticipating at some point prior to the march 6th annual meeting where they are trying to replace the entire board that they are going to increase that offer. the question is to how much. antitrust will continue to be one of the key themes that qualcomm in its defense hits on time and again and this doesn't hurt when you get two large customers of qualcomm in china, saying we may have a problem with this. by the way, when it comes to china, remember, they also will have antitrust say in this potential deal were it to come to them. and it's unclear how they might view it given the opposition of some key chinese companies by the way, when it comes to chinese antitrust that takes me too qualcomm nxp we are expecting that the european union, this is some reporting out there, i've heard it as well may say yes to the deal as soon as next week but the chinese still haven't done that. and that could be a ways out,

weeks before we get the chinese antitrust approval that deal needs. by the way, a deal with very little overlap and still having taken now what, 15 months to get done it's going to be very towards the end of the regulatory review when they know it's coming that we finally get the conversation and the raise that we do expect in some fashion from qualcomm to try to get the nxp deal done. we'll see though where that ends up but regulatory will be a key here and they are certainly em bodd boldened by this story about the chinese telecom companies saying no, they don't like the prospect of a transaction >> i thought hock tan pretty dismissive of that, saying a lot of people want the deal, qualcomm has been out there introducing new product after new product and offline saying do you really want our r&d budget to be cut

let me throw something back at you. there's another deadline to tender nkpi at $110 to qualcomm. it's $118.47 you can't tender for 110 if it's at 118 what will happen there >> you can't they are going to have to raise. they know thaxt the question is to what level. it's not going to be anywhere near the 135 that elliott is saying nor are they going to have some sort of alternative to say we can also use the money we might otherwise use for nxpi to buy back stock or something like that we'll see but there's no doubt they are going to have to offer more the question is what's going to be the number. is it 120, 122, do they get to 125? i don't know i don't know but they are not going to have to do it yet. >> nxpi -- >> i know but the auto market is turning out to be the hottest market, nxpi is a hot player, qualcomm has a lot of

intellectual property in cars too. but this is such an important deal for qualcomm. y nors why they don't pay 135 and broadcom, we're giving you the heisman, we don't need you and go away. >> yeah, i get it. they are not going there but we'll see where they do end up, jim. >> got you >> we've got record highs across the board here dow is up 69 points. let's get to bob pisani. >> happy tuesday nice open here, new highs of course, mostly up overseas, want to show you korea. sam sung kind of surprised everyone, gave preliminary numbers that were below expectations the stock was down and european -- the asian tech stocks so hynix, do you know a little bit here. semis mostly down here in the united states as well. they've been one of the market leaders if you look at the sectors today. yields are up a little bit, we're also seeing health care on

the upside as you see semis down a little bit and retail also down a little bit very mixed numbers from retail get to that in a minute. the new high list today and continuing to be dominated by cyclicals which people really like that's areas where the global economy is improving cummings at least 52-week highs and multiyear high iz. the retail is very mixed we're getting mixed numbers is the best way to say it target had very good commentary, strong traffic growth. q4 guidance raised this coming year guidance was raised as well expressed though they lowered the guidance, american eagle, their guidance was about a penny below expectations but you can see a small miss bringing that down about 4% here it's been very mixed number. we mentioned that yesterday, target joins the list and we're getting other people that are out there raising guidance as well kohl's, children's place and

lululemon raising guidance here. we're on earnings season and this is a very, very important one because the expectations -- bring that full screen back again. the expectations are very, very high for the season overall. analysts are generally much more optimistic there's been much fewer downward revisions that we've seen recently analysts typically lower the estimates into the quarter but that didn't happen this time investors are expecting bigger beats and that's the important thing. the guidance overall, we're expecting analysts to -- companies themselves to raise the guidance on a normal quarter, one third will raise their numbers and one -- two-thirds willower them. that's very important overall. we think a lot of people think that's going to be reversed. more companies are going to provide more positive guidance so that's a very important thing. meantime, on buybacks and capital investments here, you can put that screen up, thank you very much. buybacks and capital investments, we're expecting

much more aggressive buybacks and capital expenditures as well what does this all mean? it all means that the expectations are very high for earnings season. not just beating by a couple of pennies but raising guidance, more news about buybacks and capital expenditures, we're almost 20 times forward earnings and the important thing is that we need to hear very positive commentary. >> david, back to you. >> thank i, bob. bob pisani on the floor. to one of the bigger movers, we have the news yesterday around 5:00 from altice and its parent altice nv, they are going to split. they are going to essentially the 67% of altice usa will be distributed to shareholders creating a much larger flow and wholly independent company that is being responded to very positively in the stock market this morning shares are up almost 15% this

morning. again, 67.2% of that interest as you see will be distributed to altice and share hoerholders an instituting a 1.5 billion special dividend and buying back $2 billion in stock. also reducing their leverage ratio, their target leverage ratio to between 4.5 and 5 times from what had been currently around 5 to 5 1/2 times and the float will go to 42% there's a lot more stock available. there's an arbitrage opportunity here for some that might put near term pressure on shares but you see the stock is up 15%. altice nv, suffered dramatically this year over concerns in the local business, where it's business overseas or its local bez, it is the overseas concern i'm talking about now, it has suffered in the stock market concerns about leverage but that

has had the effect of also depressing shares of altice usa as well. those shares are up sharply as well given this news. what does it all mean over time? that's a larger question, of course reduction in leverage is seen as a possible special dividend seen as a positive more transparency to the marketplace as well. no longer that tie to altice nv seen as a positive for her part, jessica reef cohen says without the benefit of the global parent in addition to moving altice usa in house, they question how they plan to drive margins significantly higher since the relationship with the parent did seem to be a large piece of that puzzle there is some questioning in terms of their ability to continue to drive margins towards the stated goal of 50% or moreover time but for this morning, being reviewed have positively

you may recall altice, i reported altice itself eyeing charter very carefully, working feverishly when it thought softbank was preparing an offer to buy charter it backed off from that when it appeared things had quieted on that front at this point, it would certainly question their ability to do that do they in fact even become perhaps now a takeover candidate of their own although, patrick drahi does continue altxice nv and usa, evn after the split off the end of the second quarter this year let's get to bond pits and join rick santelli. >> before we get to the regular market charts, i want you to look at a 1974 start date to the national federation of independent business small business optimism index. it clicked down a bit from 107

pts 5 to a whisker under 105 why do i bring it up last month's 107.5 second highest level ever since the series started back in 1974, the date we're comping too for the high is 108 from 1983. the reason i bring it up is we didn't take it out many were keeping a close eye on it it doesn't diminish the notion that small businesses are pretty darn excited they benefit from much of the tax reform and they are integ gral into creating jobs. do the math. let's move to the charts and look at spanish versus bunds before we get to our 10-year it is the narrowest 1.48 on the spanish 10-year. the difference is the title since september. that's something to pay attention to especially considering the nervousness of the southern european yields jumping, which of course makes mario draghi nervous, maybe taking care of it makes investors nervous.

back to the 10-year, we've clicked off 2.52 on 10s. let's take the chart back to 2014 in march of last year we had a 2.63 can't tell you how important that technical level has been for a couple of years. should we take that out, we're comping owl the way to july '14. crucial area we're not crossing it aggress e aggressively it's a slow one. hang seng is making 11-year highs in the stock market. we're on a record tear with our equities and all the horse power we can get out of 10s and the dollar index as you see on the three-day chart. it is moving higher, maybe because the december start on euro versus dollar, starting to look toppy at 1.20 and traders are paying attention ka carl, jim, david, back to you. >> thank you for that. when we come back, the future for roku after the stock's big

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take a look at some faang stocks amazon hanging on to a gain, although off the initial highs ip takes the target to 1400, helping the market somewhat dow up 42 points we'll geet to "stop trading" with jim in a moment help you with that. t, but jj cn jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade

let's get to jim and "stop trading. >> all right when is a stock and a company doing so poorly that it actually goes up? that's the case with allergon. the numbers have been cut. the numbers have been cut, and then the numbers were cut. kind of like a salami strategy finally, the stock goes up after a presentation by brent saunders at jp morgan health. why? because it's down so long it looks up it's called trough and the stock is dropping. >> all right, jim. what's on "mad" tonight? >> well, i mean, we're down here at the conference. we have a lot of talk, a lot of opportunity to talk to companies that haven't spent a lot of time on tv. canada goose, we're going to sit down with them warm here for canada goose, but that's all right kohl's saying things are

different, and jane elfers may be my mvp for retail in this year >> that's high praise, especially with what's happened in the last couple months. jim, great shot as david said. looks like a commercial behind him. >> it really does. flowers. foliage. >> carnival cruise or somebody, i don't know >> jim, we'll see you on "mad," 6:00 p.m. eastern time >> when we come back, exclusive with alex goreski, live from the conference with the dow at 58. that you're idling in your car, you're sending about half a gallon of gasoline up in the air. that amounts to about 10 pounds of carbon dioxide every week. (malo hutson) growth is good, but when it starts impacting our quality of air and quality of life, that's a problem. so forward-thinking cities like sacramento are investing in streets that are smarter and greener. the solution was right under our feet. asphalt. or to be more precise, intelligent asphalt.

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welcome back to "squawk on the street." i'm carl quintanilla with david faber, and mike santoli at post 9 of the new york stock exchange record highs for the dow, s&p, and the nasdaq as the s&p is up five days in a row. some of the macro data out of europe is pretty good and we'll be getting that in a couple minutes. road map begins with iphone's defense. striking back over a letter about device addiction and children >> target on the move. the company released its

outlook. >> plus, intel's ceo speaking out on those flawed chips. we'll take you live to ces in las vegas to tell you how he's planning to fix the issue and when >> first up, get straight to the markets this morning all three indices are in the green. the nasdaq did slip a bit. they all hit record highs at the open, at least s&p has added 2% in the first five sessions. nine days. we're already above year end targets for morgan stanley and hsbc >> yeah, it's obviously been pretty relentless. yesterday was what passed for i guess a pullback, which is a flat market, kind of a rest on the way in the other dynamic here, we talked about it yesterday, too, it seemed like the consensus was, oh, we're going to get this rotation into smaller stocks no not necessarily. value is underperforming again the large growth stocks are leading. not that anything is being really left by the side of the road it's just that they're

outperforming. winners winning, losers also winning. i think the question now we're having to ask is how much good is too good. does everyone agree a little too much that it's clear skies the targets aren't that high, but really, people have a hard time finding really persuasive reasons for themselves why this stops. >> of course, getting lots of data, and this ten-year at 2.5 has gotten some attention. going back to march 20th now >> this grudging move as you go out the curve. so the seven-year is above 2.4 now you have the ten-year above 2.5. obviously, this might be finally what people have been calling for for so long. maybe we break out of that range that contained the yields for so long that takes one of those big-picture worries off the table because the curve is no longer in this relentless flattening mode. >> don't want to extrapolate everything >> let's say you get to 2.7, 2.8, people look at that and

then it becomes perhaps an alternative you would take versus equities. history would show if there's something that could stop it, or would it through the years, where have heard so many different explanations of higher rates do or they don't. >> i think they do, but something has to prompt that switch if the market is up another 5%, and you have corporate bonds that are high-grade corporate bonds at 4%, 4% is not going to look good to somebody who got 5% in a month in stocks something has to happen to the stock market, i think, to have people re-evaluate, except for yield investors. the two-year note, taking money out of utilities it'syielding more than the s&p right now. >> and that's almost like cash, a two-year treasury. you can fake it and call it cash >> your vix, which was the topic of your discussion yesterday, is trying to go for four out of five up. >> it's interesting. it seems as if maybe it's because the market itself has more energy. it'sina not that it's in this

treacherous position, but people are still wondering, and meanwhile, you have the "wall street journal" pointing out today, everyone is taking their hedges off they say oh, people are feeling like hedges are too expensive and the cost of insurance is really low relative to the cost of betting on the upside through options. maybe it is just people deciding, look, volatility got too cheap given how much juice the market seems to have right now. >> on a day where the journal also talks about giving north korea a bloody nose. which we have not discussed at all, probably won't. >> why would you want to hedge >> right, north korea or cyber, of course, which continues to be a growing threat, it would seem. those are the kinds of things that are not necessarily going to be and should not be weighed in the market. what are you supposed to do? >> you have the see the whites of the eyes of that risk before it matters here. >> all right, let's get over to health care now. day two of the annual jpmorgan health care conference in san francisco. our own meg is there, and she has a very -- i'm going to say

very special guest, meg. take it away >> he is very special. david, thanks so much. joining us is alex gorsky, the ceo and chairman of johnson & johnson. >> great to be here with you >> one of the big themes of the conference always is m & a, is deals, and of course, with the tax overhaul just passed, you guys have $16 billion in overseas cash. what do you plan to do with that analysts are indicating maybe pay down deblt but are you going to be investing, hiring, doing research >> it's great to be at this conference about ten years in a row i have been out here. what a way to start the year you hear, it's not always about deals but innovation, new technology, and all the reporting out of the previous interviews you have done, you have heard about breakthroughs, cures we couldn't have imagined, you know, 10, 20 years ago these things are actually hap n happening in our industry so it's a great time to be here johnson & johnson, we're always looking for great new therapies.

we try to be agnostic about whether we source it internally or exturnally. the bast several years right here at this onference, we hav been able to meet new partners, see new technologies and signs we have been able to bring to the market and make a big difference for patients. as it relates to the tax, we're pleased to see the tax reform went through the fact we now have a competitive tax rate, that we have a construct in place to repatriate earnings and cash from overseas is going to give us much more flexibility, make us much more competitive in terms of how will it fundamentally affect our overall m & a strategy, i don't think it will because it starts with science, the right field, the right company, the right culture to integrate it in, but it gives us more flexibility and is going to make us more competitive. >> your pharma business is your largest unit you also have a well known consumer set of brands but that one operationally not doing as well. down about 15% in the third quarter.

are you thinking about bolstering that through m & a as all? >> we're excited about all of our segments our consumer segment, that's been a core, iconic brand for johnson & johnson, whether it's baby, neutrogena, aveeno, tylenol, we have great franchises while they did perform down slightly, they were about flat in the third quarter and through the early part of the year what we have seen is a secular shift throughout the large consumer brands overall. now, we remain very confident in that franchise if you look at the underlying growth in areas like beauty, like otc, it still remains strong we certainly have got to do things about modernizing some of our brands around baby, moving faster to the e-channel, but we're very confident, and here, too, we did an acquisition just a couple years ago vogue, a really good innovative hair care company, and what we're doing now is we're taking a way they innovate in a fast way where they're collecting online immediately with consumers and building that into

some of our other brands in the consumer area. so m & a is always going to be an important part of our strategy >> thinking about e-commerce, a big question in 2017 in health care was the presence of amazon. you may have partnerships and existing relationships with them in your consumer business, but your expectation for their potential move into the pharmacy supply chain >> what i would say about amazon is we have a very good partnership with them on the consumer side. we're talking to them, we sell through many of the big chains we work with we also sell directly. but what i would encourage almost anybody, whether it be in pharma, med device, we should be a acting like amazon is getting into our business. frankly, we have to create a crisis we have to make sure we're always competitive, always thinking about how to be more effective, how to be more efficient, so we're thinking that way across all of our different businesses >> would you welcome amazon in are you talking with them about their role >> if it leads to better customer satisfaction, if it leads to greater transparency,

for example, around pricing, if it leads to ultimately better outcomes for patients, of course, we welcome them in >> any conversations happening >> i won't go down that road right now, but i think having healthy competition can be a positive thing but you know, we always have to keep the patient, the consumer in mind. >> i want to ask you more broadly about the political environment right now. and a big debate going on outside this conference is the immigration debate and what's going on with daca and d.r.e.a.m.ers. some of my colleagues this morning interviewed a j & j employee who is a d.r.e.a.m.er and she's worried about being expelled from the country. she said she's talked with you about johnson & johnson's position on daca how important is that for johnson & johnson? >> it's very important, and it's important at a personal level. as the grandson of immigrants myself, it's something that has been a very important part of our country, and making sure that we have comprehensive immigration reform that takes into consideration, you know, how can we help these people

gain the right, their appropriate rights in the united states how can we make sure they're drivers of the economy, that's what this is all about so it's certainly our hope, we have made a stand on daca. it's our hope we can get more comprehensive reform through and we want to help our employees like the one you talked to this morning we think it's good for all of industry when that gets done >> david, do you have a question >> yeah, thank you, meg. alex, back to capital allocations specific to tax reform itself, meg mentioned the money you have overseas. but in a larger sense, not just that $16 billion or so, but one of the lower tax rates do you see yourself increasing your returns to shareholders do you see yourself in any way changing your capital allocation as a result of both the access to that overseas cash and the lower rate here in the u.s.? >> well, david, what i would say overall, i think the fact that we see this tax reform that we're going to be more competitive, ultimately, is going to be great for shareholders for us, our capital allocation

strategy starts with investing in our business. things like r&d, making sure we're competitive in the sales and marketing standpoint, and that's why we have seen the great treasure trove of launches we have been able to do in the last several years and the growth we have been able to produce at johnson & johnson after that, it's very important around our dividends, our shareholders depend on us for that after that, we then take a look at value creating m & a. usually about 50% of the innovation at johnson & johnson we have acquired through inorganic or m & a activities. and last but not least, we look at a share buyback the good part particularly about johnson & johnson with our strong financial position is we can do those things simultaneously it's not necessarily an either/or or in a linear fashion. we can do all those things that's why frankly we have such a strong track record over the last 55, 25, or 5 years. >> without a doubt i guess what i hear you saying is nothing really has changed.

in other words, you have always had extraordinary access to capital given your credit rating in particular. and what i'm hearing you say is we still have the same priorities and nothing has changed as a result of tax reform when it comes to the priorities or how we go about deciding on them >> no, david, what i would say, this is going to give us much more flexibility under the previous system, a lot of the large u.s. companies, because so much of our sales, over 50% were outside of the united states, it put us in a position where you're using your u.s. cash to pay dividends and therefore having to take on more debt under this construct, we're no longer going to have really that construct in place so i think it gives us greater flexibility it allows us to more efficiently use capital. whether it's through our own investments, through capital or m & a, i think that's going to be a very positive move in returns for shareholders >> also i want to bring it back to what's in the clinic for you and what's driving the drug pipeline at the end of the last year, you

did a deal in this very exciting new area of cancer treatment where you're taking a patient's own immune cells out of their body to fight cancer that program is under fda sort of approval, review process in china right now, if i understand correctly. how big of a driver for your business is this going to be, and what would you say about the pricing paradigms we have seen for these one-time treatments in the u.s. >> we're really excited about it for a number of reasons. one is, of course, our team led by people like paul and joaquin, bill, have done an incredible job in our oncology franchise. in the last five years, the difference that we made for patients as well as the several multi-billion dollar franchises we have been able to build is pretty remarkable. with this bill in particular, first of all, it gets us into the self-based therapy the dcma approach which we're really excited about, we could start seeing cures in multiple myeloma. and unfortunately, we probably all know somebody who has been

affected by multiple myeloma to see this possible in a short period of time is pretty remarkable number two, it also gives us a great partnership in china where we're seeing an emerging biotech industry come to life. so the fact that we were able to work together on this, the earlyidaty is incredibly encouraging. we think it's differentiated from some of the other compounlco compounds. we're excited about it as it relates to pricing, the good news is when we have multiple approaches, probably similar to what you saw with hepatitis c, we have a big breakthrough therapy, we see tremendous improvements and then as you get more competition, price goes down, it becomes more economical, and that's what the promise will be here i think that clearly, there's big returns for patients i think there will be big returns for companies. but it will also be a competitive environment. >> we'll leave it there for now. thank you so much. >> have a great conference >> thanks. we have a lot more coming up, including the ceo of valiant joining us later today

carl, back over to you >> thank you very much >> apple is defending its record of providing parental controls and protections for kids who use iphones and other devices. responding to a pair of shareholders who wrote an open letter arguing that the tech giants needs to tackle smartphone addiction in children in a statement, apple says we have new features and enhancements planned for the future to add functionality and make these tools even more robust they say their mobile software includes extensive parental controls, and it's started offering some as early as 2008 by the way, we should point out, both jana and calstrs will be on today to talk more about this. and might reflect on what the likes of tony said today, maybe apple needs to give us tools to measure the degree to which this thing has stuck to your hand >> yes, and also just to really send a message that they're trying to stay in front of the issue. if you look at the problems of product liability created for other companies, and that seems to be what the activists were

partially pointing to, it's when you either create an addictive product and ignore the research on how bad it could be if it was misused. apple is probably wanting to stay on the right side of that >> if you were to start a new social impact fund, i couldn't think of a better open than this for jana good choice. >> everything is marketing >> everything is marketing >> one way or another. >> when we come back, we'll go live to ces and hear from tim armstrong. what he has to say about the content wars, media mergers and a lot more >> also there, intel's ceo speaking out about the company's timeline for the chip fix and why he says autonomous cars will be the most amtibious data project of our lives "squawk on the street" back in a moment dow up 57. . you still thinking about opening your own shop?

every day. i think there are some ways to help keep you on track. and closer to home. i'm all ears. how did edward jones grow to a trillion dollars in assets under care? thanks. by thinking about your goals as much as you do. i know when i hand them the it's gonna be scary.car but i also know that we're gonna have usaa insurance for both my boys. it's something that they're not even gonna have to think of. it's just gonna be in the family. we're the tenneys and we're usaa members for life.

record highs the s&p and nasdaq on track for six straight days of gains also watching cryptocurrencies bitcoin continuing its pullback below 15k. >> gentlemen, good to see you both nick, what do you think explains the action since the beginning of the year so far >> for bitcoin or stocks >> for stocks. >> for stocks, it cleary is a melt-up based on enthusiasm over q4 earnings which will be quite strong enthusiasm for the q4 economy, which should also be quite strong, and the hope for tax

reform, giving us further earnings upside as we go into the year >> is that ratified by earnings season guidance or clouded by changes and charges and gains because of tax reform? >> i think most companies will do their best to push the tax reform issue to the sidelines, give you one page on the earnings release to say here's what it affects, but have a clean q4 that shows the earnings power. they have to, that's the story here >> scots, you have been cauti s cautious, i think, for several months have we broken you >> you know, carl, we moved our targets higher after we found out what the final tax thing was. and really, i would disagree with nick in that fourth quarter earnings, the actual results to me are almost meaningless. i think the market is going to be completely focused on what's going to happen in 2018. they want to hear talk about cap-x, talk about how the tax, new tax code is going to affect their earnings we know the results were good. 2017 is history.

it's uncharted territory with this tax code looking ahead. and so i think that's really going to be the focus here over the course of the next couple weeks. i just -- you know, the market has some upside momentum here. people are starting to jump in the economy is improving you know, that's the story i don't think fourth quarter earnings results are going to be very important >> i mean, nick, obviously, the tax cut, if nothing else, did give this bull market a new fresh storyline, things to focus on yet it's not manifested just yet in having the kinds of stocks everyone thought in a linear way were going to benefit most from tax cuts leading the way big tech cap companies doing well, is it still just another reason to feel good about the market >> you're absolutely right what it's going to come down to is people have to do their work on individual names and talk to companies and their cfos to understand the nitty-gritty effects of the tax cuts.

that's going to happen on a case-by-case basis as we go through q4 earnings releases and analysts forthex year. i do anticipate the market, but for right now, the default value is buy more tech and go home >> scott, any concerns about consumer credit? or the degree to which we have just hopped from a big debt financed rally in dotcom, then to housing, now to things like crypto currencies and stock buybacks >> you know, carl, i think things like crypto currencies are a sign you're moving toward the late part of the cycle you know, this bull market was born on pessimism. it's grown on skepticism now i think we're somewhere between, as john templeton would say, the skepticism and the optimism eventually, the euphoria is going to be at the top we're not near there i think the bull market is going to keep going. consumer credit and debt, that's a huge long-term issue people keep talking about, gee,

the servicing of this debt at low interest rates is no problem, but our interest rates is going to be low forever probably not so i think that's going to be an issue at some point. i'm not sure if that's what brings this long bull rally and expansion to a close i think it's probably further out than that, but consumer credit, sovereign debt, corporate debt, those are all concerns to me it's certainly in the long term. >> meanwhile, nick, you were one of the first, maybe the first analyst to cover bitcoin, writing a report in 2013 now we're hearing from people at td ameritrade that bitcoin is a way to get millennials into the market is it likely, is it good or not? >> it is true. they feel they understand the technology better than perhaps people of my generation might. but at the same time, it's a dicy way to introduce people to the merits of trading, simply because crypto currencies don't have the track record that stocks do in holding and creating value over a long period of time >> i guess i struggle with what

it tells us about the risk taking environment right now is the fact that there are these hundreds of billions of dollars in capitalizization attached to something that didn't exist a few years ago d does it tell us they're reckless, or does it tell you that, you know, equities are still kind of sober and rational right now >> the good thing you can say is people have been avoiding equities for years now the money flow data from the ici has been negative for four years running. even as the markets trended higher and bitcoin really didn't become a thing until last year. they might be independent but still show us that at the end of the day, people are looking for either steady returns in the case of stocks or bonds, or they're looking for the juice, which comes from crypto. >> finally, skault, we pointed out this morning it's 2753 this morning, s&p is already exceeding year end targets of morgan stanley, hsbc you're saying you expect the equity strategists to raise the targets in the coming weeks and

months >> i think that's probably true, carl for us, our midpoint of our target range is about 6% higher than we are here in the s&p 500, but where we could get tripped up, we're looking for 2.9% gdp let's say it's more than that. we're looking for 2.4% cpi let's say it's there or lower. there's risks both to the upside and downside, where we expect the market, but i think this year is going to be an odd year where we're going to see more index target changes than we have seen in a long, long time i mean, this year, i thought that we were going to have a volatile 2017. that obviously was not the case, but i really think this year, we're going to see some more volatility and a lot of target changes. >> we will see nick, scott, thanks, guys. good to talk to you both >> roll tide, guys >> congrats. >> thank you intel's ceo speaking at ces on the issue of security flaws

in his company's chips jon fortt is at ces in las vegas with more on intel's response. hey, jon >> hey he took the stage, wanted to talk, of course. about technology, but after first continued to address this security issue that continues to rock the chip industry and intel primarily. here's what he said. >> our processors and products introduced in the past five years, intel experct to issue updates for more than 90% of them within a week and the remaining by the end of january. we believe the performance impact of these updates is highly work dependent. >> and it's not just intel amd talking this morning about the fact that microsoft has halted a security patch for one of these issues. here is amd's statement. amd is aware of an issue with older generation processors

following installation of a microsoft security update published over the weekend and microsoft has been working on an update to resolve the issue and expect to begin rolling out again for those impacted shortly. intel also in the keynote addressed a couple chip advances one in quantum computing, also in neuromorphic security the trend overall, though, seems to be about recognizing the real world and doing new things with it, new camera angles. immersive experience they touted the olympics, which as part of the nbc family, we know a little something about. the winter olympics coming up. their chips will be used with cameras there. also, something called a volicopter a helicopter operates electrically powered that's getting quite a bit of attention, and finished off with a music and light show, but the talk of chips here this week is likely to be those security issues once again. they have got the patches ready

to be issued, but not all of them are working as expected at least initially still, though, no reports of hacks using these vulnerabilities in the wild, guys >> a lot of news out of intel. it's not going to stop anymore soon jon fortt. >> we're one month away from the winter olympics in pyeongchang this morning, north korea agrees to send athletes to the winter games in south korea in addition to athletes, they'll send a cheering squad and a performance art troupe the event will be the first time north korea has participated in the winter games in eight years. >> all right, when we come back, hitting the pause button two u.s. companies holding off on proposals to launch bitcoin etfs we'll tell you why next.

good morning, everyone i'm sue herera here's your cnbc news update at this hour. south korean negotiators making their way back across the dmz following rare talks with their north korean counterparts. the two rivals took steps to reduce hostilities with north korea agrees to send a delegation to next week's winter

olympics in south korea, and also to reopen a military hotline. a train crash outside johannesburg injured more than 200 people emergency responders saying 226 people were taken to hospitals most with minor injuries no one was killed. one train car derailed, and no word yet on the cause of that crash. >> china says rescuers have found a body believed to be a sailor from the iranian oil tanker which collided with a freighter at sea no further word on the 31 other sailors missing from that tanker, which is still on fire and at risk of exploding and here at home, alabama is the king of college football again. after beating georgia in overtime, 26-23, behind a backup freshman quarterback the crimson tide winning its fifth national title in nine years. it was a great game. that's the news update this hour i will send it back downtown to you, mike. >> sue, thanks i think i watched the wrong half of that game as it now turns out.

>> i know. >> thank you very much a little late. meanwhile, two u.s. companies holding off on proposals to launch bitcoin etfs the fund manager cited ongoing concerned from the s.e.c joining us for more on the etf spotlight, bob pisani, and matt hogan. >> thanks very much. we have these reports that two companies who are seeking bitcoin etfs are withdrawing them what do you think the s.e.c.'s position on bitcoin etfs is going to be. we haven't heard from them officially >> i still think there's a good chance we'll get a bitcoin etf this year. what they saw is that the futures market is young, relatively illiquid, and they were worried about them launching, getting significant assets and swamping the futures market i think it throws back into question whether we'll see a futured based bitcoin etf or physical backed bitcoin etf first. >> everyone at the s.e.c. which has control over the regulatory

industry for safety, different organization, before the s.e.c. said wait a minute, there is no regulated deriskatives market, so now everybody said, this is going to be great, now that we have a bitcoin futures market, maybe that will be sufficient, and apparently, it's not at this point. >> it's not sufficient they want a well developed futures market what we have right now is a massive -- >> so the position is going to keep moving. >> absolutely. they're not eager to put something on the market until they're sure it's going to work. i think it's probably smart. the market is relatively thin. the trading is pretty limited and it could get swamped by volume flowing into the etf. we may get here this year. >> it's kind of a nebulous idea, a more well regulated, quieter, whatever this is vague. >> the killer app is a physical backed etf that's what we want. we don't want a future based etf. i think that's the killer. i actually hope that's where we

end up >> do you think we'll get approval for an actual bitcoin etf, not a futures etf, an actual bitcoin etf trading >> this year >> the bar is higher >> it's already high i'm not sure we'll get it this year we may see it in the next year or two, but i do think we'll get there eventually >> when, 2019? >> 2019, i'll put it out there the twins who have a bitcoin etf will have to wait longer >> who knows, maybe it will come in, but i think that's what investors want >> matt, is it obvious at this point that the underlying market in bitcoin, physical bitcoin, as we ironically call it, is actually well developed as well? if you did get tremendous demand through an etf structure to buy bitcoin, is the s.e.c. going to think that's okay? >> there's really significant trading volume in physical bitcoin, to use that term. you are seeing it. you're seeing massive volume on coindesk >> etf is going to buy it and

put it away. good buy it and put it away. the question is how do you make it safe and secure nose are the things they're looking at those are technical details. there are already funds that are doing it successfully. virtually, it will get to an etf and that will be good for investors. >> we had the gold etfs. they own physical gold behind them here you have a bitcoin that would own physical bitcoin >> the custody issues are a little more complex or significantly more complex, but yeah, digital gold, and i think it will trade like a physical gold >> big story last year, record inflows into etfs. we talked about the trends overall for that, out of mutual funds into etfs. out of active management into index funds. that's a big trend that's going to continue. out of higher cost into lower cost do you see these trends continuing are etfs going to continue to dominate >> i think they're going to accelerate from here a lot of people think this is the year for active. i think we're a couple years off from that.

the fee war assets, et cetera, it's all going to spiral up from here >> a lot of people seem to think we'll get a correction in the middle of the year, and active management will make a comeback because they'll look smart, or low volatility etfs will come back in. your thoughts on whether there's a correction and how that will influence etf trading. >> active and fixed income will do well. i worry about flows into low volatility etfs. low volatility stocks are highly priced utilities trading at a pe of 30. where the flows should go into value and deep value etfs. i hope that's what we'll see i'm not sure that's what it is >> matt hogan, we'll have you back to talk about the bitcoin etf. >> we have big retail movers to get to, beginning with target. moving higher after reporting upbeat sales >> the first of the big box retailers. increasing 3.4%.

that's far above its flat to 2% guidance it gave in mid-november targets increasing its fourth quarter and subquently full year guidance as a result of both the stronger than expected holiday sales and the tax benefit. they think it will be about 6 to 8 quents cents it really were the sales target shares up more than 2.5% at this point. target says stores fulfilled 70% of digital sales through both shipping from store and pickup in store, but after ordered online all five categories, that includes food and beverage, saw their comp sales improve in the holiday two months, we're still in the quarter the retailer also giving its initial full year 2018 earnings guidance, far above analyst consensus at this point. target is also tripling its store remodel program. it will open 30 smaller format stores this year those end up being key nodes for faster distribution to shoppers, particularly in the urban areas.

urban outfitters grew their sales 2% for the holiday that is, though, below the rate that the company had suggested it was seeing on december 11th it was sales of media and tech products that urban outfitters that dragged that comp down of that brand shares for urban outfitters are falling by more than 5.5% at this point, but up 44% in the last three months. jpmorgan says this is an opportunity to buy on the dip. if you're looking into the details for urban, it was the smaller brands outperforming the main urban outfitters banner free people's upsales up 5%. david, back over to you. >> thank you very much let's get to -- well, let's get to a tease when we come back, tim armstrong is going to join us, live in las vegas at the consumer electronics show we're going to break down the state of media, the content wars, how it's going over at verizon for him, and a lot more. back after this.

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the annual consumer electronics show from las vegas kicking off this morning, featuring some of the biggest names in technology. julia joins us now from there, and she has a special guest for us julia. >> thanks so much. good morning to you. i'm joined by tim armstrong, ceo of oath, which is part of verizon. thanks for joining us here at ces. >> good to see you again our yearly interview >> this is your first interview since you announced an expanded deal with the nfl to bring nfl programming across oath's properties and across verizon's properties. why did you decide to make this deal >> one, i think stepping back just one step is when verizon bought aol originally and then when we bought yahoo, the real goal was the movement in the world is for consumers to go mobile and you see it in every tv statistic. you see it in every content statistic overall, so the nfl deal is a direct plug-in to what

the overall verizon oath strategy is, which is to bring the world's best content and services to the mobile consumer. and that's really, i would say this is probably one of the first big building blocks for us over time to bring great content and great services to the mobile consumer >> i hear you're spending as much as $2 billion are you concerned about the fact that nfl ratings and television are on the decline for the second consecutive year? does that mean that maybe you're overpaying >> i think it's the opposite, which is people are looking at tv ratings the question is, is there less interest in the nfl? i would argue no, that interest has been shifting from tv to mobile and we have a great example. we did a london nfl game this past fall, and we had unbelievably great results we had the size of an audience of a normal cable viewership for an nfl game. so if you think about the tv ratings for the nfl, you could say, oh, that's an issue, but if you look at the consumer market, you could say the opportunity in the issue is the fact consumers

are going on mobile. this weekend, we're able to move up our launch of the nfl that was going to be at the afc/nfc championships, a week earlier. our team did an unbelievably great job executing on the technology side, so the consumers in the u.s. will be able to watch all four playoff games with one click under the yahoo sports app you'll be able to download the app and watch any of those games. 8:15 on saturday night, i'll be watching the patriots play tennessee. i hope the patriots win. >> that's news, the games are coming a week early. last fall, verizon's ceo talked about how he was going to make some content deals alluded to some deals. didn't seem like they happened does that mean there are big content deals coming this year are you spending many more billions of dollars on content >> one thing he's been clear about is the future of 5g, where connected homes, connected people, connected cities are happening. content is one big piece of that future, so lowell has tied the content investments directly to where 5g is going, and he talked

about that last year you have seen us do the nfl deal with a digital partner for ces within gadget. we have the makers conference in l.a. coming. you'll see a drum beat of us doing more content related things for us, you're seeing us being very careful to get very high quality content relationships. verizon is already one of the biggest players in content in the u.s. >> we talked about the fact you're competing against these two giants, google and facebook. facebook invested in bigger content. do you feel like you have to do a deal, m&a, to compete with those giants they're so massive it's tough being a third player. >> we're not the third player in mobile so if you look at, we have a billion people on oath properties you have 100 million people on verizon. you have 5 million or 7 million on fiose when you look at the mobile traffic, we're one of the most significant mobile companies in the world. while people look at google, facebook, and amazon, who are partners of us, as big in scale, they're missing one key

component, which is verizon is one of the biggest mobile membership companies in the planet just like taking the nfl games, put them with one click away on the yahoo app where it's frictionless for consumers, that's how we come to the game >> do you think you need to do m&a to better compete? >> we will do more service and content deals overall, i don't think m&a, that's lowell's business our business, we're basically going to do more and more partnerships to bring services closer to the mobile consumer. >> just a final question about voice assistance it's all the buzz here at ces. google, amazon making a big push at what point will the voice platforms start to be meaningful to you >> one is you have seen us, the drum beat since we closed the yahoo deal is execution. we executed very well, hit our 2017 plan. we're launching the nfl a week early. voice is something that we're actively working on in two different regards. one is we have a voice for new sports finance that is coming out. we have very good progress on the consumer side. on the ad side, we're going down

to a one-ad system which will service voice, video, mobile, all in one system. we're in really good shape from that standpoint. >> a hot area to watch tim armstrong, ceo of oath, thanks for joining us. back over to you >> thanks very much. >> when we come back, oracle making a bigetn edat b oucion. we'll get an inside look when "squawk on the street" continues. arry murrey) when you have a really traumatic injury, we have a short amount of time to get our patient to the hospital with good results. we call that the golden hour. evaluating patients remotely is where i think we have a potential to make a difference. (barry murrey) we would save a lot of lives if we could bring the doctor to the patient. verizon is racing to build the first and most powerful 5g network that will enable things like precision robotic surgery from thousands of miles away. as we get faster wireless connections, it'll be possible to be able to operate on a patient

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one top technician says three charts are creating the perfect storm for more record highs. we'll reveal what they are at tradingnation.cnbc.com more "squawk on the street" coming up.

oracle's unveiling a $43 million charter school on its campus aditi roy joins us now with a look hi >> hi, carl. it's a really exciting day and what a cool space here we are on the campus of oracle, and i'm inside design tech l

high school. it's the first public high school to be built on the campus of a tech giant. i'm in the design realization garage, it's a workshop space where students can collaborate, work in groups, and come up with product prototypes the whole thinking behind the school is creative problem solving. the school has been in existence since 2014, but for the first time it's now on the campus of oracle they are leveraging company resources. even comes amid a shortage of software engineers and the u.s. are behind their international counterparts in s.t.e.m. achievement. they can use employees as mentors, even take classes on topics like wearables. one student took that class and as a result came up a new product, a purse sensor. the school even helped her get a patent >> it feels so cool to know that an idea that i had actually got the opportunity to be product to

life >> and it's not just oracle. other tech giants are also heavily involved in education. for instance, google supplies enough apps and chrome books for half the u.s. primary and secondary schools in the u.s facebook has a website called tech prep to help students and parents learn to code, and sales force has pledged $100 million on san francisco public schools over a decade. ceo treats the fund like a vc, meeting closely with principles. here at oracle, the company is even lending out its employee shuttles to be used as school buses and the school's basketball team will be using the company gym for practice they'll have a separate entrance by the way, the ceo will be addressing the inaugural class later on this morning. david, back to you >> okay, thank you, aditi. as we head to break, don't miss today on the "halftime report," apple responding after the investors earned the tech

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welcome back to "squawk on the street." dow and s&p in the green during early trading. take a look at one standout sector, health care. those stocks trading close to 1% higher today as the jpmorgan health care conference rolls on in san francisco names like illumina, boston scientific, all up by 3% today illumina is trading at levels we haven't seen since july 2015 certainly a sector to watch. now back to you guys, carl >> thank you very much amazon's jeff bezos is worth more than bill gates ever was, surpassing $105 billion. shares of amazon have risen over 6.6% this year, and now we're in a phase where the horse race of the richest person in the world is going to, potentially, go back and forth between gates and bezos. >> right, because he does retain enough of microsoft shares right now that it is nip and tuck. gates giving a lot of his away

back to '99, adjusted for the size of the stock market, still ahead of where bezos is right now. mark of microsoft's dominance. >> that is interesting, to your point, gates has given so much to his own foundation. that said, bezos just getting started. so who knows where that could lead >> absolutely. both the age of the company and maign, rht we're back in a minute

good morning, it's 8:00 a.m. in las vegas, 11:00 a.m. on wall street, and "squawk alley" is live ♪ ♪ good tuesday morning, welcome to "squawk alley," i'm carl quintanilla, courtney reagan