you don't want to get dogmattic in economics. >> well, warren, want to thank you very much for joining us today. charlie, thank you for calling in it's a pleasure talking to both of you we truly appreciate your time and joe, we'll send it back over to you. >> thanks for that and thank you to warren and charlie, that was great. we've dwgot to go. "squawk on the street" is coming up right now ♪ ♪ good wednesday morning, i'm carl quintanilla with jim cramer and david faber. pressure on interest rates put pressure on the futures as names like buffett on our air a few minutes ago weigh in what it means for the stocks reports that the chinese have suggested slowing or halting purchases of u.s. treasuries roadmap begins with the pause, a

decline in the open and s&p in '18 best start in 30 years. >> buffett on the market, succession planning at berkshire, stocks not richly valued and remains a buyer but not of bitcoin. >> tech under fire a powerful gop senator demanding answers from apple good battery gate the s&p is off to the best start since '87 and buffett says markets are not richly valued according to rates and what he told becky a few moments ago. >> what has happened in the market has been very sensible. nobody thought we would have these kind of interest rates for a long time. additionally you have the tax act which is a huge factor in valuation. >> says the interest rates are the gravity to value and munger chiming in saying share prices are not crazy. >> point blank tell you, this was becky quick, congratulations, unbelievable interview. you sit there and what you get

are people who know more than anyone else alive and they are saying, look, there's some interesting things and let's not go crazy, just because interest rates go up a little bit that i have seen a lot of different times when rates have gone up. i felt not sanguin i felt if you're at home and invest in an index fund this is a reasonable time to put money to work. they are basically saying it's not crazy. i like that. >> yeah. always worth while listening to him just talk. i mean, i could listen to him all day. i think so often we forget the long term performance of this company is truly remarkable. there are very few true superstars when it comes to doing this day in and day out. we tend to crown a lot of them here at cnbc falsely, frankly. but he is the true one, isn't he i mean, i think it's a 20% average annual return. i'm told by one of our viewers at least and i believe he knows, since 1965, can you imagine

that 20% annual average return since '65. >> one of the things that i find is amazing is, he's not afraid to say things, obviously he's got the confidence for instance, did he hedge himself at all in bitcoin? no did he take a perspective, saying you don't want toshort it today yes. he has the advantage of looking at time spans and making decisions that again, make me feel like -- people at home, it's not so terrible it's not dangerous to invest right now. he's not saying pick this stock and pick that stock. he is saying, look at interest rates, they are low and stocks are the all tern tif i find it joyous, he's not pounding the table, saying, it makes as much sense -- >> does have $100 billion in short term treasuries. >> i think he's always looking. >> he mentioned bitcoin and talked about how most cryptocurrencies will come to a bad end. here's what he said about

bitcoin. >> i get into enough trouble with things i think i know something something about. we don't have to know what cocoa beans are going to do or crypto currencies, we have to focus on eight or ten stocks that businesses that we think are decent businesses. i do think what's going on definitely will come to a bad ending. >> part of his hall mark knowing where he is not well suited to play. >> isn't that great. >> i said he wouldn't short but probably buy a five-year put on almost every one. >> i love this there's so many people, you read twitter, whatever, there are people who will tell you -- i happen to bring today -- i don't know if we have the ability to have a camera come close to me i have it here in my pocket, something that's probably worth -- i don't know, maybe you can tell me, millions, this is when kodak listed, this was their notebook is this worth millions today does warren buffett want to buy

kodak? i didn't hear that. >> no. >> this is the original sort of swag they passed out >> when this came republic. >> republic. >> look at this. it's got lines you can write on it. i mean, honestly, i could put this on ebay right now, don't you think the bitcoin maniacs would say, i've got to know what's in it it's really perfect. because there's nothing in it. >> there you go. >> i pay 15 for this. >> if you bought kodk at any point yesterday, you're still up this morning. >> i think that warren -- i think he would say god love you. i mean, it's so funny, because when you listen to him and what he is -- he is not going to be hectored for what he said. he doesn't know when it's going to crash he didn't say it was a fraud and what jamie dimon is saying he didn't want to hurt people.

that's one of the reasons i keep about index funds, doesn't want to hurt people. >> one of the more interesting comments came when becky questioned him about the impact of tax reform. berkshire will be a beneficiary of it but in talking broadly about other companies, he did say look at the aftertax return on capital some of it will be competed away in certain industries because there's more competition than in others where margins will -- their suppliers to a particular industry will say wait a second you're benefitting but we're all dealing with what that is going to mean as we heads into earnings season whether it's berkshire's earnings or anybody else's with the banks. it's going to be an interesting and complicated earnings system when it comes to the conference calls and also the benefits that are construed on all of these companies from a lower tax rate, they are going to start to see it was interesting to get his take as well. >> totally one of the things -- people at home who don't know him, geez, this guy, older fellow

but did you hear -- where he said listen, there's direct deferred tax asset and a liability and people have to understand that it's actually good for citi down the road, may not be good initially. what will happen, i think is that people will be flum oxed because they won't understand the things it was so great to have him -- he speaks in plain english such a delight. >> to the point of disclosure, companies are going to have to disclose whether it's in the calls or filings what the impact is going to be and even their sense of what it will be in terms of into the future so we are going to get a better sense but it's going to be very complicated earnings season we're moving into here guys. >> made this point a couple of times. >> the reason for him coming on the show, of course was jain and able being added to the board and talked about not a horse

race between the two men and what it means for berkshire's succession plan. >> when i'm not ceo, there will be another ceo there will be a ceo and how that ceo will organize things will be up to him. he'll figure out the best way to do it and it won't change very much it will change a little but won't change very much >> said his health is fine if there were a problem, he would tell the board becky said what about ten years, can we be here in ten years? he said that's a long time. >> these fellows they are talking about, they are not that young. >> no, jain is 66, the other gentleman is 55, which i do consider young. >> yes thank you. frost has a fabulous piece talking about how jamie dimon -- it's time for them to think about retiring -- >> 61, i consider that young too. >> want to throw their hat in the ring because they are old and jp morgan and goldman but

out here they are young. maybe they should be considered. >> i agree, especially if your ceo can be 87 and going strong. >> jamie dimon is a relative kid and -- >> is he the oldest public company ceo in the fortune 500 he's got to be, right? >> got to be yeah >> unless moses is still there as ceo somewhere. >> i don't believe so. >> never took the time. >> we'll talk to becky in the next hour about her interview this morning, stocks are on track for a lower open the 10-year hit the fresh high officials in china have recommended the country's slower halt purchases of u.s. stresh treasuries and predicting negative returns for the s&p this year, saying the fed has become its era of quantity take tif tightening, wouldn't be surprised to see it up 15% in the first half but that gets

wiped out as the 10-year crosses 2.6. >> maybe that's because the five-month put he suggested when came on has probably expired maybe it's the may call he felt the market could have a huge correction it could be the june correction where he said there could be a huge correction. he's a nice guy, dunlop. i think this is not his first call for this. i find it so interesting that you can't have it either way here a lot of people are saying unless the 30 years starts inflekting, we're going to go in a recession. now that it's happening, well now it's going to be a disaster. you can't have it both ways. both of us who traded, the moeser rule that we all know for those that have been around it, buffett talked about it. one of the great rallies that i saw was when the -- when the 30 year went from 14% down to 11% and at 11%, people will say, wow, get long stocks i'm not as fretting this 2.5 to

2.6 but i know that gunned loch is and made a series of calls that the market could crash. maybe he's early. >> he may be. >> listen, it's an interesting morning given the reversal we did see and bond prices moving lower on a 5:25 a.m. story from bloomberg in which they said china officials are said to view treasuries as less attractive. >> not just here bunds almost a two-year high and jjb, highest since july, right >> it makes sense. we have so many people who are saying we've got to get a little inflation in the system. we saw some export numbers that were not inflation but if we only got a little inflation we'll be better. when we get inflation, of which we get a little, it's like oh, my the demon is back, all i'm urging people, be even keel like buffett. he mentioned sidney homer, inside the yield curve that was a dynamite, 500-page

turner they can't predict what's going to happen. don't necessarily bank that to be the be all and end all. jeffrey gundloch, the possibility of 2.6 and whattha could do to the stock market, i'm saying that's probably not -- that's an ill advised call. >> are you in the bill miller camp yesterday on "closing bell." money manager who for many years had a great track record and ran into a buzz saw for some time. has had very good performance lately he thinks we're in the midst of a melt-up because people will start selling out of their bond funds which are going to suffer as a result of those prices coming down and move even more wholeheartedly into stocks. >> it was a very enjoyable interview. i keep thinking we did a -- we did a delivery alpha conference once i don't know if you remember, bill miller got up and he was talking about amazon tripling and people -- these chattering faces were like -- >> he also -- >> he also liked valiant, didn't

he. >> he was early. >> it's been a good year. >> it came back with a vevengane there are people saying he's senile, not like the town, the city we can be critical of this man but was not amazon other than apple the great stock of this year i saw another person who said it will go to a trillion dollars that could happen. when he was talking about it going to where it is now, those hedge funds, remember the hedge funds that wanted to short everything >> he also is an owner of bui bitcoin, mr. miller. >> our friend says oldest ceo is buffett followed by aidleson. >> that's right. >> penske up there. >> british exposure, supposed to hurt him but brexit turned out

to be good >> and lesslessly wexner. >> not that good a of a run there. >> it's not done as good as berkshire. >> still to come this morning, apple is under scrutiny from a power player on capitol hill also with the retail landscape changing what kohl's ceo told jim about amazon we've got calls on everything from toll to 3m, target and deere. more "squawk on the street"? just a minute.

john thune sent a letter to tim cook asking why they were slowing down phones in response to battery wear. more information about how and why they throttled this processing power in older models. >> you can keep it alive and came up with a solution. apple has become a target. it's so big. they've been coming -- really a punching bag i find it interesting because there are a lot of companies that do a lot of things that are not necessarily pro consumer and don't -- let's just say don't follow up with the solution but apple is so big it's become wow,

let's attack apple i'm trying to think some things -- >> by the same token and we can see it already changed we celebrated for so long, the amazons and apples, for obvious reasons, they are incredible success being the main one this is only growing in momentum would be my sense. >> they've become countries too some degree within our own country. when you see apple and everyone has one, you're tempted to say wait a second there's something that could be wrong with this device that everybody uses it's a national treasure but let's take it apart. during yesterday while i was being attack the by some guy on -- >> halftime. >> i don't know his name, some lawyer, saying i hadn't read a letter which i memorized they don't realize how quickly you can disable it for people. how do you shut it off there's a 911 factor, we don't

want you to shut it off. it's kinds of like what are the big problems in national security there's china and north korea and tim cook >> what was that fellow's name, all over me? >> charlie penner from jana. he was somewhat rude to scott yesterday. >> somewhat? >> i took an ill-advised strat zbi. >> we're on tv every day. >> he's new to the game. he can come to bar san miguel and let's take our stripes off and solve this, rumble -- >> carl and i will be there for you too. >> your friend -- the jana guy -- >> he boxes too. >> we've got your back >> rosenstein, total gentleman. >> yes, very understated thought about the question didn't accuse me of not reading a letter i read over a couple of times. >> to the larger point in terms of the threat to apple from all of these various -- whether it be device usage by younger

people, whether it be battery power, whether it simply be privacy issues or so many other things we haven't even discussed that may come up is it a threat to the company at all in terms of its revenues and earnings >> i think that are the company has remedies, they have the battery remedy look, i was speaking to apple yesterday, maybe you've got to help the national association of mental illness mabel you have to give some money to organizations that are directly working on this and show a commitment and work with the mental health professionals, not necessarily with jana, because i never thought jana was all that into mental health and thought barry was -- subtly tried to get walgreens to buy tobacco. i wouldn't necessarily go to them as the place for a c conscience but hey, conscience, anybody can have a conscience, that's like going to belichick, can we feel better after the game no, but there are people that tim cook could sit down and do

all of the things and have a positive effect. we need to have more -- certainly more visibility on the issue. i think in the end they could attack facebook, google, anybody. kodak. >> the congress committee will have hearings a week from today where youtube and facebook and twitter now will have to talk about the spread of propaganda on the internet. >> it's good we have the house on american activities, maybe we need a house on american giant companies. >> talk more about this later on and get cramer's mad dash, opening bell coming up in 8 1/2 minutes, don't go away

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welcome back to "squawk on the street." six minutes before we get started trading on this hump day. >> i've got a real good feeling about cisco and one of the reasons piper starts it with a buy. cashflow explosion, all of these true but this is what i'm talking about when i hear about tax reform 48 billion in aftertax cash overseas what chuck rob bins can do anything he wants other than to get the atlanta falcons to beat the eagles this saturday when you're looking for something to buy in a day like today, do you reach for eastman kodak, that's short sighted? not really involved. i think ciscois the kind of thing, chuck can buy back stock

and buy a company -- >> let's stop talking about this cash and m and a the fact is they've always had access to capital. >> are you attacking me too? >> don't even equate the two. >> absolutely not. >> buy backs or dividends, yeah or maybe even an actual using the money although we put him on the spot and wouldn't commit to anything. >> kmuk chuck is the best, comen maybe stocks aren't as expensive when you think tax reform. they've been able to buy and been buying consistently to become more software i will say please do not panic because china has said maybe he doesn't want to buy. with the one point got down to 2 trillion it doesn't crush the bond market the chinese and j powell decide to sell bonds at the same time all we really want is a little inflection, cisco is another company that is so big and has a lot of cash, can do good things. >> yeah.

>> they are not socially -- that i know of -- they are not -- >> not in the cross hairs. >> but chuck could call attention to anything, there's a lot of causes, stay out of the cross hairs. e re cinve a lot more squawk on thstetomg at you after this s season once again. >>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.

you're watching cnbc, "squawk on the street squ." futures have been red for most of the morning, yields in japan and germany and the u.s. under pressure once again. some big names have been weighing in. buffett today, gundlach, tepper, everybody has opinions. >> people make sweeping calls at the beginning of the year. are the german bunds going to be dangerous? they've been dangerous anybody who bought it has been losing money the euro i think can have another run. i think they can have another run. i do >> all of that in addition to

research we haven't gotten to. the big board, fte networks, a network infrastructure solutions provider, celebrating its listing on nyse. and at the nasdaq, an online marketing technology platform in china, iclick. among the calls today, susquehanna on target takes it to positive, price target 84 implies 12% upside. >> they must have listened to brian cornell. ceo says good things here's an amazing thin, lennar reported a big miss. down 1, 2, 3%, it's barely down. they have a tax benefit but i'm in the era of good feeling theory if we can buy stocks because interest rates ticked up, germany here and finally get the discount we've been waiting for, don't fear the discount. don't suddenly say i've got to

sell implied materials down one, because this is not necessarily a relative gain. i'm not saying, wow, right here buy them i'm saying don't panic if rates go up a little bit that's what a lot of people wanted a few weeks ago, right? you want a little inflation, we're so worried all we were getting is 19 -- late 1920s style german deflation when you look at the wage gains have are very minimal, i spoke with a lot of ceos that have to hire people, d.r.e.a.m.ers. >> yesterday at the conference, i'm sure you had that opportunity. >> labor is tight at a lot of jobs and that does matter. >> but you don't think the combination of wage pressure, commodity price pressure and reduced qe, more supply, that we're getting this week, you don't think the combination of that is dangerous? >> i think it's different from what we're used to it's definitely different.

and that -- you've got to get in the mindset if the economy does well, these things happen. it doesn't just stay the same. when we hear united technology talk about really good business, we can't say i have to sell united technologies what we do is say, it's really good >> certainly you've got confidence at cycle highs and sentiment and cash positions at very low levels right now. >> that's true and you kind of want the market to go down so you get a chance i just don't want people to say, this is the time -- i've got to sell everything because i just heard of a guy nameded gundlach who said there's going to be a good correction and didn't google terms crash gundlach. i gave it a google, or used the google box i gave gundlach a google and he's had some crash -- >> yes, he has.

>> what about an environment and buffett talked about this this morning, kodak up 70% and all of those strategies are in play. >> that i don't like. >> and people are taking off hedges. >> i mean taking off hedges bothers me does bitcoin bother me cryptocurrencies, becky asked a great question, if everyone starts trading them, will it matter you can hedge crypto am i a believer? i'm a believer in anything because it trades. cocoa beans trade. it doesn't mean buffett wants to be in there. i don't want to see irrational ex exuberance for anything. that doesn't -- it's not -- it just doesn't compute to me it may not be positive. >> here's a name that used to talk a lot about on "mad money"

sirius. >> sirius xm holdings put out some guidance on the tape, annual sort of pregot ahead of their presentation at a conference let me quickly go through morgan stanley's take here. it looks like fourth quarter pretty strong in terms of where they were in terms of adding subscribers and flat to down free cash flow and 18 versus 17 isn't helpful allows the bears to press but the initial '18 guide is for 5.7 billion that is 1 to 2% below consensus. how about ebita 1.25 billion, slightly ahead of consensus, trading at 2.09. you can see the stock is rea acting positively. >> you know who are the two biggest holders? >> the largest holder is

liberty. >> i think that they are shrewd investors. that ebita is the number is trades off of. there are have been guys saying this thing is going to roll over i continue to think the only thing to make it roll over would be spotify but 27, classic rock, i don't know what you listen to, maybe 18 elvis, e street band station. >> the spectrum, which is number 28, i like that. >> spectrum? >> christina stone. >> she's really good. >> they'll give you a song you're like. >> how about 1112. >> the kids want to go to 1, the pop and it's like, no, not more. >> when i put on the 7, it's the 70s my kids are saying that's like listening to big bands and glenn miller. >> sometimes we go to the '70s and listen to chicago. >> who knows about this thing? does anyone really use it?

>> all of us do. >> have you ever heard of something call offer surfer, where you basically use the free trial few days to go between over the top platforms >> no, come on. >> apparently that's a thing now. >> offer surfing >> and at some of these conferences going on, one of the people from fox was talking about it, offer surfing is creating attention that there needs to get sofed over time because offers could condition consumers, they don't need to pay the freight for premium high end content. we've had this proliferation of all of these virtual mvpds, over the top platforms but you can say i'll go to them free it's easier and easier now to switch. >> offer surfing, we need a bigger board. >> we need a bigger board. >> or you're not going to have a free trial period or i don't know. >> when all of things are on your box -- >> i watch the football games, you don't pay for that because

they have some service what the heck, pay it. the cable bill is big. >> you can put this thing called an antenna on your tv. >> i heard they used to call them rabbit ears. >> and goes through the air and you can get networks, cbs, abc. >> they have football games on them sometimes >> and fox too. >> yeah, it's over the air >> it's new. >> it's new. >> has the reception >> it's not bad. depending on where you are. >> can i use roku to get -- >> jim, you talked how you want financials to lead into this earnings season and we did get a couple of upgrades of morgan stanley and wells over at atlantic morgan stanley up a full percent. >> i'm one of the people that wishes that didn't happen because that gives people who buys wells a 62 and let's say it doesn't deliver and comes off a little bit great analysis, how about the will frost piece -- i'm like his

promoter >> he doesn't need any promotion. >> he did talk about the performance of jamie dimon over 200% lloyd over -- the tough mind so keep it in mind if they get hit, it could be very interesting. >> along with deere which is close to an all time high after yesterday. rbc takes it to outperform 155 to 190. >> two animals of deere and cat don't quit the agriculture market is something that people want to play so to speak and it's better than playing pot i did not mean the marijuana stocks i know you follow those closely but i do say that, look, if these come down 10%, maybe get in them. they've got to come down >> what are you laughing about >> that was a funny little line. >> now people are going to think i'm home just hitting the bong all the time, which is not the

case. >> i thought you vaped. >> i don't do anything i live such -- >> do you know what a vape is? >> i live a clean life. >> you take that downtown, right? >> by or way, the subway doesn't work in new york yesterday just delays and delays. >> this queue line, goes 68 to 75th or something. >> more or less the subway is broken. >> ge is worth watching because buffett talked about at least a theory, idea of what would happen if it came to him at a price he would like. this is what buff feett said to becky in the last hour >> different people have different views on what that price would be, but i mean, if you came to me and said we'll sell you the whole general electric company at x and it was the right number, we'd like to buy it then. if we buy little pieces in the market, that's the way we think about it. >> i want him to say we've been

a buyer -- i know there are value guys that are buyers -- >> he didn't say what the price is. >> he didn't say that. >> is it 18, 20? >> didn't say this thing is the biggest black hole in history. >> no. >> he said there's a price for it and did say it was a great american company usually don't hear that any more with ge in the same sentence. >> i know. >> i thought it was a nonringing endorsement. >> it's true you hear it more with boeing, which finally stopped going up today. >> are you kidding >> that's all -- you're wearing a boeing tie. >> a dream liner tie because i thought this could stop boeing from going higher, kind of like the sports illustrated jinx, a boeing tie. >> that's almost as bad as your breaking bad cufflinks. >> today i have the director cufflinks. >> hisen berg cufflings that my daughter got me. >> snts that cool? >> etsy. >> got them on etsy.

>> how is that stock doing >> that's at 21 the earlier management was committed to losing money for charity. i'm surprised that penner doesn't like them. these guys are committed to losing money to help causes. i read his letter. >> that's interestingly down 2% and ebay off 2.6%. >> what's going on >> i don't know. i was trying to find out >> wow stocks going down. >> walmart down almost 80 points >> good morning, happy wednesday, everybody you might think we're due for a down day but looks like we were heading downward and then had a little bump down around 5:00 in the morning. we lost eight or nine points in the futures, there was a story on another network that officials are reviewing china's foreign exchange holdings and may recommend slowing or halting

purchases of u.s. treasuries no confirmation on that at all i think there might be political issues there china gets huge amounts of dollars, they export to the u.s. and get dollars and he have to invest it. it's not easy converting dollars to other currency. treasuries are perfectly logical investment don't know if this is a real story or not but you can see we move down directly on that, futures move down and we've continued into the open asia did not look very well. i noted yesterday how techhas been weak in asia recently and saw a number of the big tech people in taiwan, united microweak over in korea. i talked about samsung yesterday. they had political numbers that were below expectations, that weakness is again continuing for a second day hynix the big korean manufacturer over there. semiconductor manufacturer again weak for a seconds day in a row. this is spilling over in the united states market and european market. here in the u.s. sectors again

we see semiconductors, smh leading to the downside and utilities are weak and two big cyclicals, materials a little weaker, banks up because of the rates are a little bit higher. i think it's important to note these semis all topped out in november and had a tough time moving forward since then. outside of tech, key sectors to the market are overbougt i looked at the market in terms of momentum and relative strength indicators and how strong has the price action been if you're over 70, you're overbougt. if you're 90, you're stupidly overbougt. the industrials and materials have been straight up like a rocket in the last three weeks or so. energy and transports as well, look at the transport index and see what i'm talking about it's up 15% in what, a month there you go that's straight up essentially almost 20% above the 200 day moving average it doesn't happen. you can't sustain that kind of momentum, it makes sense for us

to move back a little bit. talk about overbought. lennar, we're talking about the whole home building sector has been huge. up 25% in the last few months. i think it's very important jimmy just referenced this, they had a number out that was below expectations but they had a large land sale that they pushed into the next quarter to benefit from the lower corporate tax rate when people looked at the number, it was a miss on the headline number and then everybody finally started to figure out, that's what's going on the numbers overall for lennar were excellent, above expectations so lennar should be on the upside. weav we're coming back a little bit, down 82 points. >> let's get to the bond pits where much of the story has been all morning long rick santelli at the cme. >> hi, carl. interest rates are definitely at the epicenter of attention it hasn't been the case for many years, thaef been extremely well behaved. i enjoy the anecdotal information as to why.

look at interday of 10s, we're coming within a whisker of 2.60. open the chart up to one year, you can see 2.63 that is a formidable resistance, there's plenty of other reasons why 2.63 is important, other than it being a high for march of 2017 and indeed the high for the year we'll save that for a technical exchange later in the day. two day of bunds just jumped up and gapped higher. if you open the chart up, these are the highest yields going back to july for bunds here's an interesting -- i talked about anecdotal evidence. we know that the bank of japan is the runaway train in terms of purchasing anything it could get its hands on, etfs, whether it's their own securities and own sovereign jgbs and everybody is rightly so pointing to the fact that the yields are basically the highest since july look at the scaling. we're currently at '08 the entire range of that chart is eight basis points from 0 to

8 and most of the trade is within three basis points of 03 to 06. to me if there's a story about japan, it's going to be how these markets are going to force them to do things to control their yield curve that they are not going to be able to be successful at. that will be the story about japan. in terms of all of the other sovereigns, they are moving but not necessarily to historic purposes a two-day of the guilt jumped but it's in somewhat of a range. the euro versus the dollar, looking at 92 on the dollar index on 120, they are both highly significant, fairly synonymous and neither has given us a clue as to where it would be trading in three days relative to those values carl, jim, david, back to you. >> we'll see you in a bit. >> a busy week in vegas as the consumer electronics show goes on julia borseten has a cnbc

exclusive. she joins us live, hi, julia. >> reporter: good morning, carl, i just sat down with david zaz love, the stock trading down 1% and the stock still down about 18% over the past year i pressed zaslav about the company and its risks of higher -- more consolidation going against even larger giants such as the new merged disney and fox. he said he's confident in discovery's acquisition of scripps, which is still on track to close this quarter and also said he's committed to the focus on nonfiction. >> everyone else is wigging and we're wagging. we're going to have a very strong position in nonfiction, we're the only global ip media company other than disney in the world. we can -- at a time when you have these new platform companies that are so big, whether it's facebook with 2 billion and amazon with 60, 70, 80 million people in prime,

we're the only ones that could provide globally to either apple, amazon, google, facebook. we think the transaction will be very akreetive for us. >> i asked zaslav how problematic the channels aren't included on hulu, announcing 17 million subscribers, he says he's meeting with executives today and maybe discovery channels will make a deal with hulu we'll watch and see what happens. >> busy week where you are, thank you very much. when we come back, chamber of commerce ceo tom donohue dow is down 90 and 10-year a shave below 2.5. starting a business is expensive.

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>> morgan stanley talked about

how work day, this a cloud-based company. don't believe everything is a disaster nats not going to be down a lot on the recommendation. you know it's fantastic. i think he's a niners fan. next year could be his year. i think that's important to point out that not everything is just getting crushed here. >> true enough >> wow, that stock is already up 52%. i always wonder -- >> $8 billion in revenue they're talking about. that would be gigantic after salesforce, probably the second fastest growing big company. >> talked last week about sales' force, which has not recouped all of that post-thanksgiving decline. >> apparently, they're going to win big banking contract what i'm doing from the other side >> have they finished the tower? >> the tower is fabulous really fabulous. >> is ben going to run for public office some day >> absolutely not. the top floor there is used for social, for things thereat are good that company is deeply committed to ocial you could do 111, his policy at 1%, and give it to mental health

and maybe that would silence some of the people who think they don't know how to read. >> they'll just invest in this company. >> i read letters, by the way, if you send them to me i'm not that cavalier. >> i'm aware of your voracious appetite for reading >> when you get in fights with journalists who have barrels of ink, it's not going to work out well if you're against them. >> no t is not >> usually i say, i throw in a totally gratuitous, nice guy, what a nice guy. i didn't throw that in today because they have no place anywhere, not just on our network. >> what's tonight on "mad" >> we have denny's, which is really an amazing story. we have tableau data, and then the unbelievable patrick doyle, who met me when the stock was at $10, 8 1/2 years ago now $200 i said what are you going to do? he said our pizza tastes worse than the box i said what are you going to do?

he said i'm going to tell people i said, i don't know, that doesn't seem like such a good idea and it worked. he's probably the best we have >> he's going to be missed as the shares reflect >> retiring in july. it's a shame they do a lot of social responsibility stuff >> he's a young man. a young man. >> don't say, he's 54. most of their stores are owned by people who were delivery people when they started isn't that great >> it is great >> i like that >> good show we'll see you tonight. "mad money," 6:00 p.m. eastern when we come back, a lot more of what buffett told becky quick isth morning dow is down 107. 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.

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with the right financial advisor, life can be brilliant. good wednesday morning welcome back to "squawk on the street." i'm carl quintanilla with david faber, mike santoli at post 9 of the new york stock exchange. rally taking a pause all around the world as there's pressure on interest rates from asia to europe to the u.s. vix back above ten dow down about a fourth of a percent. road map begins with the oracle offo omahomaha.

what warren buffett has to say about interest rates, bitcoin, and the president. >> a selloff as we get to major market predictions for 2018. why jeffrey expects stocks to move lower, and bill miller says the market is due for a meltdown >> finally, the future of tv the ceo of dish is going to join us from the ces, and his first interview as chief executive, and what that disney/fox deal as well means for media >> first, let's get over to the cme and rick santelli for breaking economic data this time, wholesale trade rick >> yes we have our november final read on wholesale inventories that means we take out the mid-month read, which was .7, and insert the final number, which is up, .8. a pretty good number it equals the highest level of the year for wholesale inventories which is august, .08. you have to go back to august of 2016 to find a higher number on trade, 1.5. this is huge we were expecting a number less than half of that. and last month was revised just

a bit from .7 to .8. these are pretty solid numbers they will contribute to gdp, and interest rates, in the hour i have been watching them since my last spots, they haven't moved at all they have moved higher, and than have stuck like super glue, and that ten-year hovering right at that 2.59 level. carl, back to you. >> all right, rick thank you very much. legendary investor and berkshire hathaway investor warren buffett was on cnbc becky quick was with him she joins us to talk about the interview. so much to process out of the conversation what's the lead to you >> well, let's start with the lead, the news for the company, carl that is that berkshire hathaway, the closest we have ever gotten to a succession announcement from warren buffett came today berkshire hathaway saying it's naming two gentlemen from the company, greg able and gee jay, who runs the reinsurance group, naming them both the vice

chairman it's a title already held by charlie monger he's not going anywhere, but these two gentlemen will join the board. that brings the board of directors to 14 directors. even though charlie is not going anywhere, and buffett is not going anywhere, this cements the idea of who the potential successors for buffett are buffett said he's feeling great, doesn't have any health conditions or anything going on, but he does say it will give jain and able time to really get to know the businesses they don't know already jain is running all of the insurance businesses for -- in this new role. all the insurance businesses for berkshire hathaway, and able is running all the non-insurance businesses it will give them a chance to understand the businesses they haven't spent quite as much time with before. we also spoke a lot about the stock market today the stocks are down today. people concerned about what they see with bond yields rising. and just with the long run that we have seen, but when it comes to stock market bubbles, buffett said he does not see a bubble in

stock prices >> they're not valued at interest rates what has happened in the market has been sensible. nobody thought we would have these kind of interest rates for a long time. additionally, you have the tax act, which is a huge factor in valuation. >> more on the tax factor in just a moment. but where does he see a bubble potentially in things like bitcoin and crypto currencies. however, he did say he doesn't know enough about crypto currencies to go either long or short on these issues. >> i can say almost with certainty that they will come to a bad ending now, when it happens or how or anything else, i don't know. i know this. if i can buy long-term puts, a five-year put on every one of the crypto currencies, i would be glad to do it, but i would never short a dime's worth i get into enough trouble with things i think i know about.

why would i take a position on something i don't know about >> he made a big point about that you heard tougher talk from jamie dimond where he called it a fraud at one point buffett says he doesn't know enough to get involved >> a lot more to get to. the succession story, but monger chimed in as well about the reality of the passage of time and how good berkshire is at evaluating that, and also said share prices right now in this rate environment, not crazy. >> no. neither one of them. they both agrees you would be crazy for the last ten years and even today, continuing to be putting money in bonds when you're getting no return on those things you know, 2% yield you're seeing on that, just talks about that's basically the same as having 50 times multiplier of valuation on a stock that comes out really, when you look at it with the tax bill that came out, i hadn't thought about it in these terms before, but buffett laid it out when it comes to taxes. it used to be that the u.s. was

a super shareholder who got 35% of whatever earnings that came in on the stocks or the businesses that you owned. they got 35% they just agreed to take that 35% and cut it to 21%. so they essentially gave you back 14 points of the 35 points you were holding that is now earnings that you as a shareholder will get on every one of your companies. that's that much handed back when you think about it from those perspectives, it makes you think it's not all baked into the market with what we have learned with the tax bill. as recently as three months when we were out here in october talking to buffett, he thought the tax bill would get passed. that was against conventional wisdom at that point he said there's probably more people haven't thoughtthrough on some of those issues. >> as always, so great to listen to you talk to buffett you pressed him on the succession issue in other words, why now as opposed to why not four or five years ago? he's 87 years old, although seemingly in great health and mentally incredible. but i'm curious what your thoughts are, why now, since there didn't seem to be an

answer there >> no, you know, charlie said something in passing when he joined us a little later, just saying this will probably mean that warren will not have as much control over all of the businesses you know, these two gentlemen will essentially act as a filter, it sounds like, the businesses, all the other units will report to through those two before it gets to buffett's desk, which means he'll probably have more time on his hands. it will mean that jain and able will each get more time. i think this is still somebody that could have been announced years ago. buffett said, yes, it could have been announced five years ago. i don't know why now, other than the passage of time is there a jpmorgan analyst put out a report in september that said it's a big question. always trying to figure out the successor, and that does cause concern around the stock she said she thought buffett might have another ten years in the role buffett said it might be overly optimistic he thinks he has many good years

left monger said he thinks he has seven good years left. buffett is seven years younger than charlie monger. >> he did make it clear there will be a ceo. it's not as if they'll share it if and when he steps down. any ideas in terms of who the favorite is amongst these two gentlemen? >> he didn't let on. i had been looking at the companies just again trying to figure this out quickly this morning, looking at the valuations of the two sides of the business, the insurance operations versus the other operations, largely energy, manufacturing, the railroad, and then some of the other businesses aside from that if you break it down from a profit perspective, insurance is about 25% of 2016 profits versus about 75% for the rest of the businesses buffett corrected me when he joined us. woo were working out the press release we saw at the top of the 6:00 eastern time. he said when you volue the two sides of the businesses, they're about equal coming into this because the insurance business creates about $100 billion in

float. that's very important to berkshire's overall operations and what they end up doing with all that money in terms of buying new businesses and buying securities to add it all up. he really sees this as an equal split of those two businesses. he did not say which one of these two gentlemen would be leading things up down the road. i think that that could be anybody's guess on this. you are talking about two people who are considerably younger than warren buffett is ajit jain is 66, and greg abel is 55. these are two people who have a lot of experience with berkshire hathaway, know the company very well but obviously, much younger than either charlie or warren them being on the board, i think, would be an important issue, too, because they would get to know a lot of the just operations about how the company works, the culture of things they may not have had as much experience in. they have been around a long time, they know the directors very well, but they'll get a deeper peek into some of the areas maybe they haven't spent time on before i don't know for sure what he

means. he said there is one person that the board would go to today if something were to happen overnight. >> great stuff as always, becky. thanks for sticking around becky quick, safe travels home from omaha >> meantime, the nasdaq snapping its best start to the year since '06 as stocks hit a pause today. for more on where we're headed, we're joined by the number one long-term timer for 2017, tom mcclellan, editor of the mcclellan market report. good to have you back. >> hi, carl. >> you have been slicing and dicing at least the nasdaq you have been looking at various ways to look at faang. you divided it up into a couple different investments, but the main point is that you're looking for what appears to be a bit of a scare in march. can you talk about that? >> well, the scare starts in march, and it should last all the way to august, but between now and then, there's still money to be made nasdaq is still very strong. faang is leading the way you remember back in november that the i.c.e. exchange started

out a new futures contract for faang plus they took the original four faang stocks and added tesla, twitter, allah bobba, badu, and apple to make a more diversified index. i wanted to know what the things look like. i created my own unweighted index of the faang classic and the faang plus turns out faang classic does better than the faang plus it teaches us a lesson about you make the most money being concentrated as opposed to diversified as long as you're concentrated in the right things >> if we can call faang classic classic at this point, having been around a few years. what are the odds those remain the correct four names, because if you look at an uptrend for those stocks, for the nasdaq 100, whatever, we're still pushing the upper end of where we blasted off in august or so >> we sure are, and the thing to know about faang generally is you're getting about twice the performance of the nasdaq 100.

and the nasdaq 100 is still a pretty hard charging index that's going to have a higher beta than, for example, the s&p or dow you're doubling the beta of nasdaq 100 and that works great as long as you're in an uptrend beta is a sword that cuts both ways it magnifies the upside and the downside if we get any kind of correction, middle of this year, then faang will lead the way lower, just like it has led the way higher >> what leads you to this phenomenon you see in late summer >> well, there's an important indicator i discovered about eight years ago. it looks at the commitment of traders data for euro dollar futures. that's euro dollars and interest rate futures product it gives us a one-year leading indication of what the money flows are going to do to the stock market it's telling us look for a top in march and a bottom in august. then we get to surge up to higher highs by the end of the year

the interesting thing that's going to do is when you have a declining stock market like this indicator is telling me we should have, that generally tends to change the public's mood and that will happen as we have the campaigns going on for the midterm elections in november if it bottoms in august like i'm expecting, the mood can remove again with a couple months before the election. i'm expecting all the talk this summer will be about how the trump economy is souring and it's all going to hell, and democrats are going to sweep the november elections and then it will turn with that august bottom and get back to about balanced again >> tom, we're at all-time highs, have been for a while for most of the indexes what's your target for how high you can get by march if you think the market is insulated for the next little while here what tools will you use to say how high is too high >> well, my target is higher than here. i try to getthe direction righ and let the magnitude take care of itself. one thing we're not seeing yet as a sign of a top, we're not seeing any divergences in the

advance decline line either for the overall nyse or the stocks the one place we're seeing a divergence is bond funds for high yield bond funds, that gives us an early warning. it gave us the earliest warning in 2007, five months ahead of the price high then, and ahead of the other events. if we're going to get the march high i'm expecting, what i would look for over the next six to seven weeks is to start to see momentum divergences elsewhere start seeing line divergences like we're not seeing yet. if we get them, that will tell us the march high is on schedule and look out for a decline this summer it's not time yet to position yourself for that decline. there's still money to be made on the upside. once we get past a small seasonal soft patch in the immediately of january >> we're going to be listening closely to your analysis, as always especially so going into this year thanks again good to see you. tom mcclellan.

>> good to see you >> when we come back, what the bond king, jeffrey gun lack says he expected from the s&p in 2018 >> plus, the ceo of dish will join us on the future of television and his first interview as ceo of the company. dow down 66. back in a moment

we have another suck session story to get to. wilfred frost has more on the

tenure of the big bank ceos. >> the median tenure of the big bank ceos is eight years for the s&p 500 companies overall, four years, half that clearly, jp morgan's ceo, jamie dimond, and lloyd blankfein stand out. also, they're the most talked about on wall street let's look into their possible successors first, goldman sachs if the transition is soon, it's hard to see anyone else get a look other than co-ceoss david solomon and harvey schwartz. we're looking at the client expert against the gentleman with a broader background. the longer that we wait for transition, the more this younger group of leaders stand a chance pablo salami, head of securities with his trading background stands a good chance of being elevated to deputy if solomon or schwartz become ceo, where chavez, gnodde, wald rn, and

lane, all stand a reasonable chance as long shots longer out. let's have a look at jpmorgan. if diamond decided to leave today, his most likely successor would be the head of the consumer bank, gordon smith. in that instance, daniel pinto would keep plenty of control, too. a few years out, at 55, pinto's chances, of course, improve as time goes past and other wild cards come into play as well asset management head and the cfo. of this younger group of leaders, marianne lake is the front runner, largely because of the breadth of her current role, but if any of them are given broader exposure, it would be a major vote of confidence from dimond the bottom line for dimond and blankfein, they stand apart. here's share price investments of all the banks since blankfein took over when both of them were in position. because of this performance, they and they alone will decide

when it's time to go guys >> that's the key point, isn't it they don't appear to be going anywhere dimond or blankfein. >> blankfein is a couple years older than dimond, and in terms of the two purely against each other, they stand out amongst the rest if you have to push between the two, on average, people say for dimond, sorts of three to five years. for blankfein, one to three. it's up to both of them when they go, but just purely on those factors you could say blankfein might decide a little sooner than dimon, but it's up to them. their performance stands out >> okay. wilf, thank you. wilfred frost back at headquarters there >> it is day two of the annual consumer electronics show in las vegas, kicking off this morning's agenda, our julia boorstin joins us from there and she's got a special guest for us

julia. >> good morning to you that's right i'm joined by dish ceo erik carlson. now, eric, this is your first tv interview since becoming ceo just about a month ago in december even though you have been at dish for over 20 years congratulations. >> thank you, julia. >> so you're taking over at a time when dish stock is down about 20% over the past year, while the rest of the market is way up what's your vision and strategy as ceo >> well, first af, excited to be here thank you. i'm glad i can give you the scoop, so to speak but really, when i look at the business, we have three things we're looking at one is we've got a business in dish tv, our satellite tv business that's been a great business for us we have been in business since 1996 with that, with that product and service. and still a lot of opportunities, especially with our product. we have a growth business in sling tv and that business is progressing nicely and if you think about tv, live streaming tv being delivered

over the internet, we thought about that seven or eight years ago, and three years ago at ces, we launched sling tv that's our pay tv group. and obviously, my job is to really look at the pay tv business and allow charlie to focus in on the wireless business >> now, since you launched the sling tv business, i remember reporting on it here three years ago. that space has gotten so crowded. you have hulu tv, youtube tv, everyone is getting into that space. plus, there all all these other new bundles like filo, which doesn't have sports. how are you competing when even though you were first, now everyone else is doing it? >> well, we definitely like competition. we're not going to shy away from it one way to look at it is the rising tide will lift all boats, but our focus is really on the sling tv business and providing a differentiated experience for customers so the product and service that customers want at a value that they're willing to pay for. >> even though sling tv is growing, there are concerns, both that it's cannibalizing

your core tv business, and it's not growing fast enough to compensate for the declines everyone is seeing in the pay tv bundle how are you going to fix that? >> right now, we like our position i think that, you know, sling is progressing along nicely we have more customers that are joining the service. we definitely have more customers watching the service customers that are watching are watching for a longer period of time, so they're engaged in the product. >> david, you want to jump in here >> sure, thank you mr. carlson, thanks for being with us. i realize you just said the wireless business is more the responsibility of charlie, you referred to, but can you give us any sense here in it erms of the plans the company has overall at this point to do something with all of that spectrum you have amassed over the last years and need to start to put to commercial use >> sure, david i think when we talk about the wireless business, that is progressing nicely it is charlie's focus. i think we both have a bit of a new job here in the last month,

and my job is really pay tv, and charlie's is to focus in on that wireless business. and he's putting together a team to really move our position forward with wireless. so far, what we have announced is obviously we're going to build a narrow band iot network by march of 2020 so more to come on that. >> to julia's question as well, on sling tv, we had the proliferation of so many of these over the top platforms in fact, recently, i have learned about this thing called offer surfing, where people take advantage of the free days they have for each of these services. but specific to yours, why do you feel like you're well positioned giving the entrance of so many other new platforms why is sling a better opportunity perhaps than some of the others that are out there, and each day seems to introduce yet a new one? >> well, i think if you remember when we launched sling three years ago, we tried to differentiate the product and not be just like traditional cable. one of the things we have done is tried to provide the consumer

choice and flexibility in packaging, in how they can receive their content, whether it's being able to record through a dvr or being able to get a vod event or pay-per-view event. the sling platform right now is positioned to be a little different than your traditional pay for tv product i think that's why we're well positioned for the future. >> one topic that has been prevalent in all the conversations i have had here at ces with executives and ceos is the consolidation we're seeing across media, telecom, cable it's all happening everything is consolidating, and that's putting a lot of pressure on all of the smaller players. with disney buying up fox's assets, with at&t/time warner, do you feel pressure to merge? do you think dish would be better off as part of a bigger company? >> that was a nice question about merger obviously, i can't comment on that however, what i want to say is we like our position when you think about consolidation in the industry, obviously, we have concerned

whether it's espn and fox, whether it's sinclair and tribune, whether it's at&t and time warner. we really take the position that we think about the customer. and the customer first and you know, whoever consolidation occurs, we have to be cognizant of will we be able to, one, access the content that consumers love, and will we be able to provide it at a price customers are willing to pay >> what does that mean are you supporting the doj lawsuit to block the at&t/time warner merger, or are you looking to make accusations or to do a deal with a company like t. mobile? >> well, one is we would always cooperate with the doj what we have publicly said is we have concerned with at&t and time warner. for the reasons i stated as it relates to merger and acquisition. that's something i'm not going to comment on, and probably something better for charlie and the team >> an area we'll be definitely watching and hope you're come back on our air again soon erik carlson, the new ceo of dish, thanks so much for joining us >> thank you, julia. >> back over to you. >> all right, julia. thank you very much.

see you again soon when we return, the business of video games we look at one gaming etf up more than 60% ncsie the beginning of last year stay with us for that. [ male announcer ] eligible for medicare? that's a good thing, but it doesn't cover everything. only about 80% of your part b medical expenses. the rest is up to you. so consider an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like all standardized medicare supplement insurance plans,

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i'm sue herera here's your cnbc news update at this hour. the death toll from the mudslides that struck southern california climbing now to 15, as rescue crews continue to search for survivors 25 people were injured while more than 50 had to be rescued by helicopters four of those injured are in critical condition iran warning that it will reduce its level of cooperation with the u.n. nuclear watchdog agency should the u.s. fail to extend sanctions waivers on the 2015 landmark nuclear deal president trump's decision is expected on friday house majority whoop steve scalise is scheduled to undergo surgery as part of his recovery from last june's shooting at a congressional baseball practice. no details were given. on tuesday, he said he has made tremendous progress in his recovery and also out in california, oprah winfrey's montecito,

california, home was one of many hit by the flooding and mudslides. she posted this video of the damage on her instagram account. montecito is also the home to fellow celebrities rob lowe and ellen degeneres. it has been a rough year for california >> that is the news update at this hour. i'm going to send it back downtown to you, david >> thank you, sue. sue herera let's get to jackie deangelis at the energy desk for breaking news on the eia inventory. >> good morning to you you can see crude prices falling off a little here, but still supported after the eia announced a drawdown in crude inventories. we had a build up of gasoline. u.s. production did go down slightly, just under 9.5 million barrels a day. this data is definitely mixed. in the crude oil trade, we have seen a lot of support. hanging well over the $60 a barrel mark, trading at $63.15 there are more reasons, traders

say, for crude prices to go up, or at least to stay supported at this point, then there are for them to go down. when you have a drawdown of 5 million barrels from the eia, that's supportive as well. >> sure is thank you very much. jackie deangelis >> the video game business hoping for another strong year with the rise of e-sports and virtual reality based games. one video game etf gamer, that's gamr, the ticker, is up 60 percent in the past year can it repeat gains like that in 2018 joining us now for our spotlight is ted pollack, founder and president of ee funder management, which runs gamr. good to so you >> thanks for having me on >> 60% in a year, not too bad. pretty well timed launch i look at the obvious names, bellwethers of the video game business act avision, ea, take two, as well as nintendo if you own those four, you're up

80%. make the case for why you would want to own the entire food chain of the video game business through an etf >> a lot of components that feed into the value chains. there's semi-conductors. there's prefererals, display systems. you never really know what's going to be hot. so you know, while in the short term, you may have seen that situation, i think over time, the index should perform very well with all those different components >> so you never know exactly what thing is going to be hot, but you're confident that video games as a subsector are going to remain hot? i guess the question has always been whether a lot of gaming is going to just get incorporated into other devices, are we still going to be shopping for games one by one by the software creators, and of course, are phones going to be your vr device where do you see all that going? >> if you look at the trajectory of entertainment and education, simulation, you have a huge

opportunity over the next 10, 20 years to capture a layering of growth trends. and you know, one of the most important things that people don't talk about because it's not ea sports or vr, but right now is the transition to 4k in the mass market. you have more pixels you need higher resolution games. it just stimulated the whole value chain. then of course, you have esports, very exciting esports taps into the advertising market it's $500 billion a year you have virtual reality, mixed reality, augmented reality all those things layering out over the next ten years. and then you get into some even more exciting stuff down the road with opportunities to incorporate games and education in training. >> just curious, how do you weight the various companies in these etfs, and how far do you go is nvidia part of this, because it makes so many of the chips that power these games >> absolutely. there's three buckets that the stocks are put into as the pure

plays that the companies have the majority of their revenue from gaming. it's their primary business. then you've got non-pure plays and conglomerates. we restrict the conglomerates to 10%, to make sure that they don't, you know, have too much influence on the companies that are really in the trenches >> and how are you capturing esports if you think that's going to be one of the main drivers? does that not just end up being kind of the old media players that are really trying to participate there? >> there's a lot of people wanting to participate in esports. a activision is doing incredible stuff with their overwatch league intel with their partnership with esl all of the game companies want to be involved in esports. electronic guard has a huge opportunity with their sports games. it's really exciting and can be manifesting in so many different ways beyond just these large

tournaments. we're going to see in the next five years one-on-ones between famous sports stars, grudge matches between celebrities. it's unlimited how far it can go >> one last question on some of these longer term innovations like vr. we talked to strauss zelnick last month, and he said when you're playing a video game, your brain is already experiencing it in 3d. he said i'm not sure the technology that enhances immersion will be all that revolutionary. to what degree might that be oversold >> i think vr is a technology that was initially overhyped, essentially. so it's a technology that is going to be just a constantly improving technology and it just has so many years of improvement to go that it's really exciting. but i think people were led to believe it was going to be massively explosive, and it's going to take a while to get

everything standardized, but it's really exciting, the opportunities that not only virtual reality but mixed reality and augmented reality have as well >> all right, ted, thanks very much for a look at the gamer etf, gamr. appreciate it. >> absolutely. thank you. when we come back, more on the markets including why bill miller believes the market is due for a melt-up of more than wh30 and at he thinks of bitcoin as well more on "squawk on the street" is next.

stocks slipping but well off the lows dow was down 100 plus, now down 33 buffett joining squawk this morning where he shared his outlook for the market >> they're not originally valued at relative interest rates what has happened in the mark has been sensible. nobody thought we would have these kind of interest rates for a long time. additionally, you have the tax

act which is a huge factor in valuation. >> for more, let's bring in jeffrey klein top, chief global investment strategist at charles schwab kevin. guys, what a morning you have these relatively benign views of valuation relative to rates, but worries that that environment could change based on what bonds have done around the world jeff, where is your head today >> you know, i think we're still in this tax reform afterglow combined with an optimistic outlook for economic growth globally in 2018, and carl, earnings, which are going to look really good as we get the fourth quarter numbers coming in the pmi is always a great indicator, purchasing managers index, i mean, for what profits have done in the latest quarter. that's going to look very good so we're in this environment where momentum is still very strong our outlook for a recession isn't until maybe late 2019 at the earliest we're still in a very good backdrop for equities. the trend remains higher >> kevin, do you agree earnings

season becomes a catalyst. it's not like corporate profits have been suffering this entire cycle? >> yeah, the data is quite good. profits are going to be good there's no reason for equities not to behave well in this environment, and indeed, they have the one fly in the ointment would be valuations because trees don't grow to the sky, and at some point, the forward looking expectation for stocks becomes a haircut by the valuation issue. i think that ultimately, you have to stay with the trade as long as the data looks good, and we're doing that, but we're becoming a bit more mindful of valuations >> in addition to valuations, obviously, maybe some yellow lights flashing on the sentiment front. it seems as those volatility in both stocks and bonds have been so low and the moentm to the upside in both of these marketss has been so strong that we got to a point where a ripple on the pond surface seems like a tidal wave how vulnerable do you think we are for just maybe a quick shake

out? >> you know, quick shake out would probably not be a bad thing after, what are we, 14 months in a row of gains for global stocks. but look, i think if you look at attitudinal measures of sentiment, and my partner liz ann saunders looks at this closely. there's a lot of optimism in surveys. but we haven't seen that reflected in the same degree in actual buying. investors have started to come back to equities, but they haven't been buying them hand or fist in a way that would reflect the optimism in surveys. we're not seeing that overinvested position that would be indicative of an immediate top. >> kevin, on tax reform, there's still a view with cap x doesn't do what some hope, repatriation is limited to some companies in health care and tech, and you wind up with a nice environment for buybacks, but it doesn't move the needle on gdp how fair is that >> it's a little bit fair, but there's another part of it which

has to do with a big issue, which has been a decline in the growth rate of the capital stock in the united states so to the extent that capital is treated better, the other factor which is really big is the forward projection on growth and investment regardless of the cash that comes in, let's say from repatriation, that's an immediate thing, but the more sensitive and more important thing is what ultimately happens to growth and investment as a result of the tax plan and that could be quite substantial. >> guys, we're -- it's going to be an eventful few weeks as we head into earnings really starting right now thanks, guys appreciate it. >> thank you well, coming up, billionaire democratic donor tom steyer is going to join us to talk trump the 2018 midterms, and why he's buying michael wolff's new book, "fire and fury" for every member of congress. more "squawk on the street" after this why does dick bov

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let's get right out to the cme group in chicago for rick santelli's santelli exchange >> thanks, mike. i would like to welcome my special guest, john haufr meister, former shell oil president and the creator of citizens for affordable energy and ceo. thanks for taking the time, john >> thank you, rick >> listen, you know, as i look up at the boards, i see the stock market even today withstanding, having a wonderful run that started in november of '16. many citizens feel a bit more wealthy, but it isn't just about stocks the economy, the confidence, the small business, the manufacturing renaissance. and the one thing we take for granted, we hardly talk about the last administration was no help, and it still survived, the shale revolution, the energy revolution john, you know, companies have a

big advantage being in the u.s stable prices. multiple lower prices compared to europe and asia for natural gas. these positives we seem to take for granted. maybe you can dig a little and show us what we should be proud of with regard to energy contributing to some of the gody locks economic activity. >> compare it to blood ipyour blood stream we don't think about our bloom coursing through our veins very often, but energy is the blood stream of the american economy you don't have manufacturing jobs without energy. you don't have the transportation industry. you don't have the quality of life that we have in this country without energy and the energy industry has been around full speed ahead for the last 100 years it's not going anywhere. and even an administration that was as hostile to energy as the obama administration, other than their favorite forms of energy, wind, solar, and hydropower or biofuels, i should say, the oil and gas, the coal industry,

continued to deliver electronics and molecules day in and day out because americans need it just like they need the blood in their bloodstream. >> you know, john, there was a big to do, and rightly so because everybody is worried about the global environment, when we were -- when president trump took us out of the climate accord i yet, as i look at the real facts and cut through the clutter, it seems as though the people who are still involved are importing our coal we're using more natural gas the u.s. carbon dioxide emissions are at a 20-year low why is it that when the lights come on, we pull into the gas station, we fill up our cars, we have natural gas with less pollution for the power grid, it gets no credit at all for some of those wonderful things. >> the world bank is predicting 3% plus growth this year for the world. you can't do that without more energy, and the dominant form of energy for the world is fossil energy that's not going to change any

time soon. and so if we think we are in a post-oil age, i'll make a prediction everyone alive today, their grandchildren will still depend upon fossil fuel energy. regardless of how old or young they are today because or young the are today, because it's not going away even if battery electric vehicles take over half, let's say, of vehicle transportation in the next 25 to 40 years, we're still going to have as many internal combustion engines on the road 40 years from now as we do today. that's 95 million barrels a day of oil to keep today's internal combustion engines going we're going to need that 20, 30, 40 years from now as well. because the car fleet is growing in size. yes, battery electrics will come along, and that's fine, but we will still use internal combustion engines. >> let me interrupt you there. we're just about out of time i'd like to see more natural gas cars i've done conversions, had cars that run on natural gas.

my final thought, yes, batteries are great but need to be charged. if i could wave a wand and have gas engines converted to battery cars, we'd have a problem where to store these used up batteries. we need to think economies of scale as to what works on full stage and let all the johnny-come-latelies develop as long as we don't have to subsidize it john, thank you for your thoughts carl quintanilla, back to you. >> rick, thank you very much coming up this morning, stocks hit record highs, worried about regulation of silicon valley ceo of commerce will join us on backlash and what the business community can do stay with us

welcome back to "squawk on the street." financials outperforming, best performing sector by wide margin can you see. long-term interest rates rise some of the highest levels we've seep since last march which could help bank profit margins regional banks among relative winners, bb&t, comerica, pnc, m&t. around 85% of all stocks in the s&p financials are in the green

today, guys. back over to you. >> dom, thank you very much. well, whittling down of tax breaks in the new bill is putting companies in hot water ylan joins us with why some brands of pasta might be in peril. >> reporter: mike, executives from newman's own are here in washington to try to stop irs from coming after your spaghetti sauce. the company says it either has to put itself up for sale or pay a crushing fine all because of one roton doeten tomato it was founded by hollywood legend paul newman best known for marinara sauce but also makes salad dressing, lemonade and a host of other pantry products. the company is worth $500 million. it funnels all of that profit over into newman's own private foundation, which then doles it out to charities across the world. this is a model that worked

great while paul newman was alive but turned sour after he passed away in 2008. u.s. tax laws prevents a private foundation from owning more of 20% of for profit company. newman's own chief executive bob for forrester has been trying to cook up a fix for this for years, now his grace period is over this year the company will face 200% fine on the value of its holdings. >> the problem we have now is that we've run out of time stat oerl if we are not in compliance by november 20, 2018, we begin to face severe excise taxes that are meant to put you out of business. >> republicans hoped to include some sort of fix for this inside the sweeping tax bill but they had to chop it out at the last minute for procedural reasons. forrester and other executives are here trying to find another bill to attach a solution to but guys, they need to get this

figured out during the first quarter of this year otherwise, we could be saying sayonara to the marinara back to you. >> we talk about winners and losers all the time. that is a vivid example of one ylan, thank you so much. still to come this morning a first on cnbc interview with commerce committee chairman john thune as he esprses apple about slowing iphones. markets shedding losses, down 49 you always pay

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