anything to do with the law it's a nonstarter. >> but that's not true either. i mean, my big argument on the wall and i sat down with the homeland secretary -- homeland security secretary and basically said, you haven't given us a plan tell me where it is and what the plan is. that's exactly right tell me are we going to be able to see through it. >> senator, you go ahead, great to have you. >> fun to be here. >> we laugh. we do. wish we could show off camera stuff but we can't. >> enough made it on camera. that's right enough off camera stuff made it on camera. now you have to sit in a borg me boring meeting in washington. >> can i take becky? >> yes ♪ good friday morning, welcome to "squawk on the street." i'm carl quintanilla with jim

cramer and david faber futures on the move off the highs, retail sales are solid and 2-year hits 2% bank earnings as a highlight as earnings season kicks in europe is mixed and oil is giving back gains. our roadmap begins with the big banks beat jp morgan and wells and black rock with better than expected quarterly earnings. >> wall street is eyeing fresh record stocks getting a boost from strong corporateresults and a bullish sign for the economy. >> west wing vul garts, the president mixing a bipartisan immigration deal and denying offcolor language. jp morgan chase, wells are both mixed and jp morgan's released, jamie dimon expresses optimism about the new tax law. the enactment of tax reform in the fourth quarter is a significant positive outcome for the country. u.s. companies will be more competitive globally which will ultimately benefit all

americans. the cumulative effect of retained and reinvested capital will grow the economy and growing jobs and wages we have always invested even in difficult times in our employees and customers and communities. and as a result of the tax plan we will be increasing and accelerating some of those ve s investments. we expect an announcement in the days and weeks to come. >> why does he get ahead of it and say this is going to be a great year in terms of what we do buy back and dividend you can't. that would be in front of jay powell you have to let him get this right. it was the consumer bank that chimed there was one loan that was bad. we'll talk about that later but the main thing, i see net interest margin going up i like that. but i don't like the fact that trading fixed income trading, it just disappeared. >> it did. they gave us a preview of that at some -- >> but it was worse than usual. >> was it worse? >> they were talking 15 and it was down 17.

>> look, interest rates are going up it was what we want, if you're jp morgan. >> did it ever come back the times has a piece sort of questioning whether it's gone forever. that incredible revenue stream that came from so long from trading fixed income instruments and the lack of volatilities we talked about as well goldman sachs in the past which we haven't heard from yet but we'll hear from. >> the business model is so good for them anyway, commercial bank was extraordinary. every day that they turn the lights on, they are making big money. and net interest margin as a business versus fixed income i'll take it any day of the week when you have that deposit base and fed starts raising rates, it's really good stock going to come in because there was no real upside surprise and didn't give enough, reiterate fort res bank share. >> fortress balance sheet.

>> right. >> in the end, do you want them to raise dividends they can't do that i like the quarter i don't have a problem with the quarter but it's a little harder to understand because of all of the changes. >> we've got all of this lumpiness regarding the hit on their deferred tax assets and wells is the exception with deferred tax liabilities that benefit in the quarter >> the wells quarter, there's a couple of charts, the deck, the interest -- noninterest expense and linked quarter, 16 billion -- >> that's up 27. >> terrible quarter. wells was terrible. >> i have a note here saying slide 21 on the supplement should drive the stock take a look at slide 21. >> slide 16 and 17 of the document will move the stock -- it's a battle of the slides. >> they are guiding towards full year expenses and in this year 53.5 to 54.5, includes only the typical operating losses of 600 million and excludes litigation. the street is at 53.7 or at the

low end of that range. >> look, if the stock hadn't run to 63, i would say yeah, exactly. wells is not the standout. >> a share of revenue, the target they gave in may was low 60s, they are running mid 70s. >> the expense ratio is abysmal. it's not normalized. we have to see it normalize. the stock were at 59 it would be a 59 but it's at 63 so it can come off a little bit is it a disaster quarter no, it's just that after the run you would have liked to see something upside. >> commentary will be important. jp morgan call began at 8:30. >> keep hearing good things about the conference call. >> do you? and the analysts will have so many questions around tax reform and impact as they try to figure out models, because that's all they care about. >> they want to plug in numbers. >> because the teachers pension from ohio demands that >> is that what it is? >> ohio state pension fund

never ending on the conference calls but it is of increasing importance because there's so many unanswered boxes when it comes to tax reform. >> tax reform. fed being much easier, makes it so if jp morgan comes down, this is a great opportunity. >> you were talking about it going to 100 by christmas. i remember that time and again now it's 11% beyond 100. >> my sources at jm morgan were saying don't get too aggressive. i was right. >> you still like it here? >> of course. >> even though it's well above the number. >> it sells ats 13 times shares earnings do you have a problem with that? >> i might i don't know. >> took it to 115 like last week or the week before we're almost there. >> i have to pump my price target it's no boeing boeing is up again. >> boeing is unbelievable. >> boeing is again the best dow stock, 11%. >> this year. >> still beating ge.

those guys are like come on. >> you have to bring that up see the new note from jp morgan saying that the red flags of the people being fired i love steve tussa did you think flannery would keep anything given how poorly they did? is it a red flag they got rid of everybody? there's a couple of holidays coming up, mlk, spending more time with family and then washington's birthday, president's day. look, the families been starved how hard they are working. it's only fair don't you think? >> yes >> i'm going to say yes because you ran through so many different places there -- >> i'm going to bring up retails sales, up .4 in december capping the strongest year for growth since '14. cpi which some worried would have a downside surprise because of what wholesale inflation did, comes in 1.8, a tenth above expectations. >> i think that the story matthew boston said it in the upgrade of kohl's, the middle

class is back. this is something that kb holmes talked about too they are saying 90% of the people are getting a tax cut of course i'm looking at one person who's not. >> no. >> definitely -- you're probably an aberration, you don't get the comcast 1,000 -- >> i typically am an aberration. >> i embrace that. >> with the prepond rans of people doing better and jobs better, it's spelling a positive quarter for department stores. i think macy's is going to be the big surprise next. i like i like retail very much it's hard to find anyone in retail -- the only company that is doing poorly in retail is -- >> sears. >> thank you. >> the spread between diplomat stores and nonstore retailers widened again. >> yeah. >> couple of months it had begun to retrench. >> i know the seminole changes haven't changed but the big picture is still not good. >> dollar tree and dollar

general, the two to bank on, right? because they actually come in under amazon and the death star is as strong as ever. >> death star's numbers are going to be truly extraordinary. >> you've got the november/december, the strongest november/december two-month average in seven years got to go back to 2010 to have a better holiday season. >> kohl's had the best numbers since 2001 >> wow. >> and kohl's has good bopus. >> what? >> buy online, pick up in store. >> got it. >> plenty of commentary continuing, and the effect of markets and on earnings. >> the marketplace is rallying because there's a new recalibration, that's a one time thing. a lot of this run-up is a recalibration how corporate earnings are going to be and you're going to just now your

stock price to the new eps level. after that one time event, now we have to see, does a tax cut stimulate for growth, more demand and that will -- we'll see that in the revenue line. >> interesting that -- contrast fink's comments with say dudley who says the tax cuts going -- there's no free lunch. this is all going to come at a cost to the economy down the road. >> you're looking at a man, fink, i happen -- i really just respect him tremendously he's created a juggernaut. but the real story with fink and blackrock, money in. the endless pouring in of s&p money created a floor on the stock market that keeps going higher because the -- just the kind of -- just basically plain vanilla money by retail investors convinced by the w warren buffetts, should put money in -- it's the great

story, continuing story of the passive investor. >> until the day those reverse one day it will happen i don't know when. >> i don't know. >> i don't know when. >> you see some of these targets long term targets tom lee talking about a bull run that lasts 10 to 20 years, millennials the largest ever generation acting as a structural tail wind for stocks. >> never heard that demographic, larger than the baby boomer, suddenly the millennials now. >> it's an experiential thing to put your money in an index fund. what i do like is the stock shortage you look at the big cap stocks and how little stock they have trading versus what they had a few years ago. you look at wall mart, the amount of stock they've crunched and walmart is exemplary of a lot of countries when things finally get better, boom i think that the stock shortage and index fund money is what keeps -- that's the real story of why the market doesn't go down it would be high interest rates that would destroy that money. because then you would say, you

know what, i can get 4 or 5% from treasuries, i don't need to risk to get 2 -- >> not to 3% to bill miller's point. that will force people he believes to sell bond funds because they are dropping in value and put more money in the stock market. >> and takes you back to tepper, make me up when it's four, right? >> i think tepper and miller have been right. let's go with them do you think amazon is going to be hurt by higher taxes? by higher interest rate? no, lower taxes more money to amazon there is an effect lower taxes will be more retail if it's more retail it's going to go to amazon because both amazon web services which is the de facto way the retailers are playing it i thought that kohl's was supposed to be destroyed by them. >> when i spoke to mr. manziel, they are great partners with amazon it's incredible. >> the death star is everywhere. >> yes >> there's a lot of buzz surrounding the political

firestorms this morning. the president denying he used pro fain language in a bipartisan meeting about a proposed immigration policy. eamon javers is watching all of that. >> reporter: there's confusion whether the president is or is not denying the comment he was quoted as using with democrats and republicans yesterday. here's how the quoted lts president, the presidency why are we having all of these people from ship hole countries coming here, prefer to see from norway rather than haiti and west rafrica the white house issued a state not denying the president made a comment. certain politicians choose to fight for foreign countries but president trump will fight for the american people. that prompted a response from the haitian ambassador who had this to say. the remarks were regrettable and based on cliches and stereo types, this is not the view of

the american public. the haitian a.mbassador said the president has been tweeting again on this subject. here's the latest tweet, denying the conference never said anything derogatory about haitians other than haiti is a poor and troubled country never said take them out made up by dems, i have a wonderful relationship with haitians, probably should record future meetings, unfortunately no trust i asked a white house aide a few moments ago whether or not the official white house policy is to now deny that the president made that vulgar comment, the white house aide unsure now what the official policy of this white house is, they are scrambling here to figure out whether they are now denying he said that or some other position in between the president's tweet seems pretty clear denial here and the staff scrambling to catch up and figure out where they can go for the rest of the day on this one. a political furor and it throws the immigration debate tore a

loop the president was on track for a deal with daca with democrats and republicans and now scrambled entirely we'll see where we go. >> we look forward to that maybe some news about his medical exam later on today. eamon javers, thanks. it's going to be a rough morning for facebook in reaction to the news they are overhauling the news feed. i think we may talk to them later in the morning stocks down almost 6%. take another look at the premarket. s&p and nasdaq up 7 of 8 nasdaq having the best month since july of '16. back in a minute

facebook is down sharply in the premarket on track for worst day in a month and a half. making major changes to the news feed cutting it to a hold we have the analyst coming up at 11:00. i think there are only three holds on the street right now. this is one of them. >> it's tough to talk about ang because ang is the new akr nim. >> no f. >> he's basically getting rid of

autoplay which everybody is disturbed about and front run of the government which is going to say listen, why vrnt you more social, why are you more news? he'll make the user experience which is has helped the company. the analysts will not be able to resist, they have to downgrade because they are about the next three weeks, not the next three years. when he talked about fixing it trying to get in front of the fact facebook is slowing opposed to instagram he had to do it. he takes the hit short term and the advertisers will ultimately pay up even more the viewer will keep coming back and facebook will start growing again at the pace of instagram i thought it was brilliant, of course the analysts have to take it down. what else do they do raise numbers, that's all they care about >> if there are fewer bra eer bd posts, fewer paid marketing spots viavailable for advertise. doesn't that raise concern about

the revenue desell race for investors? >> do we think there would be a way to continue the momentum if the ads are intrusive and you just say i've had it with facebook >> maybe even the price of the ads goes up -- >> exactly scarcity value of the ads goes up because you're reaching billions of people they are going to again to monoties what's app and work being on video and he has to do this you don't want to be in front of congress, why are you the fake news place >> where are you on eps in '18 and 19 >> 21 times -- >> 21 times 19 or 18. >> 21 times 19 earnings, i can take this hit. it came in with a full head of steam. it will take that away what are you going to do if you're zuckerberg you're thinking i've got to always be on the side of the consumer. and where is that stock going with that mantra do you really want to doubt this

man? has this man not been ahead of every single trend and have the analysts other than on apple, i mean, they don't downgrade apple -- don't downgrade fa facebook like apple. there was a kerfluffle and i'm having a company that puts it in the pocket so the parents can't do it. suddenly that fellow that attacked me, cramer has got that, on the take for them i don't like that fellow, i'm not going to mention his name. his name is like teppen, faber -- no, that's you. i do think facebook, it's not going to be ang and bang which would be broadcom. it is going to be facebook again and it will be faang let these guys say how brilliant with the stevele note. look at the substance of that. we don't know what to do so we'll downgrade. >> there's too much uncertainty related to the economic impact of this pending change for us to

be comfortable retaining a buy. >> what a long term view they are taking i mean, are they kidding me? look, snap, there was numbers came out in snap today -- >> downgrade in snap too. >> i thought snap would do 2 billion, they are hopeful to do 1.2. we'll look back and say that guy sold down and got sold down to 170. i let it happen. didn't look at it. it was my opportunity. why did i sell it? because improved the user xperps he got rid of auto play. is auto play -- how much do you hate autoplay? tell me. >> i'll tell you who doesn't hate it, people who are pivoting to video trying to get traffic. >> that kind of video, no one is watching let me give you news flash i think this is going to be play good for facebook but analysts can't handle it. they have to downgrade it. and uncertainty, how about at 19 when peter was out a lot of uncertainty at 27 when

they didn't do a good conference call and at 50 where it got back to where it happened and now we have uncertainty we have to go or i would keep talking about how faang will come back and it's ang for the morning. >> ang for the morning. >> and not boeing or broadcom. >> bang would be good if you put boeing in. >> bang has been strong. >> when we come back, we'll talk more about the snap downgrade and get e thmad dash and opening bell in seven minutes. tomorrow, it's a day filled with promise

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a lot going on between fed speak and macro data but the s&p and dow on pace for the seventh weekly gain out of eight opening bell minutes away.

well, it's earnings 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. we've got a minute and a half before we get started with trading on the final day of the

week don't forget monday is a holiday. let's do a mad dash and finish up here and talk ibm had an important promotion yesterday. >> they can use the word promotion because there was confusion when the news came out at 4:00, people said to me, jim, schroeder demoted -- no, he gets a similar job than what propelled in what i think could be a smooth transition ultimately just because he leaves the cfo job is it not mean he could not one day end up being the ceo. >> message, we're both getting from people close to the country. this should be seen in that light. it doesn't mean it will happen but he does become potentially the successor. >> global sales, both finance and sales. what i like about this, ibm will have a good quarter. and i'm feeling good about martin's chances. >> martin schroeder the cfo of the company now head of global. >> yes, that's good because

you've got to have both sales -- ibm, everyone is a sales person because you're selling big cap stock. so good for martin i am congratulating him. >> let's get to the opening bell and s&p, at the big board, bdx capital and at the that is gac u.n. secretary general of human rights promoting the u.n.'s new global lgbti equality standards for business there's going to be a lot to watch here we mentioned facebook. some of the rebalancing we're going to see this year on tech as they combine these high flying faang names with more traditional telecom names. >> when you look at verizon, last few weeks was good but the at&t run, none at&t stuck in the mud. >> down 6% this year

of course when you say that name immediately many people in my world certainly focus a couple of months from now, roughly, when the trial of the u.s. government begins, you know the likelihood of a settlement between now and then seems small and so, it's hard to understate how important this will be, not just for at&t and whether it's able to buy time warner and really for the message it sends overall for deals. so many people i speak to are confused is the vertical deal okay? horizontal deal we can do but can't do vertical? you know, there's a lot at stake here. >> you're so right i don't know a lot at stake. >> far beyond just media but even media consolidation of which we expect a lot this year. potentially. but before that, this has got to get resolved. >> the government is taking the tact of what you just said, it's going to be tech and finance and media/tech i will say that if you want a judgment 6 this market away from

facebook, wells fargo's quarter was suboptimal and wells fargo is up. what does that tell you? interest rates are going higher. don't worry about this quarter it's a meaningless quarter they are going to return capital. it's a very bullish sign for the market x technology and i think that's got to be noted. >> you're not concerned about their expense guidance being above the street's >> it has to be viewed as being one time because otherwise the stock should be down i don't like to usually take cue from the stock but this is telling. i didn't like the quarter. what happened you don't need to look the quarter to buy the stocky guess i say i guess because rationally it should be down. but interest rates are higher and all we do is go tick by tick and american consumer is strong. it's not like the stage coach left the station >> i'm looking at one note, 13 times on 18. everybody likes to be around 13 times. >> is that too cheap

>> you can remember certain periods in time where 13 times for a financial was not necessarily considered cheap. >> when you're taking pore proctor and clorox and colgate so much and the fact that wells fargo allowed to raise the dividend where it could be i'm not being forward looking. i'm justifying and rationalizing the move as i always tell -- this is the day i feel most hamstrung, i'm not on the call. i'm out here reacting to what the stock is telling me and people are telling me and it is basically listen, if you are focused on this quart ir, then you are not focused on the big pieces this is the year for the banks. >> facebook is down, about 5%. really only takes it back to the levels we saw at the end of the year around the 50-day moving average. twitter for whatever reason at 25.25 -- >> btig saying early stages of a multiyear turnaround, your friend rich greenfield -- don't

you love when i do that to you not your friend at all. >> we're not not friends. >> you're acquaintances. >> he's basically saying there could be a take out or two twitter is on the way back it's a well timed call people are worried if you want video, people are saying, btig note says videos, good twitter. >> you know, the rally we've had so far this year, has been -- yesterday watching the melt-up, our own parent company suddenly getting a bid up what 3.6% comcast. it is down five cents today. hitting a new high, $200 billion market value i called a couple of big holders. is there anything new? am i missing something >> no, it's just people focusing on tax reform and net neutrality haven't they known about that already? apparently they are too short term they are focused on the short term and analysts who filed the

company, most haven't adjusted numbers to accounts for the benefits of tax reform for comcast which we pointed out time and again long ago is a domestic taxpayer largely going to be a big beneficiary. also big beneficiary of net neutral, suddenly that all happens in a couple of days. >> cash flow is going to have -- predictions have to go up dra massically, predictions how to use that cash, obviously the company has been shareholder friendly in terms of buying back. >> meanwhile, super bowl, they expect to potentially only get fewer than ten spots lefting selling at 5 million a piece may set the record >> i will make a pledge. >> really? >> if the eagles are in the super bowl, i'll take out an advertisement. >> i will. >> things must be good at the cramer household. >> do we know what the rate is >> $5 million. >> you said that 30 second video on the philadelphia eagles home

page.com, i will personally get every single person in philadelphia to pay money to have it as a commercial. by the way, we're going to rent ten 787 dream liners and make that a home game. >> i think comcast should give you a brief nice promo for "mad money" free of charge. do you like that >> shoot me in the box with the mad money cramer -- would they do that? >> probably not. >> you're not worth it >> fiat chrysler at the new high they are moving production of a ram truck from michigan to mexico $2,000 bonuses for 60,000 works. the plant will be $1 billion, 2500 jobs. even though we saw the dip on the nafta numbers. >> i'll tell you what's incredible watch ford and gm they've done nothing fiat chrysler is so well managed. the actual -- the leader in autonomous driving because

they've been waymo's best partner. this is one of the great stories of all time to come back we don't talk about it enough because it begins with fi at but not chrysler chryslerfyat we've been talking about all the time i'm in awe of what management has done here in a very quiet way. it's been a great stock. >> gm is asking for government approval to start doing essentially i guess we'll call them robo taxis but production of a car with no wheel -- steering wheel, no accelerator and no brake. >> they are going to have -- at the senior living compounds, they are going to be using driverless one of the things when you meet with the driverless people at waymo. what they talk about more than anything, the elder baby boomer person who is having trouble driving and how natural this is for him. i think it's a really good idea. >> yeah. i mean, we're only going to be talking more and more often about the secondary and ter

sharery impacts -- >> this is internet of things, what texas instruments would tell you an analog devices would talk about broadcom and qualcomm would talk about. >> and our friend this week, wong. >> nvidia got a price boost but pulled down by the overall facebook effect. remember, nvidia was fighting to be the n in fang but netflix has been the best performing stock in faang but wong, people should read his key note and brian krzanich had a good key note from intel these are smart guys i've spent time with some of them and run of the reasons i like to go to alifornia. boy, do they make you feel stupid. >> you get a sense of their priorities and we know the priorities for wong are the car, really they are. >> because you need chips that can calculate trillions of

pieces of data in a second having billions of transistors in the chip. andy grove, the late great pioneer would have told you how is this even possible? i mean, it's incredible. wong, it really is jensen wong versus brian krzanickrzanich that is not a friendly rivalry that is not friendly. >> and amd not in there at all >> i was quick to say there were problems, but lisa suh, by the way, i love her. she's scrappy. they are tough they do a little -- we haven't mentioned the cryptoids today. >> 39 minutes in. >> thank you amd has a balance sheet that has more restored. do not count dr. suh out she is just one tough ceo.

i like her i like her a lot >> guys, we have the dow up 100, record highs for the dow s&p and russell and transports and bertha is on the floor today. >> good morning, carl, another record, even as we have yields on the 10-year at 10-month high, strong bank earnings setting a positive high. the 2018 tax impact on companies and what they plan to do with those funds, we heard comments from fed members raising prosperity of more rate hikes. dallas fed president saying he thinks the impact will be front loaded from the tax plan this year new york fed bill dudley expects the tax plan will result in higher wages which could boost inflation. this morning's numbers fairly tame for the poor inflation number that is hotter than expected and now pushing a prosperities of a hike in march with a second hike sooner in june, according to a number of

participants and also expecting to see a third hike in december. meantime, the higher rates, a lot better for banks regional banks which will start reporting earnings next week have really been the standouts up 5% year to day. chips under pressure because of the new on specter, on pace for the second down week in the last three. there were last year's big winners and some of them like micron and lam research have been the biggest losers year to day and amd driving things down with concerns about it now, saying maybe more as you ssusce than we thought before that. on top of that, we're also watching the retailers retailers last year among the biggest laggards, but rbc upgrading including kohl's improved comps, a lot of retailers like gap and targtd raised their hourly pay numbers. j.c. penney though, up nearly 30 in the last nine days after

having been down 50% last year a lot of people with more money in their pockets will be going out and spending more. walmart was fractionally higher ahead of the open this morning after announcing those wage increases yesterday. it's going to take a charge in the quarter for a closer 10% of the sam's club stores. it does say that many of the 10,000 employees impacted will likely find jobs in restructured facilities overall, we are up here and again we're also watching the 10-year yield at 2.57, a ten-month high. >> bertha, thank you very much let's get to rick santelli at the cme in chicago hey, rick. >> running around the floor, there's so many markets that are at such key levels it really is very exciting especially if you're a student of the markets, investor who is just an innocent financial bystand bystander. look what's going on with two-year note yields i know we've been marching up,

really since the end of 2015 when the tightenings began, but it really is hovering at the highest yield since september of '08 as you see on the chart. let's look at the one week of tens, you talk about knocking on the door, pacman, we continue to bite away at significant resistance around the low 2.60s. will it go through like a hot knife like butter. the market has traded this week, traders are figuring out that rates are going up the hard part of the trade is how fast and how far if you look at the three-day of shots. here's the shortened the two-year note in europe, it is quite amazing what's going on there. the three-day chart shows you how it leap frogged. it's in the minus mid-50s but it's come a long way and hovering at the highest yields, it's incredible to say it. it's shocking. minus 55, minus 54 these are the highest yields since the beginning of 2015 and let's hold that date constant.

we know the relationships look like scatter but they really are highly correlated, especially nowadays, that day, look at the euro versus dollar that's about the last time it was at the 1.21 level. look at the dollar index i could do it with the euro as well, it's when you go back a couple more years that you see the significance of these levels let's zoom back to 2013. you see how these levels are so important? the same for that 92 area where losing the same could be said for the 1.20 area we're a handle above when you add the extra part of the chart. these are big macro patterns and traders are for the most part largely offside on the trade it will be interesting how they react to the new territory that markets are trading. carl, jim, david, back to you. >> when we return, billionaire businessman and owner of the milwaukee bucs will join us

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back to the swirling political controversy surrounding reported profane language from the president during an oval office meeting. the president takes to twitter denying the comments but illinois democratic senator dick durbin part of the meeting now the first on the record to confirm that exchange. >> that's what he used, these vile and vulgar comments, calling the nations they come from shitholes, the exact word used by the president, not more, but repeatedly. >> we'll keep on our eye on this i'm not sure how relevant it is for our purposes other than potential foreign policy relations trade relations, who knows. >> it's hard to factor in these things

i mean, look, you bash mexico, the peso goes down and hurts american industry. you have fights with europe, the possibility of the companies not buying stuff from us comes up. there are implications but they are longer term. do people forget this stuff? all i can tell you is that a lot of other countries have buying power, not the one that was actually mentioned in this case -- >> although norway has a lot of buying power. >> yes. >> norway has an enormous sovereign fund as a result of the oil in the north sea i spent some time as you know in norway -- >> yeah. >> they like their whale meat in norway and i think they really like their country i don't think there are many going to be coming here. >> no, how are they doing in winter olympics though >> we'll find out, just a few weeks. by the way, on the day we're talking about facebook deprioritizing news, former president obama is on the inaugural episode of letterman's

new show on netflix. >> whatever your biases were, that's where you were being sent that gets more and more reinforced over time that's what's happening with these facebook pages where more and more people are news from. at a certain point, you just live in a bubble and that's part of why our politics is so polarized right now. i think it is a solvable problem, but i think it's one we have to spend a lot of time thinking about >> we're back into the down side of machine curation where it recommends to you what you have already shown an interest in and you go further and further into this cone. >> i think what's important, just to reiterate, they come up with a longer note, look what they're talking about. why are they worried we have seen quarterly core engagement trends have shown signs of moderation. it narrative has shifted to

social impact. and he wants to change the narrative back to what it should be steeple downgrades are what they have to do they will be the first to upgrade. there's substance to it, but a lot of thought leaders are talking about this and they recognize there are big issues i have to tell you, when you get something as smart as zuckerberg, he's thinking these things through >> by the way, evercore has a note out in the past few moments saying buy the dip on facebook >> i'm not against that. letterman's favorite fan, who did he have on more than anybody. >> his favorite band >> i assume it's foo fighters. >> pearl jam >> eddie vedder. >> i think he spoke when they made the hall of fame. >> incredible. he was crying about how important eddie vedder is. >> netflix shares are down, but up 13% this year is netflix, adding yet another - >> it's banned >> another thing to choose from. >> it's b.a.n., boeing, amazon,

netflix. >> when we come back, we'll get stop trading with jim. dow up 151 thou and the s&p, 2775, we'll be right back.

let's get to item and "stop trading. >> it's not just the eagles that i root for i also root for the philadelphia fusion i don't know if you know who the fusion is, but it's our esports team, with this overwatch league taking america by storm. this is stock that my travel trust has had a long time. disappointing of late, but i think you'll see ea down, that's because of the star wars product, but this esports business is for real and by the way, you know who owns the fusion? >> who >> comcast specticourt but you know, you're watching other people play, and i think one day it's going to be a big ncaa sport i'm early on that, but around the country, a very big move to watch other people play video

games. isn't that something >> gamestop is way down this morning, by the way. >> nobody -- well, gamestop is physical and this is all about digital. but this bobby who was on this weekend, they're like, what's he talking about? it was the launch of the overwatch league esports is here and a way to get people involved. >> he's been talking about esports for some time. he's been right. >> i have known bobby for a long time board member of coca-cola as well extremely smart person >> extremely smart philadelphia fusion. fly, eagles, fly, guys >> what's tonight? >> hit 'em high, hit 'em low, and watch outer bio come on my show these are guys who have -- it's very important for those, the millions of peemeople who suffe from migraines, they might have something for them, and alex feherty, i don't know if you love him, but my kids love him by the way, lifetime guarantee

on clothes not bad. >> lifetime guarantee? >> good luck this weekend. >> do you know, when we think of fact, 52 years from now, we'll think of faherty >> i don't think that's true >> thinking about the fusion >> maybe >> rooting for you guys. underdogs, big weekend big weekend, jim >> huge weekend. huge >> when we come back, more reaction to facebook slumping on the news the social network is revamping the news feed. we're out ab260 points from 26k. back in a minute

welcome back to "squawk on the street." the last bit of breaking news for the week in the form of november, business inventories expected up .4%. it arrived at .4%. exactly as expected, the down .1% from last month stays unrevised. for the year, even though we have one month left, the high water mark is still august, up .6, and down .2 from april is the other extreme. looking good on inventories and the more inventories you have, the more gdp you have. back to you. >> thank you very much morning, everybody

welcome back to "squawk on the street." i'm sk sk with kelly evans, david faber at post 9 of the new york stock exchange. buying continues dow up 161 record highs for the dow s&p, as we watch cpi, retail sales, fed speak, the banks our road map begins with the banks and jpmorgan and wells out with earnings. >> plus, facebook getting hammered after it announces a major change to its new feed >> and presidential profanity. leaks comments causing a stir. we'll go live to washington for the latest >> as we said, a big morning for the banks. jpmorgan and wells both reported earnings today wilfred frost has been digging through the numbers and listening on the conference calls and joins us with more >> yes, indeed a lumpy and confusing kwaurptder with lots of one-offs for the banks, but one consistent takeaway the tax bill is a significant boost for 2018's guidance.

jpmorgan and wells guided to a rate of 19%, below the 21% headline rate and significantly below the previous effective rate of around 30% for the banks in recent years. jamie dimon welcomed seeing companies boost wages for workers and said his own announcement on that topic will come in the next few weeks he said it's the cumulative effect of retained capital and increasing competition i have no question we'll be far better off year after year than if you hadn't done this, referring to the tax bill. trading for jpmorgan was poor, which bodes badly for goldman sachs. equities were quite strong, even despite a $143 million writedown realitying to a south african retailer whose shares fell last month due to an accounting scandal. wells fargo's included huge one-offs they had no deferred tax asset

write downs or repatriation issues for the quarter that was contrasted with a 59 cent litigation expense. the clean eps likely just behind estimates. for wells fargo, loan growth was soft, particularly in mortgages, but credit quality was good. the efficiency ratio which is expenses relative to revenue, which will be absolutely crucial for them this year, was distorted by some one-offs, but their target expenses for 2018, $53.5 billion to $54.5 billion is not ambitious enough to draw the line wells fargo share prices are a lower compared to jpmorgan today. >> we'll come back to you for more clarity later on. >> got some breaking news on nordstrom this morning sources tell cnbc that family members expect to resume their ets to take the company private. that would take place later this year the nordstrom family owns a little over a third of the

company and last year, efforts to take it private were put on hold >> the family surprisingly had interest, but they never -- they formed a special committee at nordstrom and never got an offer in then we were told financing was the difficulty, in particular, for this industry at that particular juncture, but not a surprise they might try to undertake yet again, and another opportunity to see if they can get something together but we certainly would caution people that given retail, and its vicissitudes to say the least, you have to be careful. >> the irony for the family is if they had been able to get it done, they might have gotten a better price than they can now it depends on when they're able to pull it off we could re-enter the amazon death wash, but the shares are up with the rest of retail over the past three months, by maybe 20% so timing is everything if they couldn't get the financing then, maybe easier market conditions will make it less expensive, but an interesting twist after the

holiday season >> we'll watch that. back to bank earnings. joining us, marty is the director of bank and equity strategies, and on the news line, antawn schutz. wilf made the point, all these charges and losses, gains, make it difficult what's the takeaway so far >> well, it's very easy. if you go through all the noise, which takes effort, which he did just a great job of, you get to earnings where we thought. in the foreshadowing looking into next year is what matters the tax rate benefits are being verified, which is good. we're seeing that credit is staying strong, so no deterioration in credit costs. net interest margins that are still generally improving which is what we need, and then we're seeing the capital deployment of the excess capital, which has a big benefit on returns everything we need to see to make 2018 the year we expected was all in the reports this morning.

>> and we are used to now trading revenue figures like the ones we're getting >> we are. this has been the thing we have seen all year. what we know is that eventually, these bottoms begin to pop back up this activity, the clarity we're seeing, clears the decks for things to start to happen, for people to start making decisions. >> anton, earlier, we were coming back to multiples on '18 numbers for these banks. for wells and jpm, is that a number you're comfortable with >> i mean, given that we haven't started to see the economic impact of the tax cut, we have only seen it in their forecast, i think long growth could be stronger and surprise to the upside the fed could be more aggressive if we see economic activity pick up i think there's upside i think there's still upside to the valuations here. 13 times is not excessive. you know, i do favor the regional banks because i think they get much more regulatory relief going forward

>> and we see pnc a little weaker there i'm going to ask you about the difference between jpmorgan and wells fargo's quarters jpm shares up about 1%, wells fargo down about a half a percent. how would you describe the disappointment for wells >> on wells, mortgage was certainly not helpful to them, a bigger percentage for wells than it is for jpmorgan if you thing about expense guidance, i think it was disappointing. people are looking for more. they both have investor days coming up. that's really where you're going to see more of that. clearly, one of the differences we're going to see in the whole group is competition will they try to compete away some of it savings they're getting on taxes >> how do we -- wilf mentioned the difficulty in judging their expense ratios is that going to clear up in the next quarter a year from now? >> so what you have is this year was a clean-up year.

so what we had between wells fargo and jpmorgan is wells fargo still dealing with those issues they're starting to stage for 2018 they had to get a lot of this behind them. the guidance is improving expenses and improving efficiencies, and they'll get that momentum as we get towards the back half of 2018. we just think it's timing at this point with wells fargo. >> so, does today color your expectations for citi, goldman, any of the other regionals >> again, if you look at the super regionals and regionals, you're seeing all of the elements for those to outperform, when you look at the money center banks, you have weak trading results which they're having to work through they're not going to have, again, the regulatory relief is in capital deployment, and that's where we'll see the superregional banks do much better >> any expectations for actual increase in net interest margin. if we get a yield curve that does cooperate >> the good news is we're up about 20 basis points over the last two years that was re-creating the deposit

spreads without any help on the back end of the curve. we're starting to get a push on the back end which will help security yields go up, so we still think we can get another ten basis points of improvement over the next year >> and finally, speaking of loans, do we know now what happened in the last four weeks of '17 regarding loan growth >> well, i think it was tepid, but i do think you had people holding back, given the tax bill and given a lot of the depreciation effects taking place this year versus last, i think long growth is really kind of poised to take off. >> guys, a good discussion >> thanks. >> we'll see what happens in the coming days. have a good weekend. >> you too >> now to the profane comment from the president creating a stir in the immigration debate eamon javers joins us with more on the fallout >> the president's been tweeting about this this morning, seeming to issue a denial that the white house did not issue last night,

that he made those profane comments here the president's tweet from a little while ago, this morning, he said never said anything derogatory about haitians other than halty is a very poor and troubled country never said take them out made up by dems. i have a wonderful relationship with haitians. probably should record future meetings unfortunately, no trust. now, dick durbin, the number two democrat in the senate, was in that meeting yesterday here's how he described what the president said in the meeting in the oval office. >> that's what he used, these vile and vulgar comments calling the nations they come from shitholes the exact word used by the president, not more, not just once, but repeatedly >> i have been talking to white house aides this morning about this and whether or not the official white house position is that the president did not use that vulgar expression white house aides unable to say right now whether their position is he didn't use it or not they're huddled in a meeting

we'll wait and see what they say and what sarah huckabee sanders says when she emerges from the meeting. as of right now, some confusion about the white house as to whether or not they're denying the president made those comments that's going to set off a sort of race on capitol hill and elsewhere as reporters trace down all of the other people who were in that meeting, including all of the republicans who were in that meeting, asking them whether or not the president said it. right now, you have dick durbin, a democrat, saying he did say it what will the republicans who were in that room say? is that a debate that republicans want to have, given that the president could have simply admitted he said this and apologized and moved on. meanwhile, we're going to wait and see what all of those republicans and democrats who were in the room yesterday have to say, carl >> thank you we'll check back with you in a little bit >> sticking with immigration, amazon's jeff bezos granted $33 million in college scholarships for daca students. the d.r.e.a.m.ers. ylan mui has those details >> this is a relatively rare public philanthropic gesture by

one of the richest men in the world, and it once again puts him directly at odds with president trump. that $33 million will go toward college scholarships for about 1,000 undocumented immigrants who were brought to america illegally as children but have protected status under a program known as deferred action for childhood arrivals or daca in a statement, bezos got personal, noting his father is a cuban immigrants who came to the community as a teenager and had to teach himself english he also said he's honored to help today's so-called d.r.e.a.m.ers. this is also a bit of a jab at president trump. during a very tense moment in the negotiations with lawmakers over the fate of daca recipients trump frequently trolled amazon on twitter over their collect of sales tax. side note, the organization running the daca scholarship program was co-founded by the former publisher of "the washington post. but bezos is not the only tech

titan sounding the alarm over the looming expiration of daca chuck robbins called deportding d.r.e.a.m.ers a terrible mistake that could have devastating consequences for the economy corporate america is growing increasingly worried about the logjam on this issue here in washington back over to you >> ylan, thank you very much >> when we come back, facebook's down after announcing those changes to the news feed we'll tell you what they are and the impact it may have on the company's bottom line. get a check of stocks. dow hanging on to the 150-plus gain and the s&p, 2776.

hammered after the social media giant unveiled the biggest changes to its news feed in years. julia boorstin joins us with more >> carl, that's right. facebook is changing your news feed to prioritize posts from friends and family over public content. zuckerberg saying this was prompted by feedback from the community and research now he's changing the goal he gives his product teams from quote, focusing on helping you find relevant content to helping you have more meaningful social interactions facebook shares are down now more than 4% on his warning about a potential negative impact

saying, quote, i expect the time people spend on facebook and some measures of engagement will go down. but i also expect the time you do spend on facebook will be more valuable. if we do the right thing, i believe that will be good for our community and our business over the long-term, too. analysts are starting to weigh in jpmorgan hasn't adjusted any numbers, a note this morning says they believe this creates risk to facebook's financials and saying, quote, it's possible these changes will result in lower ad load in the news feed as it's unclear whether or how marketer roi will change they downgraded facebook stock, saying, quote, there's too much uncertainty relating to the economic impact of facebook's pending news changes for us to be comfortable keeping a buy rating, but some see a buying opportunity. saying, quote, our few that facebook is making a change from a position of strength and it's a long-term positive for the

quality of time spent on the platform you can expect plenty of questions at facebook's january 31st earnings call guys, back over to you >> all right, thank you very much, julia. >> back to tax reform. republicans have long talked about killing the electric vehicle tax credit, which would have hurt companies such as general motors, tesla, and a number of others surprise, the new tax code keeps that benefit, and our next guest says it might actually put gm and tesla as a competitive disadvantage here to explain why is pulitzer prize winning "new york times" columnist jim stewart. always getting into the tax code >> first, what a surprise. the last thing i expected to see in this tax code was all these green provisions after trump has railed against it, the energy secretary has railed against it, paul ryan has railed against it, and the house version did wipe out pretty much all of these things. lo and behold, there it is number one, why is that? you know, it turns out there's

actually a lot of support for this so-called renewable energy in republican states i looked a a map of the u.s. where the wind farms are in this country. they're not in manhattan they're not in los angeles they're in places like iowa, texas, you know, where we've got a lot of wind. and there's a very strong republican constituency for that, number one secondly, i think the unintended consequence here is the tax credit runs out after you sell 200,000 cars tesla and gm are expected to hit that level this year they lose the credit for their customers. meanwhile, vulvoe says it's going to be going all electric in a couple years but they have sold almost nothing. rivals, especially the foreign rivals, are just ramping up. they're going to be sitting there offering their customers $7,500, while the early adopters will have nothing in their quiver please, congress, do something about this >> that's interesting. do we know -- i mean, interesting it ended up in the final bill when it wasn't

expected to be >> yes >> but ev is only going one way. it's just a matter of how quickly the growth is going to come, but it is growing quickly at this point. >> it is growing quickly, and that's one of the concerns the green advocates all want them to lift the cap, just keep the $7,500 going indefinitely. but if these numbers really ramp up as expected, that is going to be very expensive. so i think a more realistic solution would be to say, okay, industry wide, when we hit a certain number, i don't know what that number should be it could be adjusted, we'll start phasing it out, or maybe a time, and say like, 2020, we start phasing it out at least that way, all manufacturers are on a level playing field. you know, the problem with this is the whole purpose of this was to encourage investment in electric vehicles, and tesla did it, gm did it. the others sat on their hands for a while. let them take all the risks, and put all the capital investment in it, and now they want to step in and cash in on the credit

that really does not seem fair or it doesn't make any sense from a policy standpoint >> it does say something about the impact on employment, as you said earlier, at least in some of these states. >> absolutely. the numbers for 2016, which were the mostrecent, the employment direct employment in renewable energy sector is now greater than it is in the entire fossil fuel sector. by the way, that includes, those numbers include autoworkers producing gas powered cars so the numbers, the jobs in renewable energy, which i didn't realize, have gone up dramatically, and they are generally, you know, high-tech, high paying, they're good jobs >> the funny thing about all this is it doesn't seem like the industry needs hem at this point. every day we get another announcement about somebody who wants all of their cars or new models by 20-whatever to be electric tesla established the excitement for consumers. i don't think they needed the $7500 in the first place to buy

a model s. the whole thing doesn't seem to make that much sense, especially in terms of keeping it when it could be costly when we move further in that direction. >> tesla is kind of in a category of its own, because as you point out, the averagepric point for those cars are close to six figures somebody buying that is probably not that dependent on the $7,500 they're just ramping up the model 3. some will sell in the $30,000 to $40,000, there, that starts to become more significant. to your point, tesla has been pretty quiet about all this. i think if elon musk had his way, they would get rid of all this that's a playing field, and they do have a first mover advantage. they have established a great brand. they can really probably be fine without any incentives at all. gm is in another category. they're aiming at a lower price point. they lobbied hard to keep the incentives going my understanding is with the understanding that it's easier to reform the incentive and get rid of the 200,000 cap or do

something about it than it would be to resurrect a credit that was killed they want something done about the cap because they will be hurt it's the chevrolet bolt in the $30,000 to $35,000 $7,500 makes a big difference there. >> finally, on tax reform in a larger context, yesterday we got an announcement from walmart there have been a number of them, bonuses, increase in the minimum wage are you surprised that that is part of the conversation now or are you disappointed in some way? you have a view? >> i'm certainly not disappointed i am a little surprised. i mean, one of the big issues that economists didn't really know because we haven't had many experiments like this is if you immediately provide the sort of windfall to corporate america, who gets the spoils? does it go to workers, does it go to shareholders and i think the general consensus was it was going to go to shareholders. >> it's so funny, especially after the bush experience, don't you think that all of the debate

about this very issue probably pushed the companies to maybe do something they wouldn't necessarily have done otherwise? >> by the way, elarian has a piece about whether walmart is a tipping point in that very discussion >> tee moorx it's fascinating. a big question are the corporations in a way smart enough to realize that's they need some -- they better address some of the inequality issues it surprises me in a way that that's how they're thinking, but i applaud it i think it's terrific. >> yeah. >> and by the way, i think one of the things we should be watching over the next year or two is the tax code, it's not really simpler you can argue about whether it's fairer i don't think it makes much -- many strides in that direction, but it is pro-growth how that growth is going to play out is a real test of whether this is working. one is how does it affect wages and employees? and this is really very interesting and positive >> yeah, and a central part of what we'll be following. thank you. jim stewart. when we come back, powering

the dow. we'll break down some of the stocks that are pushing the index to some all-time highs today. up 144 talking about cars, gm is looking to take the steering wheel and pedals out of its own self-driving cars and details on that as they look to the government for some approvals. "squawk on the street" is back in a moment. let's begin. yes or no? do you want the same tools and seamless experience across web and tablet? do you want $4.95 commissions for stocks, $0.50 options contracts? $1.50 futures contracts? what about a dedicated service team of trading specialists? did you say yes? good, then it's time for power e*trade. the platform, price and service that gives you the edge you need. looks like we have a couple seconds left. let's do some card twirling twirling cards e*trade. the original place to invest online.

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more all-time highs this morning in our etf spotlight dom chu taking a look at what's powering the dow >> the dow continuing to rally we hit another record high in trading. while it wasn't the best performing major index last year, it managed to beat the broader s&p 500. if you have health etfs, you're likely still smiling that spider ticker dia is one of the bigger etfs that tracks the dow, and a drives phose behind the index last year was boeing last year, nearly 5,000 points for the dow in terms of its point run. boeing accounted for 951 of those points, that's nearly a fifth of the overall gain.

caterpillar added about 9% of the 2017 gain for the dow. united health added about 416 points or 8% so far this year, those winning ways have continued for boeing the aerospace giant is on a six-day winning streak and up 13% to record highs this year. caterpillar is the third best performer with an 8% gain, but some of the early stocks to watch for the dow in 2018 are a couple of underperformers last year ge already up 10% so far in 2018, and ibm is up 7% both stocks were negative in 2017 of course, general electric, guys, doesn't have the weight it used to. not as high priced a stock as ibm is still, if the underperformers start to perform, it kwd be some of the powers forces behind it back over to you >> makes sense thank you very much, dom chu >> let's send it over to sue herera with a news update. >> indeed, i do. thank you so much. good morning, everyone here's what's happening at this hour president trump canceling his

london trip, blaming the relocation of the u.s. embassy there. he took to twitter to criticize the obama administration for moving the embassy at a cost of $1.2 billion calling it a bad deal. but the relocation was actually announced in 2008 by the bush administration a huge fire has closed nottingham train station in england, causing a major disruption flames were coming from the station's roof, prompting the evacuation all train services have been suspended. hundreds of protesters marched in jordan's capital denouncing president trump's decision to recognize jerusalem as israel's capital. they also rejected vice president pence's upcoming visit to that region >> and german chancellor angela merkel wants to conclude negotiations with the social democrats on forming a coalition government by mid-february that's according to her conservative party she and the spd party are holding a news conference after a 24-hour meeting, and they're expressing some optimism that a

deal will get done we'll keep you posted on that. that's the news update this hour carl, back downtown to you >> all right, sue, thank you very much. when we and back, a look at the state of the economy, markets and the fed. their next move with former federal reserve governor rdyan krauzner with us dow is up 157. don't go away.

welcome back last year's record rally continuing into january, as all three major indexes posted record closes in yesterday's session. look at us now the dow closing in on the 26k mark for more on the sentiment in the market, we're joined by randy kroszner, here at post 9 good morning to you. >> good morning. >> what are your major thoughts about the stock market >> well, you know, i'm going to give you the standard kind of academic approach that the stock market should be representing the value of future --

>> all right, what do you think of the stock market? seriously, financial conditions have become, and felsh stubltd has become a huge part of what the fed is obsessed with and there are people who say maybe inflation wasn't a problem back then. they should have raised more quickly. they should have done more to lean against these bubbles what do you think about financial conditions today >> well, certainly, there's a lot of enthusiasm in markets and also, the thing that probably worries me to most is people don't seem to be worried. if you look at various volatility measures whether it's the vix or the risk spreads, they seem to be low. i don't see why they shouldn't be at least average. given all the geopolitical risks, uncertainty with respect to policies. we are seeing a synchronized global growth period which is quite rare, and i think that's one of the key offsets why both the market in the u.s. and markets globally are doing so well >> i was sort of joking about this, but maybe the fed should do an intermeeting rate hike,

just to keep the market on its toes >> that would wake people up >> we might be positive by the end of the session that day, the way sentiment is explain what their thinking is about being so cautious in this environment. >> i think there's a lot of uncertainty about where inflation is going we got a report that suggests there's a little more inflation but not too much and so it's basically getting to where the fed wants it to be, which is inflation around 2% i think the fed has been surprised in how slow it's been to get there, but it's not unique to the u.s. in europe, inflation has been very low most countries, inflation has been lower than expected so they are trying to raise rates in anticipation of inflation coming but if it were all just sort of fed stimulus driving the stock market, you would think the stock market would have come off a little now because the fed has raised rates considerably without a real negative impact on the markets it's clear where the ecb is going to go. bank of japan is a different

story, but europe and the u.s., it's clear, and the market hasn't pulled back yet >> do you think we'll have a serious discussion about changing the inflation framework, targets, are we in an environment where demographics or technology are lowering that natural rate >> so i think it's really important to have that discussion, and the most recent economic, the american economic and finance association meetings in philadelphia as well as a recent brookings conference on this issue, it's important to have the issue i can't see the fed making a change now part of the issue is it's only a few years go that the fed explicitly put out an inflation target and it's supposed to increase credibility if every few years you say my target is up or down, it doesn't help much. >> are they in serious jeopardy of losing the public opinion of saying they're not controlling inflation. the general sense is it's low, it's fine. you don't see people in public surveys saying it's only 1.3%, i don't trust this fed

they can't get the job done. the trust seems kwie height. what's the big deal about a couple decimals of a percentage point here >> i think that's exactly right because in the old days, it used to be 2% versus 4% was the issue in trying to get it down to 2% because very important when we're starting to talk about a few decimal places, to say the fed has that much fine control to get it 1.8% versus 1.9%, that's asking an awful lot of our models and of the fed >> early days here in trying to digest the implications of tax reform, of course. yesterday, the treasury secretary talked again about a trillion dollar increase in revenues or revenues contributing growth, contributing to a trillion dollars. where do you come down >> i think i haven't been able to get my hands around the magnitudes yet because there's so much going on in the tax reform, and it was so deep but i do think the direction is generally a positive one for the economy, both in the short run and longer run because you have a reduction in personal tax rates, which will

help to boost disposable income in the short to intermediate run, and a lot of the reforms are really focused on trying to increase investment because we had a very slow investment recovery so i think if you have better investment incentives and a more investment friendly regulatory environment, you're likely to get more investment which will lead to higher productivity and that increases long-run growth how much, i'm not sure >> i was going to say, you think the incentive is there to do say cap-x with utilization rates where they are >> on the margin, it will be helpful, and certainly with expensive coming in, you'll see some increase in investment. that's the key issue, how much of a response are we going to get. that's why i'm reluctant to say i know what the magitudes are because this is a somewhat unusual circumstance and it's hard to use past data to say it's going to be .4 or .6, but i think the direction is clear >> synchronized global growth, we hear from a numberf our

guests you mention it's somewhat of a rarity do we have any historical information in terms of how long these periods typically last or what they lead to? >> no consistent pattern you'll get short periods where it will be positive. it's rare that you get so many pieces, whether it's china, japan, japan is actually growing. i know we usually think of japan as being a basket case, but they're actually not nearly as much as i think many people say. eurozone, u.s. that's rare. i think that just doesn't happen all that frequently. for a few months, but we had sort of 18 months of this. the prospects are for more going forward. >> go ahead. >> implication being what? i mean, continued good times, let them roll? to your point earlier about central banks, they're just going to continue to kind of roll along with it >> i think central banks like the u.s. fed is trying to raise rates in anticipation of higher inflation. also, it's not like growth has really skyrocketed we had growth of 2%, and now

we're getting closer to 3% that's not wild. i mean, it's good that we're growing more, but i don't think it's the economy or central bank has gone wild. europe is actually growing a bit stronger there is where the economy is going a little wild. >> for them, it's a tear they're on a tear. >> yeah. >> relatively speaking >> they have very low growth of the labor force. we at least have a positive growth in the labor force. many countries, labor force is shrinking. to have growth rates similar to the u.s., that's unusual >> central bankers gone wild a new primetime show >> i want that mental image erased right now >> 9:00, after the profit. >> that might affect who you want to be on the federal reserve board. >> thank you very much good to see you. >> great to see you. >> gm is looking to take the steering wheel and pedals out of its autonomous cars, for obvious reasons, you might think phil joins us with more because not everybody has that approach, do they? >> no, but this is what we're going to see from other

automakers in the future general motors being the first to petition the federal government saying this is what we want to do. take a look at this chevy bolt that has been modified yeah, no steering wheel. there are no pedals in there there is an emergency stop button you can press the reason they're doing this is they need to clear a government hurdle regarding vehicle safety standards. they're petitioning the government to allow them to build these vehicles, test them on the roads, while the government is likely to sign off on this, the question is, is the driving public are the people who would get in this vehicle are they ready for a car without a steering wheel >> obviously, there will be an adoption curve and it will take time for people to get used to the idea but everything we're doing is all about safety and the approach, and we want people to feel comfortable with the technology right from the outset >> so here's the gm game plan. they are building these autonomous cars as part of a ride-hailing service the company plans to start in 2019 at least initially, you'll see them trying it out in san francisco and other cities as

well think about it this way, guys. if you don't have a driver in a car, why not free up that space so a passenger can sit there and you don't need a steering wheel since it's a sell-driving car. that's the game plan from general motors, and again, they hope to have this up and running by 2019. don't forget, next week, we get the financial guidance for 2018 from general motors. guys, back to you. >> busy week on your beat, phil. >> when we come back, america's first private intercity passenger railroad starting service today in florida we'll talk to the man behind the train, billionaire businessman and owner of the milwaukee bucs, wes edens. >> dow up almost 200 points. we the way, dow 25k was last back after a break ll street guy. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you

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why does one top technician say that bonds are now entering the danger zone? and why it might be a warning sign for stocks. well, you have to find out

go to tradingnation.cnbc.com more "squawk on the street" in a moment

welcome back as we watch the dow now rallying nearly 200 points this morning here's a look at the 30 components merck is leading the way, and boeing is having another strong day. home depot up there with walmart as well. six names in the red, bottom right of the screen, intel is still lagging. the worst performer today. only down a third of one percent. pg, goldman, interestingly, ever so slightly in the red right now. let's get over to the cme group in chicago and rick santelli with the santelli exchange >> good morning, and thank you i would like to welcome my last guest of the week, richard favre from the marion group. thanks for taking the time >> happy euro breakout friday, richard. how are you? >> exactly you're at the epicenter. at a time where i look up at the board, listen to kelly we're 240 points away from another handle in the dow jones

industrial average it's amazing you look at new orders small business confidence. you consider how taxes are going to effect small passthrough businesses and how they're integral in hiring everything seems to be going into hyperdrive with the economy, and interest rates, even though there are a lot of channels that cause us not to rise as quickly as history would dictate, it's moving up. now you have hit it. with all that going on, why is the dollar going down and the euro going up, 121 handle today? >> well, rick, the german two-year yield is breaking out it's at negative 56 basis points here yet, german unemployment is at a record low what does that tell you first off? if rates are going to go up much quicker than people think in europe, maybe the euro has to go up as well >> yes, and it's funny you mention rates in europe in the context of the conversation. because while boon and shots rates, the two-year reference in particular, the shots at the

highest yields or dorn close, within a basis point, to around january of 2015, we still see interest rates, for example, in spain and italy going down rather rapidly so it seems as though there's a credit spread going on there your thoughts? >> well, i mean, i think some people are pointing to the new coalition in germany as a possible reason. i think there are other things it's an easier trade in germany. the bonds are more liquid. it's easy for u.s. based investors to trade it. i think ultimately, yields are going up everywhere around the world. the question is what's going to happen quicker, and right now, certainly in the case of germany, with the economy taking off as much as it is and pmis where they are, it's an easy trade for, you know, macro hedge funds to start shorting these bonds. i think that's where it happens first. there's concern, spain, you have catalonia, and italy, there's concerns there as well maybe not the five-star movement, but other concerns there.

it's an easy trade to bet against german yields. that's what people are doing right now. >> now, when it comes to what the notion of the ultimate price action of the dollar/the euro is, when i look at the long-term charts, richard, i see any kind of sustained trade above 1.20 in the euro or below 9 in the dollar intex, and we're handles below that in each market, does that imply we could be looking at 2018 as very similar to 2017? where the weak dollar just stays weak most of the year? >> it's my concern i just spent two days in new york and there's definitely sentiment for a weaker dollar amongst institutional investors in new york one of it things that worries me the most is that it doesn't seem like anyone is pricing in the possibility for an ecb hike this year so if that were to happen or even rumored over the next couple months, i think the euro could take off that's certainly one of the risks that's out there >> if i see mario draghi hinting

at a rate hike this year, you'll have to get the paramedics to chicago because i'll be on the floor of the cme group >> finally, my final question to you is, if you're an investor and you're thinking, as counterintuitive as it is that the dollar stays weak, is that going to change which stocks you consider to buy into on this equity run-up, considering the implications big exporters with the weak dollar your final answer. >> yes, rick, because a weaker dollar means more inflation in the u.s., possibly a steeper yield curve, depending on how the fed's going to react so it's certainly industrials and, absolutely, u.s. financials are going to do really well in this scenario. >> richard, thank you very much. i hope you have a long enjoyable three-day weekend. david faber, back to you >> okay, and thank you, rick santelli now time to send it over to john fortt and get a look at what's coming up on "squawk alley. john >> david, wondering what's coming for bitcoin and other

cryptocurrencies i think we all are harvey pitt, former s.e.c. chairman, is going to join us to share his views on what might be coming down the gurelatory pipeline coming up on "squawk alley"

the spielberg-directed movie "the post" opens in theaters across the country today i sat down with one of the stars, bob odenkirk. many of you know him from "better call saul. we discussed what it was like to work with spielberg on this movie, which was the director's shortest production schedule ever >> this is the shortest production schedule he's ever had, steven spielberg, 44 days, i believe it was >> did it feel like sort of a shoot from the hip >> yes >> really? >> he had no story boards. occasionally he had a plan, but usually he put a plan together with us walking around the room in a very, very brief amount of time, and it was always an inventive, rip-roaring spielbergian motivated camera choice that was inspiring to imagine, you know, because i'm

in the scene, i can't see what he's shooting, but when he takes that camera and puts it right here and has you walk out and walk over there and then walk back into the frame and the backdrop, you're like, oh, man, that's going to look so great. that's so steven spielberg we have a -- there's a great shot he's like this is from "raiders." he's constantly referencing his shots. this is from "jaws," this is from "raiders," or from an old movie. they did this in "the third man" or something, you know he's seen every movie so many times. and then we do a couple takes. not too many, but seven or eight, maybe, once or twice we did one or two and then he moves on he knows what he wants, exactly what he wants. he's making that movie in his head as he watches you do it he found this crazy shot, banked off this shining metal on the phone, which it wasn't put there by the prop department, it was

just part of the phone these were phones of the era, 1971, and he said, hey, what about this metal here, is that shiny enough to get a reflection he angled the camera up. i had to stand just so, i couldn't move my head at all, and he got this really cool shot that after he was done, and we only did, like, three takes of it, he came over to me come see this, come see this i come over, he plays it back on the monitor and looks at me, he goes, it's like a '70s movie all right. well, you're steven spielberg, so you kind of define '70s movies i guess, it's wild, but he was really happy >> you can check out a lot more of our discussion with odenkirk at cnbc.com/binge. have you seen the film yet >> not yet for me. >> worth seeing. >> i want to, i will whole family, i think. >> i had no idea they had to shoot it that quickly. fascinating. >> great stuff, fascinating. >> got the script in january and

they were off to the races interesting how in this wave of content, there are a few tent holes. a lot of them are franchises, ip franchises like star wars, but spielberg is his own >> it is the spielberg franchise. >> i have spielberg 27, 35, whatever it is when we come back, owner of the milwaukee bucks wes edins is with us. dow over 220 points from 26,000. >> wow digital id cards, they can even pay their bill- (beep) bill has joined the call. hey bill, we're just- phone: hi guys, bill here. do we have julia on the line too? 'k, well we'll just- phone: hey sorry. i had you muted. well yea let's just- phone: so what i was thinking- ok well we'll- phone: yeah- let's just go ahead- phone: oh alright- the award-winning geico app. download it today.

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