"squawk box" starts now. ♪ live from new york where business never sleeps. this is "squawk box." good morning welcome to "squawk box." we're live from the nasdaq market site in times square. we're back with joe kernen and andrew ross sorkin >> i'm back. so happy to be on vacation >> we'll steal that vacation glow from you quickly. >> i met a sleep doctor on vacation we all need to talk about sleep. getting up at this hour is the equivalent to jet lag. we really need to wake up at the same time on saturdays and sundays. >> i'm not far off >> i'm not far off either. >> i'm up by 6:00. yesterday i was up at 5:00

>> an hour or two off -- >> makes a difference? >> it's like a new jet lag every week think about that >> the three -day weekends -- >> yesterday kaley was up early. that kept me on track. >> if you go to bed early -- >> ben franklin. >> 7 to 8 hours, instead of getting fancy -- >> i thought you were going with the early to bed, early to rise. >> it sounds like you're getting a little bit too -- how does this guy know? >> if you get 7 or 8, you're great. >> god bless you if you're getting 7 to 8 >> now you're saying it has to be this time >> i can call you early on weekends if you'd like let's look at u.s. equity futures. it's been a huge year already, just two trading weeks in. look at this this morning, futures are surging, dow indicated up by 267 points

s&p futures up by 17 nasdaq up by 14. this comes after last week where the dow was up 507 points. nasdaq up by 1.7%. gains across the board with the dow, nasdaq, s&p 500 and many other indices result ending at all-time highs it's continuing again this morning. hard to try to get your arms around what this has meant this is the tenth trading day of the new year >> what is it so far for the dow? >> 507 points last week. >> the first week was more >> 571 was it? am i off by a little >> it's a thousand points in two weeks. >> we did have the big setback when the markets were rattled by the china story. >> down 16 that day? >> down 16 we were jumping on that story. jumping.

jumping. the markets were rattled >> something to watch this morning. it's hard to imagine watching this for years, watching this happen let's look at what happened in asia you can see up across the board. nikkei up by 1%. hang seng up 565 points a gain of 1.8%. shanghai was up 0.8% then this morning in europe, trading is already under way there are green arrows there the dax is the biggest gainer, up by more than 1.1% a half percent gain even in france with the cac there. look at treasury yields. last week the yield dipped on the ten-year to 2.55%. this morning it's lower, yielding 2.56% we thought we would be up at 2.6% north of that last week you can see there is some resistance to those yields

>> all right dow component united technology is out with quarterly numbers. the health insurer earned $2.59 a share for the fourth quarter, that was 8 cents above estimates. revenue beat forecast. united raised its full-year forecast the improved outlook reflects the effects of tax law changes we'll dig through the numbers with ana gupte in a bit. on an adjusted basis, the number goes from 10.55 to 10.85 the futures not hurting because of this. as we know, the dow component.

>> yes >> really? you remember >> it's a newer one. >> it is good for -- it's one of the benefits of getting up there a bit. things are new many more times you see the thrill of discovery happens with things you already know >> yeah. >> that's one of the benefits. >> the other article i read on my vacation, neither of you are anxious people do you know alzheimer's is linked to anxiety? >> oh, good. >> you guys are relaxed people i'm anxious. i may have this problem. >> you are anxious about this news >> i might become anxious. >> we'll talk about bitcoin. that may bring on some xankitan. the euro trading at the highest

level since 2014 yesterday and tthe ecb said bon purchases could be ending. big swings in currencies would be problematic and new this morning, the yuan mid point set at the highest level in more than two years 6.45, trading at the highest level against the dollar since december of 2015 for you cryptocurrency maniacs out there, bitcoin plummeting this morning, falling below $12,000 to a six-week low. traders cited fears of regulatory crackdown that is taking place in south korea. the country's finance minister said banning cryptocurrency trading was still an option. that's the overhang on bitcoin and the cryptocurrencies if you were up there when it was at 18,000, 19,000, not great

crude prices this morning, brent crude briefly topping $70 a barrel a level not seen since the crude slump of 2014. higher demand driving up prices fueled by economic growth. the price of wti now, 63.82. >> i've been watts ahatsapping some folks in saudi, all rejo e rejoicing at this news >> the higher crude oil prices >> means this aramco ipo will have a better shot going forward. >> do you know anything antidbot our friend >> two or three weeks from something happening. >> i heard he went to a horrible place. >> went to a prison. >> we think there's some action. i don't know

>> if he's worth 17, 20, whatever it is, only -- seems like an easy decision. are you stubborn is the ritz nice >> here's the big tell the ritz is starting to -- it says they'll start taking patrons february 1st >> that's weird. >> so -- >> everything has to be resolved by then. either you settle by then or you will be relocated. >> i'm not sure. all i know is -- the website says this phone line doesn't work, but they are starting to take reservations in february. who is booking >> couldn't he just cut back on his lifestyle a little pay the 6 billion, left with 11 billion. just tighten the belt a little >> this is the cache story for him. >> i understand, for me -- i think he's about 61, 62, isn't he i'd want out as quickly as possible

if i was left with 5 i might be okay 5 billion, right >> yes >> i think that -- >> the principle of the thing? >> he wants to live -- he wants to live in riyadh, run the -- >> that's another question why? >> i would not want to stay. >> for a lot of reasons. if everything was great, i would want to go, monte carlo, paris, here >> he could come to new york >> the feeling you're get sk there will be an answer. >> i think there's something about to happen. >> he could be a cnbc contributor to make up for some of the 6 billion >> when in doubt >> supplement. >> talking about saudi, an investor or an investor or one of the biggest investors in softbank is saudi. softbank considering an ipo for its japan wireless unit. the company would list about 30% of its shares in tokyo and another overseas market such as

london the listing of those shares would raise about $18 billion, making it one of japan's biggest ipo ps s in recent years. softbank's japanese telecoms business is the cash cow making up nearly half of the earnings the firm also controls sprint in the u.s., but some have been concerned about the large debt load with interest rates rising. shares of softbank rose 3% in tokyo on monday. they closed up about 2% today. >> here's some news for anybody watching this over the weekend new this morning, japanese broadcaster nhk has deeply apologized for sening a ne inses alert to theirwebsite and app saying it appears north korea fired a missile. nhk says this was a mistake. which brings us to what happened in high hiawaii over the weekend

during a nuclear drill, an emergency worker hit the wrong template and people in the state received phone alerts that a ballistic missile was on its way to hawaii. the siren tests have been suspended pending an investigation. the worker has been reassigned but it caused massive hysteria, people hiding their children in underground locations, thinking they had 19 minutes. >> right >> something happened. >> i wouldn't know what to do in that situation here are pictures of children being hidden under ground. >> let's get to eamon javers in weekend with a look at the weekend political headlines and a look ahead you were able to, with impunity, have that curse word -- you did it on our show you only said it once. did you say it throughout the day? did you total how many times you were able to just cast off the shackles and just let it all hang out how many times did you say it?

>> i said it twice >> i wasn't asking for a repeat. >> that's now three times. >> but you know why i'm asking i'm asking because cnn apparently said it 195 times i think yesterday moor maybe the day before it's not the saying of the word, they're still on that story, maybe you are, too i would like to put it in -- moveit forward to the extent o whether or not we will shut down the government or not based on daca futures are up 260 points. i don't know how you tie it together bizarre. >> i don't know. you're a markets guy, i'm not. maybe it's the case that the markets look at this shutdown and say we've seen this story before, seen the government shutdowns before it's basically some national parks close, some inconvenience for people, but nothing significant happens when there's a government shutdown so the market is probably brushing that off. the political problem for the

president is he's still dealing with this a week later after the controversial remarks were made in the oval office the question is how does that affect his ability to get a deal done the president shifted from not denying he made the comment to sort of denying that he made the comment or at least throwing some cloudy air out there about what he said, what he didn't say in that meeting. so, that opens up the opportunity now for reporters to spend the next couple of days tracking down everybody who was in that meeting and asking them exactly what the president said. it extends the story into another week when the white house could have shut it down last week. the president spent part of his weekend this weekend denying that he was a racist here's the president over the weekend. >> no, no i'm not a racist i'm the least racist person you have interviewed that, i can tell you >> the president got political

cover from rand paul of kentucky who had this to say. >> what i regret is i do want to see an immigration compromise. you can't have that if everybody is out there kaling the president a racist >> how does this impact the daca debate here is the president's tweet from yesterday taking a swipe at dick durbin, who revealed that the president made the remark. the president tweeting out senator dicky durbin totally misrepresented what was saided a the daca meeting deals can't get made when there is no trust. durbin blew daca and is hurting our military the white house has said they want a daca deal they want to put this behind them daca is defers action for childhood arrivals, those are the people brought to the united states as children who are now young adults there was hope they could get a deal that would handle that group of people and then move on

to a broader immigration deal. the president seemed open to that early last week now the politics have been blown up really by the president's comments the question is where do we go from here and we'll see when lawmakers get back to town today. futures pointing to a 250-point gain at the open for the dow, but are we in a bit of an overshoot phase of the bull market mike santoli joins us right now. are we >> could be. though i think it's important to define what that might be trchlt is and there is no definition of what an overshoot is it's a phase when the market shoots higher from already high levels, investors extrapolate good news far into the future. so there is a lot of evidence this is the kind of phrase coming incom phase this year. this is the fourth day in two weeks the dow is up 0.8%

you're seeing lots of flows into funds, sixth highest flows into equity funds earnings estimates up 2% so you're outracing the forecasts of the analysts. there's some catch up to do. riskier cyclical stocks are working. all of this stuff builds to this idea that you might be in this phase where good news is good news and people extrapolate it further. the vix is up year to date with the market going straight up that tells you the character of the market has changed there's more juice to it more demand. >> there may be more volatility, but it's to the upside >> we have a spring-loaded situation. i'm not saying it's a bad thing or we'll get a nasty pullback, but you are seeing some of these sentiment and momentum measures getting to multi-year highs. it doesn't seem as if this is the culmination phase of

anything an overshoot phase can go on for a long time. >> let's talk more about this. we will bring in kamal sr ishgsr good to see you. >> good to be back >> what's happened in the first nine trading sessions that we've seen this year >> if you look at history, you will see the so-called irrational exuberance people have f that is what mike is talking about, tends to carry on for a long period of time. in the 1990s you had alan greenspan speaking about it in december of 1996 you didn't have a crash until 2000 in the first half of 2008, like now, the two-year yield went not just over 2% it went over 3% in june. then many central banks, including the european central

bank increased interest rates. the ecb in july of 2008 before the sky fell a couple months later and they had to reverse. >> is that what we're seeing here irrational exuberance or have the rules of the game changed so significantly that people are trying to figure out what this all means. it's not irrational exuberance if there's a reason for it >> absolutely. >> you had the market run up so much many december in anticipation of the tax law changes. once again in the early part of january, it does qualify for a significant part being irrational exuberance. janet yellen referred to the market being somewhat rich in june i don't know what she would say today. >> i know what warren buffett told us last week. he doesn't market time things. he knows you won't always have rational action in this.

i asked if he thought prices were overvalued because of the run-ups, he said not based on what you're looking at in regards to interest rates. >> i watched your interview with interest if you are like warren buffett and are looking at it from a long-term point of view, maybe it makes sense if you do not look at financial news on a daily by sis basis but are look buy and hold investor. >> the other question is with interest rates being the issue of gravity, even if interest rates go to 3%, where does that put us >> it's a slight challenge to the setup but i think the credit markets will tell you if higher rates are something to worry about. if corporate bond yields shoot up more than treasury yields, that tells you there's something in the system that's not right so i do think you have that kind of a cushion in there. if you were inclined to say the markets run a lot, i have been in it, should i sell, is this a

moment to sell you're doing a series of checks. credit markets, are they upset no momentum looks good. market -- all these things check out. if you're in the cockpit you're not saying there has to be an emergency. all those things are down the road if the fed comes out and take s noties oftakes notice of how high the market is, sure, it's time for a gut check. >> last week the credit market high yield spread went to a more than ten-year low of 318 basis points that's not suggesting that anybody is scared. so you can have this bubble get bigger, but the question is how big it gets. irrationality can last a long time >> you think it's a bubble that's an interesting perspective. you think at these prices it doesn't make sense >> i think it's a bubble what you're getting the message

from is the ten-year yield, which as you just said, is even lower than where it was last time the two to ten-year spread is close to ten-year lows that you didn't see since 2007. >> that has to do i think with what other central banks are doing. >> what do you think the true downside is? >> the true downside is for equities to continue to rise and have a much sharper fall at some point in time. >> but i'm saying is this a 5% down 10% down >> 5% down would bring us back to where we were at the beginning of the year. >> 5% or 10% is nothing. you have to talk in terms of 15 to 20% decline but the question is when does it happen the later it happens the bigger the magnitude of the decline sri, thank you very much >> thank you >> mike, great to see you. coming up, united health out

with earnings. we'll dig through the report with analyst ana gupte after the break. my experience with usaa has been excellent. they always refer to me as master sergeant. they really appreciate the military family, and it really shows. we've got auto insurance, homeowners insurance. had an accident with a vehicle, i actually called usaa before we called the police. usaa was there hands-on very quick very prompt. i feel like we're being handled as people that actually have a genuine need. we're the webber family and we are usaa members for life. usaa, get your insurance quote today.

. united health group out with fourth quarter earnings moments ago. joining us is ana gupte.

can you start explaining the -- what was the tax laws affects on this quarter what was that number are they adjusting everything? are they taking it all in one fell swoop for lou it will affect the company does it have to do with using losses >> the main thing is what they did for 2018 they guided up to 27%, that's better than consensus. >> is that based on the tax law change >> based on the tax law change >> more flow to the bottom line. >> unlike banks which had charges, they can't use their net operating losses to the same extent they had different accounting adjustment to their result this was a positive one. >> it's a positive one the products and benefits had already been priced. you have to take that into account. 2019 could be perhaps a little less to the bottom line.

i don't think it will be 17% 17% beats street expectations. it's a positive catalyst >> what do you see in terms of with everything swirling around, with exchanges, medicaid, you saw what happened last week, how -- does this put united health in a sweet spot for you >> i think so, as we talked about last time the burning flat form for change and policy in 2018 is much less going forward. there is a dot that needs to be connected between tax policy and health portion if a portion falls to the bottom line and a portion goes to the consumer, medicare is getting from a third of american seniors to about 50% ofamerican senior before, say, the 2020 election for 2021 that's a positive.

it's a positive for managed care companies and seniors. states are happy with the managed care and worker requirements i don't think will be negative. if anything it could triger more privatization in managed care. exchange is around 10 million, 12 million, it hasn't moved the needle that much on the mandate. we may or may not see the funding of the csrs. i don't think there's that much momentum in the senate there's some rumblings in the house to get that done the main thing is about a million or so people not subsidized are in a place where they don't have subsidized coverage to go into the exchanges. but now we have associated health plans, the selling of insurance across lines >> is that game changer? >> it's meaningful, not a game

changer but enough for someone who is a sole proprietor even if he doesn't have employees working for him. they can buy a $200 a month policy that's relatively affordable >> one thing we've seen is the individual mandate disappear because of the tax law changes i've been reading republicans are trying to figure out a way if they can get rid of the employer mandate if that would happen, a lot of big businesses probably wouldn't change but small businesses might. would that change the guidance you might anticipate >> more small groups, united is not that much in the under 50 market anne them and the blues are there, but that ties back to the associated health plans and selling insurance across state lines. if the employer man gate goes away, i don't think the impact would be dramatic, you at least have an alternative avenue it's a bigger deal than i think the street is making

>> are we drifting towards single payer has it gotten more likely or less likely in the last three months >> in my viewless likely we're getting to the point of equilibrium across partisan ideology there will be rhetoric from bernie sanders and the liberal democrats in the second half of the year ahead of elections. if you have accessible, affordable health insurance for almost everyone in the u.s., i think we're getting slowly to that point, the cost dynamic is good these companies have -- their feet have been held to the fire, but they have delivered. they cut costs down by consolidating, by shifting procedures out of the hospital and the like >> let me ask you one more question just the idea that you mentioned maybe there's an equilibrium, you don't have one side off to the races or the other, but you have potentially a change in the dynamics of the power structure every four years or so

even a midterm election. do you get yourself into a position where the industry keeps getting whipsawed with changes? if they win the house, what happens? >> that's why i thought it became less likely there's a lot of mainstream -- i don't know what that is anymore, even a lot of mainstream democrats don't want single payer. you saw what happened in the uk. is that indicative of single payer or just a bad flu season it's where you're covered but you can't get access or can't get access to it the networks are good. it's the best in the world it's not just about having access to other countries, but getting good access to hospitals and primary care

even if in 2020 there is super majority, they may do something to tax policy. the movement for seniors from medicare to private medicare advantages are irreversible. states are the biggest consumer for medicaid, not the consumer they like it we like our insurance. >> so the demise of that was greatly -- >> it's much more stable >> thank you coming up, when we return, two high profile security bugs have made nearly every computer made to hackers. we will talk about protecting your data next as we head to break, a look at friday's s&p 500 winners and losers alerts -- wouldn't you like one from the market

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or maybe even more. you're watching "squawk box" live from the nasdaq market site in times square. all right. some news just in from general electric the company says that it has completed a review of ge capital's legacy reinsurance business to try to determine if they hadded a qui ed adequate ro cover claims

they now say that review has resulted in a 6$6.2 billion after-tax charge and a contribution of about $15 billion will be made by ge capital over the next seven years for reserves to carver for those potential that losses. in order to fund these, ge will limit the dividend paid to the parent company unclear what that means for ge overall. the stock on this news down by 1.5% >> it's just -- i think people are looking at everything two, three months ago, they saw stuff like this. >> i think the street was anticipating a charge. >> these are the numbers and the stock is unchanged >> a quick look at u.s. equity futures. you're looking at green arrows across the board dow opening up 254 points right

now higher let's talk cybersecurity intel's ceo brian krzanich saying his company will be updating all computers after it was discovered hackers could steal passwords. for more on security concerns, we want to bring in todd mcminnon of a kshokta we got it right. okta >> rhymes with lock. >> exactly so the security concern is at the chip level at this point what is okta -- does your service protect against this >> okta is at a higher level in the stack, in the software infrastructure level we help customers connect to their customers. if you are logging into the websites you love to use, we

help you security log them in and companies who are building those websites who are trying to connect more closely with those customers provide that connection experience. >> the reason i was asking, i was thinking about if investors out there now, who are trying to take advantage of this moment and think about who will win or lose, who are the winners and losers >> i think the big winner really are the companies that have adopted more of a cloud-first approach problems in technology are inevitable one advantage of the cloud is that things are managed centrally. you have less of a requirement to patch every system. >> if it's living on the cloud -- there's still a computer somewhere >> many computers. >> thousands of computers, they all have chips in them >> they do. >> what's the exposure >> the bug you're talking about, there's almost -- almost every computer in the world is susceptible to it.

it's about how fast it can be patched and managed. when that's done centrally it's scalable >> you are seeing anything about hackers trying to take advantage of it now? >> there's not been known exploits this came out of a research group. everyone in the industry is working quickly to patch this. >> we talk about it as if, you know, everybody's password and user name is about to get stolen >> it's not true >> when you hear things like that, are there hackers working day and night right now to exploit it >> i'm sure there are. that's why this central management of technology is so important. you can have the systems patched, not exposed to the flaw >> here's another question not everybody upgrades with the software updates as often as they should. >> it's complicated. it's hard to manage.

>> the last viruses that kind of went all over the place, they started in asia, particularly in china and some back reporting was that it happened there because they were using pirated copies of microsoft windows. they couldn't be updated is something like that-likely to happen goo happen again >> depends on the vulnerability. there's a bunch of security best practices, one of them is not using power of the software. i would say there's lots of things companies can do. in a bigger picture, if you're using things managed centrally by a company or an organization whose sole focus is keeping a system upgraded, that gives you a better chance of being at the latest security level. >> you used the phrase stack, a

term of art in your world, having to do with the different layers that different providers are providing services long-term for a company like you, providing centralized security for everybody, how much do you worry about competition from the microsofts, googles and amazons of the world who can build this type of functionality into their stack >> yeah. it's -- the term stack comes from really the mainframes and pcs, where it was the hardware, software, applications the goal of every important technology company is to become an enduring layer of that stack. we build identity management services and a platform for identity management services what we've been able to do is carve out an important layer in that stack while other cloud companies, whether it's sales force or google or amazon may bill

certain features or capabilities, he would have proven that identity is an enduring and consistent layer in that stack we're the identity cloud, first class layer in that stack and you have to be cross platformed and connect different clouds and different applications and that's driving results and that is what is making it clear we're a layer in that stack. >> thank you congratulations. we will see you soon when we come back, headlines from motor city. phil lebeau has a run down of thenys s news from the auto sho.

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let's get to motor city where they have a new coach and automakers are unveiling the latest models in the highly competitive pickup truck market. >> pickup trucks taking center stage leehere, because you havee big three rolling out new models or dramatically refreshed ones starting out with the ram 1500

ram has been increasing sales over the last three, four years. last year they sold more than 500 million rams chevy silverado refreshed for 2018 and 2019. sales up 2.2% last year. finally you have ford reentering the mid-sized pickup truck market with the new ford ranger. all of the ceos realize the pickup truck market is crucial to profits in north america. >> i think if you got to about a quarter of the market being cars, everything else being pickups and suvs, you would be right. >> the f-150 is going well the franchise is great this proves to us with this new category that we need to be there. a lot of what we've learned is come back with the ranger. we have a good franchise around the world. having it here in the u.s. is

important. >> it will be interesting. when we talked with jim hackett the ceo of ford, he said we believe that the ranger can do very well in the mid size market and not cannibalize the f-150. and that was the concern four, five years ago when general motors started rolling out mid size pickup trucks ford would say we have the f-150, we're okay. well, those mid size pickup trucks have been blockbusters, that's why ford brought back the ranger >> phil, thanks. coming up, when we return, ibm betting big on the blockchain the company partnering with shipping giant maersk. details next

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this information. read it carefully. welcome back, everybody. some news this morning ib m&m aersk announcing a joint venture to use block chain technology to help shipping. joining us is bridge git

vencriligon. thank you for being with us. let's talk about block chain, first of all there's so much interest around it but also so much confusion. why should companies use block chain? what can you do with it? >> basically block chain is a way of empowering and making businesses smarter because it is an ability to put multi-party data simultaneously on a shared ledger which means any transaction or any process that has many, many parties in business, the data can be seen, shared instantly it can be commissioned so that only those that you want to see it can see it and as it changes, as it goes through the business cycle it is immute bring stepped, which mean that for any business, any transactions they do with many parties they could do much faster, much quicker and with much higher trust because it's actually time stamped. >> when you start thinking about logistics and shipping, i would imagine it's much easier for maersk to allow their customers to know where their goods are at any point in time along the way.

you can track and ship where anything is and you can know with certainty when you'll be getting some of these shipments? >> that's exactly right. blockchain as you know started off driving digital currencies but this really is an application for a very big ecosystem. 80% of everything we see in this room came through shipping and it's stillthe cheapest way of actually transporting goods. so this is a massive ecosystem which is all manual at the moment with maersk we put together a way to help that ecosystem get more efficient. >> i would imagine there are all sorts of industries that could benefit in this. where else is ibm exploring? >> there are many industries we took that point of view from the beginning that this could be a technology that powers businesses so what we've done first is help power these uses and applications is bet ahead and invest heavily in the technology to make an enterprise great.

just a couple of things i would say. the first thing for an enterprise is the technology needs to be far scaleable and easy to use. we've built block chain software that allows a developer to quickly put up a block chain, which needs to have smart contracting, needs to commission users, makes sure that you time stamp and makes sure you and i can see what we need to see. that's the enterprise difference. >> i would imagine the second most important need is security. >> security. >> we talked about all of these issues and the problems existing with viruses all over the place. >> the second is security which is paramount to ibm. we have embedded with our security and the cloud we're running blockchain on is z cloud, main frame which has cryptography end to end. if you're an enterprise you can't run with codes we have a linux open source technology program which allows all the participants in the

blockchain to participate in the cloud so it's governed and transparent and not a secret so with that we are helping make blockchain not just a nascent technology but an enterprise vehicle. >> go to that last piece people have talked on this show about cold storage, this idea of this living on keeper like in a vault somewhere. you're not doing that? >> no. hyper ledger is contributed by the community, a couple of hundred enterprises are part of hyper ledger and they write the code together and govern the code and contribute. >> that's different than what ibm would be involved with. >> yes. >> open source does not strike me something that ibm would be involved in. >> we believe that's the way these technologies will evolve because they need innovation as you look at the applications, you asked me what it's used for, using it for medical records,

using it so that you and i could commission our identity, food safety half a million people die from food incidents it takes seven days to track them you can do them in two seconds on a blockchain and we've proved it. >> this helps me understand a lot of it. we're out of time now. thank you. >> coming up, guest host sam zell is here to talk taxes, trade, and real estate taxes he's here on set after this quick break. they're not investing in commodities or fixed income. what people are really putting their money into is what they hope to get out of life. but helping them get there requires a real refusal to settle for average. because when you approach investing with a tireless desire to beat the status quo, something wonderful can happen. those people might just get what they wanted out of life. or maybe even more. of emerging markets obsolete? at pgim, we see alpa in the trends,

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good morning, everybody. dow futures are up sharply on this holiday shortened trading week check things out earnings taking center stage for investors. we will tell you what's fueling the big gains and speak to sam zell about the president's

economic plan. that is straight ahead. trade and technology takes center stage at the detroit auto show phil lebeau brings us the buzz from the motor city. it is flower power time with valentine's day less than a month away, we'll have the retail outlook the second hour of "squawk box" begins right now ♪ ♪ live from the beating heart of business, new york city this is "squawk box. good morning welcome back to "squawk box" right here on cnbc live at the nasdaq market site in times square. i'm andrew ross sorkin along with becky quick and joe kernen. dow is opening up 241 points higher if we were to open right now. s&p 500 would open 14 points higher and nasdaq opening 42 points higher. got some headlines for you as well making news this hour

shares of general electric this morning taking a $6.2 billion charge on a comprehensive review of its legacy reinsurance business contributions of 15 billion will be made over the next seven years. funded by ge capital here's the real news ge capital will suspend the dividend that it pace to the parent company for the foreseeable future bitco bitcoin has dropped as much as 14% touching a four-week low follows a declaration by south korea's finance minister that they're banning all of that cryptocurrency in that country citigroup set to report its quarterly earnings set to announce $1.19 per share. we'll have the numbers as soon as they are out.

two stocks to watch, dow component, unitedhealth. 8 cents above estimates. the company raised its full year forecast adjusted up another 2.5% this morning. almost six points at another all-time high. u.s. lawmakers are reportedly urging at&t to cut commercial ties with china's huawei at&t was forced to scrap plans to sell huawei phones after members of congress lobbied against that idea. one year after president trump took office we are looking at the issues the president's campaign promised and what's been done. kayla tausche joins us with a look at trade and what's been happening. >> reporter: good morning, becky. president trump's vow to rip up

trade deals touched a nerve. they have proven harder in practice than in theory to implement. on day three in office he withdrew from the trans-pacific partnership. that deal had already been rejected in congress no such talks are in progress. an effort with japan last fall led to japan urging the u.s. to rejoin t.p.p now it's the future of the north american deal, nafta, that is unclear. trump on the campaign trail left little gray area about his views on it. >> i have very serious concerns about nafta. nafta's been a catastrophe for our country. if i'm unable to make a fair deal for the united states, meaning a fair deal for our workers and our companies, we will terminate nafta personally, i don't think we can make a deal because we have been so badly taken advantage of. they have made such bad deals, both countries, but in particular mexico that i don't think we can't make a deal if we can't make a deal, it will

be term nated. it's not the easiest negotiation. his views echoing those on the campaign trail he most recently told "the wall street journal" saying that he prefers to negotiate it. i'm leaving it a little flexible, because they, mexico, have an election coming up so i understand a lot of things are hard to negotiate prior to an election. the single source of the president's ire continues to be trade deficits imports continue to grow faster than exports and that caused the goods deficit to widen by about 8% frequent targets of the white house, mexico, china, japan, all of the u.s. deficits with those companies are up now the trump administration is currently eyeing some policies that could chip away at that for instance, a long-term framework forex porting natural gas and tariffs on steel and aluminum we'll see whether those come to bear and whether those have a meaningful and long-term effect on the deficit guys, back to you. >> all right kayla tausche, i thank you for

that report. our guest host this morning, sam zell, equity group's investment. >> thank you >> i want to start like this market's up again today another 240 points, cranking, i mean, for over a year. starting this year out very strongly you all along talked about the power of deregulation for the past year, and it made sense to you that animal spirits were increasing now we've got the tax bill the market seems to be at least foreshadowing that the economy really can grow quicker than it has for the past eight years maybe there's different things that make a stock market move, but at this point do you think the economy can grow at 3% for a sustained basis based on the tax law and deregulation >> i think that the opportunity for the country to grow at 3% is

real i think the current situation seems like irrational exuberance, but we've had eight years of substantially below trend growth, and i think one of the arguments, and i don't know the answer, but i think one of the arguments is that if you have deferred maybe 1% of growth over the last eight years through over regulation, et cetera, you start uncapping the bottles growth may, in fact, dispute the cycle and, you know, whereas right now nine years cycle is a very long cycle maybe if eight of it is at 2% growth, the cycle is longer than we're used to because we don't have any experience. >> that's an interesting viewpoint. if you didn't do the 3 when you had the chance to do it, it

necessarily seems like it's building up and you get it down the road you're talking about a reversion in the mean where you need a couple of positive years just to offset all the negative years. >> i mean, i don't know whether that's accurate, but it's an interesting argument and we're dealing with something we don't know about. we've never had eight years of 2% growth. >> right >> so we've, in effect, had a period of time where growth has been impeded by regulation, by over involvement of government in business, by an anti-business white house, and that's all changed. >> sam, you were -- the stock market looked over bought to you at much lower levels because it was mostly fed induced i think there's some truth to that, but maybe the fed at this point has happened off the baton to earnings and the underlying

economy. so 5, 6,000 points ago maybe you're at the same level that you're thinking it's over bought than you were there. maybe it's not over bought because a lot of stars have aligned to push stock prices higher or do you think it's just gotten even that much more irrationally exuberant >> well, i think that if you look at the growth that we've had in the stock market in the last year and you eliminate the fang stocks, the growth is terrific the average company is not doing that great. >> boeing is not a fang stock. >> well, it's not an average company by any means it's an oligopoly. >> right >> but i think that generally speaking, you know, when you get into the russell 2000 -- >> right. >> -- and mixed stocks, they're nowhere near as frothy as what's going on. >> although the russell 2000

keeps hitting new record highs. >> yes. >> but from lower -- >> but from a much lower base. >> what do you -- >> go ahead. >> i was going to say, what do you do with your money as a result of this >> primarily keeping it in cash. i mean, it's very frustrating as someone who's spent his whole life taking risks, making investments, betting on judgments. all of a sudden there's relatively few to bet on, and so the question is, what do you do in a very low inflationary environment like this? the burden of carrying cash is nothing like this when rates were 8 or 10%. >> but you -- as far as interest rates go, you think that maybe they -- that might be part of the problem for this sort of -- like not everything adds up in this economy now still i think in your view

partly a manifestation of staying low for too long, right? >> staying low for too long as a result of the fact that we have flooded the world with money. >> right >> so whether it be draghi in europe or quantitative easing, you know, every other time we didn't call it quantitative easing, we called it debasing the currency it resulted in the dollar going down and creating inflation. we just did it and it didn't happen. >> right. >> weill it happen? i don't know. >> dollar is really weak but if it's beg our neighbor, everybody is half the basis on currency i don't know can there be horrific consequences to that if inflation is staying so low? is inflation somehow -- are we not really seeing it because of technological advances or something? the internet has made things so cheap everywhere that maybe

we're not seeing inflationary prices that are there? >> i don't necessarily buy that. >> well, then we've debased the hell out of the currency why hasn't there been any inflation? >> i'm not sure i know the answer to that other than it's a little early to reach a conclusion >> it's not over until it's over >> yeah. and, you know, the fact that there was a lot of deflationary pressure that we overcame that delayed the results of it as well. >> sam, how long have you been keeping the bulk of your assets in cash? how big of a pull back would you have to see before things looked attractive to you? >> i don't know the definition of how long because how long is solely a function of opportunity. in other words, if an opportunity came along tomorrow and i liked it, i wouldn't have any reticence of going forward and making the investment. >> when you're talking about looking around and saying it's

really hard to look at deals where the prices got so expensive. would you have to say 10% pull back >> is it real estate, stocks, everything >> everything. >> too much cash >> the real estate market, although definitely weakening, definitely getting more supply is still trading at yesterday's prices, although yesterday we put something on the market, you have 20 guys waiting for it and today you have three and you don't know whether the three will close that's something very different from a year or two ago. >> i was going to say a year or two -- >> a year or two ago you had 15 guys fighting and each one, you know, saying i'll pay 10% more than the last guy. whatever very, very different environment today. >> so you have, you know, all of -- went with you on itell you're a stock guy but primarily real estate. a lot of the things you say are you talking about real estate or

are you talking about -- >> well, first of all, we're probably 40% real estate, 60% non-real estate so over the years as we've expanded in other areas we've done a lot more non-real estate than we have real estate and, of course -- >> you are best known for calling tops incredibly in real estate. >> supposedly. >> supposedly. in other words, i thought i wasn't calling the top, i thought it was logical. >> it's where are you now on most you haven't bought anything in real estate? >> no, and i keep selling stuff and i keep selling stuff because i keep looking in the rear-view mirror saying, do i want to buy it at this price when the answer keeps coming up no and you don't buy, you're selling. >> i just wonder where when the inevitable rise in rates comes and then everything costs more to service the debt, that could

turn out to be, you know, what makes you right. >> it doesn't -- it doesn't take a lot of trade risk. >> still not happening. >> in order to dissipate the existing cash flow >> right, 253 today or something. i thought we were finally going up on the ten year people are pointing to the two year but hard to figure out anything with europe at 40 basis points and germany it's like we're tethered to that. >> 40 is a big plus from minus 20. >> yeah. exactly. i don't know i don't know it just is unprecedented times i don't know what it all adds up to sam is with us for the rest of the show will you figure it out before 9:00 >> of course. >> thanks. okay we're going to have much more with sam in just a little bit throughout the morning in the meantime, take a look at futures once again this hour we are in the green and -- big time in the green. dow looking to open up 223 points higher. later, a big weekend in detroit as car makers show off their

latest vehicles and concepts, but there's a topic that's on every car executive's mind right now, nafta phil lebeau is going to bring us that story stay tuned, you're watching "squawk" right here on cnbc. cameras. the redesigned gla suv. at a price that'll make you feel like you've gotten away with something. the 2018 gla. lease the gla250 for $349 a month at your local mercedes-benz dealer. mercedes-benz. the best or nothing. the markets change... at t. rowe price... our disciplined approach remains. global markets may be uncertain...

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let's take a look at the

broader markets right now. our next guest says his new year's resolution is to think like a long-term investor. good morning >> good morning. >> you want to think long term now? you were thinking short term before >> yes, sometimes we would make part of our strategy being short term looking for dips in the market we think 2018 it's unlikely to pay off to be tactical we're focusing on our sector and global allocations with equities we're still very much over weight equities. 65% equity allocation. let me give you a surprising statistic. if you bought the s&p 500 on october 9th of 2007 when the s&p was 15.65, if you bought a whole equity portfolio that day, you've made a little bit more than 8% on a compounded basis or more than 6% you've more than doubled it. we're at a stage where bears are toning i've been bullish almost all of this cycle, but it's been a market difficult to buy. at this stage our advice is

there's two, three more years left of a healthy bull market. it's he not too late, but we see investors rushing in right now because they realized they were mistaken to be out. >> mr. zel is sitting on his hands. he has cash under his mattress is that the right decision >> mr. zell can afford to have cash under his mattress. he can afford it we're taking a credit risk in a lot of our fixed income allocations. it's not the valuations that bother us and the economy is healthy. >> not the valuations? >> not the valuations. they're supported by low interest rates which we think is sustainable. what bothers us is that the market, another statistic, this is a 50-year record now since the s&p's gone without a 5% pull back from its one-year high. >> 50 years? >> 50 years. you can check the data we had 390 trading days of not even a 5% pull back. usually have two or three of those a year. >> right. >> it's been a straight up market ever since the fourth

quarter of 2016. that's given us some pause for concern, but we were mistaken in the fourth quarter of 2017 thinking that the tax cut wouldn't get done by christmas and that cost us tactically. >> sam zell used the words irrational exuberance in the last hour. he's the second person that has said that. is there a point that that concerns you >> we don't think it's irrational the earnings will be there in 2018 the economy is healthy, pes are high we don't think the 10 year and the yield exceeds 10%. >> within your equity allocation, how much in the u.s., how much elsewhere, how much emerging markets, europe, asia, how do you break it down >> i'm half u.s., half foreign in the equity allocation. >> okay. >> that's a lot of foreign he can wet at this allocation versus what people normally do we like value within europe, ener energy, industrial, materials. tech, health care, financials in

the united states but emerging market asia, china, we still like it very much. >> you still like tech? >> we still like tech. we think it will modestly outperform we think it continues to modestly outperform for the next two or three years. >> thank you, david. >> thank you >> good to see you do you agree -- you disagree with this? >> i think we should take higher cuts and sing kocoombaya. >> i like it when we come back, people are putting down their phones and tablets and talking to their smart speaker. we have the details of the smart machines right after the break. later with valentine's day less than a month away, 1-800-flowers, chris mccann will join us to talk retail, flowers and much more. "squawk box" will be right back. at fidelity, trades are now just $4.95.

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welcome back to "squawk box", everybody. there's a new report by npr and edison research that finds that 40 million americans own a smart speaker. things like amazon echo or google home. the adoption outpaces that of smart phones and tablets

the report shows that many people are ditching their phones or televisions to try to spinned mo -- spend more time with their speakers there is a cultural shift with 30% researching an item on the smart speaker and 22% are using them to buy new products. >> that conflicts with news that activate, michael wolf, we've had him on the show, he said people are using the smart speakers -- >> the other michael wolf. >> the other michael wolf but in the most bogus way ask it about the weather, play a song. >> they say, alexa, turn up the volume >> right all of the thing you could have done very easily before. >> you just did that for those people who are at home. >> yeah. anyway coming up. nafta in the spotlight phil lebeau is going to join us after the break with that story. plus, more from our guest host, legendary investor sam zell. dow open up 232 points higher. back in a moment

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good morning welcome back to "squawk box" right here on cnbc we're live at the nasdaq market site at times square autonation is the latest company to detail benefits from the tax reform plan. the auto retailer saying it sees a one-time benefit of 45 cents per share for the fourth quarter. a benefit of 80 cents to $1.10 per share for 2018 u.s. oil production now on the verge of a record. on the verge of topping 10 million barrels per day which would break the all-time high set back in 1970 with the government forecasting that u.s. production is going to be reaching 11 million per day by late next year. blackrock's ceo is launching an effort to push corporate social responsibility. according to a letter being sent out today to ceos around the

country. they need to make a positive contribution to society, not just generate profits in order to succeed it's also how the topic, i should say, of my column today but i'm curious what sam zell thinks about that. also talking about playing more activist role as a passive and -- you know, we used to think of blackrock as a passive investor given that they can't sell their shares, right, most shareholders can show their displeasure by selling their shares he's stuck with them he's going to double the size much his sort of activist programs and planning to push boards not just on economic issues but on social issues. i didn't realize with exxon on climate change in the past year. >> well, i think that all of the passive ties, whether it be

vanguard or blackrock are extraordinarily hypocritical they talk about the fact that they're, in effect, going to do exactly what the market does and then they put out public policy statements that suggest that they're going to advocate the market doing things other than what happens every day so either they're a passive fund that follows the market or they're a leader that's setting the tone i just wonder whether america is really ready for vanguard and blackrock to control the new york stock exchange because that's what's happening. >> but blackrock is the biggest owner of a lot of shares, too, if you go down the list. >> they ought to vote the same way as the majority, not vote independently. >> that's interesting. so you think they should vote in tandem with whatever -- historically they were the rubber stamp of whatever management was doing. >> i didn't say rubber stamp for

management i said that general members of the stock holding group -- >> right. >> -- voted x and blackrock and vanguard should vote the same way as the majority voted. >> that's almost like withholding your votes. >> well, no, it's saying i am a passive investor my job is to mimic the market, not set the market. >> the flip side is larry fink would say given the size and scope of blackrock at this point and how much of the market they, dare i say, control, that they now have a fiduciary duty to be the last line of defense given that there are so few active investors in the market. >> i must have missed it i didn't know larry fink was the main god >> and i idea that -- okay in the -- if you just take it down to the absolute bare minimum, creating jobs, creating

shareholder value, providing a service to your customers in a way where it's well done is enough >> you mean that should be the -- >> most of the time companies then do come out and do a lot of good think of like langone, home depot or something think of the number of people that have become rich on the stock, number of employees that have had great jobs, hundreds of thousands, and now they do -- langone medical center, but for a virtue signaling person like larry to come along and then say you also need to do a, b, c, d, e, f, i think that's so -- that's annoying. virtue signaling and it comes mostly from -- >> this has already started. >> i know. >> with all of the pension funds. >> okay. there's companies that make cigarettes, okay and they -- they're trying to

make lots of money, and i can understand that that's not -- >> no, but what's interesting. because he's a passive investor and he's in the index, he can't sell those shares. within the context of the shares he has can he -- >> do you think in general that starting a successful company, employing people, creating shareholder value, is that -- isn't that a socially positive thing to do without having someone decide what you need >> isn't the more important question did people who went from active management to passive management pass over control of all these companies to a passive investor? >> right. >> i don't think so. >> different question then -- >> howard schultz is another one. >> i was on vacation last week, but what did you make of jana, typically a true activist, actually, going after apple on how they deal with children in

terms of what they -- like how an ipad works and saying that they basically need to do a lot better job is that -- >> i think jana has the right to say whatever it wants to say it's -- >> as an activist? >> he's an activist. >> you don't want blackrock doing that >> black rock is a passive investor their advertising says we are going to deliver you exactly the market's performance, period and no one -- i mean, today you look at any takeover of the last year and a half. every single one of them ended up being vanguard, black rock going one way or the other and the way they went is the way the deal went. >> there is one thing if you really understand the nuance of what larry is trying to say in this particular letter is that within the country right now, the mood, you may not agree with this part of the mood, but that

a company effectively loses or could lose its license to operate effectively if it doesn't try to have a social -- to be socially responsible and therefore that the value proposition is encompassed in that responsibility? >> i think everybody's definition of social responsibility -- >> exactly one man's social responsibility is another man's madness. >> my wife is head of the chicago symphony orchestra for many, many years chicago symphony orchestra was financed by corporate giving. in the last 20 years corporate giving has gone down and individual giving has gone up. what's wrong with that >> i don't care about larry fink's view on climate change, on single care payer health care i don't care about larry fink's view on the tax plan -- >> what about -- >> his letter we have to be long term, companies need to not do things. >> larry fink's view on climate

change isn't necessarily a view on climate change. >> pick something else pick something else. there's a reason we have charities and philanthropies corporations do a lot for them and, you know, there can be a bit of a crossover, i guess, but companies need to do what probably -- that's create jobs. >> how far they push us. he might look and say, it's your corporate responsibility to do $1,000 give back that we have said the question becomes when do you interfere, when do you not >> i think he's saying on climate change, for example, i think he's saying, look, if you're not dealing with it, that could create a risk to the company, therefore, it could create a risk to the value of the company, therefore, he needs to say something that's his view. you may disagree with that. >> as i said, i missed him being appointed god. >> we're going to see larry fink in davos so we can debate this topic with him then. >> all right a lot of buzz from the detroit auto show over the weekend

phil lebeau joins us from the motor city he has more on that. phil >> reporter: becky, one of the topics getting a lot of attention is the north american free trade agreement, whether or not it will be altered or ripped up by the trump administration why is it important? take a look at the number of vehicles sold in the united states now these are 2016 numbers, we're still waiting to crunch the numbers for 2017, but they're roughly in line with these. 21% of the vehicles that are bought in the united states are vehicles built in canada or in mexico that's where toyota, fiat chrysler along with general motors all have large plants cranking out vehicles. here are the ceos of fiat, chrysler and toyota would mean to the consumer. >> the consumer in the absence of a realignment of production facilities will pay a price. it's not insignificant if you are the only one manufacturing in mexico and everybody else is back in the u. 16789, you'll have to wear it,

so the consumer will not pay the price. >> the risk is cost. obviously if you're a tier 2 or tier 3 supplier and you have parts moving across boarders, the complexity of that is going to cause an increase in cost so likely the cost of vehicles go up. as costs go up, demand typically goes down. it's simple economics. that's risk to employment here in the u.s >> gm ceo mary barra made comments about nafta here this weekend. we will hear from her in about 15 minutes when she gives the financial guidance for general motors for 2018. no doubt, guys, one of the questions we'll be asking and others will be asking, what is gm's contingency plan if nafta is ripped up guys, back to you. >> all right, phil thanks coming up, the ceo of 1-800-flowers joins us he's going to talk flowers at the top of the hour, citigroup results will be released

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box. the holidays may be the peak season for most retailers, but for our next one, one of his top holidays is valentine's day. it's still around the corner i want to bring in chris mcman w n who's the president of 1-800-flowers. good morning >> good morning. thank you. >> so you have basically, what, three weeks? this is prime -- this is your christmas? >> this is it. we're ready for it. >> what percentage of your business comes over the next month, let's say >> well, actually, valentines is our third busiest. second busiest floral holiday coming out of the holiday season we did is the number one holiday. because of all the great food brands like harry and david, popcorn factory, cheryl's cookies. >> that makes sense. >> mother's day must be up there. >> mother's day is the busiest floral valentine's is the busiest

it's on a wednesday. when it's the middle of the week we get that extra benefit. >> what's a dozen roses cost you this year? >> dozen roses we have at all different prices probably starting from $39.99, maybe some specials for $29.99 if you want it delivered overnight. we have products going up to $10,000. >> $10,000 >> what do you get for $10,000 >> no, it starts. >> a lot of roses. >> it's a year of love a year of amore. it starts with 50 roses, beautiful lilies in this beautiful lindsmar diamond vase with waterford 70 piece box of chocolate and then delivered all year long twice a month. >> split up in the middle of the year. >> we'll take care of that >> what's the -- >> that's a pessimist look. >> margin on a dozen roses what does it cost you to get the roses -- to make the roses grow these roses >> all different depending on

the rose price pressures on this -- prices on roses have actually gone down in many, many years we're in business. the standard starting price for a dozen roses at valentine's day 10, 15 years ago was $79.99. >> i heard it's harder to grow an orchid? >> i'm not an orchid specialist. cut orchids will come from places like thailand and things like that. it's more the supply chain than the challenge of growing the orchid. >> i would guess that you have to prepare because most of these orders aren't going to come in more than a few days ahead of your crush season, so you have to have all of your supply prepared and ready to go does that mean you are -- because you're optimistic, planning with lots of excess supply this year >> every year the planning starts the day after the holiday working with our growers, making sure we have the right supplies. especially with it moving to a wednesday, it's a little better than last year then we urge our customers not

to wait until the last minute. try to make it easier. look like a hero have your flowers delivered to the office instead of wednesday, think about tuesday, maybe monday on the card message say, i couldn't wait until the 14th to say i love you. >> we've been talking a lot about alexa, then i know people at home, their alexas are going to go on google assistant and these other speaker services you guys are on google assistant? >> we just launched on google assistant this october. >> what's that been like >> it's great. we launched on alexa two years ago. we launched on facebook's messenger platform back in the spring of '16. we launched our own ai powered service kwauld gwen which is an acronym, gifts when you need we're changing consumer behavior. >> on as a friend, enemy, how do you -- disrupt you or help you >> amazon is a great competitor to all of us, we all know that they're a company we work with.

>> frenemy. >> they don't sell now yet >> we do there are many that sell it's a complicated you have harry and david, candy, flowers. >> we're always looking at new product lines to help our customers solve more of their gifting needs. just this past november/december we launched a new chocolate line called simply chocolate which is a collection of all of the great artisinal chocolates we can find >> the wines, you can do -- could you do a good wine, like can i send opus one. >> right now we have a winery license ourselves under the harry and david brand. it's harry and david branded lines from the oregon valley in southern oregon. >> that's it >> i wouldn't say that's it. i'd say try the harry and david

wine >> opus one? >> we'll work on that. as soon as we have it, you'll have it. >> harry and david pareears, ho many do you throw out? they're gorgeous. >> the pears are if phenomenal we grow and harvest about 14 to 16,000 tons of pears per year. about 40 to 45% of those will be graded as gift quality >> right >> then the rest we sell off either to commercial supply or into juice. >> chris, thank you for being here. >> my pleasure. when we come back, some stocks to watch ahead of the open plus, citi is ready to report numbers. at the top of the hour european markets at the top of the hour is up ftse is slightly lerow the dax is up by 1%. stick around, "squawk box" will be right back.

all right, everybody let's get back to our guest host, sam zell we have talked very vaguely about the tax changes that have come through, but real estate is in a different position than a lot of corporations when it comes to nols. these carry forwards are still things that can be used in real estate what does that mean when you start assessing real estate versus stocks with any of these changes? does it impact things? >> the nol, net operating loss carry forward changes reduce

investment of nols the level of reduction is probably 15 to 20%, which is really not so much because everybody discounts nols at 40 so the 40% discount is now a 20% discount, but it's still a discount and with tax law does reduce the value of nols going forward. >> i mean, you were somebody who has made a huge business of this going around identifying places where these nols were very valuable and nobody else had figured it out yet, so have there been changes in prices that you can go back in and say there's a place where you can put this to work where the rest of the market hasn't figured it out yet? >> we're continuously looking for those types of opportunities. more difficult in a low interest rate environment than a higher interest rate environment. >> because >> because in a low interest

rate environment the charge is much lower and, therefore, you have less to work with in terms of benefits of shield that an nol can create. >> so you're actively looking for this is it a place where you can find places to put your money i'm trying to go into this gently given that you've already said you don't see a lot of deals out there. the prices are too high. >> well, i mean, remember that an nol is just one piece of what you put into the pie to make the pie. >> right >> and the other piece is a company, and if the price of the company is very high, the fact that you have an nol doesn't necessarily lead to a positive result. >> so you're talking about prices that are more than 20% over extended? >> well, it's overall price. it's the price of a company and an nol mixed together and say

how does that relate to opportunity and cost of capital. >> i guess what i'm trying to get at is you hinted at the top of the hour -- well, you didn't hint, you said that things are way too expensive. when you're talking about way too expensive are you talking about over priced by 10%, 20%, 30%. i realize every situation is different. >> every situation is different. from my perspective, some of these fang stocks could be 50, 75% over valued and some of the russell 2000 could be undervalued. the spread today is greater than at any time i've ever seen >> why do you think that is? >> well, because it's -- you know, it's a nifty fifty kind of market you know, just like, you know, there's historic points at which, you know, nobody could criticize buying ibm, right now nobody can get criticized for

buying microsoft, netflix, et cetera, et cetera, until they can be and, you know, right now if you looked at amazon and you looked at the multiple that amazon trades at, you could make a case that says that in order to justify the multiple it trades at, amazon needs to be 25% of the u.s. economy in five years the last time i did that calculation was 1997 and the company in 1997 was cisco and it was the same -- same kind of mental masturbation where you keep growing, you know, the impossible until the impossible fits the numbers. >> amazon, it's always been the argument, which is amazing and it's gotten more -- and the old $300 price target that wasn't justified except for infinity times earnings suddenly is totally justified and it keeps catching up with the

higher and higher -- i mean, people have been right -- people have been right to defer jeff be zo -- >> right right. >> the problem is it's today. >> we've talked about the whopping numbers we never talked that apple would get to a trillion dollars. >> so is amazon. >> yeah. and i'm not -- i'm not critical of success i'm just saying that if you value the success at the rate it's currently being valued -- >> right. >> -- it brings in the question of value of everything else. >> sometimes you get killed discounting into the hereafter and other times -- >> right. >> i'm not ready to say it's not going to i don't know when you say that because maybe they aren't there next year to 25% but in ten years they might be. i mean, that's how crazy -- you know, they're -- >> well, you know, there is some serious headwinds. >> i know. especially regulatory. >> regulatory headwinds and

just, you know, how much is the rest of the world going to give up of the commerce platform to one company? >> right right. regulations in china might be tougher than here. >> you bet. >> sam, thank you. coming up we have citigroup results ready to hit the wires market reaction after the break. plus, how concerned are oil companies abouelt ectric vehicles phil lebeau joins us a big hour of "squawk" ahead [ police sirens ] cameras.

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futures surge. quarterly results from citigr p citigroup. >> shares of general electric are dropping we will tell you why. plus, our guest host, a man who does not hold back, sam zell. >> i think the current situation seems like irrational exuberance. >> his take on the markets and the economy as we approach president trump's first year in office the final hour of "squawk box" begins right now ♪ ♪ live from the most power full city in the world, new york this is "squawk box. ♪ ♪

good morning, everybody. welcome back to "squawk box" on cnbc we are live from the nasdaq marketplace in times square. the futures have been sharply higher all morning long. once again, you are talking about the dow up by triple digits not just barely by 100 here. you're talking about the dow futures up by 240 points above fair value this comes after more than 500 points gained for the dow last week and 570 points gained the week before. again, you're waking up to this situation. s&p 500 indicated up by 13 nasdaq up by just over 40. wilfred frost joins us right now with some breaking news. >> reporter: hey, becky. we just had the citi numbers out. revenues basically in line, 17255 billion in revenue 17.255 eps, 128 ahead of forecasts of 119. before we get into the details of that beat, they had a big tax writedown. we were expecting a big oneoff

write down it would be 20 billion and it's come out at 22 billion slightly bigger than expected and that's because of the full terms of the tax bill hadn't come out in early december they do say very clearly that it shouldn't adjust their capital return plans of 60 billion in aggregate shareholders over the coming couple of years it's bigger than expected but not that much bigger effective tax rate guidance for 2018 has come in at 25%. wells fargo and jpmorgan was 19%. we were expecting this to be higher because we've got more international earnings 25% will be their tax rate this year versus 19% for jpmorgan and wells fargo. back to the eps beat, trading down 19% jpmorgan down 17%. that is broadly in line with citi's own guidance. investment banking is strong up 10% mid to high single digits. cards business showing 1% growth this is an important part of their growth showing that after a slightly disappointing loss.

expense management is a big standout here. efficiency ratio is 58% for both the quarter and the full year. some had expected that to tick up to 59%. you want a lower number there in terms of expenses relative to revenue. we're up a percent before the numbers hit. we're now 1.8% these numbers going down well. guys. >> thank you for that. appreciate it. we'll see you in a little bit. in the meantime, want to get over to phil lebeau in detroit he has breaking news on gm this morning. phil. >> reporter: andrew, gm shares moving higher as the company is giving guidance not only for the end of 2017 but 2018 and 2019. for 2017 the company says it expected or has ended the year in a strong fashion so that the earnings when they released them later this month will be on the upper end of the previous range of $6 to $6.50 that would indicate the earnings will come in above the current estimate of $6.30 a share. as for 2018, gm expects them to

be roughly in line, earnings to be roughly in line with 2017 and right now the sense is five cents a share. in 2019 they will be even stronger than 2018 though they're not giving any numbers at this point. there will be a $7 billion non-cash charge due to the changes for general motors taken in the fourth quarter. that is a non-cash charge that will not impact earnings per share. again, gm's guidance for 2018 coming in roughly in line with where they finished 2017, which is above consensus guys, back to you. >> all right phil lebeau, thanks. let's get back to citigroup earnings a beat on the top and bottom line joining us on the news line, marty mosby, director of bank and equity strategies at lining sparks look at the net on per rating loss carry forwards. in the past, marty, it actually

got political. normally you need to go bankrupt to get that much to carry forward every year so they got the best of both worlds they got bailed out and keep all the losses that was crazy now it's coming home to roost. $22 billion. that's a lot, isn't it, or not >> oh, it is and it does reflect the losses that they incurred through the financial crisis in the last recession. so that is now writing that off. what it means for citi is it does reduce the tangible book value per share. that's what matters right now because they really have to begin to improve possibility while they beat on the estimates, they really haven't improved theirprofitability over the last year. >> i see it at 78. i still see $7.80. am i wrong to see it at $7.80? isn't that where it is >> $7.80 in there for? >> share price because of the reverse split.

used to beibe a $50 stock then it went to 5, now it's at 7. it has a long way to get to the pre-financial crisis level for shareholders >> it does that's been, again, the permanent delusion that those banks that were in the businesses that they had to divest, derisk themselves significantly. they've gotten rid of a lot of their earnings power that's a part of having them move forward is recreating the base now that you've re-created the base, having now to push forward and begin to show possibilities. being able to get to returns above your cost of equity is the biggest thing for citigroup. and, you know, we don't think they can do that until you get really into 2019. >> really? and the job of corbett stone, those people give him accolades, don't they it was a tough hand to be dealt. >> it was. he had a lot of, like i said, de-riski de-risking, which is cleaning up

the back book and building the front book they've been doing that. they've been starting to -- you know, they can show some momentum once we get capital markets and some revenues higher that's a big piece of it right now they've been improving some of their core businesses but capital markets has been a pressure on their overall earnings right now. >> so do you actually have to rate the stock at vining sparks? >> well, yeah, we do we do have a market perform. >> yeah? >> so it would be in the bottom third of our ratings right now because, again, we think that, you know, when they were at a discounted tangible book value we didn't see the risk that's when we were recommending the stock. now that they've gotten ahead of their possibility, we think there's a timing process where they have to prove profitability. >> do you have a price target? >> we do we think they have about 5 to 6% up side from where they're at right now. >> all right thanks, marty. >> nice talking to you. >> all right

see ya later thanks also have some other news that we want to bring you real quick on qualcomm because the nxp/qualcomm fight getting a little bit interesting ramius is planning to reject qualcomm's offer for nxp that's one of the activist shareholders in this big debate over what's going to happen to qualcomm then there's the broadcom bid over qualcomm. we'll be watching this in the qualcomm/nxp takeover battle it's really a question whether the deal is going to happen, but new questions emerging and we're going to keep looking for perhaps qualcomm's response. >> we'll keep an eye on that in the meantime, here's what else is making headlines this morning. check out shares of general electric the company taking a $6.2 billion charge following a comprehensive review of its legacy reinsurance business.

a contribution of about $15 billion will be made by ge capital over the next seven years in order to fund all of those contributions. ge capital is going to be eliminating its dif dend thvidet pays to the future analysts had known this reassessment was taking place. it was a nine-month reassessment the number they were looking for at the north end of that was something like $10 billion in terms of that funding that's going to now be $15 billion and that's probably why you see the shares down but just over 4% this morning trading just under $18 at $17.99. shares of merck up over keytruda up by 5% unit unitedhealth, another dow component, beating the top and bottom line. citing benefits from the new tax will you th -- law. when we come back we'll get

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welcome back to "squawk box" this morning check out the price of bitcoin this morning under some pressure again as fears grow about a regulatory crackdown a south korean news website reporting that the country's finance minister is coming up with a set of measures to clamp down on the, quote, irrational crypto currency investment craze. we're living around 12,000 on bitcoin this morning also making headlines, wall street journal reporting u.s. counterintelligence officials warned jared kushner about his friendship with wendi deng

mourdock officials had kurns that mourdock was lobbying for high profile $100 million construction project funded by the chinese government in washington, d.c. it was deemed a national security risk because it included the 7 foot tall white tower they say could be used for surveillance wendi married rupert mourdock in 1999 they divorced in 2013 and have children together. in the meantime, we want to get back to our guest host, sam zell, equity group investment chairman we just mentioned bitcoin coming back after the break we haven't talked bitcoin with you. >> good. >> good. >> you say good. >> that's what i said. >> what is your take on all of this in. >> well, i think the blockchain technology may have some interesting future obligations, but i think the identification and attempt to replace currency with a crypto currency i think

is not -- not likely to be very successful. >> if we're having this conversation in five years will we be talking about bitcoin? do you think this goes to zero or there's more to it than that? >> i think we'll be talking about blockchain technology -- >> right >> -- and its relevance. i think the bitcoin part of it will be less relevant. >> will there be a crypto currency at all? >> i'm not sophisticated enough to know the answer i'm not accepting any crypto currencies >> fair enough wanted to talk to you about a different topic, which is investing in the middle east the reason i wanted to ask you about that is you have invested in the middle east we were having conversation in the 6:00, 7:00 hour. >> 6:00. >> what's going on in saudi arabia, whether the prince is going to get out of the ritz carlton jail and whether what that was going to cost him have you made any investments in the middle east and would you?

>> we haven't made any new investments in the middle east i think it's too broad a question to ask that way >> okay. >> i think there's always specific situations that are active enough to generate enthusiasm. >> okay. i'll ask in a more narrow way. would you invest in saudi arabia >> i think that's a challenge. i don't know enough about it to answer the question. >> how about israel? you've invested in israel before >> i have and i probably would again. you know, it's -- it's a very, very, very competitive market. it is a market with reasonable degree of rule of law and that's a positive >> let's talk about international markets. are there any that you think they look like they are more reasonably priced than the united states? >> oh, yeah. i think latin america is much more attractive. i think mexico is very attractive i think brazil is attractive

i think argentina is attractive relatively speaking of the, quote, undeveloped worlds. they're far enough along in terms of creating the capital structures to be able to both create the investment and monetize it. there are a lot of places where you can create the investment, but it's like the roach motel. once you're in, you can't get out. so we start in everything we do when we go overseas, we start with the question of how do we get out. and how difficult is it to get out? and then take it from there. >> and would you be looking at real estate in those markets or is that different? what are you thinking about? >> generally speaking it's been real estate, although we've expanded the definition of real estate to include cell towers and other kinds of fixed assets.

we've previously been involved in retail outside of the united states in the emerging markets very successfully, and a number of other businesses. >> by the way, talking about retail outside of the united states given that retail has been crushed in the u.s. by ecommerce -- >> yeah. >> -- how far ahead or behind do you think the u.s. is relative to when you go down to latin america, obviously in many of those countries ecommerce is nowhere. how do you play that >> i'll give you an example. we own, with partners in mexico, a chain of shopping centers. 85% of the traffic in the shopping centers is cash. >> really? >> cash. i mean, that creates a completely different set of circumstances than what we have in the united states where 85 or 90% of it is credit cards. and that creates a very different environment. so i think every one of them has

to be analyzed correctly there's cultural issues. i mean, we're -- as a society, believe it or not, we're much more trusting. we're much more willing to buy based on a picture on the internet that's not the case in a lot of other places. >> one of the things you must be evaluating though when you're making investments like that are -- what about trade deals? if nafta were to get ripped up, what would that mean for the economy in mexico? how do you gauge that? >> much less than all of the pundants suggest. >> because >> because historically and particularly since nafta mexico's entire orientation has been sell it to the u.s. >> right >> that's the easiest way to do it so they didn't build international markets, but since the election of president trump and since the discussions about nafta, there have been definitive efforts on the

mexicans and discovery that they can sell their products other places. >> china and other things? >> china or other places in the world. >> well, was this a mistake? if we were talking about ripping up nafta, should we just have done it without giving them a year's plus notice we had more power a year ago than we do today. >> number one, i don't think we should rip up nafta. i think nafta is beneficial. i think it's very important to understand that nafta was created 50% as a trade deal and 50% as their foreign policy, but since we don't, quote, put a cost on foreign policy, we ignore the foreign policy cost and charge it all to trade, but the reality is nafta was stopping illegal immigration guess what, it worked. it stopped it. nafta was from a political point of view making mexico stronger giving us a much stronger border

and one we had to be less concerned with i think that's happened. that's all positive. so i think there are a lot of elements of nafta that are positive could it be tweaked? could it be, quote, better for the u.s. yes. is it possible to do that without ripping it up? yes. >> do you think that this is just a negotiating tactic, what we've heard to this point, of the u.s. saying we want x, y, z, if we don't get it we are going to rip it up >> i'm he not a politician, thank god. >> you are a negotiator. >> yes i guess my answer is as someone looking at the benefits of nafta to everybody, it seems kamikaze that any one of the three countries would rip it up. >> okay. >> so i think it's beneficial to all three. i think that there's a lot of screaming and yelling going on,

to be expected, but in the end i think they'll make some modest changes that everybody will be able to claim victory and we'll go on because it's a positive thing for the three countries. >> sticking around for the rest of the hour. >> coming up, new jersey has a new law on drinking and droning. not what i do on the show, but that type of droning ay will explain. st tuned you're watching "squawk box" on cnbc

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that news coming just minutes after ramius came out and said it's going to vote against qualcomm's take over of nxp. it's a three-way potential takeover deal. several in the world's top oil company is not concerned with the threat of electric vehicles phil lebeau spoke with saudi aramco's vehicle

independent forecasters believe it will be the majority tomorrow napt power source for vehicles if we want to do something about reducing emissions, we have to improve the efficiency of the internal combustion engine >> reporter: how high can we get in terms of miles per gallon if we're at 20 how high can we get? >> they're trying to get 50 to 55 miles per gallon in the next ten years. >> reporter: 50 to 55 miles per gallon >> 50 to 55 miles per gallon. >> reporter: that's not the small eco box, across the fleet? >> across the fleet. these are tough challenges if you look at all of the cafe standards, they're all targeting that really,really tough target we think by looking at the technologies, radical technologies can be applied and they can actually get us there. when we come back, grading the economy as we approach a big milestone for president trump.

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good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square. check out the futures this morning. up triple digits and how in fact, a couple of triple digits 232. so two one sixteens. goldman sachs is making a move on proctor and gaer & gamble all-time high is 94, 95 1/2. goldman had been at a sell and they are upping their rating to a neutral. pressure on earnings has abated. gold man continues to have returns. that obviously if that were the dow we wouldn't be talking about how great everything is because

it's sort of flat for the last year or so so not necessarily a bad call from goldman, and maybe it is significant that they now see some of those pressures alleviated -- being alleviated walmart is reportedly planning to cut 1,000 jobs. according to t"the wall street journal" it would come at the corporate headquarters hershey is -- this is the opposite from the p&g move pointing to increasing competitive pressures by hershey's chocolate business if you're flying a drone in new jersey, there's a new restriction that you should know about. on governor christi's last day in office, you can't fly a drone with a blood alcohol level of .8% no more drinking and droning it bars flying a drone near prison or in pursuit of

wildlife >> what, like trying to shoot the wildlife >> i don't -- >> like armed thing or just trying to videotape it >> i think you could be videotaping it but you could hurt a beautiful -- >> gotcha. accidentally >> .08 you're not driving that sounds a little -- >> yeah, but you could run into somebody with one of these things and they can cause damage they've fallen on people in marathons and banged them up. >> okay. we are approaching president trump's first full year in office steve leaiesman joins us. >> president trump looks to have gotten his 3% growth the question is how much he's responsible for it and whether it can continue. gdp averaged exactly 3% since the second quarter of 2017 and we assumed in this that the fourth quarter comes in the projected 3% which is a rapid update that's an extra 1% of growth compared to the prior four quarters most of the extra growth comes from investment with less growth in structures and housing but a

lot more in equipment. one force could be increased business confidence from the president's policies, expected tax cuts and actual deregulation higher stock prices may also be generating a wealth effect the president has benefitted from higher oil prices and a part of the equipment spending there looks to be tied to energy growth has also been helped by federal spending especially defense. big boost in inventories and trade. part of the trade is because of the weaker dollar and better growth overseas. job growth strong under president trump. up 1.9 million since february. a bit less than the comparable 11 months of the obama administration employment rate is punch to 4.1% to 4.8 when he took office manufacturing jobs have been stronger under president trump up 184,000 but trade jobs were much weaker, a sign of change in the retail space overall the first year of the trump economy looks to have benefitted from positive reaction to expected and actual policies

with a little help from outside forces beyond the president's control. true test comes this kind of growth can continue now that some of his policies are actually coming into effect. >> so you haven't been drinking at all today, right? >> or driving a drone. >> no, no, i'm saying if you haven't been drinking we can't arrest you for drinking and droning, the report. >> drinking and reporting. >> i already used it on myself >> yeah, i already said that -- >> not what he does. >> you know, they do use it to look for schools of fish so i wonder if that would violate the new jersey policy. >> that would be flying animals. >> i don't know. >> that's the problem with these laws, they blanket regulations i'm not sure about this. >> that's cheating >> the commercial tuna fisher men. >> that's like putting jelly donuts in a barrel. >> droning. >> i was droning on and on. >> now -- >> steve, stay right here.

>> took me a while, but i get there. >> we're going to talk more about the economy with sam zell. you heard what steve laid out. a big part of what had been missing was capital spending that is coming back from corporations what do you think that's a result of? >> confidence. predictability you've got from an administration that said you didn't build it to an administration that says how can i help you build it? and that translates into the positive numbers you've just laid out wasn't so long ago, i think it was less than -- it was a year ago when shows like this made fun of trump who kept predicting 3% growth all over the place you know, we haven't had 3% -- we haven't had anything over 2% in ten years, now this guy comes along and says he's going to make 3% growth. >> i think he's also said 4 and

5% growth. >> well, it's early. >> yeah. >> we may see that, too. >> obama had stretches of either an average of 3% growth or a couple quarters of 3% growth so i don't think it's not been seen in the recovery period here. the question is the average growth and what i did right there was look at the last three quarters assuming fourth quarter and compared it to the prior four. >> i don't think there have been three-quarters. >> not three quarters of three but three quarters averaging 3% in 2015. >> okay. >> i agree i think some of it is a step up and some of it is forces beyond his control. higher energy prices, weaker dollar i'm not sure the president engineers that you're right in the sense that somehow the president's being in office has given a go ahead to business perhaps that investment decisions at the margin where we weren't sure if we were going to do this. well, now i think we're going to do it. >> even the critics of the tax law say it's front end loaded. >> that's right.

>> maybe more to come this quarter and next quarter better than 3 >> i'm fascinated by how the tax cuts will work in part by you'll get some in wages, some in capital spending. >> how about bonuses. >> bonuses i think that's part of it. but i also think you're going to get people buying back stocks and so what you have is you have this double whammy here of better -- more stock buy backs into a rising earnings environment and that could propel essentially a pe ratio to a higher level >> if -- just thinking just anecdotally about what we've seen, the rap was it was going to be all buybacks i haven't seen a lot of companies since then come out and announce big buybacks. but i have seen a lot of companies come out and announce the other thing. at this point you have to say anecdotally -- >> there's a list someplace, joe. you had high stock buybacks to begin with you had a bunch of companies doing it. >> maybe they're acting alone.

>> i don't think it's a bad use of your money. if you think -- >> no, or raising dividends. >> what i would like to see is fewer bonuses but wage increases. are you doing anything like that, sam, with your extra money? >> not yet >> why what are you doing with it >> well, generally speaking, we're investing it i think that our ratio of debt to equity in our companies is appropriate. we're really careful not to get too excessive and i think from a confidence point of view i think we're much more confident about the economy generally, but we're still very late in the cycle. >> what do you make, by the way, of all of these companies announcing they're going to have these one-time bonuses >> a little gimmicky a little, you know, i want you to have a goody. i think you're right, steve,

history says one-time anything has very little impact didn't george bush have one-time tax resnunds. >> repatriation that they did at one point, the american jobs -- >> but it didn't -- didn't do anything there's nothing -- >> because it was temporary. >> this is -- this is right in line with our discussion about confidence if you raise my salary, then i am confident my income is going to be x. if you give me a bonus, i like the bonus but i don't start the next pay period assuming i'm going to get another bonus and, therefore, i'm less confident than i would be if you had raised my salary and i think that's -- you know -- and i think you could take that analogy and apply it across the board. >> a lot of them have done both, raised to 15, some of them, without government -- i don't

know what's going to happen in seattle when you just grab the city and make people do it when it's done organically like this, others have gone -- walmart went up to -- >> to 11 bucks. >> yeah. that's for a lot of people. >> they didn't do it through a bonus, they raised salaries. >> right and it's not over yet. we'll see what happens >> the first reporting period that we're in right now. >> one thing we want to follow is you have had an increase in productivity up a percentage point. it's hard to attribute that to the president in that productivity, the things that create productivity are put in train ahead of time and that should come along with the ability of business to raise wages by at least some part of that 1% increase so we'll see if that continues do workers continue to get their share of the productivity gains? which has been something that's been a huge disconnect in the expansion since the recession. >> the expansion since the recession has had a very minimal amount of productivity gains.

>> true. >> we're just starting to see some productivity gains so the question of, you know, maybe the fact that wages haven't gone up is a reflection of the fact that we've had no productivity gains. >> yeah. >> and maybe you can't have wage increases without productivity unless you're going to create a republic. >> i think if you're -- i think if you're hunting deer or bear, that's totally cheating. there's a whole herd normally you're sneaking around in camouflage with a bow and arrow. you send a drone up. >> there they are. >> that's totally cheating. >> a guy who baited the bear traps with donuts. >> that's what i said. >> for five days. >> if you put a barrel with a bunch of jelly donuts in it. >> he would go down to boston,

buy the old donuts. >> it wasn't yogi. >> bait them for four days, pop the bear on the fifth day. >> i'm still thinking -- >> when we come back, gm ceo mary barra speaking out. live report from detroit. facebook says it will no longer prioritize news for users. that could be an opportunity for some new players, like zig whose app has a few big-name investors. the co-founder will join us on set right after the break. we've been preparing for this day.

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let's get to phil lebeau in detroit with comments from gm ceo mary barra. phil >> reporter: and, joe, gm has just given its guidance for 2018, premarket. shares of general motors moving higher here's the reason why. 2018 will be roughly in line with 2017 which could be a record year in terms of profits. they're going to make a $1 billion investment in autonomous drive vehicles in 2018 and trucks will be the area that they're going to be expanding their portfolio the most for in the next year. they believe that will be driving profitability not only in '18 but even greater profitability in 2019. then with regard to what happens with the new tax reform law and whether or not general motors will follow what other companies have done and award its employees some type of a bonus or some kind of benefit because of the tax reform law, here's what mary barra had to say

>> we think that system works. it keeps goal alignment and so that's -- that's how the benefits as they flow through the company will flow through into profit sharing and into the overall performance. >> bottom line is this general motors may do something because of this tax reform law, but if it does it will be through the profit sharing agreements they will award those in the first half of the year so there may be something down the road, but nothing special in terms of a one-time bonus they're seeing from other companies. guys, back to you. >> thank you for that, phil. meantime, media curating app zig is going live. high profile investors include former vanity fair editor, carter adam classner is here and joshua is co-founder of zig you sold him a business at some point? >> i did, long ago. >> back in the day.

>> it was too small for sam to remember you own the company allied reiser communications and you bought a company i started in college called rise tech in 2000. >> this guy started another company called sleepwater -- >> dreamwater. >> dreamwater. maybe i'm sleepy because of it, but i occasionally -- it's like a melatonin mixed with tryptophan. >> yeah. >> jab like that >> it comes in a little bottle. >> little bottle 40,000 stores. walgreens is a big couple. >> today you have a new company called zig. >> yes. >> this is really a new way to read the news. we've been talking about this before the break in the context of facebook changing its news feed this is basically a news feed through images. >> yeah. i mean, it's a mobile media technology platform focused on pop culture, and we feel that it's fundamentally changing the publisher model and altering how people are -- >> explain how does it work >> so what zig does when you

first download it is it allows you to opt in, to look at your social media accounts. if we look at your social media accounts very quickly, who do you like, who do you follow, who do you care, who do you share? we go out to all of the pieces of content that are published live and real time, and we grab the bits and pieces that we think you will care the most about. it's not links to things, it's actually after the click it's what you see after the click. it's the content it pulls it forward. you can consume it really quickly. it's pretty exciting. >> so, of course, invariably one of the questions about social media and news is whether we are only seeing stuff we like, meaning are we only seeing our own opinion? >> sure. >> are we reinforcing our own cocoon like world. if we were a hard news product, that would be a bigger question. we're really in the pop culture space. sort of a broad culture. if you do or do not like taylor swift, probably not an echo chamber that anybody really cares about, it doesn't really affect our product in the way

that it would affect if you were reading deep politics, that sort of thing. >> but i was reading "the new york times" article about what you guys are doing and brayden carter is saying people care as much about kellyanne conway these days as they do about taylor swift. >> they do, so we have a light news product when we say pop culture, we think of it in a very broad sense. brayden helped us that in 2018 politics is pop culture. so we're the place to read light news of the day. we're not the place to read "the wall street journal" on the trump tax policy but we're the place to read a little light part of it >> entry point. >> the idea that i will live on this app throughout the day and go back to it like an instagram or will it be sort of a quick feed in the morning, quick feed at night what's the use case? >> it is i mean, the instagram model is kind of what we're going for you get into the instagram and you stay for long periods of time then you go back later in the day, then you stay so it's actually the entire idea is not to send you to other places like most places that aggregate

content are trying to send you away from their place. we keep it all there. >> how do you do that? you're effectively aggregating other people's news, right >> we are. we have an app modd model basedn consumption. we have met with excited of our product the volume that you can consume in zig is so much higher than looking around the website and finding something you want it is all there. >> how much of it though is dependant on people commenting or liking or sharing themselves? >> yeah, you know, something that actually we should mention is there is a feature called zi zig-react, it allows people to go through the platform and make reactions and share it across the platform >> thank you, guys i am going to download it. >> when we return, jim cramer will join us live from the new

york stock exchange. we'll be right back. what are the ingredients of a life well lived? is it the places you go?

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. welcome back, lets get to the new york stocks exchange, jim, this great mark is

notwithstanding. you know matt ryan is a great quarterback and that was pretty amazing. the defense is real. i think just having a game between the eagles and the falcons is cool because they're both really cool birds, right? >> thank you, thank you, in a sense that we beat the team after it was not so great. you know that was the hottest team in the nfl coming in. >> he's good >> they want to get back to the super bowl matt ryan. hometown guy, went to pen charter. good defense fly all over the place. they were not so bad, the vikings were the best team ever. all i can do is coach pederson that we are not done yet they don understand what it is like

>> you almost got suited up. you got three quarterbacks, you got foles, bortles and case keenum and sort of against the icon it is kind of weird. do you think any of them got what it takes to knock that guy up >> they're a great team. i am tired of hearing of the vikings because they did not show up in the second half drew brees took them apart they were in vikingville, they should not be able to take it apart. again, we are anything but over confident. that's a nonsense lie put up by the media, that's total fake news we are not done yet. >> you are sure it is okay when i ask you to talk about this it seems like i have to drag it out of you this market, 222 on a friday, 500 a week

>> we want to be sure that the dollar stays weak and bonds and interest rates go higher interest rates are a little lower and the dollar is a little bit higher we don't want that near us that's to make up for what happened on mlk day. people don't seem depressed of the ge, long-term care problems and that's good, too we are not done yet. i think people should stop feeling annoyed or anything like that >> i am excited, i am excited for you. anyway, we'll see you up next. thanks jim our final call from the market with our guest sam zell.

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. i want to give a sincere thanks for our guest this morning is sam zell. it is hard to get you to speak frankly and bluntly. you wrote a book, right? >> right, "am i being too subtle"? it is really a fun experience. >> yes, it is just right in terms of not being subtle. we need, a lot of times i just sit over here and let you talk

i did. anyway >> that's a rarity, sam. >> that's a rarity, sam. >> that says something >> thank you. >> stay warm >> join us tomorrow, right now it is time for the all evil all the time with jim cramer "squawk on the street. ♪ >> good tuesday morning, i am carl quintanna with jim cramer we watch banker earnings and autoand bitcoin. japan is at a 26 year-high the dow at 26,000 watch, future soaring stocks, their stro