you can throw. it is very unsettling as you see it coming but then it just bounces off. you are okay >> you are not mad >> which camera? >> we have four seconds. go to kyle >> i am going to this one here make sure you join us tomorrow "squawk on the street" begins right now. good wednesday morning, welcome to "squawk on the street," i am carl quintanilla and jim cramer bankers dominates today with goldman. europe is in in the red, our road map begins with wall street's wild dry after yesterday's nearly 400 points

swing. bank of america kind of mixed, goldman sachs sees a plunge in trading. the ceo blankfein may call it a challenging environment. a new hot seat of a new look at the an coventry trust risk to big tech the biggest reversal for the dow since february of 16th the blue clip saw 380 points trading range after hitting 26,000 for the first time ever s&p 500 reaching 2800 before finishing lower. jim, you said this time yesterday, you don't like big opens and mid-morning you watched the transport starts to roll >> yes, it was surprising because really it was not anything happening there is nothing happening was yesterday based on unh being good it was anything that was reasonable oil going down and trades going in the wrong direction

you have to base an opening on something other than gut and instinct it can turn against you. the market will come to you, there are people that want to sell there are people that want to sell right here. they're going to drill big and hope something underneath. they think these openings have little capital involvement i call them pa jam jamas trader. not seeing any earnings that's making me feeling confident. what is it based on? its got to be based on something. it is not like wow, things are good you cannot do that that does not work >> some work last night on dow days where you are up 1%, you lose the 1% and you close red. it happens 24 times in the cycle. a week or month or three months

later, it is forgotten >> that can happen you go back to larry fink's conference call of the ceo then he says one day we'll deaccumulate, right now we are in accumulation mode and that money trails off, you can say, i was looking at what happened over seas, asml reported great numbers, they make these gigantic bus machines. bank of america was better than mix but that can be argued back and forth and goldman's. i want to hear something about something before you come in and buy it >> something about something >> i mean what this market is like it is a show for nothing and that's what we are looking

at i am not green lighting this opening unless i got something to base it on. >> we'll get into the next block of our show, i want to hear your thoughts yesterday, you and i were not able to talk about we got bank earnings this morning which we should get to as well and one more detail. >> roll it down. boa, 47 cents. they do book a $2.9 billion charge from the new tax law. goldman beats this environment in the release, he says "with the global economy poised to accelerate, new u.s. u.s. tax legislation providing tail winds. >> suboptimal number investment banking is a little

better you want to hang your hat on something. >> seven points, not bad and under writing and advisory, they continue to be the powerful franchise when it comes to great advisers, it helps other businesses, too. we sometimes talk about it in of itself it is not as a large number as you may think. there is a lot of other things that can go along. >> exactly right the one thing i would point out versing bank of america verses goldman. you get 100 base points. you are going to add $3.3 billi $3.3 billion to earnings for bank of america. that's not going to happen for goldman. >> no. >> bank of america regarding victory, should it be taken up the stock has moved up a lot pay 3%, that's better than wells and j.p. morgan and not as good

as citi which is a gracious buyer. they're not going to boost dividend dramatically. i like the course of action of bank of america. i know this is not terrific to talk about but there is a tremendous amount of option of the mobile and mobile is very good because it allows you to have your people at a branch to be selling products and the actual kind of just high cost cars that's being shipped through your mobile. i am not mobile. >> i am not mobile either. social security concerns sometimes. >> if you talk to the guys in the fbi, they'll say don't do anything online. >> what do you call that, head of the fbi >> you do it all in cash at the teller >> when i talk to these guys >> yes. >> ibm doubled up great today

>> that's right. >> and barclays. that's why i get up at 3:30. >> are they kid sding >> let me just see that. >> whei am giving a bridge, you have to put all of these together >> they argued the decline in revenue may end soon >> yes, the main cycle has ended and they're doing quite well are we going to hear from watson dl >> watson can sit right next to us and do nothing. you don't go from bad to good unless you have a good incline that quarter tomorrow is going to be good

i do many cycles at works. the stock is driven down by warren buffet. i wish it was not so much ahead of the quarter >> i want to go back to goldman for a second it was lagger last year among the financials as we know. >> right >> they did buy back another 8 billion of capital of the common shareholders was returned. they decreased by 6.2% of basic shares outstanding, a record low. record low number of shares out. >> well, they keep buying. >> 89 billions basically >> and i correctly, your one day fit can come back or they can be the cheap currency trader for kr crypto or whatever they're great traders. >> something already has which is the tax rate. now, they took the hit for it.

they did have a lot more over seas earnings perhaps to recognize over the size of that. >> comp down over five years of some 15% and i mean 324,000 is still a fair amount of money >> again, everybody loves stick it it was the best record the worst quarter for fink and equi equity they obviously feel at goldman that it cannot stay this bad it cannot stay this bad. >> right >> i think they're right >> i want you to keep ongoing with the dickens' solutions. what else have you gotten for me >> i have said over and over that steven king is our dickens.

>> got it. >> this thing, we are in peace i would rather take pencils and stick them in my eye than read that >> do you like the character of lebin? that's one of the great characters >> the reports are getting longer overall >> amazon was 46 pages yesterday. >> let me go into page 47 here >> ibm tax changes -- i don't know >> on page 72, i am really looking at a lot >> teachers pension fund demanding kind of thing. >> bitcoin is now below 10-k which takes the route from the high to 50%. 50%. >> you know what i think is interesting? bank of america is sticking by, why the heck do we need to trade possibly i think they are right they have a lot of consumer business that's digital. they rather not deal with the

currency that's not a currency i am not saying that they think it is going to die i am just saying why the heck do we need this they got all the block change in the world. bank of america get that stock of 35. >> well, not now suddenly, it has changed look at what's going on with bitcoin at this moment down another 11.5% >> i recommended in a good way since 2012 >> if you bought it all there. >> you are still up. >> you told me to recommend it >> 250 >> i forget. >> with that said, you would have sold on the first uptake, would you? >> you will take your bases out. a lot of these guys are saying this is when you double down are they doubling down who put at 19,000. that person is ready and waiting for the come back. >> i know. >> they should gotalk to bank of america

>> have a look at ripple right now. >> gee, that's platinum. i don't know what you are talking about kryptonite was really amazing, i don't know if you remember that. >> didn't do good thing for super man. >> the latest on ge as it c contemplate with the break up of the company and we'll talk to alfred kelly and a lot more, three more days without a 5% correction on the s&p 500 and it will be the longest stretch ever without one for the 500. take another look at the street mark more "squawk on the street" in a more "squawk on the street" in a minute 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.

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industrial production, lets get to rick santilli in chicago. >> good morning. although we did lose 3/10 of last month it was reported two and now stands down at 1/10. 77.9 it is a steler number. last month was higher, 77.2. 77.9 is the highest since january of 2015. so basically it is a three-year

high high still, a far cry from the 260 in today's high or the 260 on a yield. carl and jim, david, back to you. >> i will take it, rick, thank you. lets look at shares of ge this morning the stock was down yesterday after we got news in the morning about it, largely of an expected lost associated with run off reinsurance and long-term care policies and a number of other things in what was the legacy insurance business all of it was dispatched in '04 and '06 in the company. what we pointed out to were the comments from the chairman john flannery, saying all options are on the table including breaking

this company up into a separate part and as i reported, that's something that advisers have been wonderirking diligently it seems more likely enough to break up some of ge. you can characterize it in different ways aviation or power is separated or one business is separated out. it is unclear at this point as you may have imagined and a lot of technical issues around in terms of figuring out what makes the most sense but, they're working on it and the status quo clearly is not an option, jim. the question is do you create value which at the -- is what flannery is focused on above all else no matter where it takes him. >> david, what do you hear from the three different divisions? >> i have not heard much

>> the liability the question is, are there more liabilities of this ge capital legacy and assets. i hear no and this is a clean house. >> we heard it how many times. david, it is an i fog everywhere there are multiple buyers for some of these divisions but it won't matter if they cannot. when we look at some of the parts and you discussed in the past, estimates are all over the place and bank of america is up there and you got callan owen a very low number. when i talk to investors, they

say listen, you are talking about a company that got consensus and you can make an argument that a third of that and signs are related, maybe you get a blended of multiples and aviation and healthcare and the question is what's power worth and if they can get to 2021 on some of the parts. the larger argument is we need focus and a management team that's focused you hear that a lot right now from companies and shrink to grow >> executions. >> focus will help and capital location will help and new talent will help and ability to retain that talent will help you cannot just throw some of the parts >> if you are using a turbin order bases of 600 that you think is going to be 600 and it comes in from 150 to 200

how many people do you need? if the projections are so high, how big is the write off and who would buy it this answer is unless you downsize this thing to a point where it can only needs to have a small number of turbin built because that business is no longer a liable business as a large entity, who do you sell it to in. >> right >> you can build this stuff. i am saying you order base is that the previous ceo use were wild high. that's a business judgment that he made. you are going to start hearing auditing >> we are out of it and it is hard to imagine not many years ago moving towards breaking itself apart >> well, the healthcare does not

blow the power now, john flannery was able to do great things with healthcare. everyone wants aerospace, power, we have to write it down from 600 to 150 i have no idea what that company will look like when they do that allison, what is it worth? >> i don't know. >> i didn't think anybody thought you were saying that >> all the twists. >> i do think david copperfield is needed and i am not talking about a book i am talking about a magician. >> we'll take another look at the market as we try to get back yesterday's big reversals. more "squawk on the street" in a

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all right, hump day comes early here we got 6-minute we can talk about trading. i want to talk about apple >> it is bugging the heck out of me it is the worst of time for apple, they downgraded to say it is not great iphone super cycle. the super cycle is alive and well and china supports it

david, i would say that long bow wants you to trade apple >> i am in the own apple camp. a lot of people felt that when it took out the top 177, it would move up and got stalled, i would warn people, look, the stocks had a big run and it is a big capstock i see no reason to doubt her work she's the best china's source. >> you have been consistent and pushing people to own it rather than trading it. >> it is a consumer product story, it sells it at 13 times, 13 times the fiscal year of 2018 13 times, proctor, colgate and you mentioned gilette. >> yeah, gilette's margins are

really high and apple's margin is really high it is sold at a higher margin >> why, i don't know >> i am gointoea ig lvet there. we'll return more with you when we get the opening bell in a few minutes now.

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. you are watching cnbc, "squawk on the street," the opening bell in about a minute, busy wednesday morning as we come off of that reversal yesterday on the biggest volume since june if you take out expirations and month end, fascinating statistic. >> yeah, that was a huge, huge day and you had the so-called reversal day, i know david does not talk about which the idea the market opens up and go down. this was a total return of volatility than fewer people expected good more goldman if he gets to volatility >> apparently they needed. >> the macro is coming pretty good today industrial production doubled

the estimate machinery order nearly four times. >> i just think the banks -- [ inaudible >> when goldman is up and bank of america is up and citi is up and j.p. morgan and wells was up at one point these are big leader groups. i like that leadership i did not like to see the transport. >> the big board this morning, avaya holding and celebrating its emergent of bankruptcy some of the second tier of corporate news this morning includes tiffany of a holiday comp of five

some say new bar for a new chief executive. >> yeah, i was surprised if the dollar get weak, they do out macy's maybe they're just slowing expectations you got a couple of comings but not yet. i mentioned tiffany to ford because ford was supposed to do well at a weaker dollar and it is not happening we are talking about 20% increase of commodity points >> others are not seeing that. ford is a little miystifmystifed >> fiat is going to do better than expected. gm is not reacting well.

i think these are nafta place, too. we need to hear more definitive oo on nafta, what are you hearing >> i am not hearing much >> what do you hear of the retaliations of the chinese? >> that got to be a central focus for investors as a real risk >> thank you >> it does appear on price report if the president's relationship of xi jinping is considered to be good. it is surprising a year into this presidency that we have not taken a more aggressive tact towards china. the chinese have seem to be well prepared for that event. >> yeah, they do i kept on thinking that this would be one more time north korea would get in the way we sacrifice a lot of trades in south korea in order to send them in north korea. now we got the chinese to do what we want for north korea and maybe we surrender our stieelers

>> there is news today north korea will send a member delegation of 550. that's huge news >> i thought that was so big i saw that and i thought why is this relegated and how are they going to do it in solemn that's like one of the most impressive things. it does say look, we are unlikely go to war while we are playing on the same team, right? >> one would think that. >> right >> kind of like if norway were to declare war on sweden >> norway got one of a greatest olympic team, too. >> plenty of oil and of a country of only 6 million people, amazing. >> it is interesting some of the stocks that we were connected with the wall street journal, against facebook, it is not really new

this is factoring into, there is no real other than the break up of standard oil. do we ever hear about what where we are going to go into concentrate. >> a great gift. on the front page story whether or not facebook and google are the new standard oil for american telephone and telegraph. his point is they maybe big but their products are essentially free they don't charge you anything despite their market power the time warner case is really hard and that has not prevented the government from taking the case. >> no, it has not. >> the government may well lose that case verses at&t and time warner in this case, it makes the point, it is really about are you preventing new entrance. >> right >> and more innovation and it is interesting, standard oil and they go back to standard oil

history and how many patents and how few it had and whether or not you are mitigating against true innovation as a result of this hammer lock that these companies have >> it is tough, ingenuity should not be punished. >> that's why he had his second head quarter in washington >> he's also is aware. >> here is two things i am hearing about facebook one is obviously zuckerberg is hoping of the facebook fatigue to solve it. the more i hear over seas, the more i realize that we are not counting on what's app as being the maybe the next big banking >> a financial service company,

really >> it could be something >> okay, you want to explain a little >> okay, countries that's not a lot of infrastructure and what's app are the two companies i keep on hearing and paypal, i am hearing this could become a modern day banking system over seas >>e interesting >> david marcus, said on january 16th, this is "from the street," they're talking on monotizization of what's app they found some way to be able to make it something more than it is. i think that maybe they can make venmo. >> that's so good. that was a good booking. >> you mentioned mr. fine for

guidance and csx, although they beat shipment volume down and they made it on pricing, is it curious to you >> i did not like the quarter but analysts running and defend insta instantly. you can say that's something to hang your hat n. internationals still using coal, they are still shipping a lot of coal and that was incredible and interesting. cars are bad >> cars are bad? >> okay, cars bad. lets talk a little bit about chips of those using devices and qualcomm got a boost in price target today from somebody, i saw the stocks are up again, we went over yesterday in decent amount of detail and qualcomm arguments to why it is vastly under valued by the $70 bit by

broadcom, coming up with that highly confident number for fiscal year non-gap 19 of 50 cents. i talked to shome shareholders, okay, you want to assume 19 is correct multiples for your business so qualcomm may say we are worth 19 times of that number but nsp is not broadcom is the key here when are we going to hear from them we'll have iss weighing in on the index fund it is important. there is got to be a bump for broadcom the e requequestion is what's te number that's dpoigoing to get

momentum and attention as you expected, you don't think there is any overlaps and representing any impediment and it is taking so long on the antitrust because these guys are incompetent. >> what? >> incompetent in getting a deal done >> hoch tan, he will get a deal done easily because he knows how to execute on tan, he will getl done easily because he knows how to execute ok tan, he will get done easily because he knows how to execute on deals. >> i made comments yesterday of hock tan and he should walk away you are right, he's got to stop this and one person says insanity these are ceos >> coming to you and saying this >> watch what i said yesterday >> why do they feel that >> because it is not going to

happen because there is so much overlap because two of his chinese companies he wants to talk to would not see him. it is obvious realization that these k-inds of proxy fights doe not work it worked for darden, that was an activist situation. this is an outright take over. >> you made the point that you think it could be a stronger board and qualcomm would make the point given the refreshment their board is under gongone but, look, broadcom, as someone i can tell you that i care more of what broadcom stock will do than qualcomm.

i am saying hock tan, you can just say qualcomm, good luck, go solve the problem with apple you are terrific, we are going to perceive without you. the most important thing is you walk away 300 bucks and some shareholders of qualcomm contacted me and said we want 300 bucks and you get it by walking away >> qualcomm's management team is in town and i talked to a few people they'll be visiting with shareholders they continue to sort of sound people out on what's going to take to acquire nsp. yesterday, they bring up this idea that well, we can use the money we are going to use on nxp which is over $30 billion and buy that stock, that's a lot of stock to buy one time. >> goldman sachs is down, once again talking about low volatility and low activity

world. that means bad and the stock was driven down by it. >> yep >> stock is now fallen >> great, jim, you mentioned the journal reporting that a deal could be announced within weeks. is that contributing some what for the mood today >> yeah, i guess so, what do you think? >> celgene is down, right? >> you got these companies, i think some people questioning whether celgene is desperate because something have not come through. i think these -- you keep on hearing remarkable things about cart tee here and saving a person with cancer or another

place here with breast cancer. you want to be involved with that celgene, franchise one day is going to be challenged juno, that i got to tell you, that conference at j.p. morgan, wow. >> a lot of news >> yes >> dallas trading above its all times of a record close. obviously not quite today's high bob's on the floor, morning. >> morning carl. >> porn thing here, 3-1, just look at the sectors here, when i talk about a broad rally, we know industrials have been doing well and healthcare is moving weaker, i think it had a great one, they're up 5% for the year and a little profit taking and not surprising there take a look at the dow components here. the important thing is ibm and nice comment from barclay and

boeing has been, 20% had been boeing general electric complete round trip we are back to 17.45 that's where it closed on december 29th. what a story chevron, oils have been holding up very well it may in fact stay up there we sold a lot of volatility yesterday and people trying to reverse long standing trade. lets remind everyone where the big guys on the streets are positioning and what they own. they are long. you want to look at here is the most crowded trades, bank of america surveyed every month on this and they are, this has been a long standing story, they are short volatility and long faang

name they were buying vicks products. there is a attempt n attempt toe that that's a story for a long time the ceo of visas, we have been talking about this, increasing the 401-k match, it is a fantastic idea you listen to his bytes, we are running it all throughout the day today. 401-k had a good year. fideli fidelity's business is up 10%. a lot of people had a lot of bonds there. they putting more in 8.5% that's up the last seven years and maybe people start saving more if you look at the actual number, it is pretty disappointing. baby boomers in particular are not saving nearly enough the average 401-k for baby

boomer is only 100,000 average baby boomer has $62,000. is that a lot? no, it is not. if you look at what you need for retirement, if fidelity had a time line on it. at $30,000, you should have $50,000 in savings if you are making $50,000, you should have eight times your savings. i assure you that most baby boomers don't have that. we'll be dealing the retirement century. that's a big one the expiration is here for the first bitcoin futures. it is today right at the close and there is a lot of writing on that and they want to see a big move right now dow is up lets get to rick santelli.

>> yesterday was a really cottonwood day you could have had a key reversal of the equity market by making an all time highs i know that's just, based on the bounce today, i think many are paying attention to the dynamic. the dollar did join in it continues to make strides against history, going back to 2008 think of the shots, two years in europe, lets put them both in the same chart from mid 2008 you can see the difference there. it does put into the center stage of the notion that traditioncentra banks around the globe is going to have to act like our central banks. our growth is growing and everybody is going to join this parade it just a matter of times how

much influence it asserts, that's one of the reasons euros have been strong pch remember basically this is around the high yield close of the year you see the chart, we always seem to come back a little bit here today to boons, the pattern is similar and differential remains darn close the dollar in vortdexindex, it d a little bit of a bounce it never seems to hold it is not just the fact that the euros are strong and it had over 50% influence of the dollar ind index, look at the dollar yen, it does not come back in the the end of 14. a the dollar does have a little bounce on the dollar yen as well carl, jim, david, back to you. >> thank you, rick santelli,

coming up, we'll hear from mr. kelly ahead of visa at 11:00 a.m. talking about consumers and markets all around the world dow had a nice pop at the opening. we'll be back in a minute.

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bitcoin below 10-k is 50% loss from the city citi is no doubt according to reuters saying it may be cut in half again fall to 5600 looks quote likely to be speedy dow jones industrial average up. we'll get with jim with trading in a minute.

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let's get to jim and trading. >> if you want to hang your hat on something that's good, take a look at as holdings one of the largest companies involving semi conductor. and capital equipment. that's moving up applied materials, one of my favorites and moving up. so demand being very strong. in the semi conductor world. so at least there is a reason

there. a reason besides just, hey, it feels good only one that feels really good is unh by the way. big reversal in the bank stops because i think goldman is saying it's the worst in times they don't seem to know the narrative. >> mr. chavez on the call. now that stock is down almost 3% after being relatively flat. >> 24% tax rate would be higher than we've heard from some of these other banks. >> he's not saying sell the stock, is he >> sell his own stock. >> but not necessarily -- maybe he's being honest. >> there you go again. you refuse to let the story override the facts that's what's so difficult about him. >> how important is it that we close higher today >> i don't think we can close higher because i think that the banks are the leaders. but, you know, maybe juno and

amsl can do it but it's important that the sellers get washed out looking for companies like unh to survive the onslaught, ibm, those matter. >> and tonight >> i have the great developed the export market for natural gas. and then plunk is what you need to figure out all the data i continue to think the data and cloud is very strong i can't believe goldman. >> bank of america isn't far behind. >> goldman can pull everything down it's sort of like it was unveiled. >> this is like literature class today. when we come bk acvisa, dow is up 101 [ click, keyboard clacking ]

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considered positive sentiment. index stood at 67 at january of last year. it hit a 18-year-old high in september following the passage of the republican tax cut plan and builders continue to see a stronger economy pushing tee manned for housing but they are coming off that euphoria and remembering the issues they continue to battle namely high and rising costs for labor and materials. the vast majority say they expect both to get even worse this year. of the sentiment indexes, current sales jumped to 79 and buyer traffic fell four points to 54 regionally sentiment is strongest in the west and weakest in northeast f you missed the numbers they are on cnbc.com. >> thanks. do y dow had a nice high at the open. bank earnings continue to come

in we will get api inventories tonight because of the shortened weak start with the bitcoin sell off-price falling by half the recent peak. we'll discuss what is scaring the crypto world. >> and on capitol hill we'll give you the latest. >> also on washington clock is ticking to pass a spending bill can congress get it done before it's too late. we'll go live to washington. late sell off from tuesday we are here with our panel guys, good to see you both. >> thank you. zbl what a weak, 10% above the 200 day. adding 1,000 dow points. industrial nice beat they are calling it an earnings led melt up. >> right. >> so is yesterday going to spook us >> no.

what we have now is normal economic expansion taking place across most parts of the world so we have been dealing with very strange circumstances in the global economy for a number of years we've gone through a series of crisis what you have now like i said a normal expansion global economy looks great good and stocks are reflecting that. >> any argument with that? >> no, not at all. in fact i think for the first time now we have fiscal policy driving economic growth. because mon tarry policy it inflated asset prices but now with the deficit that the tax reform will create you have fiscal policy driving growth and we think anywhere from 50 to 90 beats higher for the next relatively to what it would have been without the tax reform. tan that's great at the end of the day for both consumers or corporate earnings so we think we are in a good spot right now. >> brian, how much is the tail

wind from the new tax already baked in what are we seeing in terms of the reaction and financials and sell off, looks like the sell the news kind of event is that concerning to you? >> remember, we continue to see global stocks have been long-term leaders and growth stocks have done fairly well this year. so i wouldn't say this is a rally driven just on the tax cuts now there are some parts of the market that can benefit if the economy picks up and goes to a new higher sustained level of growth, that will be the more value oriented parts of the market that would ultimately be the banks. >> tax cuts will then lead to more sustained growth? >> no, i'm actually on the other side of that argument. >> it sounded like you didn't believe it. >> i was painting a story to suggest that you need to believe that this leads to higher level sustained growth, that interest rates will go up and banks out performers now you could say brian was here three months he got this wrong i'm talking about over a longer

term period. still in our mind a growth in modest growth world. investors will pay up for growth where they can find it. >> the benefits a side if you get continued modest wage pressure, maybe immodest commodity pressure, how much tax benefit is given back in second round effects? >> if you look, for example, total yield on the s&p 500 which is about 7%, and you compare it to the yield on the ten year treasury, which is 2.5%, you still have fairly decent equity. and even if you raise that yield by a few half a percent, you are still going to have decent equity which suggests it would take a long move, a very big move in treasuries to make the equity market look expensive

relative to bonds. we still think that the equities are going to look attractive for a while at these levels, both of the treasury yield and the s&p 500 total yield. >> it's hard to find i guess there is inflation out there. but capitalization today, almost at 78, right is another sign that eventually you get a bond spook maybe not "today." today. >> the irony is we hope to not see that that's good because it gives fed cover if they want to raise interest rates like they did in 2016 and flatten and the cycle cole have more room to go. if you don't get the inflation follow-through, the fed would have to back off and the good news is they would

have to the flex ain' akt to do. you get more volatility. but this cycle will continue. >> one of your picks today is walmart. are you a believer that tax reform will help the consumer, have more money in his pocket and therefore help walmart on top of a lower tax rate? >> yes in fact, we do when we looked at the entire cut, the cut that tax reform represents, about two thirds of that ends up in the pocket of consumers, a third in the pocket of corporations. so the individuals right now, they are already getting one-time bonuses and see some wage growth. so we do think all of that will benefit a company like walmart and consumer stocks in general in fact, contrary to brian, we believe value stocks, those more

exposed to the economy are in the driver seat going forward, especially given the out performance of growth over the last couple of years and the under performance of value stocks so we are favoring value over growth given the points potential we'll see in growth going forward. >> going to have a lot to talk about over the next few weeks and months brian, thanks, guys, appreciate it. >> thank you. >> bank earnings continue. digging through the numbers joins us now with all the numbers. will ford. >> yes, goldman sachs finished over all trading down 34% year-over-year this compared to down 16 or 17% for j.p. morgan and down 9% for bank of america. fixed income commodities again the stand out reason for the miss, that was down a massive

50% year-over-year cited the fact that low volatility has disproportion investor client base despite the slide trading remains the most importantpart of goldman sachs for the full year 37%. for context this compares to 56% in 2010. very strong up 34% however, despite the growth still smaller part of the pie. 23% of full year revenue now goldman sachs came in lower, but just now said it means buy backs in 2018 will be lower. also said the 2018 tax rate would be 24% and that's higher than people pektsed and a reason that shares have sold off in the last 30 minutes or so. now shares of bank of america started to sell off similar time that despite the fact that their

performance has been steady and continued to out perform recently trading was solid. ongoing steady expense management was also strong and loan growth picked up. they can expect more buy backs thanks to the tax bill but both have sold, goldman sachs down about 3% almost now. guys. >> in this buyback issue which did see to pressure goldman sachs stock price, was that expected were a number of analysts saying as a result not to expect the full buyback that they would be allowed to pursue? >> so it's been a bit of up and down over the past 24 hours. people wanted guidance they guided 5 billion. we came in less than that. 4.4. so i this i that gave people hope this morning they wouldn't

be impacted. clearly, they said on the phone the buy backs will be impacted but actually the share price sell off itself happened a little bit of the buyback comment, happened when they confirmed what the 2018 expected tax rate would be at 24%, effective tax rate, that's a little higher than people expected they thought it would below 20s. citi did come in at 25% but that was expected because they have higher amount of international earnings. >> right and to put that in perspective, goldman underlying tax rate was 28.4%. >> exactly. >> so certainly benefiting but perhaps not as much as people had anticipated. >> spot on exactly. >> thank you. >> when we come back this morning the pain is not over for bitcoin. crypto currency down more than 30% in the last week on coin base visa kelly will weigh in later this morning and get another

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sell off in bitcoin doesn't seem to be slowing down at this point. investors were spookd yesterdsp

yesterday. falling again this morning saying bitcoin could fall quickly and likely and start trading. and the first cbo contracts expire we have this and start off with on the block train beginning trading today. >> so far the simplest way to get exposure is buying crypto technologi that uses these technologies and that invest on companies amplified etf and reality shares which follows an index and passive. top holdings of the amplified city ski group, over stock, ibm, square ceo telling cnbc fast money they

see strong demand as they put them into their products. >> we think getting in early in these companies granted not as pure as we'd like, but we have taken an active approach to adjust the investment strategy and the universe of companies as the industry matures we think this is a better idea than buying maybe a privately offered security that's working on block chain or making a bet on one or two companies. we think the diversification makes sense. >> but finding these etfs may prove to be difficult. they asked the holders to take the word block chain out of their name so investors weren't misguided in thinking actually buying the block chain technology at most of these points most of the companies are not getting significant value but hope overtime they will the launch has brought fort questions the bitcoin will get approved

but exports don't seem likely. their filings due to push back from the scc bitcoin trust, and rafferty management to name a few melissa. >> thank you now bob at the boitcoin if you'e tou futures that expire. >> yeah, and it's a big day. today thefirst cbo will expire on january 26. investors will be watch to go see how smoothly the contract closes out today investors will typically roll over their contracts into the next month, but with bitcoin nothing is really certain. there have been some vague concerns because bitcoin is settled in push, it might be possible them to push around by buying andselling. maybe. but presumably if they get out

of whack with the cash, they should step in with series of smooth closes, to potential next phase options would add a whole new sphere tv trading and respect ability for bitcoin. and add to the feeling that bitcoin is not ready for prime time to get to options, however, traders would need to see several months of smooth closes in the futures contract as well as larger open interest in these contracts. that may it be an issue. often traders want large open interest because they want to hedge using futures and that may be the biggest problem for the path to bitcoin. volumes in open interest have been fairly small in both of those. one thing for sure holding the contract from the opening to the close was a losing proposition these contracts open for bidding at $20,000 on december 10th. but yesterday bitcoin as you see here trading below $10,000 that's a fall of about 50%

guys, back to you. >> thank you very much, bob. on that point, visa ceo kelly talked and joins us here with that interview morning, john. >> yeah, i got a bit amount of time with kelly and one of the things we talked about was bitcoin and volatility visa will not deal in bitcoin. only deal in fiat currency i asked him why. take a listen to what he said. >> people want a fair exchange of value when they are buying something. so if it costs $100 i want to pay $100 if i'm page in something where it's bouncing around at the level bitcoin is bouncing around and if you think about buy ahead kinds of transactions which we have many, buy an air line ticket, rent a car, reserve a hotel well in advance of using it, using bitcoin, when is it valued at? valued at the time when you do the transaction?

valued at the time you show up is it valued at the time you check out of the hotel. >> this was especially volatile weekend. you can imagine what would happen if you tried to do a hotel in bitcoin not ha method of payment visa doesn't process crypto transactions directly. later stick around for squawk ally and we'll vl more interview. he talked about quite a number of subjects including whether he doesn't care if you buy with a card or phone, he wants to be in all those transactions. >> visa does have a bit pay product. has he seen an up tick on that >> yes, they will deal with products those that issue cards using visa technology, that first translate from a crypto currency into another currency there was a problem earlier this year with one of their customers. that wasn't following the rules.

they ended up getting kicked off of visa platform it gets kind of complicated from there. >> great john. >> can't wait to hear more thanks. >> all right when we come back we'll talk about the case against big tech, should the companies be broken up. plus social media giants on capitol hill answering questions from lawmakers over extremist content. we'll get to the latest from washington d.c "squawk on the street" is coming right back

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you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity. open an account today. looking at live sheet at the senate commerce committee this morning. hearing on extremist propaganda on social media platforms. officially called terrorism in social media hashtag is big tech doing enough we will continue to monitor that hearing and bring you any headlines. i think facebook, twitter and youtube among those who are testifying hearing comes as they remain under hire

writing the anti-trust case against facebook, google and amazon, and writes in it, should they be broken up. as we said with jim the difference here is the costs they are directly charging consume ser consumer is practically nothing so the idea of harm may have to be invented. >> it's going to be something that gains more and more transparency separate matter. but these companies are becoming more and more of a focus, in general. it is hard under current anti-trust doctrine to make a case because it's hard to prove that innovation is being harmed which would seem to be the central part of any case being made as opposed to mon ip list particul monopolistic behavior, but it is

coming. >> and does drive cases lower in the case of amazon but i would think in the european union this could take light. maybe not here and the anti-trust laws. and if the data is worth something, that's something that the consumer is getting to the giants and that is a cost. >> we've gotten some comments from leader mcconnell on the congress efforts to avoid a government shutshown and now speaker ryan. >> good faith negotiations are under way and to push that a side and try to jeopardize funding in the military to me nation no sense. you never ask a question at these things do you not have one? i always look for you. all right. manu. >> mr. speaker, yesterday steve bannon and gourd both republicans and democrats alike on the house intelligence committee after the white house invoked executive privilege saying he should not answer

questions during the transition and time at the white house. is it appropriate in your view for the white house to invoke executive privilege and deny steve bannon. >> i'm not familiar with what happened yesterday but there has always been a tension on this. this goes back to every administration obama did it bush did. i don't know the specs on that. >> should bannon answer? >> i don't know the specifics on it i really don't casey? >> do you have enough republican votes to keep the government open this week and can you look at the d.r.e.a.mer in the eye and promise them you will put a stand alone bill to help them on the floor of the house >> we've been very clear we want to see a daca solution but a daca solution has to be a balanced solution. ha daca solution has to be a solution that also not just treats the symptom, which daca is, but the root cause of the problem in the first place look, i feel that it makes no

sense for democrats to try and bring us to a shutdown to try and shut off chip funding for the states running out of money, like minnesota and kentucky and other states so i think cool heads hopefully will prevail andy we haven't looked at it yet. >> do you agree with scott walker that last night's results in wisconsin were wake up call for republicans? and is it evidence that ha potential wave is many coulding in november? >> i know the district very well it's not my district in western wisconsin but typically we've held this seat and we lost the seat last night so yeah i think we should pay attention to it. >> last month leadership said you needed a few more weeks to negotiate a caps deal and daca deal are you confident that all you need this time >> look, i think the caps deal is very, very close and i think the democrats are holding out on caps deal because of these daca negotiations but i think the fact that we are in ernest in negotiating in good

faith with our four leaders on daca speaks to the fact that we want to see a solution we want to get this thing fixed. it has to be a balanced bill we will not bring ha daca bill the president doesn't support. what point would it be that we won't have signed into law by the president? so this has to be balanced this isn't a one way street. it has to be balanced and bipartisan and the president has to support this for this to occur. and the president is being completely rational until that you want to fix daca but also address the root cause so you don't have daca problem in the future i also think the caps deal is in our interest i think it should be done and can be done. but for people to hold up funding for our military over these unrelated issues and for deadlines that don't even exist this friday, that makes no sense to me. the federal government has many responsibilities but it's first for most primary responsibility is to provide for the common

defense. and when you see a situation where more men and women in our military are dying in training accidents than they are in combat, igt's a serious situatio and to block funding for military with a friday deadline over unrelated issues makes no sense to me. it's wrong leave it at that. >> do you have a feel where the president stands on these dreamers though? >> speaker ryan referring to not just the state senate seat in wisconsin democrats took, but also the efforts congress is making to put at least a short term funding bill take us into february, would extend an extension of chip. mark zuckerberg on on daca i'm optimistic this will get solved. there has been good bipartisan legislation but not the first big tech ceo to weigh in somehow. >> this had been a big issue in

tech and speaker ryan said all leaders were negotiating in good faith to have a deal on daca in terms of government funding that's pektsexpected to be done. now let's get to contest a. >> here's what's happening north and south korea said they would do a hockey team also march under one flag. president moon calls tit histori mean. and abbas criticized president trump. he said consider to jerusalem as capital was sinful, his word addressed a conference in cairo. georgia governor state of emergency for third of the state's counties, hundreds of schools are even closed or

delayed because of the storm. walmart is helping customers get rid of left over opioids by giving them packets that turn the pain kill nears a useless gel. provide those free with opioid filled at 4,700 pharmacies in the united states. that is our cnbc news update for the hour send it back to zblu thank you when we come back shares of general electric adding to yesterday's losses 20 cents away from a fresh 52-week low. we'll talk about what it means for the company. and says holiday seals rose with over all sales up by 8% full year 2018 earnings to be flat to sleetly lower. that stock is higher by 1.5% "squawk on the street" will be right back

shares of general electric larger than expected loss. saying all options are on the table including breaking up the company which could coma decision on which could come as soon as this spring. and joining us now to talk about that john, let me talk to you we talked a few weeks ago. worse than expected loss my own report inning kating it is likely they go down this break up path. does it end up creating value if they do? >> i think your sources are probably accurate, david. >> thank you. >> and the fact is it's very convenient for them to have this narrative out there at a time when the company is hemorrhaging cash for insurance and who knows what else. some of the parts says it's less

than the stock is today. so clearly separate would not unlock value they have bonds in the market. company cannot separate. it has to back stop legally those bonds. 31 billion on pension they are on the hook for. and general electric hasn't paid taxes in many many years so not that simple as bussing it up you can't create three businesses, some good, some bad, what happens to the liability. it's not practical. >> so i can make case aviation and hektd but the question is more about power and continued problems there where do you come down >> power is going to go on in terms of challenges for many years and that's based on industry dynamics including the substitution substitution of solar. you just can't, ge is desperate for cash needs cash to pay insurance and other bills. you can't just take the cash generators and separate them out

and create value how do you apportion liability you run the risk of lawsuits there is a lot of messy issues this company would have to grapple with so nice narrative, i just don't think it's practical. >> john, listening to all that, why do you still own the stock >> excuse me, brad, i apologize. brad, why do you still own the stock? >> i don't own it. >> listening to john, what are your thoughts? >> well, there are certainly challenges on the fundamental side no doubt this is not going to be easy but at the same time, they have to do something to change the narrative. and by moving around the ownership, by creating greater transparency, greater control, you definitelyhave an opportunity to at least change the perception and thereby do the stock valley stock value if you look at where they are, they are getting the bad news

out. they are made a determination we'll get the bad stuff out, get it on the table and deal with it and the value right now reflects that once you get things cleaned up and once trust comes back, is it crazy to assume people will feel better about the company? i don't think so. >> why wait for that you just said you believe the company is in the middle of telling us about all the bad stuff. so why wait that long, brad, aren't there better investments in the market? >> we don't hold the stock directly our advisers do. and many tax consequences to selling. not simply move in, move out but you are right, somebody making new investments it may make sense to look at other opportunities and wait for the bad news to be on ts table. >> john, they would make an argument those in favor of a break up in some or in total of greater focus from the individual businesses, that even if you come to some of the parts that is below the current stock

price, over time they will perform better than they have because of greater focus, because of the ability to retain and tragic different talent? because capital will be made in a better way. >> sure. i think i said last time on the show the age of the conglomerate is pretty much over. so ge defies that. so the problem is i'm sure they would want to separate out but for legal reasons they cannot. in contrast to what brad said, the fact that things are on the table, number one as the analyst ge i can't tell you this he are all on the table. >> why do you believe that >> people i'm speaking to seem so say we spent a lot of time liability with the insurance portfolio. you seem to be doubt that? >> that's one piece. they owned a sub prime mortgage company called wmc which they divested but if history is any track record they ample liability

period they keep bringing it up in disclosures. that could be another ticking time bomb under the hood other factors that go into that as well. including the mortgaging and leasing they couldn't sell f they are on the hook for insurance which they got out in 2004, 2005, what else are they on the hook for? this is going to take a long time to work through this company. having things on the table, i say they are not all on the table. we don't know. a lot of black box to this company, including why are the tax rates 0? tax reform are negative. their tax rates will rise to low to 20s i don't see moving past dollar overtime which makes the stock overvalued. >> the journal quotes a chance saying no chance they do nothing. you think there is ta chance they do nothing? >> i think a lot of things they could potentially try and do, including maybe tracking stock or car have out some aspect of

the portfolio. reality is they have been doing a lot, right they did a lot now they are going to try to do a lot to shake things up but try and sell baker hughes. history any guide may not do it in an optimal way. their happen their hand is forced i'm sure the optics of this will look like they are doing things but the fundamentals are what matter ge is huge liquid company. the fundamentals cash flow is still under tremendous pressure are going to drive things from here and we don't think the thing is going out of business. this is a real company producing real product but for 18 dpz i would be a seller today. >> brad, what do you come down in age of terms of the con glat rate yesterday reporting this as a strong pocket does raise the idea, ge breaking itself up? conglomerates are something that investors are interested in any longer do you think that's the case >> i absolutely think that's the case you look at other companies.

look lat dow dupont and hp, looking to move the structure to make it more transparent the point that john made which is everything is not on the table yet. i totally agree. but flan eery right now has wonderful opportunity to really dig down right now there is a lot of bad news out there he wants to get it all out so he can move forward so right now you are going to have more incentive to get the bad news out than you ever have. is is there more to come? yeah, quite possibly but how can they get investors to buyin the black box they can't the age of the black box is over whether it's cosmetic or accounting base, they have to provide restructuring to make that transparency to prevent the kind of problems they are having right now. and at that point kfd ns starts to come back potentially. >> what is your analysis now that the other shoe has dropped? >> official stock price is $15

some we'll refresh after they report earnings. but let's put it this way, if were not a dow 30 company, i suspect the stock could trade much lower, like ten times earnings. >> that's the dang remember too though you tamper with the struck ooh of the company, they could be out of the dow that's another leg of pressure. >> remember, 42% is retail investors. they slash the divorce end in ha dividend to give it that reality is we think the dividend is still at risk and if it gets cut again, probably no down side limit to where the shares can go in the short run. >> 10 times a buck if you are lucky. so you think ten bucks >> entirely possible i don't see what the down side limit is at this point pretty interesting. >> i would say you are overly negative to certain extent but you've been right. >> traded below 20, and here we

are all this bad news continues to stream out. >> john, thank you brad, thanks to you as well. jn and brad. thank you. >> thank you. when we come back nafta and trade. we'll sit down with carlos get a look at stocks "squawk on the street" continues after a short break.

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let's get to rick santelli with exchange. hi, rik. >> hi, rick. >> we have secretary gutierrez, thank you so much for joining me today. >> pleasure. >> you just nchd me thinformed u came back from china and i want to discuss trade i have a good friend in canada and he always says when the u.s. sneezes, canada catches pneumonia. i'm sure the same can be said

for mexico and china two way street trade we have a lot of bluster from the president, can all that turn out to be a good thing what did you see in china? >> well, in china what was most alarming is that dialogue between the two sides is almost broken down. a lot of the mechanisms, you know, joint commission on commerce hand trade and the economic dialogue, they are not taking place so communications have broke down the president will most likely, president trump will most likely announce that he's opening up a 301 review on intellectual property rights, technology transfer, either at the state of the union or before. that's going to be a big surprise for the chinese, because they believe that relations are going quite well, especially at the top. so they have all confirmed to me, all of the leaders who i met with, that they will respond

so i think over the next few weeks we have to watch china, u.s., and potentially the beginning of some trade battles. >> you know, are mr. secretary, i find it interesting, and we all as humans completely understand the dynamic, that sometimes it's just easier to stay in comfort zones, it's easier to swallow the status quo,sometimes trying to feder out small improvements can be a very large mission if this was all on your shoulders, decades of intellectual property in many ways just being reaped chinese, some of the big ventures with giant corporations seem to end up with the technology and other corporation pushed out don't you think at some point a stand has to be taken? >> yeah, i don't disagree with that and when i was in government i took many stances, especially on ipr. i think the key thing, though, is the relationship. if we are going to do this,

let's talk to them let's let them know. let's warn them. let's let them know it's coming. the frustration is they have no clue because the only communication that's taking place is between between presidp and president xi, and i am not sure they get into the details but i agree. we need to get tough, as tough as we need to get without hurting ourselves and hurting ourselves would mean going into one of these nasty trade wars that will hurt our economy everything we've got going for us now, stock market, unemployment, growth, will be impacted if we go into a trade war with china or if we lose nafta. >> i agree with what you said. there's also the perspective that just as we may feel some harm economically, so will the chinese, the mexican economy and canadian economy it is a two-way street, sometimes we forget that

listen, you're the perfect person we saw speaker ryan speak of dreamers and daca. do you think it is a state of emergency, we have a large group of people that need to understand where they stand. it is almost a national emergency, is it not >> i agree we're talking about 800,000 kids who came here, no fault of their own, they think they're american, they feel american, don't even speak their native language, and all of a sudden to boot them out of the country i think would be a big blemish on our history on our country the problem here is we had a bill on wednesday, the graham durbin bill, and the president shot it down and what's happening is the president is listening now to the extreme of the republican party. >> you know what, secretary, i agree with you but let me interrupt you a minute when it comes to other emergencies, the americans and

congress act quickly if you look at 2017, 18 million for california wildfires, 125 billion for harvey 7 billion for maria, 50 billion for irma last i looked, they're asking for 1.8 billion a year, 18 billion over ten years to bring everybody to the table and get this done. i think the democrats are being very short sighted over 1.8 billion a year, when we spent hundreds of billions in 2017 trying to fix things, mak people's lives better. what, this doesn't qualify >> i agree, rick i don't like the wall, but if what it takes to save these kids is a wall, then build it i mean, the important thing is to save 800,000 kids >> i couldn't agree more you know, secretary, there's aspects of this that make me so mad because it is very, very political. let's be honest here, not solving some of these huge

issues gets a lot of money to the party, gets people reelected. >> you're right. >> time after time after time. sometimes the solution is a negative political future asset for many of the politicians. you can finish it up, sir. >> you're right. the dreamers are the ultimate political pawn they have been used for years and years and years as well as immigrants and the problem with immigration reform is that by definition it has to be center right and center left. it takes a certain amount of moderation to come to an agreement to have give and take. as soon as you bring in the extreme of the republican party or the extreme of the democratic party. >> it gets nasty. >> you'll never get a bill so we're not going to get a daca bill, probably do a cr, punt, and hopefully do something before march >> listen, mr. secretary, awesome to speak with you. thank you for taking the time. david favor, back to you

>> okay. thanks to you both. when we come back, another look at bitcoin's deep slide you can see it there squawk on the street will be back we took legendary and made it liberating. we took safe

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welcome back dominic chu. consumer staples, best performing sector in the s & p today. shares of cam bells soup and monster beverage among the best performers monster shares hit a record high back to you guys >> thank you. when we come back, social media giants on the hill, answering questions from lawmakers over extremist content. "squawk alley" begins in a couple of minutes.

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