it's thursday, january 18, 2018. "squawk box" begins right now. ♪ live from new york where business never sleeps, this is "squawk box. good morning welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. let's look at the u.s. equity futures. the dow yesterday up by 322 points all kinds of statistics we can throw at you it wasn't just the dow it was the s&p 500 also closing at record highs and the nasdaq composite. if you're looking at yesterday's jump, the dow joining the s&p 500 for being on pace for the biggest monthly gain in march of 2006 nasdaq on track to post the best month since july of 2006

that dow ever close above 26,000 came after eight trading sessions you've seen four days this year where you have seen the dow going up 200 points or more. it only had six days like that last year. this morning futures are relatively flat. dow indicated up 2.5 points. overnight in asia, china reporting fourth quarter gdp of 6. 6. 8%, bringing the 2007 gdp to 6.9% we will get china bay book data at 6:30 a.m. eastern time, independent data collected from businesses from china. check out europe, where early trading is already underwa way the dax is up. in france, trading up by 0.10%

the treasury yield which we have been watching so closely, pushing above 2.6% for the ten-year 2.603% >> so we were at 25,000 and 1,000 points -- >> in eight trading sessions >> 1,000 on 25,000 is 4% >> think about 4%. what is every person say, sell side guy say coming on here. >> mid single digits >> 4%. so either it's more than that or there will be a lot of reversion of the mean. we did 4% already. i get a bit annoyed because -- >> it's still early january. >> but when they say that, it's the response i have to say something. >> it's generally not right but

safe because you're not off by too far. >> it's useless for people watching looking for guidance and help >> and you pointed out many times. >> who is coming on today with that a couple of them they'll be here. >> stocks to watch today verizon expecting to book nearly a $17 billion gain in its fourth quarter profit due to the new u.s. tax law the company saying it is reducing the corporate tax rate and that will slash its deferred tax liabilities. verizon says the move will add $4 to full-year earnings per share. intel seeing the problems in the patches that it issued to fix the spectre security flaw also happens in new chips causing them to bute more than normoot l

then there's this, shari redstone reportedly discussing adding new directors to cbs's board. redstone had preliminary talks with leslie moonves about recombining the companies. shari and sumner redstone failed in a merger attempt in 2016. there are questions about why we need to reconstitute that. >> got to put them back together >> but the idea of reconstituting the board -- >> you're not even questioning putting them back together after splitting them apart. >> you know what we all learned in family-run companies? the family wins. if you're the family, this is what you want, this is ultimately what will happen. >> the world has changed that much they needed scale back then -- >> back then it was to get rid of slower growth business, like billboards, cbs -- >> you're saying it wasn't a good idea?

it's complicated becky is right ed lee is coming on. i'm curious on what he thinks about this >> i'm sure we can figure out a wash nall th rational that makes sense. >> les moonves was key in restructuring that >> i would nwhy not just put hi charge of both >> let's get to kayla tausche. republicans in the house, it was with europe we all said kick the can, kick the can. now we're starting to bring it back, using it a lot again that's what congress is planning to do. they may kick the can to keep the government running, but even that may run into a road block kay k kayla tausche joins us now with more would it mean democrats voting

against the thing? >> democrats need nine votes in the senate to pass this. you need 60 votes in the senate and it's now a 51-49 over there. aides say they're working to sure up republican support for the bill it's the fourth time in four months that republicans need votes from their part toy keep t party to keep government open. this proposal would delay certain obamacare taxes for one to two years and fund children's health insurance for six years that's the gamble that the gop leadership is making they believe most democrats won't vote against children's health insurance and most republicans won't vote against delaying obamacare funding conservatives and defense hawks are frustrated that these short-term bills don't provide

more assurances for military spending senator lindsey graham said he won't vote for this plan, but if it passes, the white house says the president will sign it. >> we support the short-term cr, that's not our first choice. we would like to see clean funding bill, a two-year budget deal but we do support the short-term cr we will continue moving forward in that process. >> that partisan war of words has been heating up with each party blaming each other if the government shuts down, we will see what happens. but in the senate you need both parties on board in the house, if this doesn't end up splitting the republican party, which republican votes have been deteriorating with each one of these spending bills, you may need democratic support there as well. >> what's the deadline

>> friday at midnight. the house could vote as soon as today. >> all right we have our own issues here, kayla. it's like packing 12 suitcases to go to davos >> i do want to say, it feels like we had this conversation a month ago. >> i'm talking about me. >> you personally. >> yeah. because we have to go. sunday >> that's what makes me think the government shut downis almost a certainty we won't be here >> right but kayla, davos is relevant again. it hasn't been relevant. you know, a u.s. president hasn't been there in 18 years. >> i'm sure that president xi of china or prime minister trudeau or francois hollande -- >> america first america first. >> it was relevant when they were keynoting >> it's more relevant. >> the world economic forum themselves have said this is the most heads of state that will be there.

more than 70 plus. >> klaus is like ka-ching. he's so psyched. you know that dude, right? >> trump's presence will give the entire thing a whole -- >> it will >> new energy. >> kayla, you can stay tuned or you can -- >> for a lot of people in davos, it's like an alien invasion. >> for all of them even you, davos man. how many -- you have like a calendar for each day with things on it >> right >> how many things do you have >> it's a bad situation. it's complicated >> do you have six, seven, eight things per day >> yeah. >> they have pizza over there. they put an egg on it. i have one thing most days, that's lunch, which is after the show and then reading time. i think i will read one of walter isaacson's books. >> ben franklin you said >> okay. yeah no, this is a -- this is a 16-hour day proposition.

>> i can't avoid the stockholm -- the socialism creep. >> you won't be able to avoid it any way. >> i know. >> you won't hang out with donald >> he's coming on thursday we're trying to find together time >> you guys can read walter together >> we could. >> or take him to the pizza place. >> there's good coffee there >> all right thanks, kayla. i imagine president trump is saying thank you or at least has a smile on his face about this apple announcing its boosting its investments in the u.s. economy starting with rukti in constructing a third campus in the united states. joining us right now to break down tim cook's plans laid out yesterday, ed lee recode managing editor and cnbc contributor. good morning >> good morning. >> so this looks like great

news hard not to applaud or put it in the good category. >> big headline number >> i can tell there's some skepticism in your eye >> we are journalists, we should always be skeptical. >> what's going on >> the headline figure they put out, 350 billion over the next five years, nicebig number i read through the press release, looked at it carefully, it's unclear how much of that is new spending versus spending they already planned on. i think they said 30 billion on capitol expenditures over the next five years, they spent 15 last year and 16 billion this year so already that's eating into what they were planning todo i don't know that 30 billion is a bump up from what they were already planning there was a $1 billion innovation fund, they're bumping that up to 5 billion the third headquarters is great,

more jobs, but for technical personnel. it's not executives. not like when amazon and their second headquarters, where you will see a slew of people. >> technical personnel, it's better that they're based here than in mexico, canada, india or someplace else >> these are net-net positive things it's hard to -- >> how much of this do you think is related to the tax reform plan >> so, it was an odd press release. there's clear signaling to d.c., hey, we're doing our part, which they are again, it would be nicer if they had separated things out, here's how much money we plan to spend thanks to the new tax law. there's the overseas cash they're bringing back or paying taxes on, 38 billion after that, they will net out 200 plus billion in cash sitting on their books that they can use for other things, including capital expenditures, new

headquarters. >> >> including acquisitions >> acquisitions was not necessarily mentioned. buybacks, dividends, increasing dividends were not mentioned there's still a lot of room for those things to happen >> what do you think wh what do you think happens to that money >> acquisitions is the best use of that money. there's a lot of areas apple is trying to break into self-driving cars. media, programming they have six new shows they're planning to spend big money on they could spend a lot more certainly. they could go buy something. cbs is for sale i heard. >> right i think that's the most strategic use of cash. they usually bump up the dividend every year that might go up. again, that's all pro forma. that's stuff you expect them to have done. >> two questions all of these companies statements, in particular apple,

do you think -- you think it's aimed at washington. aimed at washington because you think apple, google, alphabet are under threat this goes back to the cynicism that joe would say i had in the days that followed the tax reform plan when a whole host of companies came out with their plans for bonuses and whatnot. >> $1,000 for you. >> i said some were for reasons of -- because they have certain things in front of government players and other things but at the same time i'm starting to think, i don't know. there's been a lot now they're not all with something right in front of me that the president or congress at this very moment is doing >> a lot of times when you see these announcements happening, you have to wait for the second announcement we will buy this, do that. something they need to curry favor usually with d.c apple typically doesn't put out releases like this

they don't really communicate a lot of these things. it is a new regime under tim cook it's not traditionally apple this is not something they normally do. >> if you -- >> joe is skeptical. >> if you find a cavity in the teeth of the horse, or a sore or something, if you find something in the horse's mouth, can it not pull the plow? can it not win the race? >> that's what i'm saying. >> do you look every gift horse in the mouth and try to find the slight of the -- what about the cavity would that make you give the horseba horseback? >> depends on how fast the horse runs >> it is like -- it's like pulling teeth that have cavities to get you guys to say -- >> never take anything at face value. >> separately then, speak to the issue of what you think is going on now between cbs and slyya come and where shari redstone

is, and why do you need to reconstitute the board if you are going to merge any way and control 80%, why do you need new board members >> there's a bit of theater going on with this shari, she has every right, she has the controlling shares to merge the companies. they tried to do it in 2016. les moonves, cbs ceo was not on board. if that happens, you know, cbs is the prize sort of unit here combining with viacom, cbs has to carry viacom in these carriage negotiations. cbs is a must-carry channel. it has nfl, great programming. not to say viacom doesn't. mtv and nickelodeon is not as must carry as it used to be. now it's you're helping viacom but not really boosting cbs. it was split up originally -- >> with the thought that cbs would be the slow growth >> and that was true at the time

because cable was growing. the funny story is sumner redstone said i need to give les and tom a job. so i created two companies the underlying thought is i really didn't need to do this. >> you want some useless information? >> we haven't had enough of that this morning >> yeah. horse's teeth grow slowly. you can wage the agauge the hory the teeth. someone can say this horse is a couple years old, you look in the mouth, it says ten years old. >> you have a lot of experience looking horses in the mouth. >> no. no you don't want to accept the damn horse if all you're going to do is feed it and it can't do anything that's a good saying for you to use and appropriate for what you do >> i'll keep that in mind for next time.

>> thank you all right. mr. ed -- >> wilbur. >> the dow topping 26,000 eight days after it broke the 25,000 barrier for the first time it's the fastest 1,000 point spread we've seen in history we'll talk strategy after the break. your friend @just_marea.

you like her. she's really good at social media. she buys stocks in companies that "stand for something." you like her. she's always up on the latest trends. she got in early on the whole goat yoga thing. and her sunsets are always #nofilter. you like her. but you'd like her better if you made more money than she does. don't get mad at @just_marea. get eátrade.

welcome back south korean policymakers confirming reports they are considering a crackdown on cryptocurrency trading the head of the country's financial services commission said it is considering a ban on the crypto exchanges that violate local laws and a ban on all crypto trading in the country. the governor of the bank of korea said cryptocurrency is not legal currency and is not being used as much let's check on the price of bitcoin. a gain of 6% 11,470. the dow closing above 26,000 for the first time ever. for more on the markets we're joined by ed campbell and jason pride. we had such a past beginning to the new year has it changed what you think we should do in positioning

that's an eagle. cramer would like that eight sessions, 4% the quickest move to 1,000 points ever. does that moderate your view of the full-year possibilities? more churning this year? is it just can we actually amortize that and think we'll have another huge year >> we don't think we'll have another huge year but we'll have another decent year. >> we already had another decent year will it get more decent from here >> the main reason, earnings growth is good, the economy is strong the downside is evaluations have gotten pumped up to a good degree and something could go wrong along the way. but we have this ongoing expansion and ongoing grind higher by earnings that helps the stock market >> this is knot grindiis not gr

soaring. tell me about the future, from here on out it will be grinding? >> i think one thing that everybody has to adjust right now which is interesting, we're poring through and digging through models, is the impact of the tax adjustment a lot of strad gists bui s a lot of strad gists buitrategid models on the back of this and now you have the 5% shift in the base, and people wonder what does this do >> i will make this really simple for you if we're already up 6% for the year are you looking a t a total return of single high digits for the year is that all we'll get for the rest of the year >> we won't be one of those typical strategists that puts out a very ideal -- >> so you don't want to answer me what do you think, ed? >> we're in the 6% to 10% range. >> we only get two more points we will churn for the rest of

the year >> that's 6 to 10% over the next 12 months. >> in addition to what we have got. >> yeah. that's what models say what do you think? >> i think i'm a bit more bullish than what i'm hearing from jason there's the potential to have another fantastic year as we laid out in our year-end outlook, the best case is not much different than a 10% return we think there's a non-trivial probability that we get another 20% year if you look at the composition of total return from last year, we got 12% out of earnings, 2% out of dividends, 8% in terms of multiple expansion i don't think that earnings expectations fully incorporate the impact of the tax cut. they increased from 11% to 14%

since the beginning of the year. we have the potential to have an explosive year in earnings growth whether we get 15% or 12 or 17, it doesn't change what you do in terms of the equity strategy if equities give you 10% plus and bonds 2, you want to be overweight equities. that's where we are. >> i guess i need a -- like a bell curve for probabilities i would jaj anyoimagine there's chance on the right-hand side that we get 25%. in the middle there's a 40% chance we get somewhere what you're saying, then you have to incorporate a down year on the left side. >> one reason, when you ask these questions on 12-month forward returns, you have to take into account the volatility of the market and the error rates in these models.

quite often our model points out that the 6 to 8% return, but there's an error range of 11% to 12% around that, which falls into the ballpark. >> but there are some strategists that would have said last year we're going to do 25% plus that person exists, and he was right. >> they're within the bell curve though >> but to say high single digits, just so you can sort of, you know, play all the angles and play it safe, and not be wrong, you end up being wrong. anybody who said mid single digits last year was dead wrong. >> one of the differences here is that we're investing here you need to take into account when you are actually investing the money, it's not about putting out a very specific number on the forecast it's about taking into account the possibilities. >> don't sell just yet >> i can tell all our viewers to

sell we're detached observers any way here ed, thank you. >> thanks. so you like the eagles >> i'm from philadelphia we have to be supporting the team right now >> all right okay coming up, china lorti inre 6.8% growth rate that tops expectations coming up, new data from the china beige book as we head to a break, a look at the s&p 500 winners and losers (daniel jacob) for every hour that you're idling in your car, you're sending about half a gallon of gasoline up in the air. that amounts to about 10 pounds of carbon dioxide every week. (malo hutson) growth is good, but when it starts impacting our quality of air

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welcome back you're watching "squawk box" live from the nasdaq market site in times square. welcome back to qux squ"squ box. we have weekly jobless claims out at 8:30 a.m. eastern time, along with houses starts and buildi building permits morgan stanley, bank of new york melon, and a look at the u.s. ek tie futures. dow looks like it is opening up higher not as high as other days, but high enough. the dow opening up about 23 points higher. nasdaq off 2 points.

s&p, we'll call it up about 2 points there >> china releasing fourth quarter gdp beating expectations joining us is china beige book international president leland miller china came out with its gdp, 6.8% growth which is stronger than people were anticipating. we look at your numbers, the beige book, because sometimes we doubt the official numbers from china. you're looking at corporate reportings coming back in. what do you think of that 6.8% >> it probably underestimated what happened. one of the problems ignoring the falls before the declines in growth you can't claim sufficient rebound this had this 6.9 gdp, going to 6.7 and then 6.9, but we saw in the data significant downslide in '15 into 16, and a major rebound. there is no we that the economy

rallied like crazy >> because the country was doing what to get that number up ahead of the congress >> stability at all costs and strong growth at all costs you had to have a strong jobs number, strong fundamentals. they opened the credit spig got spigots. this is a great year in terms of growth, but when you look to 2018, it's not sustainable >> because the party congress is over until march or so you have this extended party congress put. but it's showing up in data. you had this great growth. no question about it you're seeing that other numbers are not so good. hiring stopped accelerating. orders have slowed down. wage growth slowing down inflation across the board is nowhere near what people think it is. looks like the economy may have peaked in the second quarter of last year. this is not the explosion into

2018 >> you're not talking about dropping off a cliff either. >> absolutely not. you have that possibility when you talk about trump trade action and trade wars, in terms of economic fundamentals, you won't fall off a cliff president xi wouldn't let that happen any ways. people assume you have this organic momentum coming from a strong year, that's not the case there's a lot of strong pushes, you have global growth as a becoback wind, but you have other problems >> let's talk about that global growth we are seeing strong growth in the united states. we've seen it in china it seems to be happening everywhere simultaneously. >> that's the case you look at europe you look at the fact that the u.s. has got this bump from the tax plan, whatever you think of it and so the assumption is that a lot of these good things in china will continue. the major problem with this is a lot of the 2017 performance has been from the old economy,

particularly commodities people have read into that saying commodities is going crazy in china it will continue and catch on. what happened in china on the commodity side and property side was speculation. this is not the demand response. there is strong demand, but this doesn't mean it will catch fire elsewhere. china is not the center foundation of this it might be part of the global movement forward, but it's not the center or foundation of global reflation what is? >> if it happens, europe of the united states. but you have not dealt with the overcapacity problems. everything you read now is how tough president xi is on sell side reform. we tracked this. what we're seeing is, y there's strong demand. yes, there's growth cuts, on the net basis, capacity is not being cut. production is not being cut. a lot of the supply side people think is being pushed by the way side, it's there and still growing. >> that makes me question what's

happening in china but also leads me back to caterpillar which has done so well recently. people say it's back on. how much is china responsible for that and how much is the global growth? >> i think the perception game is huge in china they're saying a rebounding china. if that's pushing us forward and looking at inflation, look at sales price, then that affects a lot of these earnings going forward. but the problem is that we're not seeing that. >> your numbers, you're looking at corporate numbers that you can track. how much accuracy do you think you have with this how much of a margin of error is there? based on the idea that you're scrambling, trying to find numbers. >> we spent two years on the ground in 2010 and 2011 finding the best way to do this we tracked the share of firms reporting strength, share of firms reporting weakness we do it over thousands of

firms. we're not trying to get pinpoint accuracy by something going up 0.4% we're showing broad strong trends and time and time again, it's -- the trends tell the story much better than the 0afl dat officia >> would you travel to china would you feel comfortable doing that >> i haven't done that i decided to lay low before the party congress now there's a question before going back in there. i feel fine doing it right now the chinese government understands that having a credible third party data source that calls balls and strikes, we're not bulls or bears, we call the data as we see it they see a major bonus in having us out there considering you look at -- as much as we complain about china's data quality, fraudulent official data, when we had the real downturns, august of to 15, january of 2016, we were coming on the show saying this is a total overreaction

there's no collapse or hard landing. we're seeing something more moderate >> they have never reached out to you officially or unofficially >> unofficially -- we've had discussions, sure. certainly. >> thanks for coming in. >> thank you coming up, we said at top of the show, the countdown to the shut down. we'll ask congressman jeb hensarling if they can get a deal to keep the government running. and professional neall ferguson will be stay tuned, you're watching "squawk box" on cnbc tomorrow, it's a day filled with promise and new beginnings, challenges and opportunities.

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♪ >> it was on two days ago. i put it on.

just sort of in the background robert shiller says artificial intelligence could be the biggest challenge to the jobs market he has an interesting proposal shiller is advocating livelihood insurance to protect against potential job losses or drops in income >> only for ai or if you lose your job for any reason? >> good point. maybe it's one of the reasons you might lose your job. >> you lose your job because of bad trade pacts? >> he said some protective measures are being implemented web design academies that don't choose tuition unless graduates get a job with a certain level of income then they take a percentage of your first year of income >> we talked to somebody about that, about schools that say you pay me over five years, but only if you're making this much money. >> i'm torn. i want ai to move quickly. i do because i'm counting on

downloading myself to hardware, picking you as an avatar, because you have -- you have all your web squatting stuff done. you have not picked yourself as an avatar, have you? i can actually be you once i'm downloaded >> you want to be me >> yes, i want to be young, thin i want to have those strong eyebrows i want to have all the things that you -- >> thank you >> you're welcome. >> i appreciate that >> you don't want to pick me, i guess. that's what a nice person would say. >> i'll think about that >> okay. vladimir putin can rest easy he has secured enough voter registrations -- or voter signatures to qualify for the march presidential election. putin is running as an independent candidate and self-nominees have to obtain 300,000 signatures in order to qualify. polls suggest that putin will win re-election comfortably. easily >> okay. david solomon, he has a thing

for fine wine. former personal assistant though to goldman sachs's co-president facing federal charges that he stole more than 1$1.2 million o rare wine from his boss. prosecutors say the former assistant used a fake name to sell stolen wine from solomon's collection to a north korcarolia wine dealer. a rare burgundy sold for an average of $20,000 a bottle. this is not the first time that goldman sachs partners have been hit by assistants, if you will i wrote a story years ago about scott meade, his assistant stole about $5 million from him. the same assistant stole about 1.8 million from the boss before that we're actually right next door to a whole host of assistants

who had stolen all sorts of money from their bosses. one woman was using -- was having her boss use erasable ink on the checks. she would erase the name, make it out to cash, opened a pizzeria in queens that takes gall. another secretary was making checks out to herself, intercepting the mail so they wouldn't see it on the bill. she did this over ten years. she would take $5,000 at a time, $2,000 at a time hoping they wouldn't notice. >> that's the way. >> they noticed it recently. years ago in scott's case, he was trying to give a big donation to harvard, he calls up his money manager at goldman, they said there are these transfers to cyprus you have

been making. >> i wish we were in position where a year later someone says you're missing $5 million really that's representative of working at goldman sachs yeah show me? yeah, that >> oh, those 12 bottles of wine. >> exactly >> when the numbers are that high -- >> i know. >> it's all relative >> it is. when we come back, we'll talk about rebuilding america. the ceo of construction company jacobs says a trillion dollars in infrastructure spending is not enough and a quick check on what's happening in european markets right now. when this bell rings... ...it starts a chain reaction... ...that's heard throughout the connected business world.

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welcome back to "squawk box" him alcoa revenues falling, they were hurt by energy and raw materials and unfavorable exchange rates alcoa issuing a weaker guidance, also shares, though, have surged more than 50% in the past year >> that stock down at 5% in the free market. joe. >> assuming congress can keep the government running, one of

the next items is improving american infrastructure but it may take a lot more money to fix tan we know. joining us is a technical service leader, jacobs, infrastructure i think about it is like six or seven different things that i think of it seems like it will be hard to screw it up it seems to me why are we underestimating the problem? >> joe, i think the big changes the macrotrends compared to several deck kids ago are massively different. urban pieg gragmigration, watere globally lacking access to clean water. >> we're talking this country. >> this country, same thing, water in the united states, our highway, rail, there is $200 become of economic value lost by congestion on highways and

delays on airports, so all of the areas in infrastructure, this is what we do at jacobs him we're in the mix >> how would you, if you were, i don't know, richard le trafffrar the trump administration, how would you prioritize usual go rightings, is that the way you do it. sit in a room and listen what needs to be done and what one, two, three, four are on the list in. >> i think we have to have a better immigration between the state and local and infrastructure entities run by the government, take a step back use some of the new technology, digital intelligence to really understand what the consumer needs, what the population needs and integrate these. >> nobody argues that any of these projects aren't worthy the problem you get into in washington is where the democrats want 80% of the funding and the republicans want

20% of the funding what's the right mix and what will happen? smr the right mix, it will ultimately flow out. because everybody wants infrastructure to be prioritized. both parties. >> i'm reading an infrastructure deal is more likely to get done, one congressman, a former governor says when i was the governor of my state, we needed 80% of the funds to come from the government t. few sproefl 80% from local and state government and sources is that possible >> we believe it will be a combination between government and private funding. the key is to make them more investible >> for private companies >> and it has to be return oriented while solving the environmental sustainable needs that the communities want. that's why it has to be more integrated there has to be more technology to drive the crowds down crowd behavior, one of the

things we are doing is working with some of the best companies in the world to access da that the state of the art data access on cell phones, anonymous day that >> how many people are here? >> prod transportation, who is usi using. >> that answers your question. >> is the web built up where we find we need to think about that you have the power grid, that infrastructure, too? >> everything is infrastructure. >> we need to figure out where it's not an endless supply of money. >> it comes down to water, transportation >> bridges >> also resiliency, sea rise, right here in new york, we're working on protecting the reclamation projects we're working in miami, toronto. these are resiliency, transportation and water >> you can see why there is a

push for the private texter, where it makes money, if it's all comes off the top, there is not enough money to go to other things >> but there has to be the triple bottom line, sustainable benefit. it's got to benefit the social aspect, ecosystem, economic benefit. there has to be a return >> what kind of job do you think we'll ends up doing? when we look back on this period in the future on a scale of one to ten, will we do it to the fun of seven or a mess >> i think we're at a point where everybody in the us knows we're at a breaking point the funds, we will figure out the funding. this will be the next transformational error it's public works program. >> there is a guy who is worth you know $110 billion. we're a wealthy place.

we should have nice things everywhere >> we have 16 of the world's busiest airports, five in the top 100 in service quality how does the u.s. not have all of our airplanes being among the best in the world? >> there has got to be a way where it adds to the check well-being of the country, though, it can't subtract, there has to be a way to do it >> the chinese airport in singapore. >> yeah. >> half the people are not traveling. they're going there as a destinati destination, shops, retail, it's creating return for the private investor >> i never hang out at an airport ever >> intentionally >> intentionally >> anyway, thank you when we come back the countdown to shut down we will talk about the prospect for a spending deal that will te wllal government running. lar,e' tk taxes and american business with the u.s. chamber of commerce. stick around, "squawk box" will be right back.

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good morning, everybody. the one and quarter trillion dollar rally, investors get ready for what could be another day on wall street we have more on the major market whilestone and putting your money to work is straight ahead. congress is racing against the clock to pass the spispending b. we will have a preview of the grammy awards t. boom in latin music and buying hours of latinos. the second hour of "squawk box" begins right now. live from the beating heart of business, new york ity. this is "squawk box.

>> good morning, welcome back. "squawk box" right here on cnbc. we are live at the nasdaq. u.s. equity futures at this hour after what has been a big up week the s&p 500 higher the nasdaq in the red briefly, here's the bill thing in ed lines. earnings out for morgan stanley. >> andrew, this is a decent beat and the adjusted number in lumpiness with the tax bill. eps, 84 cents forecasters, 87 cents, 9 money 5 billion t. forecast is 9.2 billion. it's less than expected. they forecast 1.41 billion we haven't as far as i can see equal zbooins guidance of what the ongoing tax guidance will be

yet. it will be decent if terms of the wealth management, which is 1.2 billion up from 900 million of earnings. record revenue for that part of the business of 4.4 billion. the trading is a little soft it's been outweighed so investment banking is still up nicely, 12% year on year. most of the peers were up around 20%. goldman sachs is up more than that, still. the investor bank has grown but not as much as the beat on others on trading, gold man sax and city were down 16 and 17%. but morgan stanley is down 19% and the nixed income number is

similar to gold man sax. they didn't thit hit their target to hit a billion of revenue per quarter. so trading investor banking a little soft, wealth management very soft. the tax smaller than expected. net-net, eps ahead of expectation. shares down 1% >> we appreciate it. live from earnings central >> exactly it's an actual location out there. wealth is right behind you >> yes, it is, there is earnings back there he told me it is more a state of mind, really. >> i think it's a state of mind and it's an aspect of what logo we have up i'm in earnings central. >> is it near the cryptodesk >> the cryptodesk is down there. >> which is also a stait state of mind. an insane state of mind. >> it's volatile state of mind

>> wait a second turn around. wait a second. >> breaking news central >> now i'm really on edge. >> what happens is it's an earning story, uh-oh, the story. >> do you want to have more details on it? >> we have a good job, will. see you in a bit, in the meantime, we have a rapid update for you, which is this, a government shutdown could be looming. a short-term funding bill expires tomorrow night it's not clear it will garner another bill to pass the job claims and december housing starts we get the manufacturing index all that at 8:30 eastern time. >> or perhaps the first time in this cycle the good news is pouring in on

all fronts we got economic growth, corporate results, investor risk appetite, they're all major tailwinds for stocks mike san tolly joins us with more on how much is too gad in >> michael santoli >> what is good is all front and center what's not so good is hypothet cam or over the horizon, that explains partly how the market found the new gear people were positioned for a pre positive year. nothing in terms of the intensity of this news, it's obviously the market can run away a lot faster than people expected there are no pain points, inflation, sure in theory, that will be a problem down the road. we're not seeing it. rates are not a challenge. i also think that earnings season this quarter has very low stakes in other words, there is more

rewards than risk in it. you can write off the tax noise, so you can almost kind of look past it. even if we do get, it has an opportunity for this market to slow down or stall out a bit obviously trader sentiment it's running extremely hot >> that explains a day like tuesday a. day like tuesday when you can be up 280 on no news, they gain it back the next day so we have a wider string energetic tape that's something that would be a problem. the vix is okay. it's beenizing, telling you there is more juice, down the road if it rises past 13, maybe it's an uptrends >> every year we used to say, first week of january that goes so good with the month of january. the month of january goes so good with the year it's ail like all systems go >> right. >> someone the other day said liking something technically to

87 i thought about 87 >> sure. >> it was so good. and it seems, you wouldn't understand anything is wrong >> all these analogs are brigg you to 97 or 98. look you are up 40% year-to-date >> it was all systems go >> right. >> so i mean, my point is, even if you get to something silly like that overdone, it seems like there is room in that. >> there is miniscule back-up in interest rates >> that's what happened. >> but that's the thing, so the rates were going up steadily and the stockmarket wasn't paying attention so right now, i don't see what the stockmarket isn't paying to, necessarily >> yeah, i don't know. i want to know the one thing that really is on the horizon, is it inflation in. >> that's the thing an icbm. >> it's a guess. >> it's an educated guess.

it's not something in front of that you the markets ignore. >> all right okay thank you. we want to bring you into the conversation, director from fidelity investments, the acs e asset division the chief market strategist. about that >> thank you >> you got i. he nailed it. >> you know, they did it, oh, they spell it out here >> they put it in. >> phonics >> like "hooked on phonix. >> i need "hooked on phonix. >> i think you could have done it, it's more complicated, don't you think? >> no, it's interesting. >> you are sitting here with us. where are we what year is this? >> i think mike and i disagree on rates i think are seeing a pickup in volatility starting to rise in

germany, the schatz and the jgbs, too. the markets are a state of mind. earnings central is. >> right >> i think there are some real tail winds here. but the risks are building because the rate paradigm is changing and global equity will not be as abundant among all the central banks last year. >> that will fall to below a trillion dollars >> where is the u.s. equity market s&p >> our target is 6825 a. lot of fingers are in the air on these sorts of thing i do think we get a little more volatility early in the year i think we pull back simply by a rate scare >> twa are we talking about? >> 25, 2600. not a heck of a lot. >> it would scare people they would realize vol at 5 on s&p.

that's a scary pullback. >> you are in. would that scare people? i think people buy on that dip you know, therefore, within they forget the dip that's the conundrum you're in? >> fair. >> this is still a market that a lot of people are not par sis pa -- participating in. you will not get the dip everyone is waiting to buy the short vol or the market. when you get the dip, it's real, it's fundamental nobody wants to buy it anymore it's only as good as it seems until it actually happens. but in 2017, zero dollars went into u.s. equity funds and etfs combined despite a 23% rally. the market is up 3 for the% since '09 $250 billion of outflows, while bond funds and etfs took in $2 trillion

this is a market a lot of people never really liked. >> you just said, the money so much of the money moves the etf market but the etf market is the market to some degree >> what i'm saying for every dollar that flowed to etf, a dollar flowed out of funds net-net into the stockmarket no money has gotten so usually you would think nine years into this bull market, especially after the two years that the retail sort of investor would be chasing this. i don't see any evidence >> yeah. >> so that tells me this market can keep going >> i just wonder, though, you mentioned the percentage gains in the stockmarket anybody in the market had the market do its allocation into equitys for them if you look at the exposures that retail portfolios have, you get record low levels of cash at swharls schwab i don't have those numbers on the brokerage side

it doesn't seem they're irrational, the market can go to the moon it seems to me, the market has gotten to a position where people are involved. >> i think for those investors who own like a target day fund or solutions-based funds, they will obviously have an allocation to equities and they will have done well. you see this flush of new money rushing into the markets we just haven't seen that from the retail side, obviously, surveys and you know option skews and things like that tell you that this market is getting a little hog, but just from that particular perspective, just a cultural change. >> we keep talking about it before everybody is waiting for this dip. since the president was elected is this dip coming >> usually when everyone is waiting for the dip, it does not come when the market actually does

start to degynei klein, it will be on an actual fundamental thing. you pensioned 87 earlier i do think the fed is probably one of the key lists going forward, maybe not for 2018. but for 2019, the economy seems to be overheating. if we're going into a classic boom-bust cycle here, inflation presumably will come back t. fed will be hiking more than the market is pricing, which is three more hikes over the next two years, which is not a lot. >> that can reset the risk-free rate in the bond market, that can sends the ten year to 3% or beyond >> that is the risk. by that time, the dip ply i buyers won't want to buy anymore. >> thank you coming up, avoiding a government shutdown, republicans will vote o through mid-february we are just hearing the freedom caucus chair meadows says they do not have the votes. to avoid a government shutdown, said that on msnbc

songman jeb hencearling -- hensarling, historian and author will join us, the driving force behind theolic cin pitalha of command. stay tuned you are watching "squawk box" on you are watching "squawk box" on cnbceople that fill it with meaning? for 150 years, generations of families have chosen pacific life for retirement and life insur.ce solutions. protecting what's most important to you. that's the power of pacific. ask a financial advisor about pacific life.

republicans hoping to vote today on a short-term spending bill to keep it opened to the middle of february the chairman of the financial services committee jepp hensarling, we had -- jeb hensarling, congressman meadows says the votes aren't there. what do you know >> well, as i flew up from dallas, i left my tar ot cards at home. i'm not the one counting votes, i'm not sure he is the one counting votes either. this is not a good way to do government frankly i wish it was an institution, not one in a thousand understand it takes a super majority frankly to keep the government opened. right now we have incredible challenges with our armed

services they need to be fully funded i hate that we come down to this brinksmenship and for the democrats who are claiming they will shut down the government over daca, it's an important issue. it needs to be dealt w. it's not a part of an appropriations bill it's not funded. also, it doesn't expire at week's end we got at least into march to deal with that issue so to hold these issues that are separate and hold that hostage, that democrats would hold that hostage for funding our troops, i think it's unsustainable i hope it does not happen. >> this is what we heard would happen at the end of last year, the democrats sort of i don't know was like a trojan horse kind of. they went along wit. they were saving all their ammo for this exact point if team

so we shouldn't be surprised by it, right? >> well, i'm certainly not surprised by it. i can be displaced by it i hope the american people will hold them accountable. those of us in the house feel we have done our business a number of people know, discretionary funding is through different appropriations bill the senate, the house passed all 12 appropriations bill t. senate, again, given they have to give democratic votes, in the past, zero appropriations bill that left to this very clunky continuing resolution process. it's just not good for anybody so i don't know if the democrats think they have the high political ground, but i got to tell you when our soldiers and sailors and airmen don't get the support they need, if they're not getting paid, i think that's an indefensible position national defense >> i don't know how it works, but it seems like republicans

always get blamed for government shutdowns, yesterday on one of the web sites, a drudge happening, i look at the ball t. lead was shutdown fears, grip washington and the headline was all tow president trump is confident, democrats will take t the blame republicans are woirtd and aren't so cure u sure. they quoted republican dent, when there are shutdowns our side always takes the hit. you think that is not the case you just said i'm hoping that democrats will come around because they'll be seen as the ones doing it. it never seems it had happens that way, does it? >> i'm more interested in the policies than the politics of it >> that makes you a very lonely man in washington right now jeb, doesn't it >> what i'm concerned about is number one, my friends over my shoulder on the other side of the capitol coming to their

senses and deciding that appropriations bill needs to be passed within the majority vote, instead of a super majority vote and i hope that everyone in the media if the democrats choose to hold the government hostage to an unrelated issue that doesn't expire until a month after next, i hope again that at least the focus is there should that occur. so i don't think that the blame will necessarily happen. right now i think it's more important that we have the right policies in place, we make sure our national defense is funded but people are grumpy, nobody is grumpy nobody likes this process, so you spends all year going through an appropriations process, article 1, section 9 of the constitution, you are making sure you are fundsing the right policy, bam it comes to a brick wall the united states senate

you get less of the series short term cr which is a terrible way to run a business. it doesn't allow you to change the policy of the federal government it's a horrible way of doing business my complaint today is mainly the united states. as a house member, i reserve that right >> if you do actually get the passage just for another temporary setup. it doesn't solve the big overriding issues here, what happens with data? is there a solution? >> i think there is a solution that can be found. i think on a number of fronts, we are close republicans want to solve this daca problemch but we want to make sure we don't have any dent in the future. again, we have to deactivate a number of magnets for illegal immigration. >> i'm sorry, i want to know, are you running another ctfa in the end, what will happen with this whole dodd-frank reform bill? >> you are not done.

are you? >> no, i announced my retirement that's a years away. >> from congress >> from congress >> ladies, is there a super fund >> i'm not applying for that at the moment >> on the dodd-frank reform piece, is there enough support there are some that say the piece of it doesn't go far enough >> it doesn't go far enough. i will see what the cynic can come up with off the floor hopefully we can work with that. >> congressman, thank you. i'll never live that down. >> we both remember that all right, guys. >> congressman, thank you, jeb when we come back, big banks raising the forecast we will talk oil prices and opittsburgh's latest forecast. in the meantime, wti above $64 at $64.11 a barrel we'll be right back.

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cpu? the answer, intel's first processer, the 4004 was first released in 1971 >> coming up, senior fellowed a sanford university uber institute niall ferguson will join us. singer and arectss talia are here "squawk box" returns with all of them in just a minute.

good morning, every. welcome back to "squawk box" here on cnbc we are live from the nasdaq markets set in time's square among the stories front and center, hotel operator wyndham worldwide is expanding to buy la quinta holdings. it will expand in the mid-scale hotel market you can see la quinta up by 8.5% this morning morgan stanley the investment

bank reported a quarterly profit of 8% per share. morgan stanley's results helped in large part by continued solid performance from its retail broke raj. that stock is up by 2% despite some blockbusters, 2017 was not the best year for the movie industry in north america. numbers from the national association of theater owners show the numbers sold fell by 6% early year stocks declined 2.5% thanks to higher ticket prices. opec, jackie deangelis joins us with the details. >> reporter: the headline, opec production went up in the last month of the year, 32.4 million barrels a day. now what's interesting about this, is the group promised the market a production cut of 1.8 million barrels a year they're in their second year when they implemented the cut, they said the goal was to get it

to 32 million barrels a day. they are under that target mark. note they are sticking close to that target and playing around with the numbers, last month production went up in iran, iraq, nigeria, the unusual suspects those companies have been ramping slowly their increases have been offset by qatar, venezuela, it's a balancing act here the largest drop came from venezuela, output went from over 2 million barrels in 2017. that's a big drop. in fact, stripping out the strike of 2002, this is the country's lowest output in about 28 years that's significant because if those numbers continue to drop, it leaves a little room for the other countries to ramp f. they drop quickly and the pace is quick, you will see the support for oil over 60 is not only going to hold, it could send them up higher, watch venezuela, nigeria right now. >> jackie, thank you >> you too the latest history of power and

networks is putting us on notice niall ferguson is also boston globe contributor and the author of the new book "the fair in the tower, networks and powers from the free masons to facebook. >> it's good to be here. >> this is pretty sexy stuff, going back to the free masons to what ewe seen from the roman emprior. it's about the secretive nature of power how'd you get this idea? >> when i moved to stan forbid about a year-and-a-half ago, i was amazed to find nobody there in silicon valley was remotely interested in history, they had begun and everything before that was the stone age. so part of the book is to explain to silicon valley that history applies to it and networks were not invented by mark zuckerberg, there have always been social networks, some small and secretive, some large, indeed, stuff has always

gone viral fake news was not invented in the age of donald trump. it's a message that i think is long overdue >> probably long overdue i imagine the reception would be yeah, yeah, thanks very much, eric smith seems to have liked your book. what does he think about it? what has the reception been broader? >> i think he diz understand some network signs, part of my objective was to explain it to historians it goes both ways. in the space of the last year-and-a-half, silicolico sill valley had a weak-up calm. suddenly they realized their wonderful apps helped donald trump to become president. that was definitely not the plan wasn't facebook was created or twitter was created. i think the backlash what happens in the election is a part of why this book is timely.

i am slightly remind of my book "a sense of money" ten years ago, there was a tremendous huberis and crisis struck and at that point people were ready for financial history. something similar is going on. >> you were working on this stuff ahead of time. are you smart or lucky >> nostra dam -- nostradamus >> not that i'm in favor of regulation >> you historically are on the ought end of that. >> >> the current regulatory setup is very australian him for example the tech companies, which now are the biggest publishers in all of history, zuckerberg is much more powerful than william randall hurst was facebook and the others are not regulated in the same way or liable for the content on the platform >> the type of regulation you are calling for is a level

playing field. why should the tech companies be treated like they're not publishers when they are 45% of americans get their news from facebook. >> is this the market -- you seem to be going against something different. are you talking market dominance, amazon is in so many different fields or you are talking the libel laws and other types of sort of laws that apply to media companies there is a distinction >> there is a confusion. some people think this is all about anti-trust and there is a monopoly problem that's not an issue. i don't think it's remotely plausible you can trust it on anti-trust grants. how can you show the consumers were worse off that's a dead ends i think people will want to go down that road. >> on the "wall street journal" you went down that road. but on the assumption that perhaps actually there is less competition than we think. >> i think this is the wrong

issue. these are naturally monopolies the things about network-based markets, there is a weren't takes all effect it's not conceivable you can use anti-trust to keep that happening t. key issue, if you think of these as essentially content publishers, they're fought regulated as such the mid-1990 exemptions silicon valley won, you know >> all the boards put up are you a publisher? >> exactly so the argument that these are just tech companies, they're first quarter platforms, therefore, they shouldn't be subject to the same rules the media publishers are that argument is surely out of date so all i'm really arguing for is there should be a level playing field. i think that's important because at the moment if you think of this as a contengsventional publisher, you are destroyed. all the revenue goes to facebook they're essentially using content for all the media to

fuel their businesses. that's the anomaly. >> that's the argument silicon valley least wants to take on. you were talking about chopping their ability to raise funds for these things right now their great idea is you can have a million people creating content for you they're responsible for policing all that. >> it's an impossible task we have been kind of missing the story, partly because of the great focus of the russia involvement. i think it in some ways gets overblown, the real story is facebook and twitter and facebook wins the size of the election t. russian's contributed to the content is a drop in the ocean. i think without facebook trump wouldn't have won. >> you really believe that >> i think if you take away social media and have a conventional media campaign, they outpend two-to-one. >> is that true of brexit in the uk is this true of politics >> when i show the tower that,

in fact, brexit was one of the first occasions when a political movement used facebook advertising, targeting advertising, using big data to identify huge demographics and to hugely good success that that was in some ways the overture to the main event, which was trump. >> nothing has really changed. and is there any historical corollary that we are in this new age of data. you make the argument that new yorker is there forever? >> it's always been there, today's is bigger and faster than any in history t. public's sphere, which democracy plays out have been fundamentally changed by the enormous network platforms him every election will be effective. every campaign will have to go to facebook and do it's tiesing early on look at brazil, mexico, italy. >> we have anti-terrorist people

who have come on and talked about this too look at isis, a larger than life sort of presence. >> absolutely. >> there are all kind of networks networks are not good at defending itself part of the 2016 story is this is a network world i think we are still only gradually realizing the implications for way democracy works as well as the market works. i stunned you on into silence? >> no, i won't ask >> i have one final question trump 2020 >> you would be i think making a mistake to underestimate donald trump at this point. a lot of people have suffered for underestimating him. i still struggle a little bit to imagine this is a two-term presidency look the approval rating is turning around t. economy could keep on going. you have to be super imaginistic to see it goes on this the way to 2020 i think in between now

and then the big question is do we see the house and democrats, impeachment? i think in many ways it's the clinton administration rerun if that analogy is right he could be a two-term president. don't bet against this man >> niall, thanks for coming in >> congratulations when we return, a grammy preview, actress/musician will be joining us on the set as we adhe to break, a look at the european markets in the "squawk"" returns in a moment.

[ music playing all right, welcome back, everybody. david solomon likes fine wine, a former assistant-to-is facing charges that he stole $1.2 million of rare wine from his boss he says the former assistant used a fake name to sell stolen wine from solomon's collection to a north carolina wine dealer. among those were seven rare burgundy that sells for an average of nearly $7,000 a

bottle. >> pretty good we talked about this there are so many. by the way, you go online, use personal assistance and theft. these stories were remarkable. anyway the grammys are coming back to new york january 28th a. week from now. this year's awards show will feature, a week from now, most latinos performers in over a decade we want to bring former sony music entertainment chairman and ceo, leading singer and actress and fashion designer for macy's. we are thrilled to have both of them here. i want to talk macy's business first up, the little grammys, what do you think will be the "decpacito" will be the story of this >> well, "decpacito" is the most viewed song in the last couple of decades if not ever >> last 4 billion years.

>> exactly t. good thing about that is that i think the blending of latin music and you ban music which rules is going to become the new popular music and you know, it's like a fast forward version of w457d when we created the latin explosion. now it's really gone global and as a result of this. >> i think the important point in this occasion, with this new latin explosion is that it is in spanish. so everybody is right now singing if spanish, right, in the -- >> why does that work? >> the reason it worked is the record was a hit in spanish. but the minute they put bieber on it, it went out to the pop stations because he sang it in english and spaglish that was the magic >> it's invebl i know the writers >> don't you want to go little >> you know the song

decpacito -- you move the body, it's moving the body i think music has no frontiers, no language. it's about union this is the case that is happening right now. it's about union >> did you know the tongue would work the second you heard snit. >> 100%. i think everybody did. not that you needed to be a genius i think it's one of those records you hear and you know it will go all the way. no one anticipated how big but yes. >> i think it's really cool, it opened the door right now featuring beyonce or cardi b itis like right now a new wave of collaboration in english and spanish. >> is that going to open up a whole new mark, though >> i think what happened is the blend of urban music, which is the pop music of today and latin music now becomes the popular music, pop music in essence,

yes. >> 17% of the population in the united states right now is latino so 17 i think. but the thing is, it will be good to take some spanish lessons right now. what about the music, right? >> it's still only a small portion of the music i think i read 2.9%, even though the population is popping. >> it's correct. latin music sales, yes >> can we talk about macy's? >> so how did that happen? >> how does it look this good in >> are you wearing the whole thing? >> the whole brand >> we have the shoes the look, the intimates, shape we're we have it all the most important part of my collection is making it like sometime for my woman. in the beginning, we thought it was gentleman to be targeted to the latin consumer and i understand the shape and the need of the woman. she works maybe two jobs a day

she has to go back home to dinner, homework with the kids, deal with husband and start all over again i need her to feel comfortable, sexy, confident, don't think about anything, be herself through my fashion >> the great thing is it was the largest private label launch ever in the history of macy's. we targeted our customer we knew we were going to target the latin examiner, which is the number one consumer group spending $1.5 trademark a year we knew what the business was at macy's with no dedicated brand so we were very clear on what we were going for and we were very specific about where we were going and then thalia brought all the authenticity and only in to that brand. >> the music is happening right now, it made the crossover, spanish to the world t. collection crosses over, too, from the latin idea that we had

to everybody >> jeff gannett has said this has been one of the most successful launches or their most successful launch they've ever done. it's happening when retail is suffering. how do you take that when online retails are taking the players how do you fight that in >> social media. i use the platform i love to engage with my people. i use the platform to just leave my collection. >> the good news is despite any store closings or sales being down, our brand is up this year in sales >> it's so important >> everybody now, it's so important. it's nothing more than, you know, it's the flagship and it represents and states what it is physically it's our showroom, exactly

>> i'm curious in terms of marketing online you were talking social. >> yeah. >> between facebook, instagram, twitter and snap, what do you think is the most effective for you? >> hmm, everything is different. like i have a different crowd on facebook that youhave to like pamper differently instagram is more like fun, stories in instagram, you are yourself, yet you have your profitability. it's perfect you can target your brand for instagram. >> we have such instant reaction she has 35 million followers that resonates when we put something up we can know instantly good, bad, indifferent. can you make judgment calls. >> that itself best thing about it >> it's immediate. >> price point >> price point is so - >> affordable. >> would you ever -- >> you can walk out of macy's for $100 or less with this brand

head-to-toe. >> head-to-toe >> it's some stuff, girl >> we will get becky wearing some would you ever do a men's line in. >> i'm going to. >> you are >> they asked many tow do some kind of boxers >> you can do joe boxers >> i love it >> i do. >> i'll sends you some >> maybe i'll start wearing underwear again, i don't know. >> we have a promo >> apple music for spotify, everyone thinks spotify will ipo this year, spotify hands down. >> because >> because they have just taken the lead and i think they're going to be impossible to catch. i just think the platform is just superior in every way and every respect ease of navigation and i think what it offers in the way of opportunities for new artists as well, i'm a big spotify fan, i'm an apple fan, spotify has taken the lead >> i have a curve ball

people say, i don't know enough about this, amazon music is the dark horse in this thing >> amazon is the dark horse in everything i mean, you know, if jeff wants to go into an area, he certainly has the opportunity to dominate in every respect and they're from a to have z, you know, they start the story and they complete the story. that's what i love about amazon. >> okay. >> guys, thank you for come income this morning. >> thank you >> we appreciate it. >> thank you >> i was telling you, really the excitement level here, thank you guys for coming in we appreciate it >> we will play a little "decpacito" oway out, maybe. >> we'll see when we come back, we will talk about stocks to watch and later bitcoin balancing. showing signs of support after its biggest two-day drop in years. >> here we go.

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>> lertsz take a look at stocks to watch this morning. wal-mart also added, saying wal-mart increases the momentum over the consumer economy. goldman's move comes a day after citi added the stock to its focus list al coca reported a $share

missing sentiment. the line was hurt in part by a drought in brazil, that acted several of its business years. coming up when we return, the trump administration finalizing the plan we will talk to ceo todd donahue after the break. check out futures right now. we are in the green. market looking to open up higher on the dow by 15 points. i should tell you the nasdaq which was green earlier turned down, the lid opened off that 10.5 points. nah. not gonna happen. that's it. i'm calling kohler about their walk-in bath. my name is ken. how may i help you? hi, i'm calling about kohler's walk-in bath. excellent! happy to help. huh? hold one moment please... [ finger snaps ] hmm. the kohler walk-in bath features an extra-wide opening

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record shattering rally. the dow close up for the first time ever. it could be a full day on wall street the full market ahead. an infrastructure plan we will talk to the u.s. chamber of commerce ceo john donahue a wine thief caught red handed david solomon's cellar cleaned out. you won't believe who did it grab a flas as the final hour of "squawk box" begins right now. [ music playing [ music playing >> live from the most powerful

city in new york, this is "squawk box. [ music playing >> good morning, welcome back to "squawk box" here on cnbc live from the nasdaq markets site in time's square. i'm joe kernon along with becky quick and andrew ross sorkin let's get a check on the markets. we see most morning, up 18 points, indicating 18 on the dow, 20, 21, dow down fractionally on the s&p. the nasdaq down about lean in europe they have now turned mixed. take a look at 6% we saw earlier and if this is the time. it hasn't been there in a while. there is some resistance levels santelli mention in the past

>> let's get you caught up on the earnings morgan stanley recorded a profit of 84 cents per share, 7 vents cents above estimates. the company says it saw growth across all of its business segments in 2017 >> that stock is up by 1.7%. keycorps, eps based business, beth mooney says the new tax law will benefit the country by strengthening the competitive position and promoting stronger xk growth. another bank reporting bbt earnings, topping revenues beat. that stock up marginally a person on cnbc interview with bb & t interview kelly king. he will hang out at 2:30 p.m. eastern time today and for all the arguments around dodd-frank and all of that, i don't know if

this helps or hurts that i think in some ways people will say, look at the profits, this is starting to work in a big way. separately, after the bell, we will get results from american express and ibm. watching both of those very closely. president trump about to mark his full first full year in office has his tough love for the auto sector paid off so far phil lebeau joins us right now phil >> becky, he's probably had nor success in terms of influencing the auto makers. when you look at the first year of the trump administration and the impact on the auto sector, take a look at the announcements that have been made not necessarily decisions that have resulted in plants or shifts added. but clearly, we've had a number of automaticers announce either an expansion or upgrade of u.s. auto plants. you also had within the last couple weeks, toyota and mazda, deciding to add a brand-new

assembly plant in alabama. mexico's auto imports are up over the last year, remember when donald trump was campaigning for president, he said we will top the flow of vehicles from mexico into the occupation uh-oh, that has not happened take a look at the percentage of vehicles in 2016, last year of the obama administration, 21% came from plants in canada and mexico into the u.s., we know that mexico's imports were up 9.4% so as you take look at a couple of stocks, keep this in mind, auto makers, while they are expanding their production in the united states, they haven't abandoned canada and mexico. general motors made it clear, they are not altering their production at all this is a stock the first year under the trump administration then have you toyota t. sales for toyota in the u.s. in the last year close to a record high and there were some people who were thinking, look, you might have to see toyota import a few fewer vehicles >> that has not been the case, clearly, guys the trump

administration has been effective in influencing the decisions of auto makers in terms of future production and we'll see that filter through in terms of job increases probably over the next two-to-four years is when will you see the impact. >> thank you very much again, phil lebeau, let's talk about upgrading the u.s. roads and bridges. joining us ahead of the u.s. commerce infrastructure summit, tom donahue, the president and ceo, thank you for being here. >> glad to be here >> what is the chambers' official position on this? what should be happening in terms of infrastructure, what should be spent and how we come up with those funds? >> i think we're 25 years behind at least in bringing up our roads, our brejs, our transit systems and then on larger projects, issues of ports and airports and dredge the waterways and all of the energy driven issues for power and

generation, all of these are behind so the chamber in working with the government and talking to people all over the country is coming forward with a plan that is to talk about we're not saying it has to be these way. we say these are the issues that should get the most discussion and i can tell new four sentences, one, we should take roads, bridges, and the issue of transit and put that together and the way to pay for it is to increase the federal fuel tax for the first time in 25 years second, we should then go to the other major issue, ports, airports, energy and so on and we should go forward and layout a plan, which would be paid for with some federal money and a

good deal of investment and public private programs which could be supported, in part, by the trust funds with airports and ports and so on. but there is tons of money just two last things. >> we can dig through each of these first. ly let you get through the other two points start with what you mentioned first, the idea transportation, roads, bridges increase if federal fuel tax we haven't seen that in a quarter decade this is something we talked to politicians. we had them say, nobody wants to go first, it's like touching the third row when you talk about raising a fuel tax do you have support on capitol hill for a move like that? >> first, let me say, i'll tell you who wins first all of the states, the great preponderance of the states have raised their fuel tax a number of times over this same time what's happened on the hill is people say we can't do it.

it's the tax oh, really you are looking for money we are going to hide and pretend it's not a tax. we need the money to do it and here's the reason. we all drive cars and get far more miles per gallon and what's happening, we're taking in a lot legs money than we did before plus we haven't put any increases in, there are all kind of people, the truckers, the triple a, most of the companies in this country, there is support for this, and there is quiet support amongst the members of the house and the senate and we just have to give them the support they need, the political support they need to do it. if you don't want to do it i don't know how you will pay for those issues, potholes are everywhere >> so who are they hiding from grove nor quist who doesn't want to see additional taxes coming in >> i think we can get grove tore go take a break on this deem t. country needs to save lives to reduce accidents, to increase

efficiency this is something that everybody can get around and the white house will be coming out with their plan people on the hymn will have a plan we'll get a good discussion on this, there is power there to do it >> hey, to him, can you is ask you a separate question. we are talking apple and the announcements they have made so many other companies have come forward since the tax plan was put into effect, saying they plan to provide bonuses, and other kieps i types 06 spending plans and what not and it all looks like very good news and yet there is a remarkable amount of skepticism you could call it cynicism around some of those press release and those decision what do you think the driving it there are certain economists who would say there is not really a reason simply bus of the tax plan, itself, that you necessarily give these bonuses if they were effectively retention bo nutss, or you try i

to actually keep these people. you say you give a bonus at the end of the year. so what do you think this is all about? >> i think it's all about, we have a tax bill which basically lowers the corporate tags significantly, gets rid of this double tax >> right >> so now we can bring some money home it puts in place a tremendous thing for capital expenditure and takes care of the middle class taxpayer the bottom line is, this is a move by many large companies, bringing a lot of money home to say we're going to share some of it you are right on target. what happens in the lang term is how we spend the money where we put our capital expenditures how we create jobs, but this was a smart thing to do. getting the tax bill done wasn't easy most people thought it would never happen and we really think that what you have here is a that understand to all of our

workers. here's the last thought. we are now a country with relatively low unemployment and a massive shortage of workers and companies are beginning to realize that if they don't take care of them and give them a little thank you, somebody else will get them. >> so think wage inflation is coming this is the 84 we have been waiting for, for so long >> i'm not sure we will see wage inflation. i think we will start to see wages increase in a competitive environment when there is fewer people to work than the people are needed >> you mentioned that no one thought we would ever get a tax bill done. >> that seems to be the consensus around the infrastructure bill at least for this year ahead of the mid-terms at this point. what do you think the odds are of getting something passed, infrastructure doesn't seem it will be a contentious issue. it's how you pay for it that democrats and republicans can't agree on >> the issue sheer an

infrastructure bill is only the beginning. then you have to side what you are going to do, you have to design it, work with the state you have to get you'll this stuff done it's going to take years and years and years. i really envision a 40-year project. now that's not so significant, if you really think about everything we want to do in this country. but you have to get started and the two things we're worried about is number one we must change the permitting process. permits do nothing but slow everything down and you never get to do it we ought to go to where two years you get to approve a project, otherwise, we move on to another project and if we don't do that, we are going to be wasting our time and money and finally we have a real problem. if we did a trillion dollar infrastructure program now, we don't have the workers to do it. that's going to take a lot of work between the government and the private sector >> tom, thank you for your time

today. it's always great to see you >> thanks, see you again soon. a lot is still ahead, coming up next, bitcoin prices are in the green. we will check in with a cryptio, investor at our victimodesk with the victimotask force that we've put together plus a trio of economic news. we will bring you the numbers and later inside the king dom. we will talk to somebody that got back from saudi arabia about the crackdown. stay tuned bcu are watching "squawk box" on cn[ music playing and the wolf huffed and puffed...

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welcome book to "squawk box. check out shares of wal-mart this morning, getting a pop of upfwradz to buy to neutral analysting upping it to $117 from only $115 $2 there wal-mart is quote in control of its own destiny.

>> that stock up a little over 1 thursday this morning. >> well, the cryptocarnage is on pause at least for now i don't know if it's over. almost 400 billion has been wiped from the market cap in digital currencies a partner of place holder capital venture fund and shouldn't have been surprising, and i don't know or what it says about the future, i don't know if it says anything. these are all sort of to be expected i don't know 20,000 is to be expected certainly maybe a pull back in consolidation before an assault on higher numbers is in the cards. wouldn't you think that? >> historically, volatility has been inhearnt to these markets we're less than ten years in, since the birth of bitcoin so with any new market here we have a new technology with a new asset class so the combination of those two

things create volatility we soon it with railroads with autos the internet right now we are seeing it with cryptoassets >> so when things are ready to grab on to something to justify a down trend, what was it this time, south korea? it's very popular in its amazing countries as well, right >> yes, it was a combination of things, actually similar to late 2013 we had negative commentary from a few state regulators so china and south korea combined with a bitcoin exchange going off line. so in 2013 we had the people's bank of coin coming out, swinging against bitcoin and going out shortly thereafter so sort of, we need to see this confluence of events to break a bull market. that's what we had recently. >> that's the real rationale why

this will never go away? is it becoming more global and you need something to exchange that isn't based on any country's central bank what is the real reason why it's here to stay, do you think or is it here to stay? >> well, we have to differentiate between bitcoin and say the asset class as a hole i would argue they are the native class to networks it's a much more native and clean way to monetize these information networks and our world is dominated by information networks now in terms of bitcoin in particular, which is a cryptocurrency, people are looking for a disaster hedge people are looking for an uncorrelated asset to add to their portfolio and as nathaniel pauper said this is a digital goal >> i'm trying to understand, given we could create a sort of "squawk box" coin right now or we can create the current coin or the certain coin, and i

imagine everybody is going to be creating coins with all sort of different variances on them for all sorts of different purposes. why are we so convince thad bitcoin or z cash, why do you think there will be a handful that will be the winners if terms of the as a value proposition. >> well, it's going to be about adoption with the mind share and something with bitcoin it's adoption, more from investors and users who want to transact around the world, a theme around developers a. theory is a developer platform same with file form, where you file your files in a different manner can you start your own coin and chances are you'd get a lot of traction because of who you are, who the show is. but every single cryptoasset relies on a community to deem it to have value. >> is there ever a moment which you think this could have no

value? >> i think we're too far deep at this point and really when you go back and study this in the history of information technology and the progressions we've had and the consolidation, a lot are open and shared layers that really cut at the business model as the data aggregators. so it follows the history of innovation >> chris, if i read this cryptoassets. >> yes >> will i get through it will it be entertaining? will i understand it or will i want to turn on netflix if i start snit >> i think you will be entertained? >> i will? and i'm capable of understanding? >> i think you will understand it >> joe is looking for a book he is going to davos >> i don't know if this is it. davos is bad enough. if i have an assignment. >> can you note page >> money doesn't work with me. candy. >> president trump he is awake

this morning he is tweeting there's what he is saying. -- mr. trump also headed to davos next week, where i imagine the wall will be a topic of discussion coming up, more than 1 million of the world's rarest wine it is gone now, the victim in this case, gold man sax is co-president, rather, david solomon, you kw nowho did it his assistant. we'll tell you how it happened back in a moment at fidelity, trades are now just $4.95.

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>> welcome back to "squawk box." more than a million dollars of wine went missing from a goldman sachs new york city cell ar. we have remarkable details of how this all went down >> good morning, andrew, a wild story, the victim david solomon. this morning we have new details how he and his family were bilked he was duped by his personal assistant, 40-year-old dig las demeyer who federal prosecutors say stole $1.2 million he worked for the household, not the bank, made his first court

appearance yesterday they say she and her husband had and in-person meeting in november of 2016, where he admitted to the theft. de-meyer told them he would meet them at a bank to compensate them for the money instead, authorities say he fled the country. later in a recorded call with solomon's wife, they admitted he committed the crime and when to the rome they found he went to italy, buenes aires, switzerland and morocco. he was issued a ten-year vis have a in brazil in 2016 de-meyer was arrested tuesday at lax on his way back to the u.s he is being ordered back to new york and denied bail becky. >> thank you very much folks, when we come back, a full slate of breaking economic news, stick around, "squawk box" is back after a quick break

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we are just seconds away from housing starts, jobless claims

and the philly fed index all hitting at a triple whammy, remember the dow yesterday up by more than 320 points can you see this morning, green arrows once again, especially for the dow 100. nasdaq down slightly by 12 points it also closed at a new record high rick santelli is standing by in chicago. >> reporter: all right we have lots of data points. a big miss here, down over 8%, 1.98 million seasonally adjusts to units. last month lost .3 up to 3.3 on permits. a different as farrio, off a bit. we are expecting a number below 1.3 million. sequentially still down a bit 1.302 million versus 1.303 sequentially a little better than expected.

philly, a january number 22.2 we are expecting 25 also not a bad number, sequentially down from 26.2 finally the old stalwarts, initial claims, wow, this is a biggy. 261,000. we talked about the gps of holidays and what not. this is remarkable we are going back in time on this one 220,000. we know we also had a holiday. so we might have erred on both sides of this equation down 41,000. that's a big deal going back in the early '70s and continuing claims 1.952 million follows 1.876. there is a revision it looks like on philly coming out late so it looks like it was revised a bit higher 26.2 it stood at it looks like there may be a revision let's put ap asterisk by that.

this data is suspect on the revision becky, back to you. >> thank you very much let's get to steve leishman, your reaction to these >> you know, i'm still digging, becky. i don't know where this housing starts miss came from. it's a huge decline in single family construction. multiple was up. >> is it weather in we were talking about the weather. there has been freezing, snow in pensacola, florida. >> it could have been weather in a couple ways. let's go back to the hurricanes. you had a huge increase in single family starts, in november that could have been related to the hurricanes. now maybe you had a december dropoff. i like the permits still up at 881,000. so i'm not ready to be concerned. have you declines in every region of the country, especially in the south. we have some weather as my friends in atlanta say, if you get an inch of snow down there, the whole city shuts down. so they've had some cold down

there him looking at the permits, i think we will reserve judgment on the housing market to wait to see if this ends up being weather or a seasonal fluke. rick is right on the jobless claims, have you holidays, weather, the 221 is probably an overstatement. it gets to the general idea the jobs market remains pretty strong anything, that 260 was a surprise nobody gave it too much credence i'd take the middle point between those two and say you know what the job market is going along just fine. we don't have a sparking claim i want to show you the fed probabilities out there now. now the market is pricing in a third rate hike this year. remember we have been 45, 40%. these are the probabilities just before this number i don't suspect they change very much. >> you know, i was watching. we finally pushed between 2.36%. what do you think about that >> i think it's something that

it's a challenge to the marmt. but it's not that big a deal 260 takes out what would it be the march 2017 high that we had, the next stop's 299, i'm really interested in these probabilities and what the market knows i don't know if each side of the investor banks talk to etch a other. but the expectations you get when you look at these probabilities is that the market is okay with three hikes and maybe four so if we're at these levels on stocks with a 50% probability of that third hike, in other words, we will be at a 2% funds rate at the end of this year, the market knows that, it's okay bidding stocks at this level then i think we're all right what i worry about is the sides aren't talking, all of a sudden you wake up one day. is rick there? you wake up one day the market says, oh my goodness the market is hiking three times. >> i'm glad you were there

2.6% tell us what you think >> i tell you 2.63 t. high yield closed at 2017 we fall back to 2014 i think quite simply, becky, as the monumental huge level. i expected to see that resistance at the end of the scent skwen 16 we didn't get it like old soldiers, great technical levels never go away it think will be much hard tore close than people do i think the path to potentially testing a 303, which is the last significant time one day we spent above 3% might be likely. keep in mind also, considering the breath of the stock rally for the last 14 months, there really has been a soft path on interest rates, even though we are testing that significant level. >> let's talk about real economy interest rates there is this phenomenon out there, where some of the repatriated money could be, i think it's already being used to

pay down debt. this has been positive for interest rates in the corporate bond market. so when we ask the question, do higher yields matter, we wonder about the real economy and i think from a corporate borrowing standpoint, these higher rates may not be holding back companies. >> oh, i totally agree i think in the tax reform, we all see the charges being taken at the higher rate by many companies like bank of america and all the financial institutions i think there will be a lot less focus potentially on debt. i personally think that's a food thing. will that be a shock absorber, a mitigateing factor indeed it could be listen, there are times when interest rates in this faux world getting its gps book are harmful, but at this point, to watch interest rates go up on the back of a stronger economy, potentially three-quarters of gdp with a 3% hands him, i think it's appropriate i don't think it's considered a negative >> rick, thank you very much

i'm glad you were there. yay. let's bring in lindsey piaza rick brings up an excellent point, it's happening for all the right reasons. >> it is happening for some right reasons. a lot is still unfounded competence driving the marketplace. we seem to be in a trump bump or a tax ramally akinesiology to 2013 amid the taper tantrum. we see rates rise temporarily, they're struggling to find a more sustainable trading range we need to see a lot of this optimism supported by very clear gained momentum in the underlying economy and at this point there still is a lot of question marks as we heard from some fed officials more recently, yes, three rate hikes are on the table also this possibility of way less than three, one, maybe two are on the table

so there are some question marks regarding the health of the underlying economy, what it means for fed proils and whether or not we can support these levels in the marketplace. >> go ahead. >> there was talk this morning, an analyst on. he said the real problem for the market is what happens with the fed in 2019. i'm not really concerned about that, partly because of what you just said, who ill the fed goes higher, there is a kind of pullback to not going higher at least that itself where the debate is. should you go higher also the fed has already said it's not really going that high, the upper limit on the fed funds rate is somewhere between two-and-a-half and 3%. that's one of the reasons stocks gets an all clear, at least from the interest rate side, even if they go up, they're not going all high >> if it's a win-win scenario for the equity markets, the feds have been clear, even if we see a continued gradual rise in rates, it's likely to be closer

to that two-and-a-half percent mark the median consensus is around that two-and-a-half mark, very accommodative levels, which could coincide with moderate but stable growth in the u.s., both of which will be fantastic for rick assets, absolutely. >> there has been a rumsfeldian idea this idea of known unknowns and the known unknowns when we look at the things that could derail the economy the kind of risc out there what are your big concerns? >> i think there is a number of wild cards we still have uneven relations with russia. we have the threat of nuclear war with north korea we have lingering instability if europe we have some very important elections coming up in italy in the spring, which we see a growing anti-eu sentiment. we are still learning about whether or not this will be a hard landing - >> stop right there i want to point out the top three things you just said are all outside

this country >> that when you look at and think about the big risks, they're not domestic >> some are domestic when we come back to bringing it back to the u.s., i think the lack of excuse me further steps in terms of fiscal stimulus. remember, it wasn't just tax reform businesses and consumers were anticipating a more of a pro growth agenda in total, including regulatory reform, health care reform, a large infrastructure spending bill that's still priced into the cake at this point and without that, i think we're going to see a clear undermining of confidence and support to the marketplace that it's already been preemptively priced into the marketplace. >> thank you for joining us. steve, thank you president trump talked about approaching a big anniversary, his first full year in office. has the president changed the game for voters? we will take a look at that. good morning, diana. >> reporter: good morning, joe, you definitely changed the game

with upside and downside, confidence among home builders jumped in the month following the election of president trump t. biggest jump in 20 years to the highest level before the crash. at the time the president of the national association of home builders, which gauges sentiment say builders are hopeful president-elect lump will follow through on his pledge to cut regulations harming affordability. one year later, deregulation isn't happen, small businesses, which most small builders are, did get a tax break the credit markets they rely on are tight no change to the banking system yet. and the two biggest issues for builders, the cost of labor and materials got worse under the trump administration his stance on immigration started an outflux of workers and a shortage following the housing crash. trade wars especially with canada caused the prices of materials to skyrocket lumber and wall boards up double

digits jim gypsum isn't far behind. why are builders opt mick? the economy is stronger. bottom line, a stronger economy means more people will want to buy homes. as for that housing starts number a. lot will get blamed on weather and snaurl disastnatura disasters out west we may see that happen in february looking to mortgage rates, it's important to note we are coming into a spring market with record low inventory, high prices that continue to go higher the slightest move higher in mortgage rates we seen in the past two weeks will hurt buyers coming into the spring market. they will not have that much movement >> thank you for that. coming up next, when we return, we will talk to someone that got back from saudi arabia with the corruption crackdown, the crown quk"ce' vision for the country "saw returns with that in just a moment.

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>> welcome back to "squawk box." an anticipated goal for vision 2030 back into focus joining us right now for more the founder of the arabia foundation, a washington, d.c. think base tank focused on policies in the middle east. she back from riyadh we have so many questions about what is going on over there. >> thank you for having me. >> thank you for coming in, both about the tuition 20-30 plan and also in part because our audience knows the prince aleaf,

who we believe is imprisoned inside the ritz, if he hasn't been taken elsewhere, where that is all headed and what that means. can you start with the corruption piece of this anti-corruption piece of all this, which is to say are you supportive of nbs' strategy of roundsing up all of these folks? >> i am. i think what he had to do is change the mode of behaviobehavr you know, when the king took pow 24 years ago, he talked about the need to reduce corruption t. problem is there has been a way of doing business in saudi arabia the last 50 years and talk doesn't effect behavioral change by elites you needed some sort of shock therapy and what took place was shock therapy. it was a very hard message that the old way of doing business, the country can no longer report it's messy it's destructive it has short-term negative implications but long term, it's a very

positive development >> can i ask you on the piece, if he was not on the list, i argue this could have been a very important big signal inside the country but this piece for alwaleed, how important it was to include him in this because at the same time on the other end of it, there are now american investors and european investors who had relationships with alwaleed who say i don't know what's going on, what transparency will we have in this process to understand why piece people were arrested, why these settlements have taken place at all >> well, look, will you not know that until the process is over. >> will you know at the end? >> because the government understands it has to draw a red line and explain to the markets,

do nestic and international this was a once-only unique generational disruptive event that had to take place to effect behavioral change but that going forward that cannot happen again. now as far as the prince alwaleed was concerned he was a high profile person doing business the way everybody else was there was a purpose of including him because of his high profile. it sent a message that is top high profile individuals that were perceived to be immune were no longer immune so nobody will be immune so i think in that sense, that was the purpose that was studied by that. >> it does mean no matter what, they will have to come forward to the public arena with information that is damming about all of these people including alwaleed, so that it doesn't look like and isn't, in fact, some kind of shakydown

>> well, and i think they l. i think to the extent that they have said that they're going to come out >> right. >> with a very transparent and public explanation of what happened when the process is completed. what you have is a situation where over 90% of the people who have been held in the ritz have settled. >> yes >> or a settling a portion will remain. >> that portion that remains will be formally indicted and the charges will be available and then they will go through a formal legal process >> do you think this has helped or hurt their ability to get international investors to get behind this and for example -- >> it's disruptive, but any dramatic change is disruptive. there is a price everybody understands that so yes, the saudi market and people are nervous and in a state of shock because this is something that has never happened before. >> what about the nbs the stories we hear about him buying real estate in france for $350

million and art for $450 million. all of -- he was internally popular about this sort of anti-corruption effort yet these other cracks, he bought expensive assets a couple years ago, before ago before he became crown prince. and he could certainly afford it optically, in retrospect, it doesn't look great the country isn't fighting wealth they aren't going after people who can afford to buy yachts -- >> it looks like you're taking these ill gotten gains and turning around -- >> there were different ways people made wealth in saudi arabia, the king has the capacity to get patronnage and has a budget where he allocated. >> it's okay for the king but not princes. >> he gives it out in an organized fashion. the third element of it was that people were going to make money out of government contracts by cooking those contracts to be --

to be equal to two or three times the real value and that is the part that the government wants to stop. that's corruption. in other words, when the king gives you legally and has the full right to do that, that's pat tronage. >> to the western era, it sounds similar. >> they don't have that kind of system legally the king has the right to give you patronage. and you see, that's the difference. >> appreciate it >> when we return, jim cramer will join us live from the new york stock exchange.

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jim cramer joins us now. big day yesterday, apple added to all of the positive sentiment, i guess, jim. how is morgan stanley as long as we're talking -- >> morgan stanley is good. these are -- when you look back at these, actually there was no one -- i can even make a case for goldman, that is not cheap and better than the average stock in the market because of the tax reform and because the possibility of the yield curve changing and just more spending money for people and i think that some of these

stocks have become political the fact that the banks are doing well after being companies viewed as being not great actors during the previous era is still stinging these guys. i listened to an excellent report about credit conditions being tight. that's going to change the idea they sell between 10 and 14 times earnings makes no sense. they are growth companies. >> okay, great we'll talk more about the full year market potential and what happens this weekend are you nervous yet or you're good >> i'm plenty nervous. these guys have a good "d. "d" wins ball games. >> when is it? like sunday night. >> 6:38. >> i think you'll be on a plane. he's doing the eagles -- flies e fly eagles fly. >> maybe learn how to spell the word eagle it's probably hard because we pronounce it eagle we'll see you in a couple of minutes. tim cook speaks out on battery-gate we're in the chairs ne

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fidelity. another day at the office. why do you put up with it? believe it or not you actually like what you do. even love it. and today, you can do things you never could before. you're working in millions of places at once with iot sensors. analyzing social data on the cloud to create new designs. and using blockchain to help prevent fraud. so get back to it and do the best work of your life. joe loves john mellencamp, he was just singing -- >> i was he's a lyricist -- went to a

small town -- then a small town. >> probably where they bury me we're in the chairs and apple ceo tim cook speaking out about battery-gate that's the controversy over slowing down iphones with the upgrades they put out. here's what he told about the slowdown. >> when we put it out, we did say what it was but i don't think a lot of people were paying attention and maybe we should have been clearer as well and so we deeply apologize for anybody that thinks we had some other kind of motivation. >> iphone users can now replace those batteries for a reduced fee of $29 >> she was at cnbc for a while. >> rebecca jarvis. >> before that on "the apprentice". >> with our president. it's the ultimate day before

davos. >> davos focused all of us. >> i keep coming back to the one, the only one worth reading i think. >> walter isaacson's book. >> no. >> thank you for that. on that note. >> that's a great note to end on make sure you join us -- who wrote that >> andrew ross sorkin. "squawk on the street" is next ♪ >> good thursday morning, i'm carl quintanilla with jim cramer and david faber. stocks are poised to take a pause from the surge, best day since november 4th 200 point plus day we're watching the looming government shutdown. europe with gains, 10-year above 2.6s, that's on the cusp of a three-year high. futures largely flat ahead of th