on the shares this morning and panera is asking the fda to define what an egg is wow. i knew how hard it was to figure out whether it was the chicken or the egg, now we're trying to figure out what an egg is. we'll tell you why it's friday, january 19, 2018. "squawk box" starts right now. ♪ live from new york where business never sleeps, this is "squawk box. good morning, everybody. welcome back to "squawk box" on cnbc 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. yesterday the dow was down by just under 100 points. off the lows of the session. that may not sound like much of a decline, but it's the worst performance for the dow in about three weeks.

look at the green arrows back this morning, even though the government could potentially be shut down. s&p futures up by 4.5. the nasdaq up by 19. we'll talk more about that potential government shutdown in a bit. overnight in asia, the nikkei higher. up 0.2%. hang seng up by 0.4. so was the shanghai in china in europe, at least right now green arrows across the board. biggest gainer of the major averages is the dax, which is up by almost 0.9 percent. the ten-year yield hitting 2.64% yesterday. that's the highest level since september of 2014. again, concerns about the government shutdown really pushing things we'll see what happens to the

ten-year when and if a budget deal is found. right now it looks like it's setting in at 2.63%. some big headlines this morning. ibm returning to revenue growth for the first time in five years. shares are down. there's weaker than expected guidance overshadowing that news the company beating on the top and bottom lines but took a charge of $5.5 billion as a result of the next tax law we'll talk to an analyst about this at 6:30 a.m. this morning what was your line even trump -- >> i was kidding if ginni heard that, she would be mad after working so hard so long to get it to a revenue gain and to attribute it to a macro government -- you know what tax rate for the quarter was >> 6%. which is kind of a common thing

with the difficulties. the stock is called down it's gone above -- almost back to where buffett was buying it people soured on it. but it's had a good run recently with the entire stock market amazing that the big -- the sophisticated big mainframes, up 35% or something >> yeah. >> cloud is doing better i was gratified to see it. >> good news >> and the blockchain. we talked about one of their people earlier this week about the blockchain >> she is trying hard. i like her it's daunting. it's hard enough to be microsoft. >> yeah. >> this new facebook, google, amazon world >> talking about in this uber -- did you say uber world >> no. i don't know about ub weuber >> softbank's investment deal closed yesterday with uber bringing the stake to 15%,

including a large purchase of shares from uber investors and employees. a discount valuation of $48 billion. completion of the deal triggers governance changes including the addition of new board members and benchmark capital agreed to drop its lawsuit against travis kalanick upon the deal's complex. sources say kalanick will get 1$1.4 billion from the deal and some of the shares into the transaction. the international energy agency said the u.s. is well positioned to take over saudi arabia and russia as the largest energy producer by the end of this year. >> amazing >> quite remarkable. >> i think their call was explosive growth from the united states >> check out crude prices right now. we'll show you what the barrel of wti is at, 63.70. >> they pointed out because other places are constrained

>> yes >> venezuela and -- >> so did you know what -- did you know the chicken fried thing? >> yeah. >> zack brown. >> don't you claim oklahoma? ♪ >> zack brown is awesome ♪ a pair of jeans that fit just right and the radio's on ♪ >> you've heard of johnny cash, right? >> heard of him. >> all right all right. countdown to shutdown. the house passed the kick the can bill to fund the government for another month. now it's on to the senate. i'm sure you're seeing a lot of smiling faces. i'm reading from the journal, senate democrats have indicated they have the votes to block the measure to keep the government open so they are saying they've got the votes to make sure there's a shutdown

guess -- that basically what's going to happen? a lot of smiling faces down there. >> that was something we reported yesterday they seem to be buying some time to continue negotiations with leadership, with the president to see if they can get a las last-ditch daca deal as part of this it's not currently included. last night the house struck a deal with the conservative freedom caucus that was also balking at this, to pass that bill that moved into the senate's court where there is not on opposition from democrats but also a handful of republicans, at least four, potentially five, and some democrats have said they have enough votes to block the bill paul ryan was pleading with the top senate democrat last night to let cooler heads prevail in this situation >> i also want people to understand that senate democrats do not oppose anything in this

bill they're just holding this critical funding hostage for a deal on a completely unrelated emigration issue yes, we need to address the daca program, and we're engaged in good-faith negotiations as we speak. but that deadline is weeks away. >> what followed that moment was tense debate in a procedural vote over in the senate where mitch mcconnell adjourned the group until 11:00 a.m. today that's just 13 hours before this shutdown deadline. on the floor senate democrat, chuck schumer, said there was only one solution to the problem. >> the four leaders could sit down, there's been a lot of discussion and come to an agreement and do what the president said at one point, send it to his desk and he'll sign it. we could get that done before the deadline of tomorrow night expires. >> senate majority leader mitch mcconnell said it is not easy saying it's not clear what the president would sign in terms of

immigration policy president trump is scheduled to depart for mar-a-lago this afternoon with a gala scheduled tomorrow night to mark one-year of his presidency, but he could be presiding over last-minute deal talks to see what they could hammer out or potent shoolly a looming shutdown one thing democrats have proposed is a short-term bill that would only last a few days to ramp up the pressure to get this immigration deal as part of this >> yeah. you know i was kidding you at the top. i knew there was no chance as of yesterday. you know that i know that you know that i know that you were kidding. you are playing it very straight it's weird to see. >> that's part of my job >> it is the new -- yeah. you have to -- though, i see the press corps. do they really play it straight those other people you're down there with they have their own -- i don't know maybe not. >> i think we can only be responsible for the work product we put out there are good and talented

people in the washington press corps. >> it says democrats are excited because they have the votes to make sure the government shuts down i'll tell you why i'm pointing it out republicans will get blamed no matter what. that's just -- they're seen as people who don't like government as much as democrats so when it gets shut down, most people immediately assume they're doing something to try to shrink government it's just the philosophy of the two parties. it doesn't matter what the actual facts are of the situation, they'll be tarred with the political damage probably in this case, this is totally unrelated to budget -- the daca stuff. totally unrelated to keeping the government open. it's obviously, you know, it's being -- they're using it, holing it hostage, holding the government hostage to their own interests, right >> it is in the eye of the beholder or in these situations the eye of the proposer. when democrats were in power and

made proposals of this kind, then it was the republicans who were on the other side of the fence trying to get their votes together to block this it's worth noting that idealogically there have been a lot of republicans that do not support these short-term spending bills just on the face of it. they think that military should be funded with more certainty for a longer period of time. they don't like the couples uoif this with the debt ceiling you have republicans in the senate and the house voting against the continuing resolution at that time. >> it's like the obamacare repeal you have guys, democrats that don't want it to happen for one reason then the other guy is saying it's not far enough. >> when you're not in power you have the benefit of being more to stick to your position. but when you're in leadership, you have to suck it up and --

>> we shouldn't kid ourselves of either party being holier than thow -- >> this is the democrats flexing their muscles. we knew from the last continuing resolution, this is the one they were going to do kayla tausche, thank you kayla, thanks for everything seriously. you probably -- she knew who zack brown was i know you do. >> of course they sang the national anthem at the national championship game last monday. >> they did. >> they're on tour they're here this summer >> if they started that game before midnight i might have seen some of that. >> the outcome wasn't good >> it was a great game i think georgia has a future i think that -- well, the coach is from alabama. that's the irony maybe they finally got some good management down there. thank you. let's get a check on the markets. joining us is mary ann bartels, head of portfolio strategy at merrill lynch wealth manment and

chris wexler also joins us mary ann, let's start about what the tax plan is going to mean for earnings we're in the midst of earnings season waiting to get guidance from these companies what do you anticipate >> we anticipate earnings going up an additional 10% than where we were without the tax plan we think it's a huge benefit for earnings we were already seeing analysts raising numbers, now with the tax plan we expect the numbers to go up more. >> is that why we've seen this big jump in the market this year the momentum has been huge just in the first nine or ten trading sessions >> i think that that's part of it we're kind of in the sweet spot of this part of the growth in the economy. and in the world you know, we always talk about the u.s. we're seeing emerging markets recover, seeing japan recover. seeing europe recover. this is a global recovery.

so it's very good for the multinational companies as well. so we think we have another strong year of earnings. >> you wouldn't call what we've seen so far irrational exuberance >> absolutely not. >> how about you, chris. >> i just got off two days visiting with companies here in new york after meeting with 30 to 40 management teams, they're positive they're excited about the future they're not talking about headwinds, they're talking about the tailwinds of opportunities to invest money, grow businesses they're the job creators in the economy. they're excited. technology continues to be a great place where they're investing money. data continues to grow data storage, data processing, movement money is flowing in. taxes certainly were some part of the discussion. will it impact them on their rates? can they return money? these are things they'll think about over a period of time.

it won't happen immediately, but it's tailwinds and helping the market here. if it doesn't happen immediately you would still be positive on these their these shares >> yeah, they're looking at top line growth finally, where they can put leverage into the income statements and have earnings drop to the bottom and tacks are a part of that >> mary ann, you said capex, we will see companies putting money to work? >> we see capexa and the return to m&a >> that means what for which sectors? >> your space will do well in the small and mid cap -- chris's sm space will do well we see a lot of potential m&a activity in energy consolidation there, a lot in

healthcare, that's something we've been bullish on. stek our forga tech is our favorite the true leadership in the market is technology we moved into the digital period >> technology was a big leader for last year. some people thought that leadership needed to change hands. >> heavens no. this is a major cycle. it's a long-winded answer. but in the 1500s the u.s. economy was driven by agriculture. we had a new major technology called the steam engine, we went into this industrial period. in 2000 we went into the digital period technology is in early stage of birthing it's not just in the united states, it's global. your emerging leadership can be industrials. >> can i ask something on the m&a side talking big m&a or smaller there's also a real question

around the regulatory environment, what does america first mean what does size mean? >> i think that -- >> there's a lot of political pieces to this >> i think chris's space benefits in the small to mid cap space. it doesn't have to be big headline mergers, but you'll get consolidation in the mid to smaller space. >> chris, your concern is what's happening with the yield markets. you're worried about a potential inverted yield curve with the twos and tens. >> that's something we keep an eye on it's been flattening out i think the fed does have it under control because they're controlling pretty much all areas of the yield curve for now. >> the ten-year above 2.6% now >> so it hasn't inverted, i don't think it will. the other area to focus on is high yield markets which continue to be healthy for now, but that area could give weakness to small caps we think this will be a good

year for small and mid caps, it sets up better for small and mid caps after underperforming in 2017 >> thank you both for being here >> thanks. when we come back, a lot going on flying international on united is getting more comfortable, but these things cost money. we have details after the break. you need to buy a car

and you want to get an excellent price you'd think with all these options it would be easy. but with terms like msrp, invoice, list price, things get confusing pretty fast. you just want to get a real price and that's where true car comes in. only with true car can you see what other people paid for the car you want and you can connect with certified dealers who offer prices based on this same information. none of those other sites do that. from end to end, true car is your only one stop solution.

> . welcome back united airlines joining its competitors launching a premium class, it will be called united premium plus passengers will receive free alcoholic beverages. flts that's a that's all we need on a nine-hour flight >> you also get a blanket from saks fifth avenue. there's a 27% premium over

regular economy seats is what they're charging >> you get a slightly better seat >> so you'll be like this and you'll still have a pillowment. >> i got my turtleneck yesterday. >> the inventor sent me an e-mail yesterday >> no way. >> i'll bring it to davos. >> we'll see how it goes >> yes, you will be in this little seat. you get more leg room. the leg room matters >> a little more leg room. i'm trying to think of an analogy for what premium coach is like. it's like an oxymoron sort of. the way they pack people in. on a nine-hour or eight-hour flight >> leg room platters >> leg room matters. if i can get the exit row, i call that poor man's first class. always go for the exit row >> then you can't store anything underneath >> it doesn't matter

>> you don't fly -- >> i flew to chicago -- >> i took coach last week. >> i do all the time >> because there was no first class. that was an express jet. >> no, because it's a two-hour flight >> was there a front of the plane? andrew -- you're sure? >> he was paying for the ticket himself. >> i know. >> sorkin family was just on vacation, we all sat in the back of course we did >> andrew ross sorkin walks through the front of the plane and people look at you and they try to avoid your gaze as you're moving to row 40 >> yes absolutely >> i need this on film >> absolutely. >> do you have any witnesses >> i have a son named henry. we sat with ipads in the back. >> you don't want him to know his father can't afford to fly in first class >> i sat in the middle seat, i gave him the window. this was big news yesterday. amazon has actually named 20

finalists in its race to win its second headquarters. the short list includes 19 american cities plus toronto the picks lean heavily into the east and into the sunbelt. you figured this would be as far away geographically as you could get from seattle amazon expects to pick the winning city this year you saw newark, new jersey is one of the ones named in this. >> if they were totally pc about trying to go to an area that could really benefit from this -- what is your pick? >> they would go to a place like newark or -- >> you could rebuild the entire city with this >> or do they end up, you know, orlando, something like that which is nice. you go there because your employees will be happier probably transportation hubs. >> transportation. >> let's see >> what's your vote? >> i want newark i hope they come to newark >> i think when push comes to shove, there's reasons, stat

income tax down there. there's reasons. that's why this migration is happening. you can deny it's happening, but where you're -- >> why do you think detroit was left off the list? >> i was surprised too >> i can think of a lot of reasons. do you want to move to detroit i can think of a lot of reasons why it was left off. >> yet places like newark and new york and philadelphia -- >> i was surprised they didn't make that list >> it's in the stages of a pretty good recovery >> they made an interesting -- i thought their offer was compelling they were also going to do it with canada. remember they were using the border >> yes with toronto making the list >> i have to see this. panera bread has petitioned the fda to define what an egg is it's a shot at competitors i'm starting to understand this. do they use a powdered thing

>> powdered eggs >> panera says burger king, taco bell and dunkin' sell egg patties that contain more than five ingredients >> oh. okay >> panera just uses eggs panera wants the fda to issue clear guidance on what brands can actually call an egg >> that's a fair point >> that is >> i wouldn't know there are five different things in there >> you have had like an -- >> like an egg mcmuffin. >> or where it's really bad. you know it was a long time ago that that thing came out of the shell. >> a lot of additives put in >> powdered stuff doesn't even taste like eggs. be nice to have a real egg we don't know. this has nothing to do with -- >> this is like -- >> a chicken or egg thing. >> powdered eggs did not come first. coming up, ibm reporting -- >> it has to be the chicken first. they need to sit on the egg.

>> ibm reporting its first quarter of revenue growth in the last 23 quarters, however tax related charges weighed on earnings and the stock is lower even after the investors finally got what they were waiting 23 quarters for we'll talk to an analyst next. here's a look at yesterday's s&p 500 winners and losers what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter.

morgan stanley with expedia, you can book a flight, then add a hotel, and save. ♪ everything you need to go. expedia hey, need fast try cool mint zantac. it releases a cooling sensation in your mouth and throat. zantac works in as little as 30 minutes. nexium can take 24 hours. try cool mint zantac.

no pill relieves heartburn faster.

hey, what are you guys doing here? we've been helping you prepare and invest for retirement since day one. why would we leave now? because i'm retired now. so? we're voya. we stay with you to and through retirement... ...with solutions to help provide income throughout. so, you'll still be here to help me make smart choices? well, with your finances that is. we had nothing to do with that, uh, tie. or the suit. or the shirt. voya. helping you to and through retirement. ♪

welcome back you're watching "squawk box" live from the nasdaq market site in times square. ♪ >>o a shutdown the markets are taking it in stride the dow looks like it would open up higher again, 25 points higher nasdaq looking to open higher as well the s&p 500 looking to open about 5 points higher. >> the trump administration considering san francisco fed president john williams as vice chair of the federal reserve that's why we were playing that music. it wasn't clear if williams -- ♪ >> thank you you opened the floodgates. we will be playing it every day. >> it wasn't clear if pill ywils was the front-runner other candidates include three

frequent "squawk box" gets larry lindsay among them and mo h mo hhammed el-erian. >> because of the multi speed economies. >> we love all of them >> can't pick a child. >> williams said he would welcome the opportunity to contribute at the highest levels let's tem yll you about sto to watch this morning. american express reporting its first quarterly loss in 26 years in the fourth quarter but adjusted earnings did beat the street they will suspend the share buyback program for six months to rebuild capital following tax law changes in the u.s that's why they reported that loss stock is down by 2%. that's a sane move to say, y we'll rebuild capital, and go.

>> with the old system we had much higher nominal rates, and they were doing things that allowed them to benefit from all the loopholes, now -- >> it doesn't surprise me at all. >> i know. now we're seeing it. the tide has come down >> i have to say, i like to see a long-term move like this even though the stock reaction is down 2% i like to see a long-term move where they are concerned about making sure -- >> but you're seeing near-term they were doing it one way now when you level the playing field -- >> it's not gaming the system, it's playing by the rules of the system >> i'm the one who usually says that >> all of us do this, personally in our own lives >> people say that's your duty to avoid as much as you can. not evade, but avoid >> play by the rules, but when the rules are so complicated -- >> i never knew about our friend here, how affective he was, when something changes, you have to gauge the situation to figure

out what to do did you see him jump into action didn't you you did. you found out about state taxes -- >> as you said, it was your patriotic duty >> i never knew he was that patriotic. i never new the level of your patriotism in terms of avoiding -- >> god bless america >> let's tell you about jpmorgan jpmorgan's ceo jamie dimon receiving 29$29.5 million in tol pay last year according to an s.e.c. filing. that's up more than 5% from 2016 his pay package includes $5 million in cash. his base salary remains unchanged at 1.5 million texas instruments named brian crutcher as the new ceo. he will succeed rich templeton in june. templeton will stay on as chairman did you realize it's been 14 years that templeton has been there? he was put in there at 2004.

i remember the young new guy coming in. >> i do. >> crutcher has worked at the company for more than two decades. >> but my failing faculties prevent me from remembering the guy we were -- i see his face. >> yeah. >> i liked him >> it's not your failing faculties because you're old, i can't remember this either >> who was the guy before templeton? he was our buddy >> this is why google exists so you don't have to remember everything >> of course let's get to ibm posting fourth quarter beats on the top and bottom line ending a 22 quarter streak of year over year revenue declines speaking on "mad money" last night, ibm's former cfo and current global markets chief talked about the company's momentum >> first half to second half which we described in july played out as we said. that puts us on a good base.

we guided towards growing revenue and stable margins when we think about the transformation of ibm, yes, now that the portfolio is transformed, we have momentum going after 2018 joining us now is steven milanovich from ubs. great to have you today. especially after this happened it was a big day why is the stock down first of all after that great news on revenue finally growing. >> the stock's had a good run early this year. it underperformed the market by 27% last year. there's a bit of a dogs to the dow feeling. in terms of the report, revenue is g margood, but margins were pressure they had a 6% tax rate the guidance for '18 is the same as the guidance for last year. it's 1380 in earnings. i thought they might have guided above $14. monetary pressure is the reason

the stock is down here people are excited about stability at the company, revenue growing, but not convinced that they're out of the woods. >> so, with ibm at this point, we have seen it run up recently. maybe it's not surprising to see it drop down a bit how much of the revenue gain was currency 3 points, wasn't it? if the dollar had not moved at all, would they still have been down they had headwinds with currencies in the past you live by the sword, die by the sword, but it helped, right? >> they would have had slight constant currency revenue growth they're suggesting for 2018 they'll have reported growth with help from currency two to three points as well as actual growth so the street tries to look through currency the non-currency revenue is growing. so that's encouraging. they do have a mainframe cycle that's contributing to it. at the end of the day, we are focused on margins they have their new business they claim the new business will

be more profitability than the legacy business. >> you're talking about blockchain and watson and all of those? >> exactly artificial intelligence, consulting that goes with that recently blockchain. new types of services and software the cloud. remember, their strategy is the two pillar cloud platform, cognitive commuting. that's where they're investing into ginni rometty's credit, three, four years ago she said we have to invest into these new businesses, so there's progress, but we're not yet convinced the margins are where they need to be >> could she be investing more in those business? do you look and say there should have been a bigger bet into those businesses >> you could argue there should have been an earlier bet >> is there still a bigger bet to be made >> possibly. >> by the way, they were early on blockchain relative to others >> they absolutely are

block klachain is nascent and na profit driver for many years >> but it could be a huge profit driver later >> it's important. they do have thought leadership working with a lot of big banks. free cash flow is good, but they give most of it back to investors. last year the m&a was quite small. a tenth of the previous year so there's an argument that perhaps they should be more aggressive on m&a and high-growth areas. >> we will see her next week in davos. what's one question will you have for you >> why do you believe the margins of the new business will be better than the very good legacy margins you have enjoyed historically >> so, the cloud business, that was up 30% are they now real players? a company can have thought

leadership that's weird >> yeah. >> that's a good buzz term for yo you. >> you know, if i can pull that out of my pocket >> ibm has always succeeded when it's been a thought leader in the industry in cloud, they're doing a better job, but i would argue there, amazon, google and microsoft are probably the thought leaders so ibm is on the defensive >> why do they have a 6% tax rate >> they still have about 4 billion of tax credits going forward. putting aside the $5 billion charge related to the tax law legislation. >> what's that related to? >> discrete items that they have legitimately they have things they're working through with the irs, they do tend to go into ibm's favor, because in the past ibm has been conservative, but they tend to pull out a low tax

rate when they need it they need it in the fourth quarter, they need it in the first quarter, too. >> i need one. >> please. >> can i pull it out have you checked into that, andrew how do you pull out a low tax rate i could definitely -- >> please don't. >> i don't think you have 4 billion -- >> do you have any n.o.l.s >> nothing i'm just patriotic like you are. we're finally -- we're finally doing what you wanted to us do for so long. >> very quickly, what do you tell people to do if you're not completely convinced the margins are there? buy the stock? hold the stock >> hold the stock. we have a nueutral on it here. don't chase it here. >> it's mark shepherd. >> i thought it was -- >> it's mark shepherd. >> he was there until -- >> 2009. >> mark shepherd was chairman and ceo of texas instruments >> i don't remember him. >> maybe he was before >> yeah.

he was from -- to 2004 >> i think he lived -- okay. when we come back, the countdown to the shutdown. hakeem jeffries will join us at 8:00 a.m. eastern time at 8:40 we will talk to rob portman. stay tuned you're watching "squawk box" on cnbc what are the ingredients of a life well lived? is it the places you go? the things you own? or the people that fill it with meaning?

for 150 years, generations of families have chosen pacific life for retirement and life insurance solutions. protecting what's most important to you. that's the power of pacific. ask a financial advisor about pacific life.

well despite the chill we are weeks away from the start of the spring housing market. all anyone in the industry can talk about is record low supply of homes for sale. now mortgage rates are breaking into new highs and that will make supply worse. diana olick will tell us why >> mortgage rates were stuck near record lows for the bulk of last year. that's no longer the case. we're suddenly breaking out. the average rate on the 30-year fixed is up nearly a quarter point from the beginning of this year from 4% to 4.22% a big jump to end yesterday thanks to the selloff in the bond market rates loosely follow the yield on the ten-year treasury that might not seem like a lot,

but there's a couple reasons why the move could weigh on the spring housing market. namely because of the supply crisis there's so much demand, so little supply already that home prices are rising far too fast faster than incomes and inflation. if rates continue to rise, sellers will have less incentive to list their homes for sale because they'll lose that rock bottom rate they have locked in now. that means even fewer homes for sale on the buyer's side, a new rising rate environment could have more first-time rate buyers to get in fast before rates rise further and price them out that means more demand. what's ahead in the short-term, a government shutdown could reverse the bochnd selloff or bd buyers may feel like it's time to get back in again after this kind of spike. just one note for today, if the government does shut down, government mortgage programs like fha and va loans, they are all shut down as well. >> diana, thank you very much.

coming up, from prison to politics, don blankenship served time for mine safety violations, but now he's running for sflena in west virginia he will join us next as we head to break a quick check of the european markets right now. stay with me, mr. parker. when a critical patient is far from the hospital, the hospital must come to the patient. stay with me, mr. parker. the at&t network is helping first responders connect with medical teams in near real time... stay with me, mr. parker. ...saving time when it matters most. stay with me, mrs. parker.

that's the power of and. tomorrow, it's a day filled with promise and new beginnings, challenges and opportunities. at ameriprise financial, we can't predict what tomorrow will bring. but our comprehensive approach to financial planning can help make sure you're prepared for what's expected and even what's not. and that kind of financial confidence can help you sleep better at night. with the right financial advisor, life can be brilliant.

our next guest is going from prison to politics he spent a year behind bars. he's now running for u.s. senate he joins us on the news line don blankenship, former chair and c of massey energy. >> good morning. >> good morning. >> tell us how you expect to run and how you can overcome some of the publicity and obviously some of the past?

>> well, i think on the explosion and the prosecution, if you will, it's probably a badge of honor to have been in west virginia, at least, to have been jailed by obama and loretta lynch because i think most people are coming to realize there are a lot of problems in the doj and of course the candidates that i'm running against, two of them supported hillary in the past, she didn't do too well in west virginia and the third one is from new jersey/new york. i think we've got a pretty good chance. >> in terms of your particular platform, is it -- >> it's closer to president trump than anyone probably for certain in west virginia, if not across the entire country. in fact, three or four years before president trump ran for office i produced a documentary called "rape session" with is a play on the words of regulation

and recession that speak to the words of what president trump was talking about, trade policy, illegal immigration, corruption, taxes, so forth. >> this is senator joe manchin on twitter he says, i hope that mr. blankenship chooses to do the right thing and disappear from public -- from the public eye. what do you make of that >> doesn't sound very moderate or centrist to me. the senator declared me guilty before i ever went to trial and so didn't president obama effectively and of course i was tried in front of obama appointed judges and i think people see through what happened there. and, of course, the investigation reports, they show the government issues were under obama's control, mansions control and false. i think it will play well for me as the campaign develops. >> and do you think or would you try to score an endorsement from

president trump? >> not during the primary, i wouldn't expect that he would endorse anyone during the primary, but i think he probably will endorse anyone against senator joe manchin in the general. in the primary it will be primarily evan jenkins and patrick morsi and myself like i said, jenkins has been in public office for 20 years and not done anything for west virginia mr. morici is from out of state. i think i'll stack up pretty well against them. >> do you think given the history and the conviction, and i appreciate the point that there are people who believe that you were wrongly convicted, but nonetheless, that it would -- and given the deaths that did take place, the very real deaths that did take place and the very real victims, that it would be hard for certain people to endorse you? >> i'm sure it will be hard if they continue to believe that, but the fact of the matter is that anybody that cares to look

knows it was not what the government said it was obama declared that he knew what it was before they even investigated it and so didn't others it was not a dust explosion, it was a gas explosion and the science will show that of course, i will continue to file motions and paperwork, if you will, to try to get the verdict invalidated and that will be hard to do that before the primary, but the bottom line is that west virginians will learn through our campaign that the explosion did not occur the way the government said it did and they'll also learn about the real don blankenship >> and just so we understand, i mean, you're going to be running on the track record as an executive, as a , where do you -- where do you land on social issues relative to economic ones, for example?

>> i think i'm pretty much in line with the republican party on things like abortion and other issues of that nature, which most west virginians are so i think i line up really well with the typical republican platform and perfectly well with president trump. and i think i have more going for me than having been the ceo of a coal company. i've been involved in west virginia politics for a long time i' i've written campaigns that defeated mansion and got the severance tax or the tax, i should say, the sales tax on groceries eliminated and i've also been heavily involved in donations and so forth so the people that know me see me as much more than a ceo of a coal company. >> would you have supported the tax reform plan? >> yes >> and how would it -- >> simple answer after -- what's that >> and how would you think about the debt that may -- that may

come, the $1.5 trillion in debt that the package may be worth? >> well, i think the people are greatly underestimating the growth i mean, we said 7 to 12% of growth and 3% was an achievement. the fact is if you change both the regulations and the attitude, if you will, and the tax policy, you could easily get 4, 5, 6% growth and it will more than overcome the deficit that would otherwise occur. >> don, we appreciate you checking in with us. we look forward to talking to you throughout this process. >> thank you very much >> thank you. >> i appreciate you having me on. >> you bet. when we come back, shutdown looming. we will get a live report from washington on today's budget vote in the senate that would keep the government running. later, senator rob portman will tell us how he's voting "squawk box" will be right back.

(whispering) excuse me, are you aware of what's happening right now? we're facing 20 billion security events every day. ddos campaigns, ransomware, malware attacks... actually, we just handled all the priority threats. you did that? we did that. really. we analyzed millions of articles and reports. we can identify threats 50% faster. you can do that? we can do that. then do that. can we do that? we can do that.

shutdown showdown. the house passes a temporary bill ibm shares under pressure. we'll show you what's dragging big blue into the red. the chocolate factory for marijuana buzzing. the second hour of "squawk box" begins right now live from the beating heart of business, new york city this is "squawk box. good morning nice shot of new york city right there. welcome back to "squawk box" right here on cnbc live from the nasdaq market area

take a look at the futures on this friday morning. we do have some green arrows despite what we keep calling the countdown to the shutdown. that's what may or may not be happening in washington right now. dow looks like it would open about 26 points higher the nasdaq 21 points higher. s&p 25 points higher ibm shares, they are lower this despite breaking what has been a string of revenue declines 22 quarters of revenue declines. this time they break the streak and yet the stock is down this morning 3.3% of premarket. the company reported better than expected earnings. posted a revenue increase for the first time, as i said, now that's in 23 quarters. a cautious forecast among some of the factors pressuring the stock this morning we'll keep an eye on that. similar story for american express which beat on the top and bottom lines but is trading lower. amex took a one-time charge to cover repatriation taxes and suspended stock buy backs for

the first half of this year. this, i believe, was probably the last -- is this the last quarter? perhaps. but it's good to see an outgoing ceo take some difficult moves to help position the company. >> absolutely. 100% goes out, as you can say, off of that. adt going public today after seeing its ipo priced well below the expected range the home security company will go public at $14 per share compared to an expected range of 17 to $19. investors have expressed concern over adt's ability to get customers. does everybody remember where adt once was >> yeah, tyco. >> lawmakers have just under 17 hours to pass a spending bill. kayla tausche joins us right now. she has more on what to expect and how things are jockeying into positioning at the last minute kayla, good morning again. >> good morning, becky 17 hours until that deadline but 4 1/2 hours until the senate

convenes again majority leader mitch mcconnell adjourning late last night after tense debate with the vote still in jeopardy. at least four republicans plan to vote against it chuck schumer, whom aides say has enough to thwart the bill. it offers citizenship to children of undocumented immigrants second, after a 30 day funding bill to a couple of days and take out the sweeteners. that would add pressure to get to the deal. one problem, funding for children's health insurance which is included in this bill expires today. on immigration, mcconnell said the deal brokered by hill leaders wouldn't necessarily get the president's support. >> the presidency under our constitutional system is not irrelevant he's the person who signs things into law for most ofus, in the house an senate, on the republican side, we're interested in what his views are and those have not

been made fully apparent yet >> the white house does support the bill that the house passed last night speaker ryan striking an 11th hour deal with the house freedom caucus for its few dozen votes, but this could be a ping pong situation, becky, back and forth where each chamber is considering new details if, in fact, that is the route they choose to take. >> we're talking about hours for this, really, is what it kind of breaks down to i know it's difficult to try to figure it out. people in washington, are they thinking odds are it will be a decision odds are or odds or that, look, it's going to be too much of a heavy lift in that short amount of time? >> well, the gamble that senate majority leader mitch mcconnell is making is that the later you have the senate come into session this morning, the closer you potentially get to a shutdown, meaning those handful of republican nos would feel too much pressure to actually vote no and they might become yeses they're also just less than a dozen democrats whose votes are

unclear. they voted in favor of the last short-term spending bill back in december and have been mum on where they stand this time around the whip count is actually a little bit fuzzy here. yesterday senate democratic aides said they have the votes to thwart the deal they're thinking the closer you get the more pressure people will feel and the more they won't want to see this end up in a shutdown. >> kayla, thank you very much. folks, at 8:00 a.m. eastern time hakeem jeffries will be joining us to talk about last night's note at 8:30 a.m. senator rob portman will be our special guest. we'll talk to him about how he plans to vote. stick around for both of those interviews. concerns over a government shutdown hitting the markets a little yesterday dow closing down 97 points this morning the dow looks like it's going to open a little higher joining us now, gabriella santos and doug ramsey from the

lewdhold group jim paulson is at the lewdhold group. what's his title there >> he's chief investment strategist and i'm chief investment officer we sit on the same asset allocation committee. >> whose decision was it back in march of last year to say that trump's going to regret taking credit for the stock market? i think it was you according to doug ramsey. >> that was me. >> it said that because he's entering the stock market is at one of the most richly valued stock markets in u.s. history when he was elected. it's gone up 40% since then. was it really richly valued when he was elected or are you revisiting that notion >> tech stocks might be up 40% i think the market's maybe up 15 i mean, the view -- that view

was totally nonpartisan. i mean, the study was done looking from the valuations as of inauguration day a year ago looking at the likely four-year returns. so i've got three more years for that to prove out. >> it's early. okay all right. >> much like w coming in -- >> where there's hope there's -- maybe it will turn down and back down you might still be right about that but at this point you're basically saying that you don't have any worries about a shutdown though? >> no. i think it's theatrics you know, the democrats and republicans position themselves as if they're miles apart, but really i think both parties when you look at the ultimate policies and the spending that both embrace, they're playing between the 40 yard line so, i mean, the potential for any kind of shutdown here does not impact our market view in the least. >> gabriella, you've been -- >> which is bullish, by the way. >> good.

you've been talking about domestic investors missing the boat to some extent because of -- you like the global markets more that's been your mantra for a while. >> it has been about 18 months, two years. >> done pretty well here >> we have absolutely, and it's not at all a knock on the u.s. economy, on the u.s. market either, but just one thing to keep in mind for last year, really phenomenal year for u.s. equities, 22%. everyone else up 28% so, yes, the u.s. is doing phenomenally, but international is coming back and it's outperforming. we think that's a trend that continues for the next few years. it shows having a little bit of balance in making sure you have exposure both to domestic and international story. >> so at any time though you point out that -- i'm trying to figure out something that's consensus here what's the most -- you say we can have a correction at any time, could be 5%, could be 10%, could be a buying opportunity.

what's the most nonconsensusening your viewpoint right now that investors could benefit from what do you think? >> the first is international outperformance, again, focusing on strong performance, even better abroad. and the second is in regards to rates. i think we've just started seeing a move higher on yield, right? we're still at 2.6 yes, we've moved up but that's still incredibly low for an economy in the ninth year of the expansion, accelerating to probably 3% this year and with central banks around the world normalizing policy we see rates ending the year close to 3%. >> doug -- yeah, i know what i like here that i wanted to ask you about, and that is that some of the recent volatility in the stock market you think has to do with bitcoin finally came down from what almost 20,000 and so you think that can actually spill over into the speculation

that maybe is in the stock market or not? >> yeah, i do. i mean, to the extent that it's, you know, social mood that drives these things. when you have something that, i mean, has very ephemeral fundamentals that cracks 50%, i think that's a sign that investors or in this case are no longer able to suspend their belief i think it's important to watch. >> you even mention the super bowl tickets, how expensive those were, and you have front row seat to that, don't you? you're right in minneapolis. >> yeah, in my living room >> do you like the vikings this time around? >> i'm a -- i do i do defense wins championships >> gabriela, are you a vikings fan? >> i'm from brazil no comment world cup is coming.

>> do either of you think that we're underestimating inflation? >> yes yes. >> you do? >> absolutely. that's exactly why we have a slightly out of consensus view on rates inflation has already started to turn around for the past three months after, yes, some very disappointing months there around the second, third quarter of last year core inflation is turning back to 2%. it's not at all saying that we'll get much above that, but it's enough to keep the fed on track in terms of rates and in terms of the balance sheet absolutely >> pretty interesting. doug, where is steven? when he retired 2011 i'm sure he still weighs in, doesn't he? >> he does he came to our christmas party, got a new girlfriend. >> good for him. still got that beard you have a beard and paulson has a beard. is that like a leuthold thing or is that just it's freezing in minneapolis? >> that's exactly it.

>> is that it? >> it's cold out here. it's a seasonal thing. >> how cold is it? >> thins out during the summer. >> becky, how cold is it >> so cold they had to chip the dog off the fire hydrant >> okay. >> wow >> what? >> it's so cold that pick pockets -- what was it >> well, you want me to repeat the won that you won't repeat. you know exactly what it is? no, no, no, because it's about pick pockets, pick pockets have their hands in their own pockets. it was supposed to be lawyers. >> lawyers yeah, lawyers. all right. but we digressed doug, thank you. thank you. >> i'm definitely going to use that. >> chipping the dog off the fire hydrant? >> that was a scary visual. >> he's attached. >> ahhh. >> okay. coming up, when we return, julia boorstin taking a look at president trump's media regulatory overhaul despite his objection to the at&t/time warner deal, more than $70

billion worth of deals have been done in the space. we will talk about what that means in just a moment later, president's infrastructure plan taking place. secretary ray lahood and ed rendell are going to debate the state of the nation's airports, roads, bringesmodg, re stay tuned you're watching "squawk box" here on cnbc only track a benchmark. flexshares etfs are built around the way investors think. with objectives like building capital for the future, managing portfolio risk and liquidity and generating income. that's real etf innovation. flexshares. built by investors, for investors. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. yes or no?gin. do you want the same tools and seamless experience across web and tablet? do you want $4.95 commissions for stocks,

$0.50 options contracts? $1.50 futures contracts? what about a dedicated service team of trading specialists? did you say yes? good, then it's time for power e*trade. the platform, price and service that gives you the edge you need. looks like we have a couple seconds left. let's do some card twirling twirling cards e*trade. the original place to invest online.

welcome back to "squawk box. it has been one year since trump took over. what has it meant ft. meade yeah julia boorstin joins us this morning with more. >> good morning, andrew. one year into his presidency trump has followed through on some of his campaign trail promises and threats to the media industry last month the trump administration's fcc voted to overturn net neutrality. the obama administration's regulation of the internet this is after trump promised to, quote, eliminate the most intrusive regulations. obama's attack on the internet is another top down power grab net neutrality is the fairness doctrine he says will target conservative media. while taking a light regulatory touch on net neutrality, president trump has taken an active stance on mergers after

trump criticized one of the largest media deals ever, at&t's $85 billion deal of time warner, the department of justice sued to block the deal. here's what trump said back on the campaign trail >> at&t is buying time warner and, thus, cnn, a deal we will not approve in my administration because it's too much concentration of power in the hands of too few >> president trump's opposition to at&t and time warner's merger hasn't stopped a number of other media mergers. last year four were announced across the media landscape, disney buying fox's assets discovery buying scripts and meredith buying time the disney/fox combination is the largest of all of those deals valued at $52.5 billion of stocks that deal sparked no controversy. the president said he thinks that deal is good for jobs

andrew >> i'm just media mergers given this situation or not? >> well, yes i think that the consensus now is that there's so much pressure on companies to merge because with this consolidation, some of the smaller guys are just going to be put in a very tough situation when it comes to negotiating for distribution and reaching consumers so i think there's a lot of talk now about what's going to happen with viacom and cbs. what's going to happen to some of these smaller players like lion's gate who are considered for -- >> that's along the smaller end. the reason i ask is when you think about lion's gate, people say where's amazon where's apple? where's google >> well, amazon -- >> my larger question is if one of those players becomes the buyer of any of these other companies are we back in the same conversation that we're having right now about time

warner/at&t? >> well, look, i think if amazon or apple were to buy a company like lion's gate for a company of the size and scale of amazon and apple, a lion's gate acquisition would not be massive for them it would be a way to grow their media industry, but i think if you're asking about the question of competition and concerns about antitrust, the industries are all converging right now you're seeing the tech industry, the media industry all compete with each other in ways that they haven't before which is why you have at&t, you know, defending its choice and its decision to buy time warner, because they simply believe that that kind of vertical merger historically hasn't been blocked and that there's so much competition out there that everyone from facebook to google to the traditional media players like disney is all competing for consumers' attention so they say that it should be allowed. >> i thought andrew was going to ask you about whether you

would -- would you stay in old california or would you move to new california, julia? i think you have lower taxes in new california but you won't be on -- you might not be as close to the water have you thought about that? is that going to happen? >> you know, it's not something that seems plausible enough that i've had to consider a move or not. >> all right all right. just wondering because they don't want to leave the united states apparently, they just want to -- they want to leave california. okay all right. thanks, julia. probably won't happen. you're probably fine get back to the mergers. coming up, amazon's short list of cities do they have one in new california >> i don't know. i don't think so >> list of cities for its second headquarters a look at who's in the running is right after the break infrastructure spending front and center what will the president's plan entail we'll discuss that at 7:30 eastern. "squawk box" will be right back. time now for today's aflac

trivia question. what was netflix's first igal series? the answer when cnbc "squawk box" continues and a gentle wave-like motion... liberate your spine... aflac! and reach, toes blossoming... not that great at yoga ya but when i slipped a disc, he paid my claim in just one day. so he had your back? yup in just one day, we process, approve and pay. one day pay. only from aflac

now the answer to today's

aflac trivia question. what was netflix's first original series? the answer, "house of cards. welcome back to "squawk box" this morning amazon has named 20 finalists in its race to win its second headquarters the short list includes 19 cities plus toronto. >> hold on >> yeah. >> hold on. >> the picks lean heavily east and in the sunbelt amazon expects to pick the winning city this year lots of chatter, by the way, about one city that's not on the list, detroit. we talked about that earlier but you can look through the list right there and i know there's some people at this table rooting for newark at this point. >> or philadelphia >> or philadelphia. >> i love to see that. new york city would be interesting. did you see, i hadn't put two and two together they have washington, washington d.c., maryland, southern maryland and northern virginia which is kind of like -- they've got three different locations in d.c. >> it's possible you might consider colleges and talent. >> right. >> coming from an area.

>> right. >> raleigh/durham? >> pittsburgh, too carnegie mellon. >> columbus? >> ohio. >> that would be great >> columbus, i like my -- i'd feel like i need to recuse myself. >> as a homer? >> yeah, as a homer, but i don't know i like warm weather. but it's supposedly going to get warmer. >> of all of the cities they think they could help the most. >> in terms of help instead of what's good for them, what's good for the city? >> what would be good for the country? is there one that you think -- >> you know what, it's like you need to do the ben franklin clothes. no, you need to do the positives and the negatives because it's nuanced, right >> yeah. >> not straightforward there's a lot of -- jesus, you asked, you know, they need to go to, i don't know, the worst place in the country they need to go there. something social -- if you want a virtue signal like larry.

>> you're going to see plenty of these -- >> that's preposterous. >> all 20 of these cities jockeying to come up with their best proposals i think philadelphia has a billion dollars in incentives they're planning to put together >> philly would be good. >> they're going to get the cities to put the very best offer on the table. >> philly would be good with the best college education in the world at the university of pennsylvania when we come back, the president's infrastructure plan is taking shape. we will talk spending and where the money will come from to fund major projects around the country right after this break. right now though as we head to that break, take a look at the u.s. equity futures. a big week a lot of swings during the trading day, too yesterday was a down day 97 points or so. devery big week for the up sis.right now green arrows acro the board. dow up 32. "squawk box" will be right back.

another day of work. why do you do it? it's not just a pay check, you actually like what you do. even love it. and today, you can do things you never could before. ♪ ♪ you're developing ai applications on the cloud. finding insights hidden in decades of medical documents. and securing millions of iot sensors. so get back to it. and do the best work of your life. ♪ ♪ and do the best work of your life. but through goodt times and bad at t. rowe price we've helped our investors stay confident for over 80 years. call us or your advisor. t. rowe price. invest with confidence.

good morning welcome back to "squawk box" here on cnbc we're live at the nasdaq market center in times square accord yeah therapeutics is on the rise this morning. it's been boosted by both reports that it is possible that it could become a takeover target of biotech company biogen as well as the announcement of a corporate restructuring that's designed to reduce expenses. you're looking at that stock up about 9% right now the white house also reportedly considering san francisco fed president john williams, cue the music this morning, to be fed vice chairman. that's according to the wall street journal i said cue the music. >> we can sing for you. >> take your pick. >> bingo >> "star wars. >> he's set to replace janet yellen as fed chair. also on the list we should tell you a couple other regular "squawk box" guests including muhammad al arian. coca-cola is going to make the

packaging 100% recyclable by 2030 james quincy says the world has a packaging problem and companies like him have a responsibility to sell i believe he's going to be in davos where i imagine they're going to talk about that. >> details starting to emerge from the president's pending infrastructure plan. for more on that let's bring in governor ed rendell. he is the former governor of pennsylvania and the co-chair of rebuilding america's future. a plan to try and build infrastructure rendell's co-chair, ray lahood governor rendell, secretary lahood, thank you for being here secretary, let's start with you. we have heard so much about infrastructure in theory it's the kind of thing that you could get both sides of the aisle to agree on but when it comes down to details it could get sticky >> the big problem is not what to fix everybody knows a bridge, a pothole, a road that needs to be fixed. america is just in a state of terrible repair. roads are crumbling.

there's 60,000 structurally deficient bridges right now. the problem for congress, i served in congress for 14 years, how do we pay for it there's no money the highway trust fund is broke. there really is no money i think part of the dilemma for the trump administration is how do we pay for it we're talking billions and billions and billions of dollars. now ed and i have been traveling around together for about four years promoting the idea of raise the gas tax, do infrastructure through three ps, public/private partnerships, give states more opportunities for willing to but we have to raise the gas tax. that is the pot of money that built america. that's the potof money that built the interstate system over the last 40 years and it hadn't been raised since 1993 now you tell me one thing that hasn't gone up since 1993. the gas tax. >> right. >> and with prices as low as they are, now's a very good time to be doing it

you could create a huge pot of money, couple that with public/private partnerships, infrastructure bank, willing to, boom, you've got a pot of money that can really fix america. >> governor rendell, we have spoken with you plenty of times over the years about this. it seems like a relatively common sense idea, but when i've spoken with senators and congressmen about it, they say, okay, who's going to go first? they're all a little afraid to say, yes, i'm the one to support a higher gas tax what happens >> we should all hold hands and jump off the bridge together look, the american people are about 50-50 split on whether we should raise the gas tax, but it's interesting, on referendums for specific transportation projects they've won over the last ten years 75% of the time even though they've all called for either increased taxes or increased willing to the american people are not dumb they know you get what you pay for, and the average person, according to the texas transportation institute, loses

$800 a year because of our inferior transportation infrastructure you hit a pothole and lose one tire and that's twice as much as you'd pay if we increased the gas tax 10 cents a gallon and indexed it to inflation. ray's right, we've got to look at that, but that's a short-term fix and only produces a quarter of a billion dollars we need much more. i think the long-term solution is a federal capitalbudget the federal government is the only political subdivision that doesn't have a capital budget. no major company doesn't have a capital budget because if you put transportation infrastructure and other infrastructure like water, sewer, electrical grid, if you put them in the operating budget they compete with health care, military, they're always going to be under funded capital budget is the way to build long-term assets. >> that makes perfect sense, but

again getting back to that, how do you get that through congress at this point when every single day we hear about the battles on spending more for health care versus spending more for defense? there's not enough money to go around right now, so the idea of creating a new pot -- >> well, the health care -- problem solvers caucus, a group of republicans and democrats who meet regularly they endorsed the capital budget so i think we've got to differentiate between spending and investing in long-term assets infrastructure is an asset that protects our public safety, that, in fact, makes us more economically competitive by the way, it's the best creator of well-paying middle class jobs in manufacturing and construction itself than we have the best creator if we did an infrastructure revitalization plan in this country we could create four to five million well-paying jobs that pay between 60 and $90,000 a year. >> it's a state issue but i wonder if it's going to be a

model for others i don't know if you saw the report in "the new york times", congestion in brypricing, this a that cuomo wants congestion in pricing below 60th street. what's interesting, it goes to whether you want to -- >> 12 bucks. >> it would be very expensive, $12. >> 25 if you're a truck. >> beyond that, it was how technology has changed the plan, which is to say that now that there's technology literally with cameras that can go on your license plate, you don't need big toll booths, you don't need all of these other -- you can charge every car you talk about a gas tax, could you have some kind of willing to tax using technology that's completely different from the way we have thought about this before >> no, no, it's a good point many states are doing it my home state of illinois is doing it virginia is doing it virginia just went to congestion pricing, particularly along 66 from the dulles corridor down into washington. >> that's expensive, too. >> it's very expensive there was a big uproar about it,

but look it, if you want to get someplace faster, you're going to have to pay for t. if you want to get around the city of new york, you're going to have to be able to pay for that and it does raise an enormous amount of money. if you look at governor cuomo's plan, what he's going to do is reinvest that money back into infrastructure in new york. >> let me ask just from looking at it, from hearing the details that are just starting to come out. >> right. >> just hearing the numbers on these things when i heard $25 for a truck to be here i suddenly thought, wow, is that going to make this a less attractive place for businesses are you going to be inadverte inadvertently making it so expensive to be here that you make it less desirable for companies to locate here for workers to want to be able to come >> we're going to find out i mean, that -- you know, part of the idea is implement a plan like this, see if it relieves congestion but also if you're putting the money back into infrastructure, that's what people are really looking for, and infrastructure drives the economy.

it creates jobs for people who build the roads. it also creates economic corridors, economic opportunities for the people that are using it. >> you know, i come back to the point, and governor rendell, i'll throw this to you, i come back to the point that this makes a lot of sense you all have been talking about this for many years. you're able to get the bipartisan commitment from the problem solvers caucus, and yet it seems like nothing has been done in that time. why? >> well, it basically takes presidential leadership. i was pretty hopeful during the campaign when candidate trump said he was going to have a $1 trillion infrastructure plan it's a little light. it should probably be double that it would be a good first step. what the president has to understand is you can't rely solely on the private sector. >> 20% federal his plan and 80% state and -- >> it's not going to work. it's not going to work because the private sector justifiably wants a return on their investment take those 60,000 deficient bridges that ray talked about.

only 100 of them get enough traffic to support willing to. willing to would, of course, produce a reasonable rate of return on an investment. what's going to happen to the other 59,900 bridges that can't support willing to the state and federal government have to pay for those revitalizations. by the way, states have stepped up in the last three years, 25 states have raised the state gas tax including some of the reddest states in america. >> you know, i really agree with ed on this if the white house decides that this is a priority, and they're -- there's a big debate going on in the white house about this, how to pay for it, boom, something will happen. you know, congress wasted so much time last year trying to figure out what to do about obama care and in the end they passed the tax cut at the end of the year, but the bottom line is now they're talking about introducing an infrastructure plan and if president trump comes out full force behind this with the white house, we have --

we have an opportunity -- >> if he comes out full force with the plan that they're talking about, 20% federal funding, 80% from the states and private, ed says that -- >> you know what, there's a big debate going on right now. the reason they haven't come out is because they're debating whether that's the right formula or not. >> what do you think the right mix is >> i think the right mix is raise the gas tax, use -- give states more willing to opportunities, create an infrastructure -- >> but the mix, 80/20, 20/80, how would you break that down? needs to be -- >> i like ed's idea. there has to be a real commitment from the federal government to invest in infrastructure the way that we did over 50 years when we built the interstate system. the way this region did when it built these huge bridges and other infrastructure here. it has to come from the federal government when you go to europe and asia and china and see all new infrastructure why? the national government made a commitment to do it. there's just -- there's not enough money in the states to do

it. >> governor? >> can i say one last thing, becky? >> sure. >> we say there's not enough money. let's repeal the real estate developers tax rate that was in the tax plan that was $340 billion over ten years. that's more than increasing the gas tax by 10 cents. do both of those and we have a robust federal investment at 60% of the billion let the states pay 25%, the private sector pay 15% and we're in business. >> you sound like governor cuomo who's coming up with some ideas that he wants changed in the tax legislation, too, to go after private equity and some of the tax considerations they've had. >> i think real estate developers, the last time i checked, they do pretty well >> all right governor rendell, secretary lahood -- >> thank you guys for focusing on this. this is important stuff. >> we appreciate t. we hope we see some progress. >> thank you very much. >> thank you. when we come back, we'll talk ibm earnings and then the

candy man of cannabis was supposed to make a ton it turns out regulations are a real buzz kill "squawk box" will be right back. ♪ the candy man can ♪ candyman cause he mixes it with love and makes the world taste good ♪

us. it's what this country is made of. but right now, our bond is fraying. how do we get back to "us"? the y fills the gaps. and bridges our divides. donate to your local y today. because where there's a y, there's an us.

i thyou never got the brakes looked at?l... oh yeah. no. at cognizant, we're helping today's leading manufacturers make things that think and do automatically. imagine that, a world of new digital products and services all working together for you. can i borrow the car when it's back? get ready, because we're helping leading companies see it- and see it through-with digital.

welcome back, everybody. ibm ending more than a five-year long streak. the dow component's fourth quarter earning sales both coming in above expectations ibm says it took a one-time charge of $5.5 billion as a result of the recent tax reform. here's what sbp martin schroeder told cnbc's jim cramer on "mad money" last night. >> first half to second half which we described back in july kind of played out as we said. that put us on a good base we guidedtowards growing revenue and stable margins when we think about the transformation of ibm i'd say that, yes, now the portfolio is transformed and we've got some momentum going into 2018. >> joining us right now for more on what's been working at big blue is daniel i wves. thanks for being here. >> great to be here. >> do you agree with him, that

the turn -- the corner has been turned essentially >> yeah, i'd say partially true. 50% of their business, big data, ai, analytics. i mean, that's grown mid teens that's really been the positive story. the problem is the anchor on the ship the traditional businesses, declining, margins have declined that's why right now 2018 is really a make or break year in terms of this transformation and shift. i view this as a small step in the right direction but it does really show some of the wood that they need to chop ahead. >> we're going to see ginny next week one of the questions we were talking about in the last hour, she used to talk about empty calories, what she called empty calories revenue meaning we don't need that because we're going to get this better version of revenue the question is is the better version of revenue a higher margin or not? >> ultimately, it's a higher revenue. you look at big turn around stories, microsoft, adobe b,

cisco. they cut businesses that weren't working or sold them off ibm has done a great job to get to this point after many bumps in the road. really now it's about like can they get that over 50%, 55, 60%, that growth business, the strategic imperatives. that's really going to be the question there's no doubt, i mean, patience is wearing thin among investors. you'll see stop and go, knee-jerk reaction now it's really about 2018 if they can't turn this around and start to see steady growth, i think that's where there's a lot more question marks than answers. >> we have an analyst earlier today who said really the big question in his mind is whether you can actually see improving margins in these new businesses. will they ever live up to the margin potential that you had in the old businesses what do you think? >> they had a bonanza in terms of margins back then they were the only game in town so you're never going to get

back to that sort of -- in those days it's a new ibm it's a new creation in terms of what margin can be here. can they increase it, 100, 200 bits per year. that's what they need to do to see the stock move higher. >> one of the hot things that they've got involved in, we got involved in early to their credit has been the blockchain again, when we were speaking to an analyst last hour he said blockchain, there will be no money. his view was there's no money in blockchain, at least for the short term >> it sounded great on a press release and it's great to sort of promote it. the reality is that and t$2 get you a cup of coffee on the street the reality for ibm, can they grow the core business the traditional business is declining and margins are starting to repeat i do view it, start to see a turn around story, but if you look at the core turn around stories in tech, microsoft, adobe, i could say cisco right here in terms of what they're doing, there needs to be some

tough decisions whether it's acquisitions, whether it's divestitures those are some of the tough decisions that the management team's going to need to make there. >> in terms of price, we're looking at the stock at $164 today. you said investors have lost patience you will see knee-jerk reactions up and down. what's a price that's a good entry point? >> look, i think if they the next few quarters continue to show this type of growth you could see 175, 180, $185 stock to see that $200 plus, they're going to need to do something strategically different on that core business and/or show that they're willing to make some of the tough decisions on the margins, on that core business whether it's more restructuring and/or acquisitions to show the change of story. i view it as this is the feather in the cap but ultimately you really can see if this turn around is going to be successful for another two or

three-quarters on the strategic imperative does it cross over 50% growth? and that's really going to be the key. >> your price tag is 175 to 185 even if they don't do some of these acquisitions that's still more than 164 would you tell people to buy more >> that's why we have a buy rating i view this. if you look at the valuation, more than can go right than wrong over the next few quarters for ibm. it's a turn around story, cheap in tech. ultimately, as you getinto the second half of 2018, that's where the rubber meets the road to sort of make that next leg higher you know, with the 2 in front of it from a stock perspective. >> what's your favorite stock in world coverage >> favorite stock is amazon. it continues to be our thesis is, it has been for the last few years, if you look at what they're doing consumer, we believe 50% retail commerce went to them. >> for the holidays? >> for the holidays. aws looks massively strong look at whole foods, tip of the iceberg to health care and

pharmacy firming out that iron grip from a valuation, if you look at amazon right here -- >> where is it going to be okay boston is three to one on this. >> on the odds already >> yeah. boston is three to one. >> where are you getting the odds >> carl tweeted this out >> carl is the odds maker on this >> no. he found an irish book maker called 3patty power. boston 3 to 1. atlanta. >> atlanta -- >> transportation hub. georgia, georgia tech, augusta. >> schools and transportation. >> it's the island >> and it's geographically about as far away in the country as you can get from seattle. >> savannah. have you been to savannah, sorkin >> i have. >> how long is a direct flight from seattle all the way to atlanta? >> you want it to be far away, don't you? >> yeah.

>> it hits -- >> boston, schools. >> east coast presence, transportation hub. >> yeah. >> engineering. >> you think it's more likely atlanta than boston? >> oh, yeah, we do. >> you do? >> yeah, we do i mean, our call has sort of been atlanta, raleigh is sort of the two that sort of stick out. >> kind of like newark >> look, you never know, but i tend to think newark's further down the list. >> thanks for coming in, dan. >> thanks for having me. >> excellent coming up, the cannabis confection industry is drowning in candies regulation and rule changes in california making it hard for companies to keep their head above the chocolate river. that story is next as we head to break. here's a look at european markets at this hour they're green. i'm a small business, but i have... big dreams... and big plans. so how do i make the efforts of 8 employees... feel like 50?

how can i share new plans virtually? how can i download an e-file? virtual tours? zip-file? really big files? in seconds, not minutes... just like that. like everything... the answer is simple. i'll do what i've always done... dream more, dream faster, and above all... now, i'll dream gig. now more businesses, in more places, can afford to dream gig. comcast, building america's largest gig-speed network. when it might be time to buy or sell? with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity. open an account today. fidelity. the markets change... at t. rowe price... our disciplined approach remains. global markets may be uncertain... but you can feel confident in our investment experience around the world. call us or your advisor... t. rowe price. invest with confidence. what's critical thinking like? a basketball costs $14.

what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley

regulations are a big buds kill for companies trying to cash in on california's decision to regulate marijuana. aditi roy joins us. >> reporter: good morning. we are here at a cannabis laced chocolate and candies factory. they're putting new labels over the old ones to meet brand-new

state requirements for packaging. one of their most popular items here are these petra mints they're popular as hamam mints because they come in micro doses. one has 2.5 milligrams of thc. it's designed to give their users a little bit of a buzz, maybe take the edgeoff without making them high by doing so, they're going after the first time user, millennial parent to supplement or substitute their wine at the end of the night they are going after the first-time user. they expect to double or triple their revenues they have a lot of regulatory hurdles to overcome. for one, to meet new packaging requirements, kiva had to double its packaging staff. they can only supply to other recreationally licensed companies. since most haven't received the permits, kiva is only supplying to around 100 dispensaries versus the 1100 on their roster

doing medicinal. also a lot of edibles companies are having a dosage of their products and they're scrambling to do so kiva is not in that boat they say in order to fully ramp up, it will take about a year. back to you. coming up, thanks, aditi, hakeem jeffries of the house judiciary and budget committee will join us to talk about last night's vote, what's going to come up. and then later this morning senator rob portman will be our guest. stick around for those interviews "squawk box" will be right back. nobody's putting their money into equities.

they're not investing in commodities or fixed income. what people are really putting their money into is what they hope to get out of life. but helping them get there requires a real refusal to settle for average. because when you approach investing with a tireless desire to beat the status quo, something wonderful can happen. those people might just get what they wanted out of life. or maybe even more.

(nadia white) the moment a fish is pulled out from the water, it's a race against time. and keeping it in the right conditions is the best way to get that fish to your plate safely. (dane chauvel) sometimes the product arrives, and the cold chain has been interrupted, and we need to be able to identify where in the cold chain that occurred. (tom villa) we took our world class network, and we developed devices to track environmental conditions. this device allows people to understand what's happening with the location, but also if it's too hot, if it's too cold, if it's been dropped... it's completely unique. (dennis woloshuck) if you have a sensor that can keep track of your product, it keeps everybody kind of honest that way. who knew a tiny sensor could help keep the food chain safe? ♪

shutdown showdown. the house passes a government spending bill but will the senate follow? we'll ask senator rob portman when he joins us. wall street on high alert. investors watching closely as the drama unfolds in washington. what the debate in the halls of congress means for your money straight ahead. plus, the tale of two dow components the inside line on ibm and ge as the final hour of "squawk box" begins right now ♪ ♪ live from the most powerful city in the world, new york.

this is "squawk box." good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square i'm joe kernen along with becky quick and andrew ross sorkin the futures are bouncing back a little bit from yesterday's, what, 90 points or so on a percentage basis not a lot, but unusual for this year and in recent memory. we're up about 13 on the dow, up 4 on the s&p, the nasdaq indicated up about 19 and three-year highs on the yield on the ten year when it got about 2.65 at one point it's 2.63 right at this hour. among today's corporate top stories, ibm shares are under some pressure this morning tech giant posting better than expected earnings. revenue increase for the first time in 23 quarters. but, there's a big but in all of

this, a cautious forecast is giving investors reason for some worry. that stock down 3% in the free market we talked a little bit with a couple of analysts about what's going on there also, american express reporting its first quarterly loss in the first quarter when suggested earnings did beat the street they will suspend its share buy back program for six months to rebuild capital following tax law changes in the u.s also, softbank is now the largest stakeholder in uber. softbank's investment deal closed yesterday bringing its stake to 15% including a large purchase of sales. discounted valuation of the company at $48 billion that's a 30% discount from the most recent valuation up $38 billion. however, they did put in a billion dollars into the deal at that $68 billion valuation so the public valuation will still stay at 68 maybe the real valuation is somewhere in between the real deal changes governance including the addition of board

members. we should mention getting above $1.4 billion out of the company after his sale with some of these shares. >> now to washington, the house passed a kick the can bill last night to fund the government for at least another month the senate has to act on that bill by midnight tonight to keep the lights on in washington. kayla tausche joins us we get closer to that deadline. >> reporter: we are, becky the short-term funding bill is in limbo top republican mitch mcconnell add journg unt adjourning until 11:00 a.m mike rounds of south dakota has gone from no to yes but nearly a dozen democrats are still needed to pass it the president acknowledging as much in a tweet weighing in saying, quote, they want illegal immigration and weak borders shutdown coming? we need more republican victories in 2018. last night top senate democrat chuck schumer suggested two potential resolutions.

strike a deal before midnight or fund the government for just a few days but not 30 in order to buy some time to get a deal. mcconnell, the republican leader, said a deal brokered on capitol hill might not fly with the white house. >> the presidency under our constitutional system is not irrelevant he he is the person who signs things into law. for most of us in the house and senate on the republican side, we're interested in what his views are and those have not been made fully apparent yet >> one republican no, jeff flake, said the only way to know the president's views pull the an immigration bill on the floor and pass it. becky, we'll get a better sense in just a few hours when the senate does convene where this is going and how close they're going to cut it to this deadline tonight. >> kayla tausche. joining us now to talk more about all of this is new york congressman hakeem jeffries. congressman, thank you for being here today. >> good morning. thank you for having me on. >> you are a democrat.

you represent a district from brooklyn and you are not somebody who voted with this plan yesterday that was passed by the republicans in congress, but you did sit down with two other congressmen and pen a letter to 168 of your colleagues have signed off on that you sent to the president what was the gist of that letter >> the gist of the letter is that we're prepared to govern, sit down with our colleagues on the other side of the aisle in the house, senate, eventually of course the president to negotiate a bipartisan spending agreement that deals with the priorities of the american people, not just in red states or blue states, not just for people on the left or the right, but for everyday americans and this temporary spending agreement that was passed in the house last night is just another example of irresponsible governance failing to meet the full priorities of the american people simply to meet a political agenda or to do what you think is palpable to the

right wing freedom caucus of the house republicans inherent in the congress, and that is not a sufficient way to govern >> congressman, those of us who sit outside the beltway have watched this play out for years at this point where budgets are never put together in time, they are never approved in time, that there is this piecemeal kind of pay as you go month at a time situation and frankly to most of us it looks as if this is partisan politics on play on both sides all of the time when you start talking about what really matters to the people who are the average americans, what are you talking about? what are those issues? and is this really a situation where you can't take politics out of the mix >> well, in our view, for instance, in this temporary spending agreement there was a failure to fund safety net hospitals which are of particular importance to the poor, the sick, and the afflicted who may not necessarily have private insurance and rely on safety net

hospitals in order to meet their or their family's needs when they face an urgent health care crisis that was missing this particular spending bill failed to fully fund community health centers, which are also an important entry point for people, working families, moderate income folks who are struggling who may be faced with sudden sickness and affliction that was not dealt with. the children's health insurance program, which should have been permanently reauthorized, was just reauthorized for a few years. again, not a serious effort to deal with a program that's important be to the american people we've seen wildfires and hurricanes afflict people in texas, florida, the caribbean in terms of the u.s. virgin islands and puerto rico as well as of course out in california and most recently mudslides. >> sure. >> there was no effort to provide assistance to those people as well that's why this was inadequate. >> those are all valid budgetary

issues the main reason is daca, deferred access for the children who were brought here. while that is an issue that tends to find bipartisan support, it is not a budget issue. is that something you think should be wrapped up in the budget negotiations? >> i think as we laid out, it's an issue we need to deal with as a congress whether it's resolved in the specific context of the spending agreement is up for negotiation, but it is a priority the president triggered this daca crisis. there's significant agreement across party lines within the country, and even to some degree within the congress that we need to provide a permanent resolution of the d.r.e.a.mer situation. these are young people who were brought here involuntarily and who essentially have contributed as best they can to the great country that we all have and should be given united states citizenship, and this bipartisan legislation to support that

effort that has been put forward that would pass the house and the senate if it's given a vote. for political reasons that hasn't occurred, and that's problematic. >> congressman jeffries, i want to thank you for your time we would like to see issues where politics are put aside good luck with that. >> thank you very much. coming up when we return, throwing out the flag. we're going to show you what the sec just said about bitcoin that could have a major impact on the crypto currency. you're looking at the price tag there of bitcoin hovering around $12,000. it's absolute confidence in 30,000 precision parts. or it isn't.

it's inspected by mercedes-benz factory-trained technicians. or it isn't. it's backed by an unlimited mileage warranty, or it isn't. for those who never settle, it's either mercedes-benz certified pre-owned, or it isn't. the mercedes-benz certified pre-owned sales event. now through february 28th. only at your authorized mercedes-benz dealer. wow! record time.s. at cognizant, we're helping today's leading life sciences companies go beyond developing prescriptions to offering subscriptions with personalized, real-time advice for life-long, healthy living. honey? you almost done? nope. get ready, because we're helping leading companies see it- and see it through-with digital.

you know what's not awesome? gig-speed internet. when only certain people can get it. let's fix that.

let's give this guy gig- really? and these kids, and these guys, him, ah. oh hello. that lady, these houses! yes, yes and yes. and don't forget about them. uh huh, sure. still yes! xfinity delivers gig speed to more homes than anyone. now you can get it, too. welcome to the party. welcome back to "squawk box. futures in the green take a quick look. s&p in the green it's down about 14 points on the dow. after being down 90 or so yesterday. dragging industrials this morning. it's down a lot based on margin worries. year-to-year revenue growth.

making headlines, the trump administration is considering san francisco fed president john williams >> play the music. >> okay. "jaws. >> there's the important background. >> people don't remember "jaws." we can do "jurassic park," "schindler's list. "star wars," "inanna jones," "close encounters. doesn't stop us. john williams, that john williams, san francisco guy for the chair, vice chair of the federal reserve according to a report in the wall street journal that it wasn't clear if williams is the front-runner other candidates we have a problem with because we wouldn't be able to play any music for these guys, i don't think, apparently these guys are in the running, they're "squawk box" guests pete pimco, former bush economic

adviser larry lindsay and mohamed al arianne williams said he would welcome opportunities to contribute at the highest level. we'll let you know i hope it's him. i do we'll continue don't you think that it's a, you know, multisensory experience. you can do audio, you can do video and you can do all of these things don't you think it helps us? >> "saving private ryan" and "harry potter. >> did you know that, sorkin >> yes >> think about his assignment, from a big -- and when you hear it, it -- >> those are the scores that we remember. >> it transports you back to how you felt when you were watching "e.t." >> here's "jurassic park." >> how many scores do you know that he didn't do? >> no.

don't you see sam neil aren't you excited that you're going to this theme park don't you feel it all right now, andrew >> i do. >> you know you cried at american airlines commercials. i'm trying to get a tear right now. >> car commercials. >> car commercials. >> where they bring it home. >> yeah. >> by the end of this year iea. federal regulators >> sec questions for bitcoin

etfs bitcoin's volatility and its potential i will liquidity it was not transparent enough for it to be able to regulate it take a look at the bitcoin price that we're seeing today which was hit pretty hard when south korea said it might ban bitcoin. this morning you can see they're up -- the price of bitcoin up across the board futures that are trading on the cboe are just under $12,000. >> ratings announcing that it will begin issuing letter grades attempting to bring financial rigor to the volatile class. joining us for more on all of this is martin weiss i called you weiss good morning to you. >> good morning. >> explain how you would apply the letter gradings. >> well, it's very important for investors to have some sanity and something to ground them. >> right >> what we've done is built a

model, computer model, that looks at crypto currencies from many different angles and provides a rational reason, rigorous research that investors need so desperately in this space. >> give us themetrics that you'd be using that would apply to bitcoin, aethereum, aethereum classic and how that would be different. >> well, we break our model down into four submodels. each one looking at a totally different aspect of this -- of crypto currencies. first is a risk index, which gives investors an indication of how much down side potential there is based on a whole series of metrics the second, the counterpart to that, is our reward index that looks at potential return from many different perspectives. all of that is nothing terribly new in the financial industry. you can provide the same kind of metrics to etfs or stocks.

where we go into new territory is in our technology index, which looks at the underlying source code and how robust it is, how flexible it is, how scaleable it is and then finally the fourth and perhaps also very important measure is what we call our fundamental index, which is about adoption and security it's great you can have a great technology index, everything -- all the pieces are in place for a very nice, strong currency, but unless it's actually reality tested in the marketplace, it may not succeed and that's what this last fourth index addresses, how much is it being used, how it's performing in the real world in terms of transaction speed and so forth put all those four together and you get a letter grade from a to f. >> okay. so who's got an a and who's got an f >> well, we're announcing our

ratings on january 24th, this coming wednesday, and at that time, i'm sorry for the suspense here, we will have our grades available to the public and i expect there will be a lot of unhappy people in certain sectors and a lot of happy people in other sectors. you know, this is not about "jaws. this industry is not about "harry potter," it's "star wars." there's a tremendous battle going on between old generation, first generation crypto currency and blockchain and second and third generation, and so that's why -- >> who -- >> wait until january 24th will anybody be getting an a >> it's very possible that one or two coins will get an a, but the tremendous volatility in the market, especially in the last few weeks, is causing the model to look at them again and very

possibly downgrade those as. >> martin, thank you, appreciate it. >> before we release thank you. all right. when we come back, google makes a big bet on china we have the details next and then next week, don't miss a terrific lineup of guests who are going to be joining us in davos in the snow from the world economic forum >> is that next week >> it is we're ready to go. among our head liners next week, ceos of jpmorgan, citigroup, and goldman sachs, steve schwartzman, steve rubin steven mnuchin and many, many others. >> no. that is good. >> that is good. just wait. stay here. you are watching "squawk box" on cnbc two,that was awful. why are you so good at this? had a coach in high school. really helped me up my game. i had a coach. math. ooh. so, why don't traders have coaches? who says they don't? coach mcadoo! you know, at td ameritrade,

we offer free access to coaches and a full education curriculum -- just to help you improve your skills. boom! that's lesson one. education to take your trading to the next level. only with td ameritrade. ow you might take something for your heart...

or joints. but do you take something for your brain. with an ingredient originally found in jellyfish,e prevagen is the number one selling brain-health supplement in drug stores nationwide. the name to remember. they're not investing in commodities or fixed income. what people areally putting their money into is what they hope to get out of life. but helping them get there requires a real refusal to settle for average. because when you approach investing with a tireless desire to beat the status quo, something wonderful can happen. those people might just get what they wanted out of life. or maybe even more.

welcome back to "squawk box. take a quick look at the futures right now. want to show you what's going on we have some green arrows across the board. things have turned around the wrong direction. we did have green arrows across the board. dow looking like it's going to open down 30 points, guys. remember, we were up quite surprisingly earlier this morning. nasdaq looking to open up about 7 points s&p 500 we'll call it under. google with licensing with china's tencent licensing. this is google's first deal with

a major chinese tech company. in other corporate news, berkshire hathaway ajit jain reports $109 million in the company's stock. jain is seen as a possible successor for warren buffet. now that he's been added to the board, along with greg able, they have to disclose all of that, and over the years he's built up $109 million in ownership shares of berkshire. >> pretty -- that's much more than i have in berkshire. >> particularly when you consider berkshire doesn't issue shares anything he got he paid for himself. >> much more much more than me. it's not even -- not in the club. >> not even comparable russian leader vladimir putin is shirtless whoa think if i missed an r >> taking a dip. >> taking a dip in the frigid cold waters of lake selega

part of a celebration of epiphany. >> wait a second, epiphany was january 6th. >> yeah. >> maybe it was some kind of awak awakening. >> it's the ort thouhodox church they emphasize the physical fitness of the president he is fit. i'm -- i, like have, most of my bathing suits are two piece at this point. >> no berther controversy there. >> coming up when we return, joe kern kernen, potentially shirtless? >> no, no, i said it's a two-piece suit. ibm breaking a long string of revenue declines chalking up its first verenue declines when we talk to a top executive next.

♪ ♪ good morning, everybody. welcome back to "squawk box"

here on cnbc we are live from the nasdaq market site in times square. among the stories front and center, one economic report on today's calendar university of michigan will be out with the january consumer sentiment index that hits at 10:00 a.m. eastern time. the number is expected to come in at 97 that will be up from the 95.5 reading we got at the end of december shares of home improvement retailer lowe's are on the rise this morning lowe's agreed to add two new members to its board of directors and will be nominating another at its annual meeting. all of this is as a result of talks with d.e. shaw and the stock is up 2%. delta airlines is tightening rules for passengers traveling with service and support animals. delta will require passengers to present documents outlining why they need those animals as well as paperwork showing training and vaccinations delta says the number of animals on board its flights has jumped 150% just in the last two years.

in news just crossing, the cftc charging patrick mcconnell of cabg tech with virtual currency fraud it alleges it received funds and ceased communicating with customers and removed the website. >> they're out. >> i think this whole crypto currency mania, we're going to see scandals and schemes. >> yes right. >> they answered the other day, andrew well, no, you can't sell it for money but you can sell it for other crypto currencies. that sends like ten over value cats for ten over value dogs i'm not saying that. like certain mergers, stocks that have gone up a lot. i'm not saying that's what bitcoin is, but it's the could you make a lot of money and cash out? you can do that, can't you

it costs a lot. >> no, the problem is you'd have to do it very slowly, meaning you would not be able to -- >> you better watch what you're saying. >> if you had $10 million -- >> you can't take -- >> and you wanted to get rid of your $10 million at $10 million today, that would be a challenge. >> really? okay we'll move -- talking about bitcoin so much. >> if you want to trade your bitcoin for aethereum, your 10 million, they'll make that happen. >> that's what i mean. among today's big stocks to watch, ibm the shares are affecting the dow at this point down almost 6. we're joined with the inside line can you just -- after you finish the inside line can you give us some of the stuff on the outside line, too, just so we have the complete picture, deidre. >> you don't know anything about the outside line you only have the inside line.

>> we'll go through those numbers first. the big picture, you mentioned the drop in pre-market trading that comes despite ibm breaking the year's streak of winning revenue. they had good momentum going into the report up 10% over the last month still couldn't convince investors. some analysts saying this could be a one-time increase you were talking this morning about strategic imperatives. this is ginny rometty's imperative watson and ia are making up the total revenue. gross margins are shrinking. still, ibm's former ceo and svp

of global markets is telling cnbc the turn around is in the works. >> the transformation of ibm, yes, the portfolio is transformed and we have momen m momentum. >> he talked about blockchain. ibm is not making money off of the imperatives. ibm may have a new challenge in the year ahead tax reform that's expected to raise its tax rate guys >> deidre, thanks. ibm looks like amazon compared to ge. ge shares hitting a six-year low this week. the latest chapter in the stock's 45% decline over the past year. joining us now with where the conglomerate itself can go from here, senior analyst covering the multi-analyst sector here's the company and here's the stock. not only was it a 45% decline but it had -- before the last

year it was the worst performing dow component over the past 10 or 20 years. trading trying to get it above 30 with all the financial finagling and stuff, remember? so it dropped from 30 to where it is now so the regular market goes drops 40%, you cannot overstate how absolutely pathetic the stock has been. anybody who has held it should get fired. anybody that's invested with them, they should fire them, shouldn't they >> the news has been all bad and it's very near term. the stock is already down 11% this week. it's looking pretty grim right now for ge. >> it's not that far from its -- it was 60. it got to 6 during the financial crisis and now it's at 17 again. that's got to be by far the worst performing. >> yes. >> okay. so no surprises now they're

talking about how do you even break it up. is that feasible >> so this has triggered a -- as of this tuesday, for the first time the new ceo brought up the idea of doing a wholesale reset of the business model. all divisions around the table they talked about public company structure. so this did trigger all kinds of speculation of what ge would look like once this type of breakup was entertained, and it brings up all of what the valuation could be on sum of the parts basis. >> so 16 that's another new low and what could it be at this point? is it worth more than 16 broken up >> so by our estimates it's not much more than 16. our sum of the parts model coming into this week pegged it at an $18 at a fair value on a sum of the parts that's a little bit different from what you say with the breakup value is because then you start and need to look at the dissynergies and whether

you're going to true up the pension. it becomes a lot more complicated. >> i don't know how to approach this subject, but when it was at 28 and 30, it appeared to be fair value -- 235ifairly valueda multiple bases on the numbers they were posting. were those numbers real that they were posting? did things in energy -- back to energy did things sour in their businesses since then or were they painting a picture that was not exactly factual with their underlying fundamentals? are they allowed to do it that way? >> sure. it's an important question if you had to point to what has gone wrong, fundamentally it's been poor capital allocation decisions, whether it was the rampup of ge capital in front of the financial crisis, whether it was buying oil and gas assets right before oil demise.

the investment in alstom, largest acquisition they have ever made in november. they declared it a big -- >> we thought all of those things were going okay that's the thing it looked like they were buying high and selling low but it didn't come home to roost until new management got in there. >> yeah. so that was a first. capital allocation decisions that have been questionable. the second element to this, joe, you're touching on this, this is the -- investors are seeing the disconnect between reported earnings and cash flow and the hallmark of well-run multi-industry companies, when you see more cash flow than reported earnings, and it's been just the opposite for ge, and we're still trying to calibrate how bad the cash flow situation is. >> destroying shareholder value is not in violation of the sec, right? people do that all the time. >> bad decisions. >> people do that all the time is that what we're talking about

here we're not talking about something that may be -- >> correct. >> the sec battle lines, are we? maybe they're broke. >> maybe you're in the gray area of misleading. what we're dealing with is trying to calibrate what is the new reality of the cash flow situation. >> you used the word misleading. where misleading is a problem? >> so it's the point of which months ago when jeff immelt was in the seat we had updates on alstom and everything going well roll the clock forward in november the new ceo looks at the group and says, let's face it, alstom's been a big disappointment how you go from everything going well to a big disappointment, last year there was no insurance reserve that we had to talk about and then as of tuesday there's a $15 billion -- >> how did that happen >> you listen to the conference call everyone was asking that deane,

i've heard from the industry this is the worst piece of news they've heard yet. you should have been able to figure out that you should have been putting the reserves aside. plenty of people should have known that. >> to put some framework on how big a negative surprise this was, we have been thinking something on the order of 3 billion charge and that was in the beginning of november and the actual cash number they're going to have to pony up is 15 billion, five times bigger if that's coming out of ge capital. they're forced to suspend the dividend indefinitely on ge capital. >> can you think of any innocent reason that the numbers would grow that quickly that easily or do you suspect people were turning a blind eye to this? >> so this all goes back to how do you look at these reserves and within the insurance itself, the mortality rates. >> you would have those numbers, they didn't happen overnight you didn't get to $15 billion

overnight? >> so as an analyst we're not privy to what those underlying assumptions are. >> but the company would be? >> exactly >> very quick. do you trust these people? >> we do trust the management and how they're communicating, especially today you know, some of the information that they're giving us is hard to digest in terms of how different it was and how much the stock has declined but, yes, we do trust them. >> deane, thank you. comingup, when we return, it is d-day for the senate to vote on the looming shutdown set for midnight we will join and speak with republican senator rob portman right after the break. ♪ ♪ and energy to fuel its growth. real estate such as e-commerce warehouses. and private debt to finance transportation and infrastructure.

building blocks of strategies to pursue consistent returns over time from over one hundred fifty billion dollars in real assets. partner with pgim. the global investment management businesses of prudential. we cut the price of trades to give investors even more value. and at $4.95, you can trade with a clear advantage. fidelity, where smarter investors will always be. athey always refer to meade was master sergeant.ge. they really appreciate the military family, and it really shows. we've got auto insurance, homeowners insurance. had an accident with a vehicle, i actually called usaa before we called the police. usaa was there hands-on

very quick very prompt. i feel like we're being handled as people that actually have a genuine need. we're the webber family and we are usaa members for life. usaa, get your insurance quote today.

the house voting to fund the government through the end of february now what could be the hard part is getting it through the senate joining us now is ohio senator rob portman. senator, good to see you do you know the very latest on what's happening at this point a couple republicans are out are there 10 or 11 democrats that are still a possibility here, do you know? >> absolutely. i mean, look, it's an unusual situation because you have a spending bill that's going to come before the senate that no one really objects to on the other side in other words, there's nothing in it they don't like. in fact, one of their highest priorities is included which is the long term extension of the children's health care program which has to be done in a couple of weeks because some states

literally run out of money it's unusual that you have this kind of opposition when there's really nothing objectionable there. there's an issue outside of spending that they'd like to have included, as would a lot of us it's an issue that hasn't been resolved yet it will take time. my hope is we have 10 or 11 and enough democrats to get this across the floor today it gives us a month to be able to resolve the broader issue of immigration reform, which is something that a lot of us want to do. it's an unusual situation. >> i don't think it is i think that's -- i like the way you're saying that because it kind of assumes that there's -- that there's well-intentioned people, you know what i mean >> well, that's what you -- >> senator, they are convinced, and either side, if either side thinks that they can score political points ahead of the 2018 mid terms, for example, let's just say forex ample, let's say chuck schumer and the democrats think that the republicans are going to get

blamed for all government shutdowns, that's all they want to do is shut down the government then if it's going to help them in -- they don't care if it hurts the military they don't care if it -- if it's -- you know, destabilizes the financial -- they don't care about any of that. they just care about scoring points and maybe doing better in 2018 and that's why everybody is so cynical and disgusted with the way things work in washington now. >> i think they've found some soft ground to fight on here though this is not a good way to score political points when you look at it, it simply continues the spending, the current spending, and it adds something that has been a huge priority that a lot of people care about around the country, which is extending the children's health insurance program. >> right >> that's what it is there's nothing else in here. >> well, how soft is -- >> that's my point though. if the ground does soften up on them to the point where they look and think it might back fire, then you might -- then it might pass but are we there yet? have you guys been -- you know, it's all about pr, getting the

message out. you probably can only get the message out on one network or maybe this show. >> nbc's always a good place to get that message out >> there you go. talking about cnbc but -- >> i think people are smart. first of all, i think people need to know how we got here, which is that we're not doing our annual appropriations bills, although ten of them were reported out with big bipartisan votes because the democrats didn't want to takethem to the floor for a vote that's also a fact so here's some facts here that are inescapable that make it difficult for this to be a good political issue. >> haven't republicans done the same thing in the past, senator? i mean, i guess that's why -- yeah. >> yeah. when president obama was president, republicans also threatened to shut down government over something that wasn't related, and it didn't turn out too well, did it. >> yeah, but -- >> i think this is a reminder of what happened in 2013 as republicans and democrats and say let's not take the american people through this. people have had enough drama

the economy is doing well. it's finally hitting on all cylinders. the tax reform, tax cut is working as well as any of us expected, including our conversations about this, joe, you know, we didn't expect for this to be this kind of immediate reaction it's been fantastic in terms of companies making investment decisions in terms of salaries, bonuses, 401k contributions. things are going well. i think the american people are looking for a little stability let's not shut down the government, let's keep it operating, let's do a deal with the children's health insurance program. 9 million kids and their families are depending on us with this one and let's continue the discussion on immigration. >> then a cynic on the other side would say, oh, now you guys, suddenly the children's health program is a big priority for you guys only as a bargaining chip to get this passed because i haven't heard -- >> it's been a priority for me for a long time. >> for you republicans. >> called on our leadership to get it done, called on the

democratic leadership because it was being used as a political chip the children's health insurance program, it expired in september and we've been kicking the can down the road. it gives no stability. this is the right thing to do and it's not a political issue it's an issue that affects families and kids. >> i think you were -- were you in the room when it looked like everybody was talking rationally about immigration and then everything hit the fan in the next week. you were in the room in the first part, right? it looked like it was actually -- it looked like something could actually happen. can it get back to that point where in good faith you and schumer and mcconnell and the president are actually talking about how to fix immigration could that happen? >> yeah. i think so, because i think what people are asking is that there simply be that balance where we do take care of the dak da i shall -- daca issue which i'm in support of and we have the enforcement not to continue to

have to deal with these issues like daca. in other words, we need to have a better system both at the border, workplace, visas i think there's a general agreement on that. now there are some specifics obviously where we've got some differences, but my understanding is that the administration is willing to be flexible and democrats at least in that meeting are willing to be flexible. i'm hopeful that in a month's time we can put all of that together. >> senator, local issue for you. i don't know if you saw amazon hq2 put columbus on the list. >> yeah. >> cleveland wasn't on the list. folks in cleveland are writing up a storm. >> folks in cleveland are not happy. i did write a letter in support of ohio, including all three sites. i'm glad one ohio site ended up. being in columbus would benefit the entire state because this is a huge investment, both in terms of amount of money invested and people and all of the suppliers. so it would be great it would be great, by the way,

for them as well amazon knows that this is a state that's centrally located, great work force got a lot of tech community in columbus and so this is an opportunity for them as well. >> will you be making a pilgrimage to making a pilgra r pilgrimage to seattle? >> i am making a pitch your home state, joe, is on the rise >> did you mention montgomery and the gold star, did you mention some of the -- there is a lot to talk about. >> those are the important things >> would you be unhappy if it is georgia? you like that place, don't you you got some friends >> we got to go with the buckeye state. this is central lilo katly locad >> yeah, that's what's on the list and it would be a great decision for them.

>> don't know, you cannot get it delivered up there they probably have skyline in columbus, don't they >> it is not quite national but it is regional >> we are watching it is never a dual moment. interesting times. >> but lets make it less dramatic and lets go ahead and do what we would normally do when you don't object to something in a short term spending bill and there is something positive for democrats and republicans. lets get it done and continue this discussion and i believe that we can negotiate something and get it drafted into law. that's the way to be handled and i am hopeful >> i am worried with republicans and shutdown, it is like heads republican wins and tail republica republicans lose >> i am hopeful with the

persuasion of cnbc, within the family that this will happen >> i am trying to get my -- do you want him to shut this down >> i don't want him to shut anything >> do you think democrats are wrong on this? >> why would anyone want to shut anything down? >> i didn't want republicans to shut things down years ago >> if they all stand there, they got problems >> senator, you may be on something, that's the soft ground thing >> yeah, good to see you >> thanks senator portman. >> by the way, lets take a look at the future on this friday, you can see the dow future is under some pressure this morning, this is coming from a couple of stocks that we'll talk about in a little bit. ibm and american express is putting that downward pressure on the futures that had been trading ghhier

nasdaq is still up by 7 points "squawk box" will be right back. what we do every night is like something out of a strange dream. except that the next morning... it all makes sense. fedex powers global commerce with vast, far-reaching networks... deep knowledge of industries... and, yes... maybe a little magic. ♪

some stocks to watch this morning. nike upgraded to out perform to neutral.

analysts returning to growth nike is also getting some positive mentions from telsi advisers the rail operator also says it is considering strategic deal by boosting crude equipment >> i wonder like all the mansions and all those sort of in the red states. do you think there is going to be 11? what do they do, close it or not? >> they love the children's health thing they thought they love them. >> i thought they break one direction or the other by the way, mccain is not there. >> yeah, and cochran was he there >> we'll give you an early look of the all-star line up from the world economics form in davos

switzerland. stay tuned "squawk box" will be right back i think we should do that meeting tomorrow. well wait. what did you think about her? it's definitely a new idea, but there's no business track record. well, have you seen her work? no. is it good? good? at cognizant, we're helping today's leading banks make better lending decisions with new sources of data- so, multiply that by her followers, speaking engagements, work experience... credit history. that more accurately assess a business' chances of success. this is a good investment. she's a good investment. get ready, because we're helping leading companies see it- and see it through-with digital.

and made it liberating. we took safe and made it daring. we took intelligent, and made it utterly irresistible. we took the most advanced e-class ever and made the most exciting e-class ever. the 2018 e-class coupe and sedan. lease the e300 sedan for $569 a month at your local mercedes-benz dealer. mercedes-benz. the best or nothing. nothey're not investing iney commoditiesies. or fixed income. what people are really putting their money into is what they hope to get out of life. but helping them get there requires a real refusal to settle for average. because when you approach investing with a tireless desire to beat the status quo, something wonderful can happen. those people might just get what they wanted out of life. or maybe even more. running a small business is demanding. and that's why small business owners need more.

like internet that's up to the challenge. the gig-speed network from comcast business gives you more. with speeds up to 20 times faster than the average. that means powering more devices, more video conferencing, and more downloads in seconds, not minutes. get fast internet and add phone and tv for only $34.90 more per month. comcast is building america's largest gig-speed network to give small businesses more. call 1-800-501-6000 today. time now for your squawk of the day. the index gained 18% of the year welcome back everybody, we are off to davos this weekend. among our lineup of guests we got the ceos of uber, cisco

and j.p. morgan and goldman sachs. so many that we cannot begin to tell you >> we definitely have to go now. >> did you see those >> you know who's going to be there on friday. >> the president >> who's better to come on the show before he gives a speech. >> i am trying >> make sure you join us on monday and we'll see you from the alps, "squawk on the street" begins right now ♪ good friday morning, i am carl quintanilla with jim cramer, the new york stock exchange tonight the first since 2013, ibm and am ex earning is going to weigh the dow down.