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. the biggest rise for the week in

a month. we begin with stocks largely shutting off dc uncertainty. wall street on its positive week plus, count down to a shutdown the senator appears on track to reject the spending bill shares of ibm. its first gain of the 20 quarters stocks are showing some resilience despite of a shutdown of the government. yesterday the dow hit the all time high before soliciting blik to the territory >> i got to tell you of the little take up which some people want to magnify on a percentages bases. i don't know how to reverse it

caterpillar and boeing, great industrials. you can perhaps come up with a thesis at a certain point and you want the dividend. there is so much money >> this is too good. lets touch on the shutdown the house passes the funding bill last night, 231-197 republicans have 51. we talk about markets not really behaving dramatically in a shutdown unless a debt limit is a factor which is it is further off. >> you perfectly summed it up. it is not about the s & p, it is about guys trying to finesse it and the president tweeting the defen defense bud defense budget every single time it is been mentioned, we have air pocket down >> it may happen 51 republicans but not all of them is on board, conceively

those senators the method gets tough. joe manson is the on one so far of the democrat who says he would vote for the cr. to your point, jim, obviously if where we are stopping to pay the interest that's what we are talking about here if we move pass the weekend and it happens and it goes on for a while, it would be difficult >> if it is a usual suspect of a shutdown there is been times where you had 2% or 3% on this i always feel like these days we -- fool us once or twice or five times, if there is not a debt issue then it is kind of like oh, it was inconvenient >> certainly a lot of furlough workers might feel differently that'll be a story for monday in

fact if we get there >> absolutely. it is just bad for the country in this market, it is giving awe serious of buy opportunities and that's what everyone is looking for. your boeing dipped >> what is a dip for boeing? >> being down for five minute ss? >> from 50 miles in a plane. >> then you just go backup >> yeah, they're not sitting there worrying about it. it is just a lot of people saying i got my chance now to do a little buy of bit of buying >> boeing came down the last five minutes, i can get in >> i did an interview with wahlberg on december 7th and the stock was 278. i think the stock is going 400 i immediately said hey, 18 months >> 278 >> yeah, right up there. >> the chart looks like when they test a new plane with a

vertical take off, right it looks just like that. >> he was telling us to buy it dividend boost and companies just minting cash. who knows what they're going to do with their extra cash, well, everybody is trying to figure out what they're doing with their extra cash that the president of the washington do >> they are. people are still wondering what apple is going to do with its cash we saw research on it and everything else. we still don't know. the journal today of course reports what many are saying probably going to end up many dividends and buy backs and anything else. by cash it is the largest single cash file company of the known universe >> netflix, any time along the way. >> well, they could have bought spotify. >> back to the government

shutdown, cayla tausche is going to watch this all for us >> now the white house says the president will not go until a short term funding bill passes in a tweet this morning, he referenced demand from senate democrats whose votes are needed, asking the question shutdown coming? speaker paul ryan broke a deal for several dozen votes coming out of the house freedom caucus. the senate requires 50 votes to pass it. the one did change his vote this morning, the negotiator of south dako dakota mcconnell adjourned last night without holding this vote. now they're coming back at 11:00 a.m. top senate democratic schumer on the floor last night says his party's votes could be turned if

a bipartisan deal to protect dreamers is reached by the dead line or if the bills by a few days but not a month as proposed to get there >> the answer here might be to pursue an idea floated by a few of my republican colleagues, pass a clean extension of government funding for four or five days to give us a hard final deadline to finalize a deal >> the white house supports the 30-day plan, unclear where they would come down on that four to five days proposal if that's where leadership decides to move each party is blaming the other for a potential shutdown the gop has control but it is not unified in its vote. republicans say it is democrat who would eventually filibuster to block the bill and they have been using the #schumershutdown

which is been trending >> cayla, we'll be talking to you all morning long meanwhile, ibm is down for the first time in 23 uarters this caused forecast among stocks this morning. last night on "mad money," the headliner told jim how tax reform is affecting the factor >> we have been supporters and we have been big supporters of tax reform because of over the long-term. ibm always manages over the long-term. it is going to free up our capitol so we can invest on par with our competitor. >> jim, you tweeted last night wait until you hear the interview because you could get hurt and it ended up being good advice >> yes i don't want to call hit belligerent but it is consistent where is this 40 cents going come from or is it going get to

the level without a gross margin improvement? i did want people to wait for the interview. could not trade the 13 at earnings i think revenue is going to be up it is an in expensive story. it is a working process. >> you are not concern, i guess the quarter as well was aided by the lower tax rate than had been anticipated. >> yes, there is gross margin and i did not like of lower expenditure and they shipped the frame and almost every airline uses she's saying ibm is apart of the mix when she does her survey of chief investment ibm, a lot of peel feel struggling for relevance in a

world of silicon valley. they don't use block chain they don't play the block chain card they're using 18,000 containers in one of those big shapes and nobody knows what's on there the haters hate it the likers kind of liked it. it did not change it >> lets talk big picture, we have been with this company for a long time and given its weaknesses and its initiatives generating a high rate of revenue growth that would offset the declining businesses they're now at 46% of revenues so strategic comparative >> right >> it is growing 14% at constant currency and 17% overall of those, what do you think it is moving in the right direction although that revenue

growth rate has declined for those strategics >> they failed to execute on some of their selling, not necessarily, they believe they are kind of giving you the language that don't worry about it, those sales will come back in 2018. the reinvention stories are live and well because of ease comparis these comparisons. the rest of the world is moving so fast. it is not as what people think i think it will go higher. >> hardware up 32. definitely gotten a lot of attenti attention. when we come back, including mx of a first quarterly loss. we'll talk to gregg abbott, the running to be in the home of amazon >> the annual fee does not

change >> okay, i am playing. >> shares are going to cross 1300 at the open 1300 at the open >> we'll be back in a moment it's not theirs. it's mine. mine. mine. mine. the new lexus rx 350l with three rows for seven passengers. are you excited about your baby sister coming? experience space for the unexpected with the rx l, part of the rx family. experience amazing at your lexus dealer. well, it'sonce again.eason >>yeah. lot of tech companies are reporting today. and, how's it looking? >>i don't know. there's so many opinions out there, it's hard to make sense of it all. well, victor, do you have something for him? >>check this out. td ameritrade aggregates thousands of earnings estimates into a single data point. that way you can keep your eyes on the big picture. >>huh. feel better? >>much better. yeah, me too. wow, you really did a number on this thing. >>sorry about that.

that's alright. i got a box of 'em. thousands of opinions. one estimate. the earnings tool from td ameritrade.

as we said before breaking news out of amazon, the company is raising the price of its

monthly prime membership from $10.99 to $12.99 an increase of 18% the annual prime membership of $99 is not going up as of now. shares look to open almost 2% higher at the open, jim. >> costco, netflix and amazon prime. three things i don't look at my bill, i don't care, does not matter it is cheap. that's what i say, raise it. i love those services and so does the world i they whink when you see this, goes right in the bottom line. i think everyone just came through the holiday season, this is great deal, my dog may ask for the sunday's night game. >> the eagles are giving a bunch away >> we know the opportunity, use it >> there should be we should point out again, i don't know how many people on a

monthly basis for amazon prime as opposed to paying annually, who will not see the increase of 99 bucks, vastly out numbered those who go month to month. if you do at $12 if you think of what amazon still gives you, it is amazon prime. at this point, i am watching everything on amazon as well as netflix and amazon mmusic. don't forget that. it is a useful service >> key bank takes netflix from 240 to 270 >> this is the year where we thought disney is going to be destroyed. it turns out they can sell anything and we buy it >> do you watch anything on hbo?

>> i watched when they fired nick foles, jeff fisher, he fired. listen man, you are fired and he thought he was trump that was the only thing i watched at hbo, i don't watch those fancy shows that you guys don watc don't watch. >> "game of thrones. >> no. >> you don't watch that? >> you never watched an episode of it? >> we got to turn it off there was some porn scene. >> not recommended for father/daughter time especially the beginning season. >> he likes the one with the queen. >> demarius. >> did he dated her? >> i don't know. >> he cannot even pronounce words so why does it matter? >> guys, mx is down.

first quarterly loss overall in more than 25 years, taking a big charge of the tax recover. the company is suspending buy backs for the first back this is the last full quarter. does this have any lessons for what financials need in terms of capital? >> i think this is much to do about nothing. i think they did have a bit of a dip, they'll come back and start buying the buy backs did not matter all that much. i like the situation and do not like it as much as visas or masterca mastercard >> square and paypal are just oh man, out of nowhere. square and paypal. they were never in the sentences with visvisa >> square is going to entrepreneur up 5.5% i think it is an instant call,

calling them -- >> you know who runs square? the man with two jobs. >> i know who's on the board of directors. >> david vineyard. >> nobody even complains about it >> they stop talking about blocks they're no longer is like we are going to take bitcoin. >> how do we measure square? should we measure by installations? the guy just sold me my coffee, they have square >> it slows down the line a little bit which bums me out >> we usedd cavier >> everybothings that we pay mo. i will pay more for apple storage, that's the revenue line okay >> okay. i have created jobs.

but, if you look at say the base that we have gotten the last couple of months companies with pricing power, it is limited >> the costco card is another great card >> what is that annual fee, do you know >> no, i just pay it >> i think it is $50 or $10? >> could be a lot more, you have no idea. >> i got the black card, put that away. >> i got the gold star >> who cares >> the bargains are great. my father bought some insurance there, fabulous deals. >> did not know that >> i almost bought my wife's diamond ring there but the guy at cartier had another proposition for me >> we'll get cramer's mad dash and we'll count down to the opening bell, we'll take one more look at the future on this

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

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♪ riding on the love of freeway, whatever. that pink cadillac got me. lets talk a little "mad dash" here >> slummer jay ochlumberger, wed

quarter. what matters just now, right here he says oil is going down and right here he says oil is going to go down this guy knows what he speaks. fir first quarter is not good. all right, we know that. i would point out this, david, they bought back stocks and coming more. most importantly, look at the market the strong growth of demand is continuing 2018 on the back of the economy, people are going to need schlum berger again you can sell it to 71 if you want to. you are missing the big picture. >> u.s. production is going to exceed 10 million barrels. it is going to be right up there with saudi arabia or russia.

>> and a hanatural gas is under >> what do you mean under? >> lower price >> most of our natural gas in the new field is just being burned we are hoping that the government will look the other way. >> apparently you see these right lights and it is flaring out. >> it is calling the flaring of natural gas. >> natural gas flare >> no, i would not like to flare of natural gas are you go toi come off with som bogus thing of carbon blowing off the air. >> way off >> smell that smell. >> nothing like that >> don't you want it next to you? >> nothing like that >> smell of high profits >> and victory >> we got our opening bell, coming up next

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potential. the t-bills have been moving people are wondering if the t n tenure is moving what's going to happen with the irs? remember the checks were delayed last year and it screwed up a lot of the situation and autozone talked about that and a couple of guys obviously, we need to know what's going to happen with the irs, that's the organization that i care about in terms of the american people and getting their money back >> they're already under pressure given the significant changes and being under demand and having to meet budget to hire more people >> there is millions of people who need that money. if they are going to shut the irs, that's going to be awful for the firm something to think about >> not essential personnel starting monday. under the way this works, by law they're furloughed without pay they'll get their pay retroactively after the fact g

goldman argues each week of the shutdown cuts the ged. >> president trump has got to get his hands dirty and solve this thing lets get to the opening bell here avt is celebrating its ipo today. we'll talk to the ceo today. >> that's right, lived in queens >> you are all over that >> he was not from queens. >> she's from queens >> louie armstrong, thankfully graced the burrow with his presence >> ibm and mx is going to drag the dow down at 50 points. >> look at ge. what's going on there other than the fact that the markets

opened >> what's going on people are talking about a hundred million secondary, wait, not a secondary? you are saying the company would sell primary they would raise money for issuing stocks >> i do not believe that i believe there is multiple buye buyer. and floor is starting to get some mojo. there are natural r is startingm mojo there are naturar is starting t mojo there are naturaur is starting e mojo there are naturaor is starting some mojo. there are natural buyer. >> ge,it is one thing where they hit 6 during the melt down during '08 and '09 but now everything is going up

>> i say the work -- >> okay. i want to understand what you mean when you say cash constraint >> meaning you have liabilities right now that cannot be paid off by cash. >> you continue that's the case after this week's announcement with the charge and the plan for the 15 billions over the next five or six years. >> we need assurance that the cash is big enough that's a tough assurance some of the research, the chatter, ge will need to raise equity cap, that was boom. that kind of an eye open >> man >> i will tell you, triumph. >> trying to be triumph. that's a tough situation i will tell you in terms of where their entrance was

>> 25 and it moved up. >> and obviously what they were saying at the time and now on the board of directors one has to imagine they wish they had that one back >> well, yes, i would tell you that if oil goes up a lot, big, big tail wind. if they really can say no doubt about it and no more problems of long-term care, very positive. multiple bidders for power would be helpful >> and the potential break up of the company coming >> do you think if they canc sel healthcare on the line >> i am hearing it is a likely outcome than not >> he does not see how it can happen if synergy is breaking up >> it is a huge right in front

of the story and does not go away ibm, they're talking stocks from 900 million shares in three years. that's a nice buy. >> strategic comparative almost at 50% >> yeah, mainframe very relevance though how do you think those airlines know you are double booking or how do you think the banks know where your money is? >> i had not thought about it. >> amazon as you can see crosses 1300 originally crossed 1200 in late november, it is only been a month and a half a lot of movement in retail guys, nike is leading the dow, foot locker is out performed and price target is at 56.

>> incredibly competitive and fabulous managers, they're not quitting they're not quitting they're just beginning >> just beginning? >> yes >> it only just begun there. >> why, what's the follow? >> all new shoe ops. i like nike. i think it is good stuff >> another big consumer name, chipotle, you got to go back to august for these levels here as ray jay goes over at market reform >> the calendar says business is still deteriorating but i got to tell you, remember when there is free cash flow, it turns out to be expensive it was the restaurant must likely to be taken over. i don't want to play that game because if they had any more bad news you would say wow, why did i buy it for >> yeah. >> they don't know jack.

>> ackman is still in this >> it is kind of on the sell side >> did you know the action of cbs yesterday? i bet you did. stuff did not get by you >> that's america's most watched network. >> cvs went up a lot today because of believes if the red stone family is thinking of v viacom verizon is out there and we can still like you still looking at content access and charter, they really tried and did not get there. that was over a year ago at this point. would it buy cvs if it was for sale >> i think it would.

>> it is not you always have to say cbs channel 2. >> the point i would make on cbs is the likely outcome here is the deal with viacom and there is nothing that i heard indicates any way willingness of apart of those that controls red stone to sell cvs separately then he would say if you want to take ownership, you are better off buying natural amusements when it controls states. that's not the option here unlike fox where they are only allowed to vote their economics in a take over situation that's not the case with cbs. >> you are close to that while we are on the subject of

taxes and entertainment. there is been some very positive chatter about sirius xm >> it is terrific story. i believe that people feel it is capped i like spotify and i like sirius xm. >> you like them both and you don't think one threatens the other? >> that's the rap. >> my wife and i listen to sirius and the kids are on the back watching spotify because the wi-fi is in in the car too and they can do that >> they get in control >> they complain our music is louder >> what do you listen to >> we gone through it. >> we like spectrum and other things >> what kind of music they don't

like >> well, my son listens to a lot of hip hop and my daughter listens to taylor swift. >> i am still in the swift's window >> you are the man to talk to about all those things a musician here. >> $50 billion for spotify >> the impact it has on music company, it is incredible. i want to do it. meet me next week. >> how much do you pay for spotify. >> i pay $14.99 for the family plan >> i have no idea how much i pay, i adopt cadon't care >> you know what i pay for pandora? >> nothing >> the ads are fairly anything >> that's unacceptable for me.

>> dallas is hanging on a slight gain lets get to bob pisani >> we got a well known brand here, adt in the business a 105 million shares at $14. midpoint was 18 larce$18 and pr 18 markets at a new high. there is a push back and maybe on the fact of a lot of debt here and maybe some investors pushing back overall here. >> lets see if i can get here. peter, how is it looking at the opening? >> we are looking at the 5 million shares opening it is in the process right now >> i think we'll have some time here in an hour or so. >> thank you, peter. this is a big deal leverage buy out had mixed

results overall. last year we had 17 of them and 9 of them pricing below midpo t midpoint what happened was the after market performance was better. the 17 ibos were up by 35% you get a lower price and it opens and performs better. what's happening here at least lower price, we'll see if it performs better. meantime, ibm and mx is shaving about 50 points on the dow we are positive on the dow that's an impressive performance. sector here, once again, every single day semiconductor leads banks have been mixed this week. consumer stocks have done very well we got nike and kohl's at new highs and nvidia at a high

today. and energy is looking very t toppy. the big threat to me for the market and i love, rick, to talk about this they're not talking about the government shutdown. they're talking about the tenure moving up. a lot of people were concerned about that that's the talk down here and not the government thoshutdown sec is pushing back. they sent a letter to the firms, citing concerns and now they have new concerns, valuation, they say funds may not have enough information to value crypto currency. they're not sure if the funds can do that. most interesting is they talked about custody, how can they prove they own bitcoin when the whole process is encrypted how would a fund validates their

existence. the big issue is what happens next we'll be inside the etf conference on monday, we'll be talking with some of the big bitcoin players there. we'll talk about them what's the next step. my opinion is they'll go around the etf structure or exchange traded note which allows company to back a fund with their own funds, not owning physical bitcoin, it is going to be very, very interesting this is this comment from the sbc kind of changes the game a little bit the dow is impressively up to 14 points david david, back to you >> thank you, pisani we'll have to move them through quickly with some news a number of different news related to activist campaigns. lets start with lowe's they're known for computer tradings and algorithms. the company is not just responding to computers and

telling them what the do of course, that's not the case. they have been apart of the hes thing. there is three new directors being added to that board in part due to pressure that will company, hedge funds says we conducted extended diligence. we consulted with retail experts. we know that lowe's is under perform of home depot. it had one-third of the value of home depot the stock will go up from here three new directors there. you can take a look at them quickly if you want. i did want to hit it quickly and get your take quickly. >> home depot is one o f the best companies in the world. it is hard to keep up with them. lowe's does a good job but home

depot is driven. they have more work of house formation, it is difficult to beat home depot. home depot's culture is extraordinary. >> lets go back to nestle. we don't talk about it perhaps as much as we should here given it is a european company he owns a lot of it. he's been pushing them to monotized states, that has not happen happened they add three big executives. >> total heavy weight. >> they add former chief fina e financer baker hughes. >> ge company. >> and the ceo of adidas

>> those at nestle says this is not about mr. loeb it is a great stuff. >> cost cutting, of course, acquisition of blue bottles. this force is being strengthening whether mr. loeb influence is there or not. loeb is still there and no word on the loreal state. >> finally something jim and i talked a lot about, elliott and xp new letter, forget 135 it is not in the right zip code and a credible offer for qualcomm requires a price in assess of our estimate of nxp.

there you have it, guys. >> this is a three-ring circus, qualcomm and nxp and they wanted for for communication and auto this broadcom fight against qualcomm is going to get nasty >> it has not begun to get nasty. >> are you serious > >> this is not nasty when they start to do background work on hock >> my issue with hock is yo pt to pay so much to get qualcomm >> it would be a great move for hock the key on nxp would be, with so many large funds out there that

also are making a clear to qualcomm management that they do not believe 120 or 125 represents the number that they would take we'll keep on talking about it until we get approval from china. david, we want to point out -- >> i want to talk about this david, is a proxy fight for real or is it all about the price in the end? >> it is about price and regulatory, this is broadcom, qualcomm giving regulatory >> i would reiterate that. maybe he's thinking 400 in a year and a half. lets get to rick santelli. >> thanks david. looking at the board yesterday and today's high is 2.64 >> dailies, weeklies and the longer the time frame, the higher the priorities.

yesterday we closed right on it. 263 was the high for 2017, did you see on the one year chart, march 13th to be exact >> this is a significant it does not mean you have to go through it or does not mean you won't go through it. traders will be paying close attention to it. sometimes these things turn out to be the middle of the range and they're still important. if 240 is the low close, 263 is important? maybe you have to add those 23 points onto find the top of the next range we'll monitor it and keep an eye on it. looking at a four year chart of 10s. keep that same date for bund and you can see some of the disparity. lets look at the euro verses dollar it continues to be the favorite currency around the globe.

it is a good week. a spike over 123, it has no t closed above it but many will continue to monitor. if you look at what's going on from the yoeuro dollar senend f 2015 quickly, dollar versus yen, this is on terror cure for insomnia. look at one week chart high and low, that's really big. open it up to september 2015, that's about the last time we were around the dollar at these levels back to you. >> all right rick, we'll see you soon important day today. still to come former chairman bob wright will join us challenges facing the company to tax reform, dow hanging onto thin lead, about 5 points as a meks are a drag. we'll be back in a moment.

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amazon still above 1300 as announces rise in prices of membership fees, about 18% meanwhile dow still below the flat line. flat line. >> we'll be back in a minute [ keyboard clacking ] [ click, keyboard clacking ] ♪ good questions lead to good answers. our advisors can help you find both. talk to one today and see why we're bullish on the future. yours.

jim, what's on tonight

>> i have wwe. mad money. this is a company that's got great sub description business george bar rios is terrific. i think this is a killer stock and killer company and i thich i should be more involved in watching the product, they are in brooklyn, but i don't have time with all the shopping. >> costco, amazon, raise my price, please. >> when we come back, the mayor of denver making the case for mile high city for finalists for amazon h 2 q

with the dow down by 9

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$339/month for 36 months. experience amazing at your lexus dealer. welcome back to "squawk on the street." breaking news, preliminary, expecting 97, receive much less, 94.4 following the final read which was 94.9, 94.4 is the weakest level since july when it was 94.4 you do remember october was 100.7, basically a 14-year high. let's go through internals if welook at the one-year

inflation expectation, it moved up a tenth to 2.8. look at the five to ten year inflation, moved up a tenth from 2.4. stands at 2.5. all these are much more significant break evens on 10 sz over 2% and ten year yield hovering highest level since 2017 at least based on closing basis. back to you. >> all right rick thank you very much. rick santelli. good friday day morning t i'm carl quintanilla along with melissa lee. sarah is off today as the count down continues to potential shutdown that's where our road map will begin. the shutdown showdown. the house passes but the senate back to work in the next hour appears on track to reject t we expect a briefing from the white house in about half hour. plus an ipo, adt ready to go

public after pricing below the range. we'll have the ceo. and short list amazon 20 finalists forehead quarters. and we'll talk to the mayor of denver about that. but can they get a deal done before midnight tonight? kayla tausche joins us from washington with the latest. >> reporter: hi, the senate will convene just before the deadline to fund the government majority leader mitch mcconnell is gambling that the time crunch will pressure lawmakers on the fence to vote yes. the senate needs 60 votes. but that number was 4 last night. so perhaps some of the 3 you see on the screen would change but two democrat aides suggested yesterday the opposition was enough to block the bill top senate democrat chuck schumer is demanding the parties each reach a deal that secure citizenship for the d.r.e.a.m.ers or fund the government for a few days until

such a deal can be reached mcconnell said even if that happened, it's not clear what the president would sign. >> the presidency under our constitutional system is not irrelevant he is the one who signs things into law and for most of us in the house and senate on the republican side, we are interested in what his views are, and those have not been made fully a parent yet. >> president trump this morning said democrats want illegal immigration and weak borders asking shutdown coming the white house supports the current bill how it would view a shorter deal we'll get more details in about half hour when they hold a briefing on camera to discuss this but from trump was supposed to be depart thg afternoon from mar-a-lago with ga la scheduled tomorrow evening to celebrate year one of his presidency the white house now says he won't leave washington until a bill passes and we'll get more details in the next hour, carl, about how likely that is.

>> kayla, thank you very much. kayla tausche in washington. on all of that stocks are missed but third straight positive week joining us to talk about this. guys, happy friday jonathan, last three shutdowns going to '95, in the span s&p is up is that reasonable to get this time >> the market doesn't care if you are an owner of proctor hand gamble and holding it for 20 years worth of cash flows, and the government shuts down for a day, and not talking about defense department, something that's reasonably minor, market doesn't care a whole lot. >> tracy, similar sentiment? >> yes, exactly. we don't think the market will care very much if there is a government shutdown in the shorter term so we would expect markets to continue their rise. >> so let's move to some other

concerns ten year, 264, when does this get interesting? >> we put out a report up about a month ago up until it hitting 3.5, is a move higher in equity valuations markets want to see more normal rates. same thing on shortened with the fed, really low rates something wrong with the system. fed taking away uber. >> how do you come up with 3.5%? >> if any one wants to go and get the report from it, basically looked at every day what is the market do on days where interest rates rise and different levels and how much the stocks move? >> because biggest point we have seen in the markets seems to coincide with the big move in ten year yield there seems to be jitneyers rise in ten year. >> if you look at the last year, if you only invested on days

where interest rates rose, would you have something like 30% return and only invested whether it fell you would have negative 5% return you could do that not only now but the last 20 years and the pattern is simple. but there is reflection once rates too high the market becomes more concerned. >> i like that analysis. but when you look at 3.5, i don't know what your line in the sand would be on ten year yield, but that would say valuations right here may not be supported at 3.5%? >> so we think that rates will end the year somewhere between 2.5 and 3% so we don't think that we are going to go to that 3.5 percent range. and there are several reasons we think rates will stay low. first one is we think international rates will continue to be low so that will make u.s. rates attractive in the 2.5 to 3% range. then the other consideration

there is that we have an aging demographic. so plenty of demand for u.s. bonds. so we think yields will stay in that more lower range between 2.5 to 3. >> common defense. demographics and technology. >> i'm not saying that rates are going to run away to 3.5 what i'm saying is if rates are somewhere between here and 3% this year, that's good for stocks, if rates retreat, that's bad. the key here is investors are concerned that the fed being more aggressive pan rates going up is in some way going to be a cold shower and that logic i think is wrong. >> jonathan, you look at as of this morning the companies that have reported, and the way in which their tax burden guidance is affecting earnings estimates? >> right. >> walk us through it. >> for companies about 25 companies have provided guidance on what's going to happen. their eps is up 9%.

>> eastimates on eernarnings. >> for 2018. >> for those no guidance only up 1% so what that means eps estimates are way too low, probably seven or eight% upside to 2018 eps as that guidance trickles out and that's happening pretty much on the vast majority of companies when delivering current quarter earnings and guidance ahead on taxes. >> is this one up? sort of mechanical lifting of eps for this year, and then after that it remains the same compared you are going to take to look at comparisons at that point? >> so that's right what we are seeing is that the pop in the markets in the first couple of weeks of this year are probably a rapid repricing that's related to the benefits of the tax bill.

we don't expect that rate of return to continue through the rest of this year. we see some leveling off and analysts do move their prices higher after earnings reports this season. however, we expect maybe 5% at the upper bounds of our expectations from here through the end of the year on the s&p. >> we got michigan a few moments ago. in a string of weird misses i wrote down a list of things. factory orders, the trade deficit, if you want to count that, philly, empire, and now this january are we back into the q 1 season seasonal weakness? >> we probably saw the peak. so the level of growth is unbelievably strong and probably

going to calm a bit especially as we get into the back half of the year the question is, is it at a low enough level that it's problematic? absolutely not but you can't stay at this level, surprise, and the like, forever. trees don't go to the sky. but still very healthy expansion. >> good point. we'll see what today brings and the weekend. thanks to you. when we come back this morning, shares of general electric 6 year low. break up of the company likely on the horizon we'll talk to former vice chairman bob wright that's with us plus the battle of new headquarters we'll talk to one of the mayors of though cities. then the ceo will join us, big show ahead big show ahead with the dow down 27

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shares of ge are down again tonight. very rough week for this stock crossing below 17 yesterday. and now flirting at $16 level you see right there. ceo earlier this week said all options on the table earlier this week, we had one analyst join us saying there is no, quote, down side limit to

where the stock can go for more, let's bring in former general electric vice chairman, my boss sometime back, bob wright and co-founder of susanna wright foundation. i know you own shares. just from personal perspective, are you sorry you haven't sold what are you thinking when you watch this stock and the week it's had >> i know businesses that exist, and some of the strongest businesses a company could be associated with, in power, health care, and aviation. and even in ge capital they have the finest leasing corrobora, c leasing business, jets this whole thing has been very difficult. when you see legacy things coming on here, like insurance,

policies maybe sold 30 years ago, and have been looked at by people zoontconstantly over the years, and i guess flattery said he's going to take the hit on this because he can't make it work we need more data and more information from him he's a very talented guy but it's taking away from the scale of the businesses that are there, which are performing at or better than expectations. and especially the aircraft engine business. that's a business that you can't duplicate. you cannot duplicate a business like that. health care is extremely important. >> right. >> and so i think the problem with the market is when they saw that the dividend from ge capital was going to be deferred, and might not be available for many years, that probably became a secondary

issue. i didn't see that coming at the time. >> no, you know, i think bob, there is this concern, and you sort of referenced it, more to come on these liabilities that haven't been properly assessed you were at ge capital before you have course came to run universal. is it a sense that's a possibility? it seems you would like a little bit more transparency. but that seems to be a fear despite the fact that ge is telling us, this is it, we are good on the capital front, on insurance, and any other big surprises? >> well, insurance was really the only issue that i would have signaled that they've been following. it's not like people didn't know about t. >> right. >> it's probably the contracts could be 30 years old now. and the seven or eight% estimate of income would come from the investment just has not materialized so they had to take this bite. i'm not aware of anything that's

in ge capital that's of concern in terms of legacy. >> yeah. earlier this week, i -- >> ge doesn't have a lot of debt but it has a lot of liabilities that are probably mostly with ge capital. >> right and of course they dispatched most of the businesses ge capital which i think is also something that some investors, that's why they are perhaps more disappointed bob, earlier this week, during the conference call about those insurance losses, flan eery touched on the possibility in a very frank way of breaking the company up, essentially. and i'what i've heard from peop close to the company it has been studied, has been for weeks. will continue to be. when you think of a breakup of ge into the strong aviation business you just referenced and health care and trouble power business, do you think it makes sense? >> well, first of all, the

troubled power business is just the factor that they had an oversupply of power generation equipment. they are the world's leader in that category, though. and that's just kind of a timing thing. now you have oil backup and other issues, and that will help them too that business isn't damaged but they got ahead of themselves but the other two businesses are right on target. and they are very big business i would imagine -- >> do you think it should be split up, bob? >> i think maybe he'll be looking to bring the public into those businesses individually, retaining a controlling interest that would be my guess. >> is it your belief, bob, that all the shoes have dropped i mean, that's what it sounds like but i'm curious, are you confident, do you feel confident as shareholder that there isn't one more thing that flan eery is going to talk about when they report earnings?

>> well, i think, again, it's the sale of what he reported because lead you to believe back in november that he was concerned about long-term care insurance and going to do a thorough examination of that so he put that on the table. it's the amount that came out. and consequence of losing the dividend from ge capital to ge, i think, that's been the more difficult thing to deal with. >> yeah. >> he's got to come out with very good -- no reason why you can't bring the public into any of those three big businesses or even for that matter bring them into the aircraft leasing business it's a big business. >> right so you expect some sort of significant let's call it restructuring but not necessarily a wholesale breakup. bob, as long time investor, somebody who worked for the company for a long time in senior management roles, what gets it moving from here it's been a horrible period for

ge a lot of doubts that we've just been bringing up is it just blocking and tackling what gets things changed in terms of narrative >> i think he has to get the legacy behind him. and then focus on the major parts that he wants to retain. he has a number of businesses he can still sell i think it's the -- people don't -- if you look at the balance sheet of ge, you'll see an awful lot of liabilities put together i think that has to be thoroughly gotten past that. then we focus on those larger businesses and that larger business is not $11 a share stock by any means. >> no. >> if any of those companies could sell for more, 120 $120 o $150 million, a billion, so it is about the liabilities. >> right and to your point, that's about $140 billion market cap. are you going to sell any of your shares? i mean, you are going to hang in

there now for whatever is to come >> well, i'm hanging in there. i've been hanging in there all along. it's been a one-way street though i feel terrible for them i feel terrible. i know those people. they are really good people. and they are struggling to get this to be more transparent and get the focus on those businesses which are much more understandable. >> well, bob, we appreciate your joining us and giving us some in sight and perhaps some positive sentiment which has been sorely lacking. >> what do you have there? >> if i could take a minute to tell you this is my code purple here, susan wright foundation. i've been spending a great deal of my time program for pancreatic cancer, and developed a program it's called har pa, advanced research projects agency, which would sit inside of health and human services and

model from darpa, which is in the department of defense, and they take on the most difficult challenges, and they are an independent autonomous unit, use outside resources, inside the government, and they have accomplished all kinds of things at the department of defense everything from the internet tonight vision to robotics it's an endless list. >> right. >> and i don't know why this hasn't been done in the last 20 years. i suggest it hasn't been done because it's been fought by the nih and doesn't want anybody doing research inside that they don't take care of but they don't do this kind of work this is really problem solving work and i've got all kinds of people lined up in the white house with my program i've gotten a very positive response but it's just hard i have to move forward with it so that's what i'm doing and ge has to help me out here a little bit too. >> you need to fund it bob, thankyou.

and of course we always appreciate your joining us bob wright former vice chairman of ge. >> thank you. >> and man who ran nbc universal for many years joining us from florida. you may have heard the bells there. thank you, bob >> that was adt opening and not pretty priced 14 well below the range remember, this company was spun from tyco, public, then taken private only deal closed in may of '16 and bringing it back to the market already highly leveraged and well it hasn't been well received by investors. >> industry where technology has lowered barrier of the century so we'll ask the ceo tim wall who will join us a little bit later on when we come back the fight for h 2 q is heating up. we'll talk to mayor on the short list stay with us "squawk on the street" will be ghbarit ck

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markets off to one best

starts to the year in more than a decade but major consensus trades like small caps and value are lagging. mike quintanilla. >> yeah, those are the popular positions. go to the small cap because they are beneficiaries and growth stocks into value. it has not worked year-to-date look at how the mega stocks. mgk is up 5% out performing the small cap russell coming in today. dominated by the big growth stocks then if you look at the pure style index, russell 1,000, value index, that was supposed to benefit from better financials and faster growth, maybe higher rates is also lagging. why is this?

momentum from 2017 trades stronger than the meaner version that might happen. out performing also, sectors don't always follow the policy scripp also, maybe rising rates to a new kind of threshold, maybe 3%, would be that thing that finally breaks the fever in the very large cap growth stocks which sometimes act as bond proxy. so all those things i think working right now. as well as fast start, guys. once you are behind a little bit, when the benchmark is 5.5% it's tough. >> bank of america, merrill lynch comes out every week it is with funds inflows and outflows. and today they said foe mow. foe mow is really dragging the trade. and it was super start to 2018 and earlier talking about the record in flows to the mtu, etf. >> yeah, fear of missing out what that means is people want

in they want equity exposure. not necessarily being nuanced about it saying let me buy exactly the beneficiaries of lower tax rates. has nothing to do with the tax cuts. >> but interestingly, bank of america also said that the flows indicate a definite positioning for rise in inflation. >> that is true. >> whilewe had the flow, we ar also seeing the other trade work, acknowledgment that inflation is it on the horizon. >> definitely. this parallel move tan high yield bonds had a big outflow this week as well. >> are you a believer that they are worth some critical leaf nel this mid range >> i don't know if it's critical to except maybe the technicians. i do think we are level of the stock market where we might search for excuse, cool out, that cob a rate move to me if credit stays behaved,

it's not necessarily kind of time to scream and run for the exists. >> don't go too far. thanks, mike we are awaiting this press briefing from the white house on potential government shutdown. joins us with more on what this afternoon and tonight may look like amen. >> reporter: yeah, carl, that's right they are saying at the white house it doesn't look good in terms of avoiding a government shutdown. mick was out here talking about it doesn't look good. but when things broke down yesterday they think it's 50/50. mark shore the director, he'll be briefing in the white house briefing room. he said the president is on the phone making calls they hope that the government does not shut down

they are placing blame on the democrats changing behavior from what they done on the past of course democrats on the ch l capitol hill would disagree with that you get the feeling started to expect there will be a government shutdown and starting to position themselves to blame the other party. we'll see which party wins the politics but in terms of legislating they are saying it doesn't look good, carl. >> and amen, if in fact one occurs, first visible clues and signals are going to come i guess on monday morning, right when a lot of these nonessential workers show up without pay? >> reporter: the big advantage here is going into a weekend, tomorrow being saturday, so won't be immediate impact in terms of visible things we have seen in shut downs in the past i remember in 2013 the images of world war ii veterans climbing over the fence to get to the

world war ii memorial to see it for themselves those were politically very powerful images, right nobody wants to see that nobody wants to see veterans inconvenienced or national parks closed or people had vacations they have to cancel. any of that. but that will start to roll out on monday. you can imagine that they are going to have to work on a plan b here for the government in terms of essential workers, who shows up, who doesn't. the director said they are working on all of that right now and they'll have to roll it into action over the weekend. gives them 48 hours to sort of figure things out when they are not under as much pressure through the weekend in terms of people showing up for work. >> all right amen, we'll be coming back to you in a few months we hope. at the white house goldman sachs, chief economist is with us at post 9 written about this thing in the past namely the economic effect and the degree it's offset in the following month or quarter right? >> that's right. so there is an affect, tk in

neighborhood of 2 tenths of a percentage point of quarter for week of shut down. so it obviously depends on how long shutdown would last and there are also ways in which it could be a little smaller there are some judgment involved in department of defense in particular but that's the order of magnitude we are working with. >> and then how long before those offsets are complete later 0en? once congress, for example, pays those workers retroactively? >> then you get -- i mean, offset for most of it. and then it would be hard to see it in the quarterly data given that we are still early in the quarter, obviously. >> debt limit not as acute concern this time? >> we are still a ways away. but if you were to get a few more of these sort of very short term extensions then it would

eventually come closer but for this particular negotiation, it's not as much of a concern. >> we have seen a pick up in terms of corporations announcing what they'll do with their tax savings. apple is biggest company with $300 million impact to the u.s. economy. are we at a point where we can start adjusting models at all or no >> well, we have adjusted models and i think most forecasters have adjusted models post the passage of the tax bill. and to significant degree already before because of course this has been a while incoming our estimate is that the tax cut gives you about an extra two tenths of a percentage point of growth in 2018 and another three tenths in 2019 range of uncertainty around that, of course. because corporate behavior matters. there are a number of things where, you know, the official scores are estimates but we'll see the reality. >> what's your assessment of how

corporate behavior has been thus far in response to the tax bill? were you anticipating this level? s&p estimates 8 companies account for two thirds of the overseas cash. so already had apple come out and say how much they'll pay in repatriation >> i think it's difficult to extrapolate from these more antidotal kinds of things. so-so far i wouldn't see anything that would make me revisit over all estimates but still a lot of information to come. >> we have a limited sample of companies who have given bonuses, right, who committed to investment or committed to raise wages. when does that start kicking in on a structural basis? i look back at nfib, net compensation plans are at 17 year high. but when does this get common, not just special >> i think if you look at the surveys, there is clearly been quite a bit of acceleration in

the wage answers over the last year or so last two years in the hard wage data, we have not really seen that and there was an acceleration, but over the last year it's been basically moving sideways, closer to 2.5% than to 3%. so that's been a bit of a disappointment i don't want to overstate the surprise here, you know, all economic data fluctuates, but it's been a little on the soft side so to the extent that increases in pay, especially at the bottom end of the pay scale, that's where we have seen some of these announcements over the past couple of years, to the extent that that helps the wage numbers pick up, it would certainly be welcome. >> so remain in this world where short term rates show a more hawkish but benchmark yields show peaceful signs and market is happy with that do you see that changing

>> we have seen long-term rates gone up a little bit but the curve has flattened as the fed has done more than market participants had expected a year ago over time, 2018 our expectation fed does more price hikes. and we also expect some drift up at the long end of the yield curve to the 3% range from a little over 2.5 at the moment. so more of a parallel upward shift. whereas over the last year, it's really been the shortened going up, but the long end not doing much. >> has a couple weeks left more parlor games about john williams as vice chair who knows. where are you on that in terms of who is going to be? two questions, how do you expect powell to do early part of term? and who do you think is backup >> i think on mon tarry policy when we look at what powell has

said, it's in line so we wouldn't expect major changes. we think he's on board with the media for three hikes. ultimately they'll add a hike, but looks like he's on board with that. who is going to get the other top jobs i don't know obviously there are a number of people under consideration but i don't know who it will be. >> sounds like this doesn't matter very much >> no, this does matter. these are important positions but we'll have to wait and see. >> a lot going on. thanks for rolling with the punishes of goldman sachs when we come back, adt open for trade down almost 12% at the open ceo is going to join us. and the dow, dow down about 8 points [ click, keyboard clacking ]

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good morning everyone i'm sue herera here's your update at this hour. comey to teach ethics. nontenured position at professor in education. turkey defense minister says his country is set up in northwest syria. say they pose an increasing threat he would not say when that operation would take place as turks buildup military and tensions are soaring along the volatile frontier between india and pakistan as rival trips shelving villages. three civilians were killed on latest side in the clash both countries accusing the other of starting it. and vladimir putin taking a

dip in icy water to mark the epiphany the air temperature, a balmy 21 degrees. that is the news update this hour i'll send it back downtown to you. bump tht that coat looks rey warm. >> i'm sure it was much warmer after he got out of the water. exactly. thanks sue herera. we are awaiting mick mulvaney to give an update as soon as he takes the podium we'll go to that live. and meanwhile we'll talk to one of the cities on amazon short list as we head to a quick break, let's take a look at shares ibm, but the stock is down 3.6% higher 2018 tax rate despite tax reform also missed on gross margins

stock is down 3.6% stay tuned

what companies and stocks are expected to show the biggest swing on earnings? we'll find out with more "squawk on the street" coming up

welcome back we are awaiting a briefing from mick mulvaney and we will bring you that live when he begins speaking. for now though back to this year's major ipo begins trading today below the $14 price it was already below the original target that it had when it was planning on coming public, adt, that had been 17 to $19. the home security company trading backed by the private

firm joining us now to talk about that what's the hurry >> this is a company that was private, taken private only in may of 2016. and here you are back in the public markets that is a very short gestation period, typically, for a company that goes private. so why so quick to come back to the public markets >> yeah. bottom line, hit most of the five-year targets inside of two years, great progress from the employees there, much better customer satisfaction resulted ingrately improved cash flows to the business so that's the reason you just felt like the financial performance had been there to be able to bring it back now? >> absolutely. >> are you disappointed at all that the markets response? this is of course a sponsor led ipo, apollo will still control the company, and proceeds are being used to pay down leverage. those things don't always go over too well with investors

and apparently didn't go over too well with the investors today. >> yeah, grew up working with my parents so having a chance to represent them is a humbling opportunity. >> and those who say, by the way i use the product and like it. >> thank you. >> but i also have a nez necess ness in my house as well who you do you combat that and continue to assure investors you'll be able to increase it given this ability for me to say, forget adt, i'll use the nest for my security >> good point. last 5 feet of the home is important. place where we shine 24-7 having the technicians that are out there. the homes get more complicated all the time getting something to, would. i happen to have adult daughters who can get things fixed but when it's out it's harder for

me so who is going to help you internet of things devices in the home and stays working for you. and at dt side service is what we do, we take care of customers 365 days a year. >> so the barrier to competition in your view, service? because the prime answer adt is technology makes it much cheaper to enter this industry we know amazon for instance has a number of patents in the home security area. that seems like a viable competitor >> there is no limit to the competitors that come into this base again, when you talk about home security, people need to understand what adt is putting in in scripted devices to skrur what they dochlt a lot of different products and as consumers you became aware of them, they call adt, we can talk them through what's different from adt. >> and finally, sir, difficult

entry. what can we expect in term of sale of stock going forward? has apollo made it clear it will beholder sometime to come? or expect they'll keep hitting market with shares >> overtime going into the secondary market with offering but based on the fact of how the company performs over the next few watching thank you for joining us >> thank you very much >> tim wall, ceo of adt. >> we're continuing to be on watch for that white house briefing regarding a potential shutdown let's go to jon fortt and see what is coming up. >> greg abbott is going to join us to weigh in on the competition for amazon's new headquarters, apple's new campus they already got one perhaps a little bit on this looming potential government shutdown all atndorcongp th a me mi uon "squawk alley.

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and that's the last shot of the briefing room at the white house. we're expecting the budget director to take that podium and talk about the potential of a government shutdown. when that starts, we'll go straight to it meantime, amazon announcing a list of 20 finalist for the proposed second headquarters with 14 of the 20 cities leaning towards the east coast of the country. the tech giant chose los angeles and denver on the west coast joining us is michael hancock,

the mayor of denver, colorado. mr. mayor, thank you for joining us we appreciate it >> thank you glad to be here. >> what is going to be the economic impact to the city and how soon do you start seeing that impact when you factor in the incentives and tax breaks that will be afforded amazon >> we expect this to be a long term opportunity for denver or any city that the headquarter falls. we're planning to day and for future generations we expect that economic impact to be part of it for many years out with us for 50,000 employees. it took them 20 years to get 40,000 employees we expect this to be a long term commitment. >> we're a network about numbers, mayor are there any numbers that you can attach to that instead of saying it's a long term goal to have growth from getting amazon's second headquarters >> well, certainly we take a look at those long term economic numbers. it's untold. you're in hundreds of millions of dollars of economic impact. you're looking at second tier

supply chain and small business development as part of the placement in your city as well as the 50,000 jobs with their salaries and economic impact you're certainly into the couple hundreds of millions of dollars of economic impact into the city and the region where amazon ultimately lands >> my folks live in castle rook. i went to -- castle rock. traffic patterns have gotten tough. what are your expectation for how hard it is to get around the city, commute on i-70 and i-25 if you got this? >> it's a challenge today. the city of den vaern tver and region started to make investments. we just passed a bond, half of that is going towards infrastructure improvement around here. we had a $4 billion transit system that is already activated in denver, moving from you downtown to other parts of the region and certainly to our airport.

and we're going to continue our efforts working with our state to invest in infrastructure. i want you to know we continue to have conversations and hope that the federal government will move on the infrastructure investment denver and colorado have already made tremendous investments in mobility we're beginning to see them play out. >> mayor hancock, recently the attorney general indicated tha he would like to move against legalization of marijuana. how would that impact the city of denver which has seen a boom thanks to that business. >> absolutely. marijuana has been the industry has done well to set up and have responsibly help the city of denver and many other silties in our region to develop a regulatory framework i got to tell you that as soon as that announcement came out, we had conversations with our u.s. attorney and our state attorney general about the laws here and we don't expect there to be any change we're going to continue to move this industry forward and implement responsibly and keep children away from marijuana

>> all right mayor hancock, thank you so much for joining us we do appreciate it. michael hancock, the merit ayor denver, colorado >> we continue to wait for this press briefing we'll take you there live. dow is down 29 points. "squawk alley" starts in a moment [ keyboard clacking ] [ click, keyboard clacking ] ♪ good questions lead to good answers. our advisors can help you find both. talk to one today and see why we're bullish on the future. yours. but prevagen helps your brain wewith an ingredient future. originally discovered... in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory. prevagen. the name to remember.

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good friday morning. welcome to "squawk alley." we're awaiting a white house briefing on a potential government shutdown. this was originally scheduled, we thought, for 10:30. so we hope to see it in the next few moments. as soon as it brings, we'll bring it to you live i'm carl cat quintanilla at pos nine american express after earnings last night and the senate is going to start deliberations once again this morning, begin debate at any moment to avoid a government shutdown for more on that, we'll get to eamon javers. >> that press briefing was supposed to start a half hour ago. dwoen we don't expect to hear a lot of particulars about how they're going to hand will a