good morning it's 8:00 a.m. at amazon headquarters in seattle. it's 11:00 a.m.on wall street. "squawk alley" is live ♪ ♪

good thursday morning. we again this morning with a round up of this normornings biggest shares report. southwest saw rising cost for fuel we talked about this the last hour >> it puts a lot of pressure, especially on our competitors because they toents hadon't havw cost structure we have they are a lot more exposed to increased prices energy prices are up 20% over the last several months. that could translate into to more capacity restraint. >> meanwhile dow components caterpillar 3m helping to lift the dow. you know the cap quarter in and

out. some of these bag locklogs are rising faster than they can make the machines >> with general electric we have seen better than we expected the the caterpillar call is starting right,0 now 3m was much better than expected >> is that profit taking a surprise why do you take properties now with expensing, full expensing now on the hoe rrizon? >> such a good question. stocks are up. traders saying the valuation is getting a stretch here we'll have to see what comes out of this call add well. the bar is getting higher and higher to hurdle for some of these industrials like c caterpill caterpillar. >> markets watching the dollar as well. continued weakness

mnuchin claritied his comments index trading near the lowest level since 2014 in davos, he said you have to way the pros and cons. >> in the short term where the tlar dollar is is not a concern of mine there's benefits of where the dollar is and there's costs of where the dollar is depend upon which side of the table you're on i'm focused longer term where the dollar is. >> it's good to have you both. op-ed making the dollar weak again. it's ultimately a fool's game. are we playing with fire here or

not? >> i don't think so. i think mnuchin uttered what every previous secretary has thought and never said the fact is that in and environment where we have big trade deficit where we love the business and we have very little inflation there's noreason to believe a weak dollar will harm anything, at least in the near term >> looking at some of these industrial names, caterpillar being a perfect example. stocks down. is this a sign that equities are getting a little frothy here >> it could be a sign of that. in the case of industrials thai h -- they've had a good run industrial capacity utilization is bumping up close to 80% the it's getting to that point where companies have to start

replacing goods because things start breaking when some of these companies have made or even exceeded expectations the stocks have slipped. i think there's a bit of concern that maybe higher commodity pricing might pinch their cost structures they have pulled back a little bit. >> this plain spokenness around the dollar, is that something that investors should adjust to that perhaps this whole administration will be a lot more straightforward saying some things that others were thinking >> i think that's what it is there's always been this sort of gentlem gentleman's game going on where there's rhetoric and then there's the whisper feelings going on right now perhaps it's this administration it's clear there's no filter

test interesting we have rolled out the welcome mat to businesses world wide. we have taken our tax rate to the highest to just below average. that's sending shivers across many of our trading partners the interesting thing is will they respond in kind will this be a race to the bottom to try to encourage business globally. we could see a huge move here. that's something we want to watch. >> taking a look at the ten-year treasury yield highest since the middle of 2014, how much is that a risk and especially if these rates continue to rise and maybe rise faster than expected a risk to the market >> it's something investor

should watch it's tied to what secretary mnuchin has said if you see the dollar weakens that means that import prices go up that raises the cpi. that could lead to higher interest rates it's something that could be good for financial services. >> jack on your radar, do you have, are you looking for a 50 basis point move an intrameeting move a hike when there's no presser, things like that >> i'm not i don't think powell wants to bring the fed forward into the

headline i don't believe the fed is controlling the ten-year treasury i think that's the ecb i think fair value, i'm not an economist but i would say fair value is probably 410 which is equivalent to nominal gdp. i would say that's going to start putting pressure on equity >> i'm thinking back, in davos earlier this week saying it would take a move like that to

tip the equity markets over. it wouldn't take very much are you agrdisagreeing with tha? >> i would tend to disagree. we should be equally indifferent between the s&p 500 and a ten year treasury. we have a lot of good things going fundamentally. that should continue >> jack, burns, nice summation of where we stand for now. we'll see you next time.

amazon getting its most bullish call on the street in 1800 there are price forecast. the analyst behind that target will join us to explain. that debate is coming up later president trump addressing trade and the economy from davos. we'll take you there live. stay with us (barry murrey) when you have a really traumatic injury, we have a short amount of time to get our patient to the hospital with good results. we call that the golden hour. evaluating patients remotely is where i think we have a potential to make a difference. (barry murrey) we would save a lot of lives if we could bring the doctor to the patient. verizon is racing to build the first and most powerful 5g network that will enable things like precision robotic surgery from thousands of miles away. as we get faster wireless connections, it'll be possible to be able to operate on a patient

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analysts have been sounding the alarm on what they're calling softening demand for apple's iphone ten samsung sent out an invite where it will launch its next generation phone the galaxy nine. the analysts really want to make this happen. do you buy it? >> i talked to a lot of people you either love it or hate it. i happen to love it. i know a lot of people going i can't get anything to work it was the first smartphone in about five years that really delighted me it's a big user experience transition i think we're so late in the smartphone cycle that for both apple and samsung getting people to be really excited is a hard

thing to do. in the case of the fwguys that would like to have party around this, bummer >> from the galaxy s9, what do we expect? others can't seem to get in this race doesn't that imply that apple is probably going to do okay with this phone despite what some of these channel checks -- supplier checks might suggest >> i think it's the start of a new era of phones. we're talking about the cameras. you're going to see a whole new wave of uses as we go to have continuous heads up display in our life i think it's an kpietsing ti ex.

>> given the fact we're at the beginning of this new wave of technology coming into smartphones, doesn't this get back to the case of why buy now when it will only get better with the next? >> in theory, the operating system allows you to buy whatever you want and keep upgra upgrading. the problem apple had a few weeks ago shows it's harder to keep old phones going on the new software because of the threat the battery might catch fire i think the point is exactly right. people's behaviors are already deeply established we all use these phones hours day. if something give you augmented reality, you're going to have drop something or it's going to take more of your day. i don't know where we are in that curve you don't pay much to sit in

front row with happen l and wat watch what happens apple being very customer focused. samsung, we're feature focused by the way, google is watching everything you do when you're on the phone. >> i would tell people i think it's a single -- if you can only own one stock, it's the best with risk reward i think it probably out performs a bit in a bad market. >> i would argue that we haven't seen our first premium sustained augmented reality hit. pokemon gotalking about that anymore. we have the filters on snapchat.

you don't really need that why haven't we had one where people are like i have to get that one >> the first ten apps most were useless. nobody could figure out what a smartphone could be. we're at that point with ar. as you get low cost glasses, everything changes we spend five hours day on our phone. imagine the trillion dollar industry when we have heads up display as part of our daily life every day last year americans bought 80 million pairs of glasses for over $100 a pair they only had one app. it's all going to change >> there's a lot on apple. there's a lot of amazon too. stay with us the mayors of most cities are together in one place.

>> reporter: there's no shortage of things of mayors of big cities to discuss. there's the opioid epidemic. there's tax reform for 20 cities still standing in the competition for amazon hq2, maybe a chance to do trash talking. that's about to go away. mayors confirming that amazon is insisting on confidentially as this process goes forward. that means less transparency mayors are okay. >> it's a very secretive process. we're continuing to do what we did last week after the announcement which is sell miami and broadcast to the world, not just to the united states that miami is the place to be for amazon >> if i were to lay out now what i think we should offer, it would be criticized and looked at and determined whether or not

that's good or bad >> we aren't really going to talk about what's on the table we have a frame work that's been in place that's supportive of our community and legislature to attract technology companies >> reporter: some of the incentive offers have have been disclosed are mind boggling. $7 million from new jersey $5 million in maryland these hay yours are here fighting we have report cards on all 20 cities on our website. our top state's website. >> one of the things some analysts are writing about is to no narrow that list of 20 down to another smaller list

is that a possibility and are mayor's commenting on that >> reporter: it's a possibility but the mayors say they toendon know for sure what's going to happen next. we don't know if we will know about that publicly or if if next word we'll have from amazon is who the winner is >> scott thanks for this you've been covering the story since the beginning. the media is going so gaga over this process it's a great vaccine for the company against this burgeoning tech backlash. >> i completely agree with that. it has to be one of the greatest pr moves ever. i don't know the shareshouldeelf amazon will win big out of this. at the end of the day they'll do something they were going to have to do eventually.

instead of it being an expense rngs th they are getting massive pr. where amazon had some pretty clear traditional anti-trust issues looming, this is a pretty perfectly timed piece of pr. >> jeff bezos is insisting on secrecy to give him all these tax breaks for amazon. i feel dirty shouldn't there be a public discussion >> democracy dies in darkness. >> what kinds of public subsidies will two to drawing this company to any given city >> precisely >> we're used to this in

manufacturing sector and the energy sector. you'll see more and more job creators doing this as they want to have more clout in shaping our economy. >> okay. >> it's the silencing of the mayors that concerns me. >> it's definitely a secretive proce process. where do you see them settling >> i have no idea. we know where the power is in this country now amazon's got wildly more power than any state or any city

because it can put this decision out there and literally get 238 people running through the hoops. 20 now, or whatever in the next round. >> i love that d.c. and merchandise are on the list. bezos just silenced those mayors sg we know who is in charge. that's what makes it so difficult. you go at some point the country has to have a conversation is it appropriate that we always bend over when they come to town now everybody is tooled up they have their slide shows ready to go.

they just put an app >> thank you, guys good to see you both today still ahead, the streets newest amazon will join us to defend his call. why he says the stock will reach, get this, $1800 over the next year. as we head to break taking a look at stocks at this hour. the dow back near session highs. you can see right there bitcoin lower as well. we have more squawk alley coming up after this break.

well, it's earnings season once again. >>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. still ahead, could bitcoin go to zero that debate is next. taking a look another major averages stocks are up for the fourth time in five sessions. on track for a fourth straight positive week. the dow is up some 123 points at this hour. we'll be right back. alerts -- wouldn't you like one from the market

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here is your cnbc news update jim mattis is meeting with vietnam leaders.

mattis said the u.s. will likely send an aircraft carrier to make a visit in march it will be the first suchpost-w. they were greeted warmly by their south korean counter parts ahead of the two teams competing as one in the winter olympics. california authorities are allowing some residents to return home after mudslides ravaged the community. the slides killed 21 people. officialsgradually allowing residents back into their home rich products cooperation issued a recall for meatballs over lis listeria concerns that's the cnbc news update for this house let's get back to squawk alley

thank you. european markets closed about a half an hour ago >> the broader market now at a one week low you should blame it on the euro that just crossed above 125 for the first time since december of 2014 after ecb president surprised market participants with a more optimistic view on europe's abilities to achieve its mandate of 2% on inflation he also made the case for maintaining the bank stimulus strategy >> an ample degree of monetary stimulus remains necessary for pressure to build up >> european bond yields are breaking up in reaction to comments we are seeing the move on the back of that boil mepolicy meetg

fiat is closer to its growth target the idea fiat may need a partner has been put to bed. the spirit making siting sales driven by an increase in spending on marketing. the home of johnny walker, adding a strengthening uk pounds and in weaker uk dollars could weigh on sales and profit. that stock down on the day back to you. >> thank you bitcoin continues to be volatile it's about flat this morning depending on where you're looking. there's been some talk of the crypto currency going to zero. >> a very fantastic, maybe a third chance that bitcoin goes to zero. that doesn't mean you can't have fun. >> zero. what would it take to take bitcoin to zero?

that sounds out rarageous to me. >> it's quite possible that another technology comes along that's faster, cheaper >> you know what i think about that, but who cares what i think. what do you think of volatility and the chance it could lose all serious value? >> i respect him and like him. i disagree with him on this issue. i don't think bitcoin will go to zero the reason for that is we have historical evidence. we have a huge community worldwide of all these holders who have in the community.

that's when the whole thing had much less attention and energy than it does today with that said, i think a good long term projection is that bitcoin's market cap in the long term continues to rise it's market share, as a percentage of total coin market capitalization continues to fall that's because there are other kinds of coins coming out. bitcoin has a lock on the digital gold application for which longevity is important >> here's the problem i have we've had the visa ceo saying these accept bitcoin is the volatility they have also said that if bitcoin stays flat for a period of time, the people that have been buying it recently will get less excited about that should put some downward

pressure on it is it for transactions or is it not? >> definitely not anymore. there's a few times that people thought it could be everything bitcoin is a pure digital gold many competitors is purely a digital gold at this point >> a piece about hedge funds trimming their positions in some of these crypto currencies one said his fund was 50% invested now versus 90% in december you could imagine what would happen if a viewer suggested the president came out with a tweak saying they were going to crack down hard on this. >> i think the way to make money is to buy low and sell high.

if you bought in december and sold today, you bought high and sold low that's probably not what you want to do in so far as hedge funds, i think smart thing to do is if you think there's a direction coming then you hold your capital and be ready when that happens. regarding the president making tweets about it, my guess is good as yours on that. >> all of the arguments or most of them about why bitcoin is changing the world has to do with what is transactions. i'm concerned about the idea that now it's solely supposed to be this store of value with little to no use for transacting. aren't there so many other things that you could do to store value versus put it in something like bitcoin if that's what it's become >> there's a good impression it is really the best value out

there. for bitcoin it might take an hour or so it doesn't have the other aspects might also say why not hold like a billion tladollars in cash. it's realtive to gold. relative to large amounts of cash bitcoin is a good store value and you can kind of show that. >> it's an evolving case a lot of people still making it. thank you for joining us

>> thank you as you know by now the president has landed in davo and begun meetings at the world economic forum good morning, michelle >> reporter: president trump is in middle of his packed agenda here in davos, switzerland in a room full of prime ministers, presidents, billionaires and ceos. the crowds were crazy. lots of pictures the room is full of people who are used to being treated like that when they are in their home countries. no matter where he goes, a lot of people just can't get enough of him even in this very high powered crowd. on the schedule for him bilaterals with the uk, rowanda. now he's doing an interview this you'll see tomorrow morning. he's doing the closing keynote speech tomorrow afternoon which

will happen in the middle of squawk box we expect him to curve his america first image slightly and hear him say america first does not mean america alone he also says america is open for business and will talk tax reform in the united states which is a very hot topic among all the ceos here. >> i do believe you're seeing tax reform in the u.s. and a expectation the money will glow back in the system even trickle down glow bally it's important for attracting capital. you'll have to respond to the u.s. president's initiative and congress initiative. absolutely you have to be competitive >> global ceos, tax reform has really changed their thinking and they're thinking about doing more investment in the united states >> reporter: another key topic also, how to deal with the backlash against technology.

>> we've taken the motion of ai and attached this negative idea that it will take away a bunch of guys. if history's a guide -- >> it will be first time >> it's the first time >> we continue to operate and continue to invest >> look over the history, it takes society somewhere from 10 to 20 years to figure out how to regulate and how to societize changes. you're seeing the economy in regulatory world that will reck a react to the technology world. >> we are going to have people in jobs that will not exist 10 to 15 years from now we have to develop an economy that will make sure those people have training. make sure those people have some

transition in their lives because artificial intelligence will be something very powerful. >> we hope to hear some of what president trump told joe later on today tune in for that and you can see the whole interview starting tomorrow morning, 6:00 a.m. on squawk box back to you. >> thanks michelle as we head to break, taking a look at shares of caterpillar. it's been a volatile day after a earnings baets shares are now higher up almost 1% the conference call going on now with executives say moving away from providing sales and outlook range as the strategy is focussed on growth due to the cycle. all this leading to 1% gain. hi i'm joan lunden.

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morning, rick. >> good morning. i like to welcome my guest thanks for taking the time, peter. >> always fun. >> we had mario's big day today. i think mario starting to perspire a bit we have done the trump jump on november 8, 2016 we followed up with tax reform we lowered the cost of capital others have been helped in a great way. now it's the moment of truth they have to speed the sometitin up is the strong euro going to keep inflation at bay >> i don't think he wants to but it's a question of whether he's forced to.

i think today he's saying that it's going to end in september negative interest rates that process will begin to end in the beginning of 2019. >> all things being equal and an over simplified view, isn't inflation going to be possible on this side with the weaker dollar than on the euro side with the stronger currency >> yes, the stronger euro will help mute it but there's still rising inflationary pressures there nonetheless. yes, we will feel it here the most that's one of the problems with this acceleration in down side of the dollar. >> the media is making this seem like mr. mnuchin and everybody incited to sell off in the dollar it was the big feature of 2017 really nothing has changed, has

it >> a year ago the administration implicitly endorsed a weaker dollar just coming out and saying it is something we have known already. >> i agree it is unusual. isn't it especially true for those of us students of the markets that there's not really a lot the treasury secretary can do in the immediacy of the way the markets are trading in that regard >> yeah, the foreign exchange trade 7 trillion a day when you're talk about the path of least resistance when you have the treasury secretary endorsing this move, it will accelerate it. at the same time there's or ordinary pressures on the dollar to begin with. >> it's very interesting efb everybody's hair on fire with regard to trade policy pragmatism also seems to win over bluster

thank you for joining us today back to you. >> all right thank you, rick. when we come back the biggest amazon bull on the street is with us. why he thinks that stock can go up another 24% from here also, hitting highs on the dow it is up 162 points. we'll be right back.

the rally has resumed on the street, dow is up 162, 3m adding 54 points. "squawk alley" continues in a moment

welcome back to "squawk alley. d.a. davidson out with a note this morning on amazon, taking its price target to $1,800, the highest on the street. for more we're joined bit analyst behind that note, tom forte. thanks for joining us today. >> thanks for having me on >> this implies 20 to 25% upside to amazon stock. make your case >> sure. if you look at amazon, their fastest growing business, cloud computing effort, aws, is their highest margin business. to the extent they're able to retain a high growth rate for that business, their shares continue to perform well that's the basis for my $1,800 new target on amazon >> how closely are you watching or i guess estimating growth in the prime subscriptions?

i know they don't actually release those numbers, but what are your expectations? >> sure. so i think within the u.s., their prime subscription base is fairly well saturated. they've done a lot of interesting things, when you think of their monthly payment offering for prime, college student prime, prime for parents, things of that nature so it's about really i guess getting the prime customer to spend more at amazon they're doing a lot, you know, we know what they're doing with grocery. we know what they're doing with apparel. and then some businesses related services, potentially pharmacy, things of that nature. i would say the growth today in prime is more about getting the average consumer to spend more money with amazon, which is where the grocery efforts and apparel efforts are very important. >> and tom, we've got mayors meeting in d.c. right now, really looking to compete for the new appears hq2. what do you expect, where do you

expect that to land and what will it mean for shareholders, if they see tax benefits or other benefits thrown into this ultracompetitive bidding situation? >> i'm glad you mentioned washington, d.c. i would call it the future home of amazon's second headquarters. to me what amazon is doing here with these requests for proposals, they had 238 originally, they've whittled it down to 20 it's all about influence, how better to have influence than to locate their headquarters outside of washington, d.c.? suburban washington, d.c., i see those locations to have the greatest likelihood of being selected for the second headquarters >> we don't get a lot of use on alexa use, the margins around that margin. as morgan mentioned, we don't have hard numbers on prime

how much of a concern is amazon's investment in that area or do you just look at the top line and how it's fueling overall growth >> sure. basically i feel like we're all lab rats in amazon's lab and what they're basically doing is training us to use alexa to buy products so a lot of investment spending. they're likely selling the echo devices at break-even. but the idea is to get us i think natural search with voice, it's very easy to do but now training us to buy products on amazon with alexa. it's investment spending by amazon that will ultimately bear a lot of fruit >> lord knows, tom, amazon has its hands in a lot of different projects, we could probably spend five minutes talking about all of them. we're going to wrap it there, we have earnings after the bell on thursday thank you for joining us >> thank you for having me speaking of amazon, kroger is up, rising on reports that it has held early stage discussions

with alibaba about working together and amazon's recent purchase of whole foods could be fueling those talks. nobody knows more about the space than panera founder and chairman ron chaikin i spoke with him on "fortt knox live" yesterday. >> i think it will make a huge difference, it will change retail we all know that retail will be a way to move product with a lower and lower labor component. >> there he's talking about amazon go, those new stores that amazon is out with you can check our whole conversation on "forttknox.com >> he's more candid now than ever, arguably >> he still won't talk about what jab specifically is working on of course they have keurig and einstein bagels and other stuff. he's working with them

>> meanwhile, a busy night with starbucks. we'll talk with kevin johnson on the 9:00 a.m. tomorrow we'll have western digital intel. >> intel with all of this meltdown and spectre controversy. they said it won't affect their earnings >> buckle up, we'll see you tom. let's get to the judge on "the half." welcome to "the halftime report." i'm scott wapner big bang theory. the dow higher on earnings, surging in fact. is your best play to stay with blue chip stocks as the rally rolls on joe terranova, pete najarian, jim lebenthal are with us. the dow, once again, those big, widely held names leading the charge, caterpillar an