♪ ♪ happy friday welcome to "squawk alley."

i'm jon fortt along with david faber here at post nine. carl quintanilla is cold out in minneapolis ahead of sunday's super bowl let us send it out there now to carl who has more on some big guests coming up this hour carl >> yeah, jon minus seven this morning that will wake up. but we're in a nice enclosed set here not too far from u.s. bank stadium where the big game is coming up on sunday. big hour obviously, we'll watch the markets closely. we'll check in with j.j. watt, houston texans linebacker about his being a finalist for the nfl's man of the year. also, about his guesses for the game and popularity of the nfl speaking of that, we'll check in with the chief marketing officers of pepsico north america bench and frito-lay north america about the big purchases they've made not only on halftime but the ad campaigns. the popularity of the league and how they translate that to consumers through the marketing dollars. a big show coming up >> all right

carl, thank you. let's get started talking about the markets now. of course, on this jobs friday as well, we were down or are down more than 250 points. the s&p 500 off the lows, down about .8%. ubs director of floor operations art cashen joins us. any key take aways as it relates to the broader markets whether they be fixed income or equities >> it looked a little better than it was. perhaps some of it has to do with weather related people reported being unable to get to work and et cetera, et cetera so overall, not a bad report at all. not very helpful to the market the market's got its mindset on a few other things mostly rates apple and alphabet and that's of concern. and politics there is a great deal and

concern the republican memo is released will it have greater consequences there were rumors late yesterday that helped the market weaken. that it might cause the head of the fbi to resign. it might cause the assistant attorney general to resign and while they would be voluntary, that nevertheless reminded some of us old-timers of the nixon saturday night massacre and that had implications and consequences that went on for quite a long time >> yeah. back to the jobs number this morning, art, it's that 2.9% increase year over year in wage that's seems to be a focus of those participants in the bond market starting to talk about a 3% yield on the ten year not too far from that. do you buy into that >> well, i -- i noticed it it certainly is of some importance.

>> it certainly did spook the bond guys and lift the yield on the 30 years and ten years >> art, as long as we've been walti wa waiting for wage growth, how likely is the market to digest that over time it should be more money in people's pockets to spend which is a good thing along with some of the bonuses that we saw come down after tax reform. >> yeah. no i think it as a generally positive backdrop and certainly i'm sure the president is happy to hear it, many of the votes he got were from people who said i haven't seen any wage growth nothing's coming in. and i'm sure he will take credit for seeing some of that pop-up we've seen people dorm anlt for -- dormant for a couple years now. let's go backward a little bit

when the fed started pouring money in, people were talking about run away inflation, comparing it to the wymar republic the fed flew over the house and dropped $1 million on thelawn, think put it in the garage we had no envelovelocity of turr in our money supply for five years. if the inflation begins to pick up slightly and the velocity starts to pick up, then that might prompt the fed to overreact. and that is what markets are concerned about. >> treasuries themselves, i mean, this year we're going to be funding a very large deficit. treasury is going to be very busy selling bonds and notes and the fed is not going to be among those buying >> that was a point i was going to chime in with up until now, the fed has unintentionally pretty much funded any deficit that came down the pike. and now they claim they're going

to cut back on that. so you're going to see more bonds with fewer official buyers and that can present a bit of a problem. and that's why equity holders have got to keep an eye on yields it's going to be an important bat this will year >> i wonder what your big picture take on apple is there was a lot to do over the $1,000 phone were people going to buy one given what the economy is doing. on the one hand, the iphone unit sales were bate short of what some were hoping but the iphone x did just fine most popular model average selling price is high. what does that signal if anything about the help nl of t -- health of the consumer >> i think it shows the loyalty of the people to the apple name. the x is not a super phone it has ater irvi terrific camerd things of that type. i think people are willing to own the name and show they paid into it. apple is enormously successful but in a perverse way it is one failed product away from

failure. so if they come in and have a failed product, things will reverse for them but so far, they're coining money. >> that's the key to a consumer products company and why so many people are focused on the services revenue which occurs more often art, thank you speaking of apple, of course, that services revenue did increase a good amount last year let's get a lot more on this from josh lipton >> david, heading into this apple earnings report, there were a the love stories about demand trends for that new iphone x you were just talking about there. apple's ceo tim cook making it clear that he is very pleased with how that flag ship hand set is performing saying since we launched it in early november, for every week thereafter including the weeks in january, it was the top selling iphone which is pretty fem knoll pheno you think about it tlachlt is going incredibly well. given it was the top selling smart phone in the world, it's pretty good.

i also asked cook about whether he really thinks of the x as a mainstream product or is this really more of a niche device? he said it's not for everyone. everyone can't spend $1,000. i don't have my head stuck in the sanld on thad on that. some people love the fact that face id is even more secure than touch id some people love the cameras some people are swayed on the edge to edge super retina screen you don't sell the numbers we're sealing that is only for a few people as for the march revenue guidance, our guidance for the quarter is 60 to $62 billion which represents growth of 13 to 17% which again is another acceleration it would be the sixth quarter of acceleration and we're really, really pleased with. that guidance did undershoot expectations the street was looking for $65 billion. gene munster of luke ventures tells me if the company hits the high end of guidance here and maintains a sps at 750, that

translate, he says, to 5% iphone unit growth in the period. guys, back to you. >> all right thank you, josh. now for more let's bring in jim suva, apple analyst and managing director at citigroup jim, good morning. so there are a few moving pieces in this quarter for apple and on the one hand, it was the 13-week quarter being compared to a 14-week quarter a year ago so, you know, unitwise and revenue wise, maybe they were doing a little better week to week than expected but then on the other hand, the guide, not that strong so overall, is this a healthy cycle for apple? do you take more joy from the asps or you are more worried about the units? >> we absolutely do think it is a healthy cycle for the stock and as well as their products also as earlier mentioned, the iphone 10 asps were very strong that shows the iphone x is

selling well the units, we're seeing growth in the developing and emerging markets. these are new users coming to the apple ecosystem. who will then later down the road spend money on apps and purchasing through apple software which will bring more revenues to their services as well as potentially purchase the apple care systems and future higher products. so we think it's a very healthy setup for apple and the most critical thing is our new users being added to the apple ecosystem and the answer to that is clearly yes >> jim, you use the word setup there. that for me is interesting has the story gone from super cycle for the iphone to setup to potentially, okay, maybe the next cycle you have not only the x but a x plus and that becomes the super cycle. >> you phrase it correctly the setup in the word of super cycle i think is now going to be something that we set aside and say that's no longer the case

for this the smart phone industry overall is maturing. most people in developed countries do have smart phones and so we think that days of double digit growth for the industry are far behind us and the setup is really more about growing users and net ads. and apple is still doing that the setup we think and the title of super cycles are forever gone and that's why we look at things what we call as apple wood or their push into india as well as services for many years ahead as long as those subscribers and users keep being added to the ecosystem. zblr we're used to apple being talked about as a home run hitter in terms of the iphones and the number of just years of profit and revenue growth that those trend up but are we maybe going into a cycle of singles and doubles you look at the ipad it also doesn't do an increase in units but didn't increase in revenue on the ipad pro. the mac was actually down

quarter over quarter and i believe year over year as well >> that's a very correct observation. i don't think that grand slam and home runs as previously drove the stock higher is going to continue. it's going to be more of a value and cash deployment. and what i mean fwha is we believe apple is going to announce a massive stock buyback when it reports earnings in april. and with that, the company could buy back up to 10% of its stock. and we view that as a big positive but you're correct, it's gone from a hitting home runs of products of wow we got to have this to, hey, these are very good products. let's keep owning them and upgrading them but the replacement cycle is slowing and the home run products we think are a thing of the past >> well, specific to capital allocation and return of capitol to shareholders, let me get more information from you

they have $163 billion net cash position they said on the call they expect to target net cash neutral over time. what do you look for in april given they already are returning 100% of free cash flow now to share holderings >> yeah. well it's a great problem to have of too much cash. and the numbers you laid out are absolutely correct and whether we look at that, we expect the board of directors to sustain additional stock buybacks now the best use of apple's cash is for organic and internal innovation but they have way more than enough to do that. in fact, they're generating, we estimate, about $70 billion per year of cash flow generation after those innovations. so we think that a stock buyback to the tune of probably about $300 billion is what they're going to announce in the april time period when they announce earnings, $300 billion >> $300 billion, that's a hard

number to wrap your head around. >> yeah. it's like $191 million a day perhaps. i don't know i couldn't even do the math. >> i'm sorry actually, i meant $300 million is the buyback, $300 million >> right no way i am talking about the cash generation number that you threw out there. >> that too. no you're talking $300 billion you said $300 billion, yeah, not million. >> yeah. the billion for the dollar amount >> right and it equates to really 10% of apple stock that is going to be repurchased. and that's a lot so when you look at the stock trading off here today, you know, they do have some more stock buyback they can do until march. but after that, you know, buying back 10% more of stock and still the problems going to continue of too much cash flow generation, setting it up for value holders to own >> right yeah a lot of money jim suva at citigroup, thank you for joining us have a great weekend

>> now let's send it back out to carl at the super bowl site. carl >> all right jon, thank you very much nfl set to announce this year's walter peyton nfl man of the year aword tomorrow recognizing a player's outstanding community service activities off the field as well as excellence on it. joining us to talk about that is one of the finalists of the year, j.j. watt, defensive end with the houston texans. j.j., thank you so much for the time today congratulations on being a finalist >> thank you i appreciate it very much. glad to be here. zblfr we were talking earlier about the amount of money that you helped raise for houston in the wake of that hurricane did you ever think you would be able to raise that much? >> no. i mean, i don't think anybody could have expected what happened to happen i mean, it speaks to the power of social media in today's world and the power of the good in people and people wanting to hop onboard of a cause that helps other people out i think that, you know, there is so much negativity in today's world and negative news, it whats so nice to have some

stories about some positivity and really highlight the good in people >> it's important to remember, especially whether the media tends to cover a disaster and then leave and not cover the recovery so much i mean let me quickly ask you, how is houston doing in your view all these months later? >> you know, it's doing well it's still a really long road ahead. it's not a six month or a one year program it's a multiple year program ahead. i was just down in port arthur a week ago visiting them and the day after i was down there they actually got hit by more storms and got flooded again. so i mean it's one of the things where it's always an on going process. there is so much adversity it's easy to forget once the tv cameras and headlines are gone there are so many people still going through so much today. >> yep we hope the people pay attention to that and continue to. as for the game, j.j., i mean you're here in town. it's been talked about so much the lopsided experience of being in this game between these two teams. how much does that matter?

who you are favoring sunday? >> i mean when one team has won five of them and tom has been in eight of the last 16, mine you have to obviously give an edge there. but never underestimate the power of an underdog story and a team that believers in themselves and the us against the world mentality. i have a lot of personal teammates from college on the eagles i know that there's a lot of that belief within them. so never underestimate that. but it's always hard to bet against the greatest of all time >> yeah. who is tougher to get, to brady or foles >> brady gets the ball out so quick. he is so tough to get. to he has a great offensive line and he knows where he's going to be and they know where he's going to be. he's very difficult to get to. >> yeah. it's been a busy week in terms of the media rights for the nfl. thursday night, of course, now going to fox we've been talking about on our program for a while about whether or not the league was spreading out their content too thin both for the consumer but

also for the player. i'm wondering if you ever dread thursday night games sometimes we call it tired night football >> i mean they are very difficult. i don't think anybody can deny that obviously me bring in a lot of revenue and things like that they are very difficult, especially whether you have to go on the road on a short week like that. it puts a lot of stress on the players and difficult. so, yeah, they're definitely bringing the challenges with them >> finally, the kmigtscommissior made it clear they're going to continue to talk about the catch rule they're going to continue to talk about safety. did youer that week brett favre was asked how do you make football safer and his answer essentially was not to play. what's going to be the easy answer to that over time >> i mean there is no easy answer it's a violent game. that's what it's been the whole time i think there's definitely steps can you take to make it safer and we do everything to make the game as safe as possible at the end of the day, football is a violent game.

you have that understand going into it. you have to really understand the risk/reward factors and understand everything that comes along with it. if you're not willing to take them, you have to understand that but as long as they continue to do everything they can to make the game safer, you just have to understand what you're getting into >> j.j., we'll be watching for you this weekend congratulations again. thanks for the time. appreciate it very much. >> thank you very much have a great day. >> j.j. watt joining us here in minneapolis. you, too more "squawk alley" continues after this

amazon shares are surging up 6% you can see that this morning after posting the largest profit ever as they continue to reshape the retail landscape joining us now, bill simon from kkr. he's a former walmart u.s. president and ceo. bill, nice to have you one of the key components to the earnings for first time was whole foods. you have a good view on that business did you learn anything from the quarter and what they told us about whole foods and how it's going under amazon's management? >> yeah, not too much. they were a little bit cryptic in their report and in the earnings call as well. they said it was going pretty well and they were happy with it but if you dig a little bit deeper, it's -- it mate be more difficult than they're letting on last year this quarter whole foods reported about $4.9 billion top line. amazon saying $4.5 billion from

their retail stores and it's unclear exactly what that is but it's largely whole foods so it looks like there's a decline there. but it's not the same reporting period exactly whole foods made about $179 billion last year. amazon saying the whole foods retail segment was a little bit off because of a change in maturization so it is hard to tell. it doesn't look like it's doing too well then you listen to the anecdotal data there, out of stocks, difficulty in ships receipts, customers unhappy. and then some underpinnings of employees issues its a challenge. now fresh food is really difficult and whole foods was not hitting on all cylinders at the sales. amazon's got their hands full. >> yeah, how important is it as an investor, one looks at that company and says whole foods is a very small part of the pie. is it still important, do you think, for the future strategy >> well, i think it is you know, to a certain extent in

that, you know, it's part of the tie in to the physical retail and particularly the largest segment in physical retail which is grocery now that doesn't mean it has to work the way that whole foods worked or a traditional brick-and-mortar retailer works. there is no telling what mr. bezos has in mind with whole foods. they didn't report any same-store sales comparisons or any unit growth, typical things you would see in a retail report so that would lead me to believe that's not how they're treating it i think it's important for their growth i mean amazon's sold the world on this story that bottom line doesn't matter as long as we can deliver, you know, really substantial top line growth. and you have to keep pedaling to do that. and if you stop pedaling, the story doesn't, you know, doesn't really make any sense. >> bill, some would say that amazon is being priced for not only perfection but to eat the entire retail sector meanwhile, competitors like

walmart not doing too badly themselves are you seeing weaknesses in amazon's model any spots where it's perhaps taken the eye off the ball that present opportunities for competitors? >> in the near term they're very, very strong. it's really hard to anticipate a really even figure out how this is going to end for them you project year, two years, five years, ten years that the growth rate has to come down when you're doing $100 billion, you might be able to deliver 30% growth but when you do $500 billion, you won't be able to deliver that growth rate at some point the valuation is based on top line growth and not bottom line growth and in the end, they'll probably look a lot like walmart $400, $500 billion walmart is $100. amazon is at $1400 and going up. that's a tough one to want to invest your money in >> yeah tlachlt is always the frustration for walmart in terms

of trying to compete with them given the differential in the way the two companies are valued speaking of walmart though, i think there is a sense, bill that, if walmart is winning, amazon is losing but vice versa. that doesn't seem to be the case can they both succeed given they are starting to collide more and more on the online world >> i think they can. and i think walmart's done a really good job sort of following the lead that amazon's laid out you know, the vinvestment community is top line growth and not punishing bottom line missors declines and walmart is $28 billion to $23 billion over the last several years. they've been able to grow the e-commerce top line. that is rewarded there is room if walmart and amazon are both growing and target had the a reasonably good quarter, that's why there is so much pressure on the broader retail segment if those three big guys are growing at that rate, there's not a lot of room for everybody else but walmart's done a really good job building their e-commerce

business >> and they've been rewarded for it a couple weeks out from their earnings anything we should be folk used on there is going a key tell for that company >> yeah. i think they're going to report strong top line e-commerce i think they'll show a recovery in some of the operating income which has been challenged for the last several years i'd be really interested to see the impact of the tax law changes for walmart. i think that's going to create a really nice additional pool of investment money for them. >> yeah. very important, of course, for so many companies. bill, thanks for your time appreciate it. >> happy to do it. see you soon >> all right good bill s bill simon >> take a look at shares of alphabet down more than 5%. the company missing on earnings. while also getting a downgrade at stiefel currently trading down later, sony's ceo announcing he's going to step down as ceo in april to become chairman of the company. what coz told me last month

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let's get to seema mody with the european close >> really seeing a global reaction to rising yields. european shares seeing their biggest weekly loss in six months led by germany which is off by triple digits. deutsche bank, largest lender, reporting the third consecutive full year loss sales and trading revenue declining 27%. deutsche bank off by 11% just this week. but putting this week's selloff into perspective, european stocks with the exception of germany still higher for the year russia, though, is the bright spot up 8% ahead of its presidential election which is set for march 18th guys, sending it back to you

>> okay. we'll take it. thank you. let's get over to sue herrera for a quick news update. >> good morning, david again, here's what's happening at this hour los angeles police now say a shooting at a middle school that injured five was an accident a 12-year-old girl brought a loaded gun in her backpack and it went off whether she drop tlad pack. police booked the girl on negligently disarming a fire arm. north korea warning against u.s.-south korea military drills after the winter olympic games n a letter to the u.n., it warned if the exercise goes forward, it will not sit idly by spain says it has extradited to the u.s. a russian citizen who is suspected of being one of the world's most notorious spamers. 37-year-old was arrested in april while vacationing in barcelona. and scuffles erupted between palestinians and israeli security forces in an arab neighborhood of east jerusalem

following friday prayers israeli forces fired stun agree fla agree fladz grenades to xpedisperse the crod >> what can you expect from this year's super bowl halftime show? we're going to head back out to minnesota and get some insight from the marketing chiefs of pepsico and frito-lay. and next, the economy adds 200,000 jobs in january. rick santelli is going to talk with ken rogoff after the break.

the dow and s&p 500 are near session lows let's get out flou to the cm aevenlt rick santelli for a special jobs friday "santelli exchange." rick >> absolutely. thank you. i'd like to welcome harvard professor ken rogoff i'm so excited to you have on this jobs friday thanks for taking the time >> thanks for having me. >> you know, ed lazier is a frequent guest he drilled into my brain over many years that when the hours worked shrinks, it has a duel effect on jobs numbers a, it overestimates job creation and, b, it makes any rise in wages less potent. today we had a drop in the hours worked and we had a nice jump in wages with solid job performance. can you equate that with the two points i brought up and tell me your impression, professor

>> ed lazier is right. if you're cutting back on the number of hours more people can work and on the other hand if they're working less hours, there's less consumption, but, you know, it was still good news that wages were going up >> absolutely. you know, if you look at things that are supposedly purportedly give us insights and how many fed tightenings we get for this year, it seems to be three or four is the fed on course and should they do three or four or in your opinion should they have other issues to pay attention to like maybe hurting the recovery what's your thought? >> they're going to be cautious. after so many years waiting for this after financial crisis. it takes years and years for the kple to heal this is tape call. they're going to let it replay i think they're going to let inflation overshoot. they're not going to panic when inflation goes to 2% z that mean

there will be three or four hikes? absolutely i think there will be four hikes and we'll still see inflation. but the fed is going to be very patient is the main point. i think they're going to continue to let the economy grow we're seeing global growth, of course we play see earlier hikes in europe, for example, and people imagine. but nevertheless, in the backdrop of very strong growth >> you know, i'm glad you brought up europe. we now have yields over 70 basis points the spread is still, you know, roughly in the slightly over 200 basis point camp which is steady for the last six or eight weeks as rates moved up. if you were mario draghi, how would you move forward considering global growth is now some what of a main stay and most commentary by analysts. how you would proceed for 2018 and his balance of his term in 2019 >> well, europe's doing very well europe was the big growth story last year.

but they're trailing the united states you know, germany is doing very well but europe overall still has a high unemployment rate they're not having the inflationary pressures i nevertheless thing they may start raising rates at the end of the year. we have very strong growth globally i think you will start raising rates before he thinks about unwinding their qe it's way more complicated in europe because it involves transer ifs across the governments. but he'll -- he, too, will be patient. but you know things are going much better. >> whether it comes to the big story of the day, i look up at the board. i see 284 for ten year note yields, professor. we haven't closed at these levels since january of 2014 in your opinion, considering the breadth of the stock move even with the last several days taking some away, the growth in the economy, some of the numbers we've seen over the last 16 months, is it your opinion that the equity markets can withstand these rates a and b?

and are rates moving too fast or in your opinion are ten year rates about where they should be >> well, it's been very hard to understand global interest rates. i got to say they've been much lower than anyone really understands. and some normalization is natural. i got to tell you, rick, central banks have just fumbling around for where they're going, what's nor normal i suspect, you know, they'll go up slowly. but that's one of the big risks. can the stock market withstand it let's face it, part of the reason the stock market is so high is that interest rates are so low i think as they go up, it may take the steam off but absolutely, if the growth stays strong, i don't see any reason to think of a collapse in stocks unless we see a very sharp rise in rates. >> awesome professor, just excellent to hear your opinions they seem to dove tail out with traders on this floor. hopefully we'll all see the markets with higher rates not

necessarily put up the white flag thank you for taking the time in this friday. i want to go to carl in minneapolis. our pleasure carl in minneapolis, what's going on on the field, carl? >> thank you very much, rick santelli scott wapner is here we me he brought the entire crew >> we did. we brought the entire crew we allowed josh brown to come. minneapolis's own. and you had a great show we're excited about what we have coming up. if you were looking for apple to help bring the market back, obviously you're not getting that today we have tony saganaki coming up from bernstein he downgraded the stock. he is the top ranked apple analyst on wall street he's a important voice to hear from on really what lies ahead for the company. >> yeah. cramer wasn't happy with his call today i'm sure you'll bat that around. and then we'll keep an eye on yields keep an eye on the dow down 311 try to squeeze in some football talk during the show you're going to stay for the weekend.

>> yep i'll be going to the game. i'm looking forward to that we have al michaels coming on with us today the legendary broadcaster who is not a fan of al's. he is calling his tenth super bowl among all of the other incredible things that he's done in his career, he'll be at the olympics we're excited to have al who loves the markets and he may be the voice of sunday night football and that's very important, yeah, yeah, yeah. but he is the voice of "squawk box. and that's more important at least in these parts we're excited for. that and we have brian cornell, the ceo of target and what better time to have him than a day when amazon knocked it out of of the park people talked about amazon and target getting together at some point. we'll ask him about that and a whole lot more. >> super bowl is such a natural marriage of sports and business. really no surprise that we all came out here in force >> it's good to be here to really capture the intersection of those two things. the business of the nfl is now so big as bob kraft talked about

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shares of sony moving high they are morning ceo announcing to day that he will step down in april to become chairman of the company current chief financial officer kenny yoshita will succeed as chief executive. i sat down with him last not in las vegas and asked him how his multicultural background helped him as ceo of the company. >> i think probably the biggest asset that i've gained through my experience of being a first grader in new york, you know, back in the late 60s and then flying back and forth between japan and the united states every three, four years because

of my faernl's business. gave me first of all number one, the ability to communicate in english. but also understand, you know, cultures outside, especially the u.s. culture and canadian culture as well. >> david, you know, sony had a lot of trouble figuring out what to do with that ceo position you had a lot of traditional japanese ceos in that mold and then howard stringer they tried to go in a different direction. you remember that? that didn't work out and then they got koz who knew the japanese culture but also had experience in the west. >> they were under pressure for some time in terms of activism he wanted them to do something with the u.s. assets, namely the studio they resisted that, successfully so >> yeah. and koz started off in the music business made a market on the company in gaming and now he has the tv business at least stabilized if not completely turned around you can watch my full, i should say, catch my full podcast

interview with koz there weekend on the fortt knox podcast. it's on apple and every other platform it's on spotify now too, david you've been waiting for that >> i have. they have 70 million users we'll be talking spotify a lot more later in the year let's take a look at the markets. the dow is among the worst performers the more important s & p is revisiting near the lows it was down only about .8% a little more than about 20 he lomo f y o weava t reoroun "squawk alley. you traded options.funny, i thot i'm not really a wall street guy. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation?

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now you can get it, too. welcome to the party. that was the new super bowl ad with morgan freeman in a rap battle obviously the company planning to bring back classic athds with with cindy crawford and britney spears welcome, guys. great to have you. i don't know, i mean, it's even more exciting now before the games. you don't have to wait for them to air what's the strategy on roll outs right now regarding super bowl >> there's so much buzz and momentum leading into the game and people are hungry for these

ads. so we actually had a teaser strategy we revealed little things b about the ad people just get engaged an the r more news you see, the more opportunities for branding that's what we're looking for. >> there's been some discussion of why pair a combo like this. doritos then dew i read somewhere they're bought together in a basket more often than peanut butter and jelly >> yes, these brands go perfectly together this is the first time we've ever done one spot on the super bowl with them together, which we're thrilled about, but we do programming with them all year long and we do a gaming program every year with dew and doritos. you get the bold crunch of doritos and refreshment of mountain dew >> the cindy crawford, britney spears for pepsi is there an appetite for nos ta

ja >> yes, there is pepsi has been around for 120 years and has been part of pop culture for that time and this year, we're celebrate iing ha we're going to play this 30 second spot that's got britney and cindy and michael jackson, jeff gordon in it right leading up to the halftime, the pepsi halftime show with justin timberlake, which will be the latest version of pepsi play in in pop culture >> the cindy ad comes with a vr element? virtual reality? >> well, on site here in minneapolis downtown, we're going to have something calls pepsi generations live and people are going to get in a jeff gordon car and we're going to use google vr and you're going to be able to travel through some of our past moments in pop culture >> fascinating talk about nfl ratings all time. and the way wrights are changing the way viewership is changing how does pepsi think declining

linear ratings at what point is that a worry or concern? >> it's still a great audience for us to capture. i think 44 of the top 100 audience were nfl audiences. so it's still something that consumers are tune iing into and they're a great partner for us >> how far in advance are the concepts decided upon, right and production have these things been in the work for a year? can you afford to start them two months ahead of time >> yeah, obviously this is the biggest stage for brands and we do start a decent amount of time. we pretty much start right after the super bowl thinking about which brands we're going to have on the super bowl next year and this year was special because jen and i got to work together on one spot. and we pretty much figure out what the specific idea is going to be a few months before and we

shoot it and to jen's point, it's not just about the 30 or 60-second ad it's about the whole story you want to do around the ad to generate as much and excitement. what's great about pepsico is that 80% of the consumers who are watching the super bowl are going to be enjoy iing snacks ad beverages, so it's a natural fit for us and it's much more than just the consumers watching on tv but it's in store. all of our retailers just build these massive kis plays widispl our products together. >> finally, sometimes there's a theme they tug at the heart string, go for the outlandish, the funny. what do you think the answer will be on sunday? >> i think america wants to smile right now. so i hope that wesee some grea entertainment and people get a chance to smile. >> all right can't wait to see it everything you guyssico and frit

america. more squawk alley after this

u out to john harwood for the fbi memo >> the memo has now been released it went first to come conservative outlets including fox news and the washington examiner and what we see from their accounts of what's in this are that it shows that the so-called dossier that was prepared by the former british intelligence agent who had been hired by a democratic research firm was used in a critical part of the application for surveillance of carter page, the trump foreign policy adviser, that has been part of this russia investigation so the key point from the republican standpoint is to try to allege that the dossier which they claim has been debunked was part of what led to the surveillance of trump campaign officials. now i should say that the memo has not been debunked in full. it has not been affirmed in full a lot of the allegations in this

deal memo, dossier, were thing that is the intelligence committee and has affirmed republicans have put out they hope will provide protection for president trump is that this dossier was yuused in the application for secret surveillance >> thank you, john likely to be a busy weekend for you guys in washington and not just because of football that will do it for squawk alley. david, thanks for hanging out. now back to minneapolis and the judge for the start of the half. welcome to the halftime report live today from the site of the super bowl in minneapolis. the beautiful u.s. bank stadium is right behind us where on sunday, the eagles and patriots will square off on nbc the ot