history. we are live in pebble beach at the at&t pro am bringing you interviews with heavy hitters. it's friday february 9th, is it olympics day ♪ oh, don't whistle. "squawk box" begins right now. ♪ >> good morning. welcome to "squawk box" on cnbc. we are live from the at&t pro am at pebble beach. i'm becky quick along with joe kernen, andrew is off today. our guest host is market strategist and portfolio manager at pimco tony, thanks for joining us. picked a good day to be here a lot going on >> he knows a lot about bonds. >> a few things. >> which may be part of the problem we've seen about stocks. we'll talk about the rising

yields our top story is the u.s. stock market officially falling into correction territory in yesterday's session. the dow was down by 1033 points. that's a huge drop we've seen one earlier this week as a result we're on pace for the worst week since 2008. the nasdaq was off by 275 points since the slide began back on january 26th, nearly 2$2.5 trillion in market value has been wiped out from the s&p 500. when you look at global markets they lost 5$5.2 trillion over te last two weeks well, you add that up and you look at the u.s. equity futures, the good news is that things are stabilizing a bit and even turning around after that big decline. that's not what we saw earlier in the week. right now it looks like the dow

is indicated up by 270 points. if we were to open here, the s&p would open up by 33. the selloff we saw yesterday continued in asia. the nikkei was down by 2.3%. the hang seng was down by more than 3%. the shanghai was down by 4%. european equities in some of the early trading that's already taking place, at least at this point, seem to be taking their cues with what -- a mix between the two. down but not by a whole lot. you were talking about a decline of 0.4%. the biggest decliner of the major averages that would be the cac in france. treasury yields have ticked higher that's been a huge concerning point for the stock market what will happen with interest rates, will we see things pushing drastically higher the ten-year is yielding 2.857%. when it's right in front of your

face, obviously it is frightening. 1,000 points is triple digits, even on my little -- even on my little screen, it needs to be smaller. but it's 4%. if i could have a dollar for every market guest in here saying i wish we had a 10% correction to wring out the enthusiasm, we went up 45% in 14 months, we need to pull dak. there's got to be reversion of the mean at some point you hear this, and then the other thing we heard, 3% on the ten-year that's coming. this has scared everybody.

we're going to 3 probably. if we sell off 1,000 points -- >> 1,000 points is not what it used to be someone was asking on twitter, why haven't the stop trading barriers kicked in because you need at least 7% for those to kick in 1,000 points used to be that, it's not anymore >> if it's scaring you a lot and it's 10%, that's what corrections -- theoretically in an ongoing bull, that's the way it operates. >> it should remind people to be forward looking with equity beta, and think about the types of losses you could incur in a correction one could look at the art market, the mundi painting that

sold for 4$470 million in november the equity market wasuoyantbuoy and then the bitcoin, but then it was said the federal fund rates could only get to the mid 2s so the bond market was staying calm and it still is. that's the odd thing about the stock market now, it's worried about the bond market, the bond market was neverworried and still isn't that worried, still priced for a federal funds rate which never gets near what is peak for the cycle >> you said your firm started thinking about a correction several months ago we have a pull back of 10% does that mean it's a buying opportunity or is this fairer evaluation >> markets are assessing the new normal, historically it's been

3, these days it's low 2s. pimco is projecting 2.5% this year the question is whether it will stay there if it stays there, growth potential is 1.8%, the jobless rate could keep falling, then we could have more late cycle outcomes, more inflation, higher federal funds rate it's too early to price in that scenario it's appropriate the bond market said there could be three rate hikes this year, let's price them in. they have. the bond market priced in one next year. it's appropriate for the market to price in much more than one we don't know the 2019 story no one will know for at least six months one should say don't worry too much about the interest rate story. >> we're testing a couple of hypotheses if interest rates go up for the right reason, it's all fine and dandy, and the markets, based on the way things work on dislocations, funding, debt service and everything else,

it's not how far it moves, it's the changes. second derivative now, we're in a rising interest rate environment after how long, some would say a global bubble for credit in germany 75 basis points now that sounds like -- that's not sustainable forever. but you see that it is enough to get people to change what they're doing. >> has the idea of a new normal suppressed economic growth >> larry is not at your firm anymore, you don't have to keep saying new normal. bill gross is not either he's been expecting correction for 15 years. >> put the words aside, it's numbers. historically we've grown at 3%, we had the 1% increase in the amount of people in labor force, 2% increase in how productive they were. now because of demographics, the labor participation rate has

grown at 0.5%. that can't change. at least until 2030 when the last baby boomer turns 65. it's improbable we return to the old 3% >> they changed what i'm supposed to tell you the government shutdown, the house did vote in the old days, government shutdown, my gosh, the market is down 1,000 it had nothing to do with these guys they will say rand paul caused the brief outage >> i don't think that caused the selloff yesterday. that was before any of this hatched. >> but you should know if you were looking yesterday and following twitter, that rand paul briefly -- >> there was no connection the likelihood is that there's a budget agreement where spending goes up substantially.

defense spending up to $80 billion a year and we cut taxes scott mcnealy, i've seen him around, he was mentioning that the tax cut is great, and if you cut taxes but you don't cut spending, that's a classic -- the currency will probably go down >> it's all late cycle >> ininflation we act like it's never coming back we may not see it now in everything we do, but it's -- >> it's creeping in. it's a creep up, not leap up >> you have a lot of these this is good this is good so even people come and go at pimco but you still come up with these -- >> phrases >> creep up -- >> different words, catchy things >> progress, not protests i heard. >> for more on this selloff and what's happening with markets, let's bring in mike santoli. good morning

>> good morning. you guys have been setting the context very well. it makes sense when we talk about this really intense concentrated bout of selling that we've seen this week t makes sense to go back to where it all got started and what has been accomplished by this sell juf and correoff an the starting point in late january was an overstretched level for the stock market you had record high sentiment, record high overbrougought leve why was that the case? there was such an enticing cocktail of great news the tax cut was kicking, you're revising corporate earnings higher, you had extremely loose financial conditions around the world with the weak dollar, rates staying low and a predictable fed. once you had that initial scare about yields going higher, we had the little uptick in volatility, it disturbing the whole premise of a lot of investors in terms of getting us

to those highs in january. we had our first trading session in more than 100 days where you had at least a 0.6% decline. what happens when you finally get things broken, streaks broken human traders and trading systems say, okay, i guess the game has changed a bit there will be an unwind. we had to adjust positioning, sentiment and arguably valuation for this new world looking at a two-year chart of the s&p 500, remember, we're coming up on the two-year anniversary of the jamie dimon low, after that nasty global correction two years, you see that's a nice trend line but look at that bulge that started late last year from about thanksgiving through the end of january you accelerated to the upside. that was the public participation, an overshoot. now you come down, you have more or less come down to where that

two-year trend is. you were 18% up from august to january. what we've done is unwound that a bit. now the question is is the bull market bent or broken? i would say it's bent until further notice until it proves otherwise. you need to have it stick together with the story of are corporate earnings come through? that's where i think we're at. as you know, when we get in these episodes, it becomes a tactical/technical story, are we retesting lows, have we seen enough fear, this stuff is all in play now. we have not even addressed the more technical driver's of this selloff, the unwind of that volatility trading strategy, which is a factor but who knows how much of one. >> all right mike, thank you very much. we'll talk to mike throughout the morning. >> we know how mike -- is mike

gone >> he's here >> are you here, mike? >> i'm here. >> the diabolical -- you remember jesse livermore, the diabolical way the market does things there's been corrections in the past that sometimes do end at 10% or 11%, but when you're down 10% or 11%, you're at a point in time -- the fear is 15%, 20%, we have no idea so to step in and say, wow -- for the people that say, od, i would give anything for a 10% correction, once you see it, you don't know if you want to catch a falling knife. in hindsight we could look back and say, wow, it was down 10%, that was the classic correction. sometimes the market can do it again and again and looking back in high sight -- >> fortunes are made when markets are down, not up >> but you don't know whether it's catching a falling knife or --

>> a leap of faith >> we don't know, but i'm pretty sure these next two guys we got don't know either -- no. joining us is joe bell from shaffer investment research and scott freese from sabertooth advisers as you can imagine, tony is still here he was just talking and you saw him on camera. tony is still here let's start with you, scott. do you know for a fact whether this is a correction that should be bought or if you go up 45%, 10% may not do it, right >> right do i know for a fact it should be bought? no but i think the prudent thing now is as the market was accelerating, you started to see some cracks in it, you start to sell off some winners, build up

a pile of cash, now it's the nvidias, amazons, companies with strong earnings and buying a bit on the dips, buying a bit on the di dips, buying a bit on the dips, but focusing on those strong companies with earnings growth rather than breading it around the market >> you're not sure whether buying the s&p is a different decision do you feel the same way, joe? >> well, it all depends on your time frame you take about the short-term price movements, the volatility we've seen in this market. picking up compared to the volatility we're experiencing daughter flag steady uptrend, you want to lean on history and look at the long-term. when you look back since 1980, we had 19 pullbacks of 10% off all-time highs 13 of those years we finished the year positive. the six we did not were during years where we were in an

economic recess, which we're not currently in when you lean on history it typically says six months out, 12 months out it generally resolves itself to the upside. >> scott, can you speak to gamma risk, the idea that wrong-way bets go really wrong, they get much worse than itsenvestors can handle what would you say to that >> when we look at this market now, everybody is talking about the bets they put on, the pain it's caused, it's started with the xiv, which is not a cdo type issue that we have that caused the financial crisis this is a short-term event in the market that of feeffects a group of hedge funds, but it's not a long-term thing. long-term like you were talking earlier with wages, inflation growth, deficit spending, those are long-term things that growth

will or will not balance out a lot of the pain we've seen is just the short-term thing. so when you talk about long-term bets, you know, it's going to go wrong, i don't think we can say that yet i think this is a healthy correction, something to start to buy the dips, not necessarily go all in. but i think we're looking at a short-term thing, not a long-term broken market. >> scott what if it's all related to the federal reserve continuously raising interest rates and going to a much higher level than people expect how would the stock market handle that? >> the fed continues to raise and raise and raise we will have a problem. you're the one that schooled me on this, you're the expert if the fed gets crazy, it beats everyone's expectations, then the market will come down. are we going to have the growth and inflation that sustains where the fed goes there are always going to be

companies that will outperform the markets. if you're a long-term investor -- >> do you have a breaking point scott on the interest rate level? do you have a breaking point where the market can't handle it an interest rate level for the ten-year or the federal funds rate in is there a breaking point? >> you're the boend gnd guy, ifu say 3% is a breaking point, but the federal funds rate is going to be at 2.5% for the next ten years, why would the rate go up to 3.5 that would be a breaking point i get that if the ten-year accelerates past where the fed funds rate should be on a ten-year scale, that's going to be a breaking point we might see selloffs like we saw in 2000 where you were losing 1,000 points a week, which from a percentage basis was much more than losing 1,000 points a day -- >> when we were losing 1,000

points a day in 2000 8, -- 2008i was for a reason, the collapse in the housing market, fraudulent activity. if you talk about rising interest rates because the economy is improving, how big of a problem is that? >> that was the point i'm making it's not the same as back then the market is not broken the economy is not broken. there's nothing wrong. we might have some unwinding from the xiv, algos going wild and a drying up of liquidity in the market on a short-term basis, but i don't think this is a long-term problem. it's a healthy correction and should be bought unless you think fed fund rates are going to stay at 2.5%, but all of a sudden the ten-year goes to 3.5%, 4%, then something would be broken. >> all right, gentlemen, thanks. tony will be here -- when are you leaving? 8:00

>> when is breakfast let me know. >> i'm speaking in east coast time, because i'm back on east coast time you'll be leaving at 5:00. >> now >> 5:00 a.m. >> "worldwide exchange," 5:0 >> we were just in davos >> confusing >> the alarm goes off. >> confusing >> time to make the doughnuts. when we come back, drama in d.c. the government shutting down for the second time in a month but just about a half hour ago congress approved a bill to keep federal employees working. a live report from walk washington after this. where can investors seek predictable income in an uncertain world? pgim sees alpha in real assets. like agriculture to feed the world. and energy to fuel its growth.

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with 150 hours of usa events in stunning 4k. 50 olympic channels dedicated to all the must-see moments, and the ability to find anything with the sound of your voice.

[ upbeat music playing ] show me "bobsled". catch all the action. every moment, every medal, every screen. x1 is the ultimate olympic winter games experience. the house passed the budget with about two dozen votes to fund the government after a shutdown took effect at midnight. the senate passed the bill at 2:00 a.m., but unable to move

more quickly due to a stall tactic by rand paul. in a 90-minute floor speech paul called his colleagirresponsibile thing that is hurting the market >> you wonder why the stock market is jittery, one reason is that we do not have the capacity to fund a government like in we've been funding it with phony interest rates that are concocted and given to us by the federal reserve, but they are not real >> once the bill becomes law, it funds the government for six more weeks but also sets in motion a broad two-year spending deal that the congressional budget office says will cost 0 $320 billion add 1$100 billion more to that including interest the bill now heads to president trump who is expected to sign it i reached out to the white house on when that will happen and whether it will take effect

before the federal workday begins no word on that yet. back to you. >> yep two years is surprising. v everybody pulled in their horns, i guess. there's no real -- except rand paul there's nobody who wants to play any brinkmanship, nobody is doing the brinkmanship this time around probably not a great time with the market down 10%. >> i think the market has shown fractures and that has caused some on capitol hill som concerns about what their action also mean for the markets. and also the length of the debt is also tied into this, which increases spending by $30 13$130

billion. in the house 67 republican nays, and that is because of the spending levels and because of the debt >> i can do 90 minutes standing on my head didn't nancy pelosi do eight hours in rand paul is go for 90 minutes? that won't cut it. >> i haven't confirmed whether he was wearing high heels. >> i thought about saying that i said i'm not even going to -- you know, you can. thank you. you know what i mean but eight hours in heels, recently >> everything fred astair did, ginger rogers did backwards and in heels >> long ago you guys were

superior, i knew that. >> anything you can do i can do better >> the return to volatility after more than a year of range-bound trade, the vix is jumping higher tim freeman will join us as we head to break, here's yesterday's s&p 500 winners and losers male vo: when that hurricane hit, the entire community came together as a whole. ♪ it was such an overwhelming response to help others. no one thought that they were going to do this before it happened and everyone just did it. i think that's the way that human nature should be looked at. ♪ i'll stand by you. ♪ i'll stand by you. ♪ won't let nobody hurt you. ♪ i'll stand by you.

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good morning welcome back to "squawk box. we are live from the at&t pro am

at pebble beach today. we've been watching the u.s. equity futures closely after a drop of over 1,000 points yesterday, you can see this morning the futures are indicated higher not as high as a half hour ago when we were up by 250 points, but right now the dow futures are indicated up by 175 points the s&p futures up by 22 the nasdaq up by 33 points we've also been keeping an eye on the vix, that's the fear index that tracks market volatility in the last week the vix shot sharply higher it was up by 85% right now it's down slightly, but again we're talking about 32.06. on monday we were looking at a vix of 17. joining us is tim freeman from elevation securities you've been watching the vix closely thinking this will be an indicator of when things even out. you've been of the impression that this was not a serious

problem with the market but some trading irregular activity that would go and work its way through. were you surprised to see another 1,000 down yesterday >> no. i think we'll see some elevated volatility the one thing i would highlight, if you look at vix futures volumes, they are down significantly overnight. you're talking about under 20,000 contracts in the front two maturities, which are hedging products -- >> versus what what was the volume we saw earlier this week? >> volumes earlier this week, 400, 000, 500,000 trading a day in those the good news is this trade has essentially liquidated at this point and it's not something the market will focus on the big thing with respect to rate vol is interest rates and how far and how fast rates go

higher that's what everybody is talking about, thinking about, that's causing the current equity volatility to point to why i think the vol markets will settle down, if you look at sort of a structure vix futures contracts, volatility is sharply going over a period of time i do expect the markets to settle down and rates will be the question of the day. >> tim, you speak mostly to the futures angle. speak to us about the options angle. we were talking about this with another guest, the gamma risk, the risk that bad trades go really bad and investors are squeezed out >> sure. we've been in the low vol environment for quite some time. the common strategy is to sell volatility, which creates a negative gamma profile, complexity profile when you have some smavol episo,

will you see a spike in volatility we'll see this -- if rates were to back up fast and quickly and we see more rate volatility, we'll see more episodes like this >> what's fast and quickly and wouldn't it be exhausted by then perhaps >> i'm not exactly a rate strategist right now if ten-year were to go back to 3.25, 3.30 quickly, that's disturbing to equity markets. it matters what happens on the front end of the fed find unds >> do you think there's options bets tied specifically to interest rates >> i think there are i do derivatives, so i wouldn't be great with rate vols. >> earlier this week you said you thought this was a volatility trade working its way

through the markets. once you see numbers like that, it spooks investors who are watching, retail investors watching this on nightly news. does that have a waterfall kre shech crescendo effect >> we're seeing a shift in confidence across the retail investor it's important we're above 2600 thousand it's important that the vote got passed and we kick this budget down the road a bit. i could see us testing the overnight lows of 25, 45 on s&p 500 futures from the other day this is -- we're not out of the woods on this. clients have liquidated some positions, bringing risk down a bit. but we have not seen wholesale liquidations or options hedges trading that would indicate that investors are concerned. we're still in the mindset by in

large of buying the dips i don't think that trend has been broken as of yet. i think people will sit and watch rates carefully and then make determinations of what they'll do with their equity portfolios relative to those growth expectations based on rates. >> what would you be doing at this point >> for me -- >> or what are you doing >> i'm dipping my toe back in the market cautiously. there's no problem buying some stock here if i had $100 to spend, i would probably buy in 10%, 15% here, watch it more an thend ad then y portfolio. i'm not a ranli iraging bull he it provides a level to buy some stock. i don't think the economy shifted overnight or that equity valuations will come in much for from here. it's okay to buy a bit more here but not your full budget >> tim, thanks for joining us.

good to see you. >> good to see you >> and coming up, life goes on the winter olympics are under way in south korea, they've 23409 benot been cancel because of the 1,000 points. and later david dorman will join us from pebble beach and we'll talk to randall stephenson about thprree ogss on that merger with time warner. you're watching "squawk box" on cnbc highest in investor satisfaction with full service brokerage firms... again. and online equity trades are only $4.95... i mean you can't have low cost and be full service. it's impossible. it's like having your cake and eating it too. ask your broker if they offer award-winning full service and low costs. how am i going to explain this? if you don't like their answer, ask again at schwab. schwab, a modern approach to wealth management.

welcome back to "squawk box. we are live today from pebble beach at the at&t pro am we are looking at what's happening around the rest of the country. the midwest is bracing for a major winter storm forecasters say chicago could get hit with the biggest snowstorm since 2015 officials took the rare step of closing schools as many will see an accumulation of 8 to 14 inches by today. detroit also closed schools. that's a lot >> it is >> chicago you lived there. >> even in chicago -- >> if you live in chicago, you get snow

>> but 8 to 14 inches is a lot thought that wasn't supposed to happen anymore just weather >> facebook is testing a downvotebutton that lets users hide remarks that they deem inappropriate. the downvote button gives users the option to report a comment as offensive, misleading or off topic. it's being tested for posts on public pages, not individual accounts. the 23rd winter olympics kicking off in pyeongchang opening ceremonies air tonight at 8:00 p.m. eastern on nbc. these guys are so good we always said that, nbc sports, these guys cover the olympics. we try our best. when you see the entire a to z, everything happens, you're there

firsthand -- >> incredible. >> so good to watch, too i think we do just the right amount of time between the olympics >> i think you're right. by the time it rolls around, you're ready to dive in. i was laughing that you said the schools were canceled, the games were never canceled. ten years ago, between bear stearns and lehman london in the middle of the european debt crisis nice you remember this, right >> we do >> the fireworks >> opening ceremonies for beijing. >> one of the great moments. not everybody knows the background story, because that was all embargoed because of the time difference, and it hit us out of the blue. and you and ravell -- >> we were not allowed to reference the fireworks.

>> that's what we were all told. don't look at the fireworks. don't reference the fireworks. >> it was not happening. you were not seeing that we don't see it. you might think we're noticing that >> it was great training for an anchor not to look at the fireworks, not talk about the fireworks guys, really quick we're rolling into opening ceremony tonight with a lot of news the sister of kim jong-un has arrived in south korea the first member of her family to visit here since the korean war. she'll visit with president moon over the weekend some media speculation about whether somehow she'll used games to pose a summit between moon and her brother, which the vice president said is not a good idea without full denuclearization the vice president is also here. he is the first white house representation for olympic games since vancouver back in 2010 security very intense. one of the governors of the

province we're in said 600,000 soldiers and policemen are at work throughout the country and working on security. figure skating and curling already under way. that's coming your way covered by colleagues at nbc sports. we talked to our boss, brian roberts of comcast about a week in which the olympics and super bowl both take place >> for nbc, this is the proudest week in the company's history. you have the honor to have certainly one of the most exciting super bowls ever. we had over 100 cameras, 500 people doing the broadcast then to come here where we have over 2,000 people as well as another nearly 1,000 back in the states creating all this content. we walked today through the technology, the team that puts it together, there's nothing like it in the world >> opening ceremony tonight, 8:00 p.m. eastern time also on the nbc sports app and

at nbc olympics.com. they always say the summer games are sexier than the winter games, slate has a nice piece about how the winter gims are t games are the better games because swimming and running you can envision yourself doing, but you probably don't envision yourself doing the skeleton or the luke pulling 5gs as you turn >> well, we ski like those gals and guys we both have skied in colorado i got an inch of air -- not on purpose over a mogul usually i don't end up on my skis watching those guys and gals go 100 feet, not even on the -- just on the downhill around --

unbelievable so great the coverage and everything. and you -- you get to go every time somehow you're a business guy. that's your thing. the business of the olympics >> it's a huge perk. sorkin is coming next week >> i know. i know >> week after. >> carl is the every man >> that's his name plate >> where is that >> wow look at that >> the korean characters andrew ross sorkin in korean >> i think they misspelled it there at the bottom. no i don't -- carl, we will be watching it's great that you get to do that i'm sure you get great seats and everything else, enjoy, my friend >> one of these times you're coming with us, both of you. >> okay. we'll think about that we got things to do out here, too. this is like the olympics for

me i hurt myself out here >> we're not supposed to say it, joe is tied for 12th 8 under. >> don't say that. >> that's like the fireworks we're not mentioning it. fl >> when we come back, the government shutdown ended this morning after a few hours. we've been watching the u.s. equity futures, after a decline of 1,000 points yesterday, fi t futures are up 260 points. they're up now but not by as much nasdaq is up 24. stick around, "squawk box" will be back there a moment as we head to a break, look at what's been happening in the european markets this morning.

♪ . let's get back to the markets right now. we are joined by jim murio of tjm institutions cnbc contributor pimlico's tony consenzio urio, everybody is trying to figure out what the short term or maybe it's a lasting bottom, what puts that in. we had a bounce in the last

couple of weeks. we had that 500 plus point bounce after the first big selloff, so we've got another 1,000 points yesterday and this morning we were up about 250, 280. now we're only up 70 or 80, rough 100 i see that at the bottom of the screen what does a real bottom look like do we want it to bounce at the open today a lot or is that just going to be met with more selling? can you figure out how we know when does it end >> we want it to bounce and we want it to last a few the herdg we know that was an aberration in the number. there's a huge vol that's built up ma malinvestment. now we have to see the vols unwind this morning i came in when i

saw it up 16 hoping we can put in a little bit of a bottom. up 16 in the s&ps is bled away it means every day we come in the weak hands that look and say, wow, i was short vol for too much for too long and long stocks too long and didn't assess correctly last night's lows were 2577. i think we move down to 2535 but we have to spend a couple days in somewhat of a relaxed mode before i'm ready to call bottom. >> jim, everybody has said, oh, look, this is just the technical issue, like you were talking about, that volatility trade needs to get completely washed through, but is there a point where it potentially becomes like a tipping point average investors get spooked by this and they run in, like you were saying, if the herd starts moving, how do you gauge that? >> there's no question selling begets selling without a doubt, and something that starts out as a garden variety

correction turns into something more remember, every correction that we have, it's part of kind of the correction's job is to convince the market that it's not a correction and draw people in to sell out but the problem i have, the biggest problem is that we're in a situation now where earnings are getting better, not worse. not just top line but bottom line as well the economic data we've seen is better, not worse. it's like if a recession was somewhere waiting in the weeds while this correction was happening, i would worry i'm not. but could it go down 15% heck, it already went down 12% on monday when we counted it after the close. somewhere in that range we're going to trade back and forth. after a few days, this is something that we're not going to have forgotten about in two weeks. this is something that could last a month 10% corrections happen we average 3, 5% corrections a year we haven't had one in did ytwo . >> a discussion these days about the markets is about the technical forces at play in th

equity market. as you know, there were technical forces at play in the bond market, too one of these is in the futures market i've looked at data from the cftc, commodity futures trading, the cot data, the commitments of trade report, it shows that the noncommercial trader, the speculator is quite short right now. there seems to be a lot of speculative fervor in the bond market, too. how would you talk about the bond market? >> i saw that, too i think if it was something that was going to be a huge deal, we would have seen a short squeeze in the bond market that people would have interpreted as some sort of flight to quality and the bonds would have rallied pretty good. so far in this whole week of increased volatility we've only seen one spike up in the bond market the rest of the time it's been relatively relaxed right now i have it on my radar screen i think if it was going to be big enough for itto be an issue, we would have seen it happen already.

>> all right, tim. thanks >> thank you. >> that was good you know, we've fixed portfolio insurance and then the arbitrage situation and we always find some other way to get the computers involved. >> there's no doubt. >> the market's going down i didn't do anything >> terminator. machines taking it out. >> we're going to figure out a way to have computerized trading mess us up every time. coming up, much more on the markets and that funding bill to end the brief government shutdown u.s. equity futures at this hour, back in triple digits. up 120 points or so. later, we're going to talk taxes, regulation and technology with scott mcnealy, former ceo of sun microsystems f. you're a free market guy, if you're not, you're going to hate it. anyway, "squawk box" is back. >> how's that for a tease?

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breaking news, dow futures at a triple digit space. wild ride. volatility is the name of the game right now as the blue chips remain on track for their worst week since the financial crisis. we will get you ready for today's session and talk about how you can protect your portfolio as well. portfolio protection, right? plus, breaking news out of washington congress passing a spending deal to end an hours long government shutdown as the second hour of "squawk box" begins right now. good morning and welcome back to "squawk box" here on cnbc live from the at&t pro am at

pebble beach the futures are up 70, up 80 i'm joe kernen along with becky quick. andrew ross sorkin, all those people are off today u.s. equity futures at this hour, as you can see, we just mentioned that so 175 after 1,000 point drop yesterday. much more on the markets in just a minute, but first there are some other headlines today that could affect what we're seeing in the financial markets because there was a government shutdown. it took effect at midnight and then lawmakers worked throughout the night on a temporary spending bill. the senate passed its bill about two hours later. the house approved its own measure just about 90 minutes ago. the new bill funds the government through march 23rd and president trump is expected to sign it amazon is reportedly set to launch a delivery service for businesses "the wall street journal" says the new service which is called shipping with amazon, it would pick up packages from businesses

and ship them to consumers that service will roll out in los angeles in a few weeks and then expand to more cities later this year. all this would put amazon directly in competition with ups and fed ex and qualcomm has rejected a revised takeover bid from rival chip maker broadcom. qualcomm maintains that the $121 billion bid under values the company. did propose a meeting. broadcom has called the latest offer its best and final bid all right. the latest slide in stocks wiping out even more market cap from the s&p 500 and dom chu champions us now from cnbc headquarters hey, dom. >> i'd rather be at pebble beach with you guys, but i'm going to be okay right here because we do have a lot of news to cover. obviously it's been a huge move for the markets over the past week and a half or so. let's take you through the play by play on just how much money

we've lost in terms of the s&p 500 during that time the recent market melees has now cost, as you can see here, with the move year to date down 3.5% and the 10% pull back towards levels some traders and investors call correction territory. has erased now, let's put up a big number, about $2.6 trillion worth of market value. that is what has now been lost in the s&p 500 just over the course of the past month, month and a half or so -- rather week, week and a half or so. to put it in perspective though, we are still up around $3.5 trillion in market value even with this pull back in the s&p 500 since the elections. so just to kind of put a little perspective on how much we've lost in that time. as for the biggest losers in terms of market cap, this is not on a percentage basis, although we know a couple of these names are now at or close to that 10% pull back mark google, alphabet, the parent company of google has now lost $114 billion during this current

draw down since the 26th apple has lost around 85 itself. microsoft, $69 billion in lost market cap berkshire hathaway not immune, down $63 billion exxonmobile has lost 54, 55 billion. it makes sense that the biggest companies in america, the megaof megacaps are the ones that get hurt the most from a market cap dollar perspective we should point out again, these are not massive moves on percentage basis although apple and google and alphabet are in correction territory it's something to keep an eye on these are the drivers of that market value number we'll be talking about over the next couple of days and next week or so >> i don't even want be to tell you, dom, about -- let's just not even talk about the weather. i'm not going to tell you about what it's like. >> is it better than last year >> that would be cruel >> yes. >> it's better than -- i've been here a few times let's just not even go there, dom. because if i told you what the

point looks like, 6, 7, 8 on pebble or 5 -- you don't even want to know what it's like out there. you don't. let's just not talk about it >> i won't, but i -- >> it will make you feel bad. >> i will be jealous is it true that you're playing with chris kirk this week? >> yeah. who could have shot -- are we allowed to talk about it he could have shot 62 yesterday. i'm not kidding. he's 4 under dom, you know how you wait for the -- you wait a couple of seconds to see if the ball is going to fall in you've seen that and sometimes it does. five times we had to wait for his just short of -- just dead on line. he would have shot 62. i'm not kidding. he was playing great >> you got me excited to watch the coverage i will be sure to tune in. hopefully i'll see you and chris kirk. >> i hope it's on a tape delay because if it's live -- you know, actually, anything can happen, i'll tell you that, with me and galleries.

>> "squawk box." >> this is a live show right here you never know what's going to happen. >> shank tony cresenzi >> all right let's bring in a couple more voices on the market this morning. brian nick is chief investment strategist and anna shulk is with new berger berming happen nick, you think this selloff is over done. you're not concerned even though we are talking about the dow being on track for the worst week since the middle of the financial crisis >> we do think it's over done. that's because we're looking around at the markets around the world, the bond markets, currency markets those markets are focused on improving fundamentals, better than expected economic growth not just in the u.s. but around the world and a much, much stronger earnings environment than we thought we would be in

earnings for 2018, consensus earnings have already been revised up 6.5% and we're only in early february. for the market to be tumbling here is a little bit puzzling. >> okay. so we'll continue to watch that. you know, the weird thing though that we've been talking about is even though this started as a technical problem and we haven't seen the earnings drop down and we haven't seen any sort of a pull back in the economy, these things can build on themselves i guess that's what people are wondering now. is this enough of something, enough of apull back that you worry about fraud mentality at this point brian? >> yeah. i think that's a concern i mean, we're seeing obviously some of these rules-based funds, any type of funds that have to force selling to rebalancing when volatility spikes there is an ability for this to feed on it self. i think the fed also looks at asset prices and there probably is some threshold at which they would be pulling back from potentially a march rate hike. i don't think we're anywhere

close to that yet. while we're not sort of actively in the market adding risk tactically, i think we're certainly having more of a conversation about do we add risk here and do we pull back? we are constructive. it's hard to be constructive over the next week or two when volatility is this high seeing where things will go it's very much the case that over the next six months, one year we're very much still buyers, still owners of stocks at these levels. >> all of this was kind of sparked in part by what we saw with higher treasury yields. that made people think maybe the fed is going to have to raise rates more quickly than anticipated. what would that mean for bonds at this point? what would you tell people to do. >> good morning, becky our view, the global economy is in a pretty good place and 2018 is bringing fiscal stimulus in the u.s., fiscal reform in a lot of places, now probably increased deficit spending in the u.s. that's just a recipe for when an

economy is at full for rising interest rates that's what we've seen so far this year. our message is i think the fed is on track. it's going to do two to three hikes. that's what's priced into the market we'll see 3, 3.25 come back into the interest rate markets. credit spreads remain well behaved. they had a tightening move back to broadly unchanged it's not a story of distress in the credit markets at the moment. >> you mentioned the global government bond market in that context considering where the german ten year is, .75%, japanese ten year, 0 point be point 07%, the likelihood there is that rates stay low for the rest of the decade in other words, the ecb probably keeps its policy rate negative through mid 2019 and won't go

positive until 2020, 2021, same for the bank of japan. i'm going to speak to the global store yirks shouldn't we be speaking optimistically about the rate backdrop? >> i think it's easier to say that about bank of japan and they'll maintain their basically ten basis point target on rates. europe, i think it's a little bit more of a potential story. how the ecb will react with their planned taper. the other important thing, tony, as you know, with the rising costs as u.s. yields go up, it's not as attractive for foreign investors coming into the u.s. market a year ago or two years ago. that demand is still there it's probably going to be less this year. >> i clicked on the numbers. for japanese investors they go 0.5% yield even though headlines say 2.8.

it's lower for the german bond. >> why is that -- >> in other words, because the world wants dollars and they're scarce and so they pay those who have dollars to get them in other words, for the u.s. based investor we could -- we, pimlico, could purchase japanese t bills and earn 1.7% positive because the foreign entities are willing to pay you for your dollars. looking at it the other way when they have to hedge the risk, sell the yen to buy dollars they have to pay up which reduces the yield that they get on the u.s. rates. >> that's a different part of the story that we haven't paid too much attention to. >> we wouldn't say there's been a dramatic change if there has been a change since the end of last year. >> brian, going back to what you would be telling people to do. you still like international stocks a little better than you like u.s. stocks why is that? >> i think the primary reason is valuation. we're still seeing despite the fact that u.s. market is down

10%. the most compelling buy opportunity for long-term investors is over seas because those markets have not had the type of run that we've experienced here over the last decade i also think that in terms of cyclical positioning, one thing i think we're seeing here, shelk made an important point, we have a weird dichotomy of loosening fiscal policy. they are pushing us towards a later stage of this cycle. the rest of the world is not in this cycle japan, europe, many places in emerging markets, those places are in early cycle just emerging not only the valuation case which takes a while to figure out but also the cyclical case, cyclical positioning, the ability of earnings to grow more rapidly outside the u.s. than they're growing here all of that makes us more bullish on the international markets. >> good point. we've been saying that the world is probably four to five years

behind the united states, europe and japan, new york more particular. >> brian and ashok, thank you for being with us. >> this should be you. >> thank you >> because you like the way i say vij gi lan tai. coming up, our bond vigilantes back. the answer to that question, or at least we'll talk about it whether they're on the way obviously the market is responding to higher rates maybe they are later, tech taking a big hit this week. we'll talk to former ceo of sun microsystems, scott mcnealy. 8:30 eastern at&t aianchrm randall stevenson. stay tuned, you're watching "squawk box" on cnbc

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welcome back to "squawk box", everybody. we've been watching the futures this morning, and after a big down day once again yesterday with the dow down by more than 1,000 points at the end of the day, we are now looking at the dow up by triple digits but just barely we have been up by over 250 points now the dow is indicated to be up by 100 points the nasdaq is indicated to open up by 21 we are now officially in correction territory for the s&p five and the dow

the dow is on track for the worst performance in a week since all the way back to 2008 in the middle of the financial crisis we are also watching the ten year and it's yielding 2.833%. >> could the market be right for the return of the bond vigilantes we knew rates would head up. it remains to be seen if it's aing about probla big problem or not michelle caruso-cabrera explains where it comes from and why we are talking about them again and whether it really is, becky likes to say vigilante. >> joe likes to say vigilante. >> vigilante. >> let's call the whole thing off. so you pointed out earlier, becky had the ten year chart there, with the recent little spike in interest rates once again there is talk about the

possibility of the return of the bond vigilantes. what is a bond vigilante it's too much government spending by selling bonds, tl , therefore, increasing yields the price of a bond and yield always has an inverse relationship the word vigilante is used because it highlights restraining government spending. interest rates on government bonds go up a government has to divert more and mother money to paying interest on its debts the term first coined in 1993 by a frequent guest on cnbc ed yardeni who will be on "power lunch", the reason there's talk of vigilantes is three fold. they're reducing how many bonds they buy the tax cut at least in the short term means less revenue for the government to use to pay back their debts, though many believe the cuts will spur

growth in the medium term and eventually lead to more revenue for the government this week, this is important, the decision to do a big spending package agreed to by many in both parties, which means deficits of more than $1 trillion a year in the coming years. so the bond market vigilantes haven't referred their heads since bill clinton's time. however, they were certainly out in force in europe during the financial crisis which was driven by too much spending particularly in countries like greece, italy and portugal the power of the bond market often surprises politicians who are unfamiliar with it there's a very funny quote from james carville, he told "the wall street journal" in 1993, quote, i used to think if there was reincarnation, i wanted to come back as the president or the pope or a .400 baseball hitter now i want to come back as the bond market. you can intimidate everybody guys, back to you. >> i didn't know it was ed

yardeni who coined the whole term >> yeah. he puts out a report called bond vigilantes it's a focus on the bond market. it implies what it means we saw what happened in greece, for example, right you can't spend anymore money and we're going to tell you why you can't, because it's going to be way too expensive. >> you imagine pitch forks and flames when you talk about them. >> basically, yeah except they're sitting behind desks and trading pits >> if you told ed yardeni that the bond vigilantes would be scaring the heck out of the markets because the ten year might go to 3%, that that is hanging over your head, he wouldn't have believed you, i don't think. >> you know, it is amazing the article that i quoted you from from 1993, it's very funny. they describe the bond market as arcane because not that many people know about it quotes larry kudlow who was an

adviser at bear stearns. it's very didactic and something that we talk about so easily on a daily basis back then was very, very unknown to a lot of people. >> i don't know if that's a reflection of them or of us? >> well, the bond market's become very different. in 1993 bond had a lot of chinese buyers, wasn't very international. >> the real story, michelle, is that the bond market then was fighting a war against the '70s and '80s inflation had gotten to 6% in 1990 by '93, '94, infrags looked like it would pick up they said -- >> we have the chart. >> it's delivered a big rate hike. >> let's show you the chart. the move from october of '93 to november 1 of 1994 was pretty dramatic it went from 5.2% to 8%. it was a very big rise. >> wow. >> right there you see it >> last big war against inflation expectations it was a big deal. the worry about inflation isn't

the same as back then. alan greenspan delivered a few small 25 point basis points hikes. then he started in the 50s november of '94 a big 75 basis point hike oddly that was the beginning of a big rally. >> yeah. >> when the fed is tough, shows resolve it can calm fears and put the vigilantes -- >> chart two we have chart two, tony. ten year note from 1994 to 1998 reflects exactly what you said so just the opposite moves in the early times of bill clinton. >> jay powell's big task the way to calm the bond markets is to show resolve, not to hold back at this point with a 4.1% stock rate. >> maybe that's what's spooking the markets. >> michelle, thank you very much we'll see you again in a little bit. when we come back this morning, we have continuing coverage of the volatile markets

futures have been up this morning but off their highs as well you can see right now a look at what's been happening with the dollar aboard. right now it looks like the dollar is up across the board. euro is sitting at 1.2241. stick around you are watching "squawk box" right here on cnbc. time now for today's aflac trivia question. e sw does the name siri mean thaner when cnbc "squawk box" continues and a gentle wave-like motion... liberate your spine... aflac! and reach, toes blossoming... not that great at yoga ya but when i slipped a disc, he paid my claim in just one day. so he had your back? yup in just one day, we process, approve and pay. one day pay. only from aflac

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knew the answer to today's aflac trivia question. what does the name siri mean the answer, in norwegian it means beautiful woman who leads you to victory really all right. >> i can go on today now that i know that. welcome back to "squawk box. the futures right now indicated up 106 they've been as high as up to 70, back up 80 or 90, but now we're -- i mean, this is showing us what we're going to see today. i have no idea on a friday after a 1,000 point decline and after the last two weeks i couldn't even venture a guess

what we see in the markets today. probably be worth watching again. >> all the more reason to stay tuned. in fact, when we come back, the tech sector hit hard in this week's market turmoil. we'll talk about the outlook for the space with scott mcnealy stay tedun you are watching "squawk box" right here on cnbc ng like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley and i recently had hi, ia heart attack. it changed my life. but i'm a survivor. after my heart attack, my doctor prescribed brilinta. it's for people who have been hospitalized for a heart attack. brilinta is taken with a low-dose aspirin. no more than 100 milligrams

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good morning, everybody. welcome back to "squawk box" on cnbc let's get a check on the futures after the dow saw a drop of more than 1,000 points. yesterday down more than 1,000 this morning the gains that we had seen early on this morning had been very slowly whittled away at one point we were up 265 points now the dow futures are up and now they're bouncing again, up by 65 points you have to watch this very closely. obviously volatility back in the game s&p futures would open by 11 points, the nasdaq up by 12. the house and senate have both passed a bill to end the second government shutdown this year both worked into the overnight hours to do so this latest bill will fund the

government through march 23rd. also, kansas city fed president easter george said the fed needs to press forward she says three rate hikes, both this year and next, are a reasonable baseline. and one of this morning's big stock winners is graphics chip maker nvidia it had earnings of 1.78 a share. the street was looking for 1.17. the company also gave strong current quarter guidance with demand from increasing in gaming and other issues let's get back to this week's big story. very volatile selloff. mike santoli joins us from the nasdaq mike, this has been a very crazy week to watch. the dow on track for its worst week since the middle of the financial crisis back in 2008. >> yeah, becky it's kind of an emotional

fragile tape with the state of play right now going into a friday session after you've had this 10% pull back is kind of interesting. i think it's going to be a little bit tentative i'll put a little bit of guidelines up there in terms of what we might be looking at as the market sort of retests the lows that we had earlier in the week for one thing, a lot of people are focused on certain levels of the s&p 500 specifically around 2540 it's basically where the 200-day average is, but also the overnight low in the futures from monday into tuesday was right around that level as well. that's less than 2% down from where we closed yesterday. the bounces in the intraday have been relatively brief all during this week. another thing to watch is a vix spike. what i mean by that is not the vix getting to any certain level but having it retreat pretty sharply from a high so it creates a spike on the chart like you've seen the previous ones there it's very helpful to know that you've had maybe the peak of the

fever for the market so that's one other trading guideline. then as we get to the low levels you want to make sure or hope that fewer stocks are actually individually making new lows that shows you that there's some bargain hunting going on and a little less selling intensity. that's the tactical stuff. a lot of people are going to say markets rarely bottom on a friday and all ofthese other rules of thumb i think we're in that zone where if this is a correction, there may not be a lot more medium down side. if a bear market is a 20% drop, very few of those have happened outside of a re session naryury environment. if it's going to be a correction, the average pull back is around 13% just 3% down from here the average recovery time from the highs of the post war corrections that were not bear markets is about four months so it's definitely a process to find the bottom, but those are the sort of general i guess perspective on how these things are going to play out. >> mike, maybe, you know, you can be a ground breaker. if we get 45% in 13 months,

maybe a normal correction is now 20%, not 10. >> right. >> maybe everybody -- because, you know, 45% is just too much in a year so maybe that's a normal correction and we don't even call it a bear and then we could say this is like the s santosa santoli edict. do you want to own that? >> i don't know if i want to put my name on it, but i do think some people don't even call the '87 crash a bear market even though you went -- you were down, what, 40% from the highs or 30% from the highs at one point. i do think that there is something to what you're saying though, joe, in terms of exactly how strong and calm the market was, we spring loaded for a move down like this because you had all of these strategies built on these assumptions that the market was just going to be steady and not have these -- i don't even mean these fancy volatility selling strategies we've been talking a lot about even if you're an individual and you look at the asset allocation and you got up to 85% stocks and

you were supposed to be up 75%, you wait to rebalance, not bother with that now that the market comes back down you say, okay, i better sell some and get back into line a lot of that might be going on as well. >> all right mike santoli, thanks we've all seen, you know, faang stocks and technology. we know jeff bezos is worth a gazillion dollars and as a result tech stocks are going to take it on the chin a little bit in any pull back, which we've seen someone who may know about that and just philosophically i think understands government, the economy and the interplay here is former ceo of sun microsystems scott mcnealy, also co-founder of way. we've had conversations and we've had conversations out here about this market volatility we've seen i think that given this piece we just had on bond vigilantes, you've talked about the same thing. we've got 4% unemployment, big tax cut for corporations but no cut in spending.

what do you expect if you're going to juice the economy what's going to happen to the currency and interest rates? we're seeing it. >> yeah, i think you have two things by the way, great to see you, great to be here much nicer to have to commute about 20 seconds from my hotel room to the studio. >> exactly >> anyhow, i think there's multiple things working here, some on the positive as we have talked, the water boarding of the stock. >> the water boarding of the private sector. >> regulations and all of the anti-business stuff has stopped, but now we're just still sipping from a sippy cup i would say there's lots more we can do there's lots of good things happening. there's certainly lots of spending that, you know, like at the u.n. we see them chipping away at it, but it was such a small percentage of our spending at the u.n. and a lot of people are saying where's the beef on all of the investment that we make, foreign investments, all of those other things. certainly the continuing

resolution is just more pigs at the pork barrel. oh, my gosh, it's just -- it's just stunning how both sides are -- trump may be leading the way to say, hey, let's do things differently and congress just keeps oh, my gosh, we're going to shut the government down. i'm actually pleased when we shut the government down i don't want to shut the military down. i'd love to just shut the government down for about -- let's do it like texas where they only come and hang out for a while instead of forever so that's -- and then the debt thing is the biggest problem nothing gets solved if they continue deficit spending because the assets represented by all of the dollars out there is growing nicely, but we're spending more and growing the deficit, which basically devalues the dollar, either through inflation or just more dollar bills based on the assets in dollars, and that's an indirect, not voted on, not

understood tax on every asset and income in dollars, and we keep doing that every year so the tax cut was great and then it took money temporarily out of schumer and pelosi and mcconnell and ryan, but it's going to go right back to them if they keep deficit spending and inflating everybody else so we've got a temporary win here by getting money into the private sector. >> you know what the optics will be you just cut taxes for corporations and then as a result if you go ahead and cut spending you're going to look like you're a very cold and calculating, we're going to give money to the rich and take money away from the poor at the same time. >> i've traveled the world and i've seen benevolent governments and they aren't, and i think you lose your personal liberties and freedoms when the government takes away your financial liberties and freedoms and choices. and so i am just -- i just don't like us hurdling towards 50% of the gdp in the government

sector that is just -- why does everybody want to come here instead of to the socialist countries? it's such a simple, obvious thing. a lot of people don't get to travel like i got to in my job and see the places that are not the nicest. >> we've seen trump talk about getting rid of two regulations for every new one. >> 40 for every new one. >> right but in terms of the expansion of whatever -- and i don't want to call it a safety net necessarily because we do want a safety net for people that truly need it, but you look at disability, you look at food stamps, you look at a lot of things in the expansion in eight years, we haven't pulled back one iota on the expansion in all of those. >> what is a safety net? you know, how many people are born incapable of taking care of themselves, just physically and mentally what percentage is that? let's find that number, ask doctors, ask psychologists, ask behavioral scientists what percentage are born physically unable to take care of

themselves then let's set that as the number of people we're going to put in the safety net. we'll give them food, housing, education, training, whatever they need, but then give that money down to the local area and not do it at the federal level. >> medicare and medicaid are probably the big issues when you start looking at health care. >> of course there's a lot of people there that, you know, maybe -- i just think -- i just -- i just think this stuff has become a benefit of being a citizen not a requirement because i am incapable of taking care of -- but family should be taking care of their people, local communities should be taking care of them federal government is so far away from taking care of the safety net people and we've got to just -- let's have the argument about how many people -- is it 3% people are born, 5% i don't care what that number is and i'm happy to have a progressive tax to help pay for the bottom 3%, but the bottom 50 million on food stamps really

gets at my draw. >> -- craw. >> do you think the fiscal situation and trajectory are enough to keep businesses from investing? the key reason productivity has been down is because of a lack of investment. for the first time in 60 years there's been a decrease in capital intensity. we're not equipping the labor force with things, infrastructure, plants, equipment, software, et cetera, to work with it's why the labor force isn't as productive. is all of this a worry will it stop businesses from investing after the tax cut? >> i do think that we want businesses to come back to the u.s. and be based in dollars but then we need to actually have a dollar that's not getting inflated and deflated -- value deflated away. we want a strong dollar. we want the ability to get a whole range of people to help drive this, drive minimum wage

minimum wage got improved because of the tax cut and all the money companies gave away rather than raising it in san francisco and having a lot of people who want jobs not be able to get them. san francisco is not a great example because of the unemployment. >> scott, you're going to stay with us. we're going to get to technology because you and -- it was the wild west, i think, when you started sun micro, but are there similarities now there are some differences now let's talk about that when we come back. all right. in fact, when we come back this morning, if you want to make sense of market volatility, you better check out the charts. we'll get technical with katie stockton folks, take a look at this we just saw the dow in negative territory. this comes after the dow was down by more than 1,000 points yesterday. we had been up by over 250 points in the futures earlier this morning right now you see the dow futures down by about 10 points below fair value stick around "squawk box" will be right back.

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honey? you almost done? nope. get ready, because we're helping leading companies see it- and see it through-with digital. welcome back to "squawk box. joining us is katie stockton she's with fairlead technologies some of your numbers in this, we

always say, katie, it's episodic you update us on where you think things stand 2700 was a possibility that you saw on the s&p about three weeks ago, i think, as far as if it were to break and go down. now we've obviously gone through that level easily. what are your new numbers? and what are the under pinnings of the market tell you right now about where we're headed, do you think? >> i'm watching the 200 average for the s&p 500 as next support on the chart it's really less than 2% below at this stage so not necessarily a lot of down side from here but it is definitely a widely watched level from a technician's standpoint. below that we're getting into the 2465 range for support i don't think it will get that bad, and i say that because remember going into the pull back we talked about sentiment being one of the biggest risks to the market. that risk is relieved. we do have what is now an extremely fearful tape on back

of the 10% pull back that we've already seen at the same time we have not seen a lot of breakdowns so it's somewhat surprising. the bottom does not show a lot of stocks taking out support levels and that's really a function of the run up we saw in january so it's not as bad as it might first look. >> so explain that a little bit better so if it was going to be a more serious pull back you'd see it in the individual names and you haven't seen that then, although you've seen it in the overall averages >> that's right. obviously we've seen much more defensive rotation we've seen a lot of names participate in the weakness recently but we haven't seen a lot of breakdowns on the chart that's what would make us nervous that this is more than just a pull back, more than just a counter trend move we haven't seen anything like that it's certainly a loss of momentum, that's undeniable. what we now want to look for are these signs of down side exhaustion in the same way we were looking for a loss of momentum on the up side, now we're looking for

momentum to improve off the down side we don't have that yet i think it will come later in the month. i do view this as something that's very likely short lived based on the nature of the volatility spike that we've seen >> and the sentiment that you were talking about, so it can be the bullishness can come out of the market in a short period of time we don't need -- just in terms of actual days, we don't need necessarily months for this to happen you can ring out the -- when things get too bullish that can happen in three weeks, that can happen in a month, that doesn't take six months? >> it's amazing. it used to take up to months at a time and weeks at a time now it can take days at a time that's a different kind of tape that we're having to become accustomed to. it last happened in august when we saw pretty shallow pull back in the s&p 500 when the north korea fears were running high, and that was enough to affect the transactional gauges of sentiment which looked beyond the equity market.

so the vix is obviously a big component of sentiment and now we're at this level that is a contrarian positive. >> so you said 2460 is possible in the s&p but you don't see it? >> i don't see it. that's a support level, 2465 i don't think we see that much down side but i'm not quite ready to buy it yet. >> okay. all right. katie stockton, thanks for the update. a new firm, huh? >> yeah, new firm. >> i'm not -- excellent. good all right. we'll see you soon from your new firm >> when we come back, we have much more from scott mcnealy plus we will be joined by veteran wall street investor jimmy dunne in just a bit. we've been watching the futures. as we've been watching, we've seen a bit of a pull back. back in green territory. up 250, 60, 70 points. we've seen negative territory in the last few minutes dow up 45 points, s&p by 9,

nasdaq up by 27. volatility is still the name of the game stay tuned you are watching "squawk box" right here on cnbc

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we know life can be hectic. that's why, at xfinity, we've been working hard to simplify your experiences with us. now, with instant text and email updates, you'll always be up to date. you can easily add premium channels, so you don't miss your favorite show. and with just a single word, find all the answers you're looking for - because getting what you need should be simple, fast, and easy. download the xfinity my account app or go online today. welcome back to "squawk box", everybody. we are joined this morning by sun microsystems co-founder and former ceo scott mcnealy scott, we've been talking a lot about how quickly tech stocks have run up in all of this they've been leading the way now we're taking it on the chin pretty hard as we see the pull

back you've watched stuff like this happen does this remind you of any previous tech situations or is this time different? >> well, you know, you have to look at each company tech as a whole is going to continue to grow we're getting more tech in our lives every day as we go to vr, ar, and all of the machine learning, artificial intelligence and the rest of it. it's unstoppable it's going to continue on. tech stocks will continue as a whole to do well it's not microsoft and apple as the proprietary players anymore, now it's google, facebook, amazon are sort of the big gorillas who have all of the data and all of the insight and all of the volume and scale to go make things happen. so they're going to bounce up and down, but, you know -- >> microsoft and apple are back in there in terms of what they're -- >> apple has not opened up but microsoft has. i give satya high marks for

really changing that company and moving it forward from that perspective. we're always going to have somebody who's the big gorilla technology moves so fast that naturally people tend to go with who they think is the safe bet and they don't have time to understand where everything is heading and what's going on. so you're getting some very, very big gorillas. you see amazon eating the world today and now going after the delivery bids and what's next there. >> google and facebook have long been the companies that have drawn all the advertising dollars. we now saw some big numbers from google and snap and twitter. between the four of them they've soaked up all of the advertising dollars that will be floated into this space. is that the situation? >> the last time i looked the only two gaining share were facebook and google and everybody else was losing share, and they dominate. they dominate.

we think this is going to change we think people -- there are some ways to disintermediate those environments certainly ad blockers are going to be a problem for everybody, but i think the world of just delivering a little 30 second roman polanski movie called an advertisement targeted is not getting it done for advertisers and we've got to find better experiences and ways to engage, certainly a weigh in why not have a conversation as opposed to having them lean back and watch a 30 second untargeted ad. >> the clicks are accidental i don't know how they move it --

i think they see my finger coming and move them. >> find the xs to get out. i finally give up. >> a lot of people -- >> turn it off sights that want me to read the stuff they're trying to give me. it becomes so impossible to get to what i'm trying to do, it's like, okay, i don't want to read it you're trying to bombard me with some stuff i have no interest in. >> we do a campaign that's engaging with hg tv, we get 130 million data records with the customers because they give away a free house every year. it's amazing people will take naked selfies of themselves for a chance to win. >> hey, scott, do you think that the u.s. companies, u.s. technology companies will remain the dominant force, specifically in china its economy is ascending. 13 trillion in size. it will probably over take the united states in the 2020s right now it's viewed as a manufacturer rather than innovator. do you think the forces are in play to keep the u.s. on top >> i think it's going to be tougher. when you have that large of a captive and protective market to

go build your scale, your volume, your innovation, your training and, you know, we're much more open so it's much more easy to see what we're doing, i think it's going to be a challenge. i think they're a force. >> thank you good luck. >> good luck what are you doing >> i'm on the monterey peninsula. >> beautiful >> thank you for joining us. >> thanks. coming up in times of great market volatility we're turng in to some tried and true names on wall street for guidance wall street for guidance jimmy dunne of sandler o'neill to connect those ideas to the world. th urban redevelopment projects worthy of the world's top talent. all across new york state, we're building the new new york. to grow your business with us in new york state visit esd.ny.gov.

market whiplash. stocks staging a comeback after a rough ride on wall street. the dow on pace for its worst week since the financial crisis. new this morning, congress votes to pass a spending bill to end an hour's long government shutdown. a big lineup of newsmakers to weigh in on the market volatility jimmy dunne, and at&t ceo randall stevenson. the final hour of "squawk box" live at the at&t pro am in pebble beach begins right now. good morning

how are you? >> better than ever. >>. >> harry:y feet we're back live with a big lineup of newsmakers including wall street icon jimmy dunne we'll keep that off camera you're playing with phil phil is a brute. he's like 6'4". >> he is. >> you look like froto but you don't have hairy feet. >> better than adam scott. jimmy's here, dave dorman, chair of cvs health and randall stephenson got a big gain 5'9". >> 5'8" 1/2. >> appreciate it markets back up but just fractionally up 24 points now on the dow. it's crazy moving around very quickly up over 250 at one point

i don't know whether it's keying off the ten year again this morning because the dollar, is it also factoring into this? take a look at europe which has also been pulling back as well but that's the way it's supposed to be. the dog a lot of times in europe is the tail. big losses overnight in asia we're -- they've done the opening ceremonies they've started? >> yes we're waiting to see -- >> 8:00 p.m. eastern tonight on nbc. >> 8:00 p.m. eastern but i think the oliympics are underway. that's an exciting time. they do -- they've staggered it. in the old days it was every four years they'd do the winter and summer. >> this way every two years we get one of the two. >> you can see losses in asia. the afore mentioned treasury yields, we'll take a quick look across the yield curve i think we were at 285 or 2.81

now. people watch the five year and the two year. >> that could be what's moving things, too. >> uh-huh. >> watching that closely >> oil prices people care about as well in terms of the equity markets. all of these things are interrelated i even think bitcoin is related to some of the volatility that we're seeing crude now all the way back down to $60 wti. >> new this morning, both the house and the senate have passed a bill to end a 5 1/2 hour government shutdown. both worked into the overnight hours to do so, and this latest bill will fund the government through march 23rd a white house spokesman says that president trump will sign the bill later this morning but, again, that's the second government shutdown we've seen in just about three weeks. in corporate news you can check out shares of ups and fedex. both of them under pressure this morning after news that amazon will reportedly launch a delivery service for businesses. a service like this would compete directly with ups and with fedex as a result you can see fedex

down by 4 1/2 percent and if you take a look at shares of amazon, up slightly. up by about $5 that's a gain of 1/3 of a percent. let's get to our first newsmaker this hour. joining us right now to make sense of the wild market swings that we've seen is jimmy dunne senior managing principal of sandler. >> delighted to be here in spite of the froto comments. >> in spite of him. >> yes. >> let's talk about what's been happening with the markets. >> sure. >> it's been unnerving to a lot of people. even though the percentages haven't been what we've seen in years past, the numbers are pretty big that makes people sit up and take notice. >> no question it's unnerving. we feel it through everywhere, but rising interest rates. you know, look at it very simple, rising interest is not good for the stock market. we have had a sustained period of time of artificially low interest rates we've talked on this show, many smart people have said the

longer that goes, when it turns, it will be -- it will be difficult and that's what's going to happen. it's interesting in some cases, you know, like you say, oil is down six days in a row i don't know that that's so bad. rising interest raets for financials are -- will be good for a while. i think that's good. tax news is good for customers and banks. obviously there's a lot of fear and volatility. >> that makes people think is this a real scenario. there's two reasons for interest rates to rise. you have real inflation and a real problem, that's bad i don't think we're there yet, although i'm not an economist

although i was an economist major. i don't think you see real inflationary news yet. the economy is strong. middle america will do better through this we've had now ten years of artificially high asset prices, which has benefitted the group of assets, and so there's going to be some volatility. i'm not minimizing it. i'm not saying it's fun. i'm not saying it's easy if you have owned assets in the last ten years you've really benefitted by this policy. this policy needs to end by the way, a ten year on its way to 4%, when i was a bond trader the 20 year bond was 15 for 3/4 of '01 i'm very old 4% doesn't seem too high to me. >> the handoff from the zero interest which helped with asset values but the handoff to the real economy can be messy, but it's a positive thing eventually. >> thank god rates are rising. >> yeah. >> i think we have been -- as

i've said with you on this show, bernanke was at the right place at the right time. i think the next fed chairman stayed too long and was afraid and we will now suffer some volatility because she didn't do what she should have done sooner i guess does it all end up in the same place the reality is for middle america it's going to be pretty good because it's going to be, you know, a lot more people have a lot more money in their pockets. how that inflection point between the deficit growth and the growth in the economy, where that will meet and does it really -- is it constructive, that remains to be seen. the economy will do better. >> the economy, have they been watching it's going to add $300 billion in spending over the next two years. it gets them to a point where, okay, we're not going to do a government shutdown. is it worth the price? rand paul overnight said no. >> i heard that, and that i don't -- i don't know.

you know, we'll know in the future it depends how effective the growth is. it's a gamble, but on the other hand i think to do nothing, you're not going to get the spending cuts, period. you know, we can't even get them when you have tax cuts so they're not going to do it that way. so the only other thing that you really can do is to try to really grow the economy, and this is something they're going to do. i think it will have an effect, i just don't know in a year or two whether the deficit will be wider, the dollar lower, what he was talking about. that could very well happen. >> let's talk about what you see just in terms of animal spirits and are businesses willing to spend. you can look at the merger activity, you can look at actual business investment. what do you hear back? >> well, the merger activity has been very strong, particularly in financials. we might have had our best year ever in terms of m&a that's 35, 6 years, whatever it is you'll continue to see that.

a lot of it is in secondary, tesch air ri smaller deals this year i think you'll start to see a few larger deals done i think the stars align for still a healthy amount of m&a. that will continue and hopefully sandler will participate in that m&a. as far as the individuals, i think the tax cuts are very good now they're not good for me or you because as jersey or -- jersey or new york city residents, it's a tax hike i don't know why people are -- i pay a lot more taxes now as a city resident because i don't get the state and the local and we're a partnership so we're not a corporation so i get no benefit from that. i'm not crying about that, by the way. we've done very well through this whole period of time, but i think that banks' customers are going to do better i think banks will have more money for dividends, for buy backs. i think that rising interest rates to a point are incredibly valuable to their spread balance sheet and as long as we don't go

all the way to a real inflationary type of thing, i think that banks will really outperform now yesterday they were down almost 5% so they were a worst performer. i'm not sure that equities will be up for the year, but i think financials will outperform at this point in time. >> do you feel good about central banks and the job they've done the global bond market, would you say, was in bubble territory? >> oh. >> it was? >> it was and it's been that >> is this policy long lasting and will be a problem or can we work through it? >> well, you always try to be optimistic i'd like to think you can work through it you have a lot of good things going on that you should be able to, but we have made the point numerous times, the longer you indulge that, the longer you have this lower rates, that's why i was more of a wash man

that will have an effect it's going to be messy. >> got to do it. >> it's already happening now so it's -- you know, the lid is off. rates are going to go up you're going to see at least, i think three raises this year, and you should. >> baseline they're saying now >> baseline three this year and three next year. >> is that what he's said? >> i'll never argue with that. i think at least three >> in terms of what that all is going to mean though, do you think that jay powell is going to come in and actively push for higher rates or do you think this is something the bond vigilantes -- we were talking about this, that the bond vigilantes will force their hand >> i don't think he will active actively, actively push, but -- and i think he's a very level headed, capable guy, and i think he will do a good job. i think that the markets will command -- you know, we're talking about a ten year that's at 280 or 90

it can go to 3.75. the world should not come to an end. it will be painful the president won't like it because he can't say, look at the stock market that's not going to happen stocks could be in for a rough ride, and i don't say that, you know, callously, it's just the reality that we've had a long run with low interest rates that we got more than we should have. >> 45% in the average since election so you can go back 12, 15% and just don't forget about what you got on the front end. >> if you're super leveraged up, been there the whole way, it's going to be really miserable if you don't have a lot of leverage and you keep -- i was with a very wealthy guy the other day, very smart guy and he says he's in 25% cash all the time and no leverage he's going to do fine because he'll find spots to, you know, buy things. >> he says all the time as of

when what made him go to 25% cash >> i don't know. i wish i knew what he did. he's with a competing network so i don't want to talk about him. >> with a competing -- >> not a network >> competing -- >> competing facility. >> so you've -- you watch basketball you love basketball, right >> i watch basketball. >> did you ever see where like the little short guy running around, the guard is 6'6" now. i was not saying you were -- >> i knew some -- >> i'm going to change it. phil mickelson -- even the golfers, phil is hagrid. normal guys that you see, you don't notice -- like people think jordan spieth is short he's not short everybody is 6 feet. >> joe, i like you better when you're just direct and insulting which is preferred. >> i was making the point that phil is a brute. >> i will tell you this -- >> is phil not bigger than people think is he not and adam scott

>> forget about nick falo. he is -- phil is very strong and very fit and imposing. >> and 6'3" at least, right? >> right. >> i think he's taller. >> i think he's 6'4" you don't notice that. that's my point. xavier, how great is xavier? did you watch trevon lewis >> he's 6'6". >> he's like mugsy bows. >> let's just leave it that golf is probably a good sport -- >> i'm sorry about the hairy feet you're average height. what did you say, 5'8" 3/4 >> 5'8" 1/2. >> we have gotten along better than normal. >> yes. >> let's leave it at that. >> becky, i'm always great to see you. >> jimmy, great to see you. >> a lot still ahead on "squawk box. live in pebble beach up next, a story that still has people scratching their heads. we're going to talk to cvs

chairman david dorman. newsmakers don't stop there. we're going to talk to at&t ceo randall stephenson at 8:30 a.m. eastern. we're back solid again now up . most 90 on the dow look out. >> yeah. >> who knows >> you're watching "squawk box" on cnbc. see that's funny, i thought you traded options. 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? it's just complicated. step-by-step options trading support from td ameritrade

welcome back to "squawk box" live in pebble beach let's get a check on the markets this morning you can see the futures now are indicated up 77 points you're looking at right now. all over the place very volatile this morning i wouldn't venture a guess at 4:00 p.m. east coast time where the -- >> i wouldn't venture a guess where we would be at 9:30. >> no. friday, maybe we could be surprised today. we've had a lot of downward momentum. health care providers are

looking to meet unmet needs. back in december cvs announced an acquisition of aetna. and then there was a trio that announced catching a lot of attention. jeff bezos, warren buffet and joining us is david dorman he's the chairman of the board of cvs health. thanks for being with us. >> you bet. >> we have talked about the changes in health care when cvs became more than a pharmacy, got into the prescriptions, you told us about the changes that were coming we have seen changes that nobody anticipated. what's happening in the system >> it's a $3 trillion part of our economy. health care is huge and kroeg. i think the buffet, bezos, dimon thing is we're mad as hell and

not going to take it anymore how they actually do it, the closer you get you realize that almost 60% of the cost is in providers so doctors and hospita hospitals. that's very disaggregated. so cvs with 10,000 stores, a store within three miles of 80% of the population, a clinic in the store combining with aetna, we think we can bring more capabilities to bear at the local level and serve national organizations and small organizations as well. >> does that mean you're going to be pushing people to go into the local cvs? >> that's right. our local clinics have demonstrated to provide great care for routine illnesses and provide the ability to monitor

chronic illness. chronic illness costs are a huge part of the whole pie. people who have diabetes, for example, and need to stay on their meds, stay monitored closely, we can do those kinds of routine functions closely and other diagnostics that will be aided by technology. >> humana came out looking to buy kindred. they're a long term care facility is it the days of being able to be an insurance company, are they pushing aside >> united health care is the quiet giant in this space who has done this for years. they've had multiple lines of business with insurance but the insurance core gives them the ability to quarterback and work with all of the lives that they insure to come to a better outcome. we've been doing the same kind of thing quietly at cvs but with the addition of aetna we'll have a lot more capability than we did before. >> going back to what we saw

from jpmorgan, berkshire hathaway and amazon, does this worry the industry we have seen stocks across the board sell off as the thought that they're going to be jumping in. >> i usually wake up waiting to see what rumor there is about amazon today it's fedex and ups there's fear of mobile and they've been so powerful in the retail space also in the tech space i think what they're saying, look at our cost increases this year jamie dimon's a tough guy. he's looking at his costs going up 10% a year as a big part of his overall employee costs and he says, what can we do about it >> right. >> i can easily see he and warren buffet and jamie dimon saying, we're smart guys the fact is the doctor on main street isn't controlled by them,

isn't managed by them. their employees have to made individual decisions on their health good luck. i think it's a very difficult effort i think we'll see a lot of things churning here, but when you start off by saying this is going to be a not for profit operation, i can assure you it will not be for profit. >> whether they want it to be or not was your point >> exactly. >> did you wake up that morning and think, oh, my gosh, here's one more thing to deal with? >> yes because we've been hearing about amazon entering prescription drugs. there are 29 brick and mortar categories some people said, naturally. there's a reason they haven't gotten into the pharmacy business it's hard. you can't just decide to offer a few prescriptions or 10,000 prescription drugs, you've got to make it available, you've got to make it accessible. i look at that somewhat cynically and say if they enter, they're not going to do it in a

broad based way unless they buy someone. if they decided to buy express scripts, that would be a serious entry into the system. this is the third aglomeration of entities that say we're going to combine our buying power, do it differently it's not the newest idea, it's the recent one. >> thank you so much for your time great to see you. >> you bet thanks. coming up, at&t ceo randall stephenson will join us here in pebble beach plus, we actually have been visited by an assistant greens keeper, carl spagler is here he's in the house. we'll be right back. obvious.

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get out there. explore. see. smell. hear. taste. touch. widen your world. good morning, everybody. welcome back to "squawk box" here we are live from the at&t pebble beach pro am the big stock market selloff this week. some investors are now beating a pretty hasty retreat some new figures from lippert analytical said new investors took out $24 billion from funds in the week that ended on wednesday. that's the largest weekly outflow. we've seen more down days since.

president trump is going to be signing a bill to end the latest government shut downthis morning according to a white house spokesman. they worked into the overnight hours to pass bills to fund the government through march 23rd. shares of online travel company expedia have taken a big hit in the premarket trading today. they missed estimates by 31 cents with an adjusted quarterly profit of 84 cents a share the ceo mark okerstrom will be a guest on "squawk on the street." expedia shares down by just over 15%. let's get a check on the broader markets this morning we've been watching the futures. they've been all over the map. we've seen the dow futures indicated up by as much as 260 or 270 points. we've seen some red arrows when it comes to the points we would open by 90 points s&p open you by 13 and nasdaq

open up by 36 points keeping track of treasury yields the 10 year right now the yield is sitting at 2.838%. let's get to our next newsmaker, randall stephenson is ceo of at&t and the host for this, what i think is to be the fifth major, i do. because the u.s. open, they come to pebble beach. this is -- >> the major. >> yes you have it every year here. charity wise, probably close to the top in terms of what the community benefits. >> incredible. $135 million we've raised for local charities here. >> 13 million last year. >> one year alone. i love being here. i'm not -- >> we do, too. it's great having you out here every year. >> it's good to do this. i think everybody has fun. so we'll obviously with you, we've got to talk about time warner at some point, but initially i want to talk about tax reform 45% move in the dow.

a lot of the things that you were arguing for in terms of making things a little easier for the private sector happened. initially there was a big reward, big payoff it seems like in terms of some better gdp numbers and stock market numbers but the last couple of weeks have people wondering, i don't know, too far too fast over valuation interest rates are headed up what do you make of it, randall? >> we had this conversation last night. big table. everybody talking about this market correction. a couple of the guys, ceos who run big capital intensive businesses were sitting around the table. we were all saying, yeah, we're watching this market correction and we're seeing the dow move down how does it affect you everybody around the table was saying business is as good as it's been in a long time we made plans to step up our capital spending over the next year it has changed nothing in terms of what we intend to do. all of the under pinnings that you were hoping for from tax reform, higher capital spending,

more employment requirements, competing for wages, going to make wages go higher, all of that you're seeing continue to play itself out. so two, three, four week market correction for those of us who are investing and running businesses, it didn't have a whole lot of impact in terms of how we think about the world in the next two years. >> human nature is funny everyone wanted a correction we saw the big move last year. january was a blockbuster month. we all talked about this can't continue there's got to be a reversion to the mean the market effectively does what you're expecting it and hoping for it to do, but it still scares the hell out of everyone. that's the diabolical way things work maybe we should all take a breath. >> for the markets, good news is bad news and bad news is good news wages moved up and that's scary because interest rates might move up. what's happening out in the market itself competing for customers and investing in networks and infrastructure,

that's continuing right ahead. >> randall, just to put a finer point on it, this is a conversation you were having with ceos around the table, they're of the opinion this is a correction, not a bear market, not something where we expect to see another huge leg down. >> so the ceos of the -- what i'll call the capital intensive companies, that's where they were i was watching jimmy dunne, he was at the table as well that guy, you know and that guy, he's a little more -- >> talking about you >> that guy was -- he was the bear around the table but the people, again, who are running, you know, these capital intensive businesses, everybody's feeling pretty good right now. >> let's get on to time warner what do we know? can you tell us anything about what's happening >> we are in litigation right now, and so we're literally involved in the trials and there are hearings going on, depositions going on so i'm

rather limited in terms of what i can discuss at this time, but trial starts on march 19 and the judge is committed to a fairly quick trial and hopefully we have an order in the may time frame. we feel good we feel good about the case and we were very cautious going into this deal in terms of it's a vertical merger, right everybody's tired of hearing me talk about it. there are no competitors being eliminated from the marketplace here just like we've seen in the last 50 years we expect this deal will get approved ultimately as well. >> we see sides with viacom, cbs, we see all the old line companies, i mean, i wouldn't say that they're struggling to compete but they certainly are facing a daunting future with new media companies, which makes me think that unless all the people considering your deal are like -- if they're not living in

the new world, they should probably understand that some of the -- you've got some nimble competitors that weren't around ten years ago that you need to factor into whether there's really antitrust concerns. >> that's one of the interesting parts about this whole debate, this swirling around our deal. there's this concern about vertical integration of having everything from content creation, content aggregation to content distribution for one entity, regardless whether it's at&t or not to have kind of the full ecosystem within their products and services is a problem. reality is, the biggest distributor of content out there is totally vertically integrated this happens to be something called netflix, but they create original content, they aggregate original content and they distribute original content. they have 100 million subscribers. look at amazon, they're doing the exact same things. amazon studios, creating, aggregating, distributing,

google, youtube, hulu, prolific. new world, hundreds and millions as opposed to ours is 25 million video subscribers that we distribute to. we're trying to move all of this content to the mobile device that's where it's being consumed now. people talk about our business is in decline because there's less and less tv being consumed. that's not true, it's just being consumed in different places it's being consumed in the mobile environment, so to your point, this thing is moving fast, it's moving at lightning speed. i've never seen such a big segment of an industry move as quickly as this is moving every week. >> if you were out and you were an amazon or a netflix or a google or a facebook, the specter of regulation would be something at work because they're so powerful because they do things so well. peter tiel says legal monopoly is the best business you can have i'd be worried

i'd welcome marketplace competition rather than heavy handed government. so i don't understand, and i wonder whether president trump made these comments and that -- can that filter down to the agencies that report to him, that they want to make sure that they don't seem to be going against what may have been a -- like a campaign sort of a pledge could that really factor into policy or -- >> that's the -- you know, kind of the big elephant in the room, right? >> yeah. >> people are apprehensive to discuss. and this thing is kind of manifested itself because of what's transpired, the sequencing of events the individual that runs anti-trust today came out shortly after our deal was announced and said he saw no anti-trust issues with it in a very extensive interview was very clear about it. then the president made his comment and then this individual was hired into the white house as a counsel to the president for months

the president appoints him or nominates him to the anti-trust division, he gets confirmed, he comes out and then files a lawsuit on this deal those are all the kinds of things that everybody looks at like what's going on. >> maybe this would be better off -- not like there wasn't press. wheeler, that guy supposedly understood the workings and suddenly obama talks to him -- >> fcc. >> net neutrality. >> interesting situation because what transpired in late 2014 is the president, president obama made a youtube video articulating that he did not want -- he wanted to see net neutrality and title 2, this heavy handed regulation on the industry that happened in november of '14. president did nothing wrong. i'm not criticizing that, but the fcc chair, who had said that was not his preferred approach -- >> right. >> -- by february passes rules that says that is my preferred approach. >> i've watched the reaction of the left and death threats against the chair of the -- i mean, what -- what -- i don't --

and you, meanwhile, were going to spend more money in mexico based on if you recoup your investment in the united states. the internet just doesn't appear you need to build it out, right? you need to recoup your investment >> the rhetoric that's come out since the latest fcc interaction. net neutrality has gone away it hasn't gone away. at&t, comcast, you can go through it, we all have in our customer service agreements that we don't throttle, we don't block content. >> right >> you're not going to see anybody begin doing that as we move forward, but this is why i took out a full page ad in several of the largest periodicals saying that is our policy, we don't intend to change that policy, but here's what's happening one fcc commissioner comes in and swings a pendulum this way, another fcc commissioner comes in and swings this way and why is this happening? because the rules around all of this are so ambiguous and unclear. just like congress needs to step up and do its job.

pass the laws and make this clear so we're not sitting here every four years with this pendulum swinging back and forth. guys like us, we're going to invest $25 billion this year you can't invest at that pace without clarity. >> it's a damper thank for all of your time. >> good to be here thank you guys for being here. >> thanks for havingus really appreciate it. up next, counting down to the opening bell check in with jim cramer at the new york stock exchange. first, we're hearing from president trump. he tweeted that he signed the spending bill that passed congress earlier this morning. we'll now be stronger than ever before we love and need our military. gave them everything and more. first time this has ppedhaenin a long time. also means jobs, jobs, jobs. we'll be right back. as investment management professionals, let's measure up. cfa institute. ronoh really?g's going on at schwab. thank you clients?

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get you down to the new york stock exchange i haven't seen this man since sunday jim cramer joins us. i bet i could get you to cry again, couldn't i? probably wouldn't be that hard not about the market but i saw some tape, the glow has not gone, is it? >> no. i think it changes your life, honestly the giants have had it four times, but for us, i mean, you wake up in the morning and you say, not well is it going to be a tough day. you say, we won. every day say, we won. when you go to bed, we won there's a kelce video making the rounds about all the great things that they underestimated us for i feel good.

>> all right i'd ask you about now the dow looks good again here. we'll see. i've seen some of your comments about who's involved with this that are pretty appropriate, too, jim. >> right. >> almost a they know nothing moment. >> i think that's true. >> time will tell. >> but randall stephenson's dinner last night, more powerful than anything i've seen in this market >> yeah. well. >> thank you. >> thanks, jim we'll be with you in a couple of minutes. we'll be -- i told you we'll check on the cdions tontiofhe course they're very special assistant greens keeper coming up let's begin. yes or no? do you want the same tools and seamless experience across web and tablet? do you want $4.95 commissions for stocks, $0.50 options contracts? $1.50 futures contracts? what about a dedicated service team of trading specialists?

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welcome back to "squawk box" everybody watching the futures they're up 200 points after we have seen a 1,000 points declined yesterday joe got the reason why >> yeah, because this gentleman is here. >> iconic. i called you one of the biggest stars in hollywood, which is weird, is it

it is kind of embarrassing for you, is it >> most of what i do is embarrassing i am not keeping track of who's in charge out there. >> i would not want to either. we don't want to get serious with you but god, what a year it has been >> it is shas been an interesti year all the movements affected restaurant business. people don't want to go out public because people say you are the guy that -- whatever >> it is carthargic in some sense. >> if people are monstrous it comes back. this is unusual. people are getting their justice

quickly, they're getting it fast >> i have known in your career and everything else, i don't think you become a success in it unless you have a really good feel for what's happening in society. i think a lot of the movies that you have done that resonates and that's why they last 40 years. i want to ask you of the political discourse of where we are in terms of the country. >> where are we and how do we get here and how do we get out of it? >> i don't know how we got - you sort of been watching it happens and here we are, it is a clash of clan first thing in the morning where people are going to war about so much it is interesting when this kind of movement happens. it creates all kinds of compose and fertilizers to make the next

stage happen of cour obviously things swing back and forth and they go this way or that it is what people do that moment of not reacting and observing it and see this changes a lot of people feel that when this new politics come now, it is going to make a new opportunity to join some people together, you know how can they be someone like someone like kristin wigg, how can she make everyone laugh? she's nthinking of what resonats with all of us people are trying to win their point of view as oppose to saying what if i spoke to everyone my friend who's a great comedy, he's accused of being a

right-wing writer. the way democrats trying to pick out little pieces of population where we are representing hispanics. they're not speaking to everyone at once. it is a meaning to say i am choosing you because i am a splinter group or i am a certain minority group there is a resentment how you are separated again by a politician you are my people, i am in control of you and i represent you. instead of thinking each citizen has the right to be respected as a citizen first under the laws of the country >> bill, i know that you don't follow the markets closely but it is in the backdrop for everybody and it is been discussed on the golf course this week. we were talking about what randall stevens randa randa randall stephenson had to say.

what do you think will happen? >> i think the change in the tax electrica laws are a great thing for corporations i don't understand what it will mean in the future and what the budget has to do to take care of what people call entitlement that may or may not work in the first step that made things easier, i feel that people feel there is too much regulations. you hope they don't throw the baby with the bath water when they're breaking down regulations that there is things that don't protect people inside the surf things that are not well observed and serviced. >> i am not kidding, the market is up 265. those are the highs for the morning. i am not kidding it maybe the pants or the

bell-bottoms >> you are also an entrepreneur. >> i am a very quiet passive entrepreneur if this is what being an entrepreneur wearing pants like this -- we'll have to have a special edition of "squawk box" of our nation's future >> you still got no agent and if you like something, you may call them back. you are doing one out of 50 or something now? what do you still need to do you won this tournament, too, you don't have to do that. >> yes, i won this tournament and i lost a little weight it is all going my way, joe. it is really a bill murray decade >> one other thing, you watch "snl." how does that work after all these years? >> it is amazing the guy learned

how to do everything he had so much confidence of the same room of people stuffed in the room between dress and air and he goes, can we do this and someone take care of this? >> how did you wine up as steve bann bannon >> the people spoke. >> i don't know my friend called me and said would you like to be steve bannon >> they had a really good wig, really good wig. >> so we'll see what happens da and you won together. good luck. you were at spy glass. >> we were at spy glass. spy glass is about survival. >> it is >> it feels like that. >> at least it is not wet because then it is even harder >> when you come and get up and make the effort to come here

means a lot. >> i heard there was a government shutdown. >> anyway, i remember more about this than you do thank you again. >> futures are up. it is a bill murray rally. make sure you join us on monday. right now it is "squawk on the street." >> good morning welcome to "squawk on the street," i am david faber along with jim cramer carl quintanilla is in the winter limbiolympics or at the e olympics we'll hear from him momentarily. this morning lets give you a look at futures as we always do. it is more important this morning, frankly how we set up in the morning does not have a great deal of how we close you were paula ebbeuropean marke all in the red though.