i will send my questions like everyone else i will send my questions have a wonder of time. a big shoutout we have an amazing team of camera people, producers it is an amazing thing this happen it is a minor miracle. >> the viewer questions come first. you go to the back of the line we'll see. >> andrew, have a stave trip fantastic coverage folks, that does it for us make sure you join us for warren buffett. right now it is time for "squawk on the street. ♪ ♪ >> good friday morning welcome to "squawk on the street." kramer is off today. futurer higher as stocks look to avoid their third losing week in four a little of everything today, some m & a in the consumer

space, berkshire results and the letter tonight and tomorrow. europe is pretty mixed in the ten-year below 289 begins with stock futurer pointing to a better open. investors continue to digest the potential impact of higher inflations and rates on equities, three weeks since the sell-off began. >> general mills bets on pets. the cereal maker agreeing to buy natural pelt food company blue for a billion dollars. >> and on the heels of historic tax reform, turbotax maker intuit delivering but weaker than expected guidance ceo joins us exclusively later this hour. >> stocks are poised to open higher, three major indices on pace for third negative week in four first time since november of 2006 the nas ended in the red. s&p and the dow about 6% below all-time high. after another session which couldn't hold the inter-day

highs. it has happened four days in a row. >> i think there's scepticism of investors being willing to wade back the flow of shows as of the weekending february 21st still major outflows of domestic equity funds, so reluctance for investors to go full-hog back into stocks. it is not the same buy-the-dip mentality we have seen over the many previous dips we had over the past year or so. >> where are we on the ten-year this morning hanging around the same levels, right? bumping up on 2.8 or so. >> 288 and change. i think in the summary of the morning. another session devoid of directional drivers. so it is going to be interesting to see how long we are to grind through some of these lingering questions. i mean do we haveto wait until the march median to see if the dot moves? >> or wait until next week when j powell goes to the hill. we have the semiannual policy

report by the fed. he will testify in front of the house and senate that will be a key driver, because we got the minutes which caused a sort of hiccup in the markets briefly. that happened before a lot of what has happened in the marketplace in terms of economic data as well as recent sell-off. so his more recent commentary next week about what has gone on, that is really going to be key for the markets to trade off of. >> yeah. for more on all of the volatility that we've seen this week obviously, let's bring in ariel investments and with us td ameritrade chief market strategist happy friday to you both good to see you. j.j., let me get your take on this inability to hold the interest-day high. are we in a dynamic where investors are looking for strength to sell into? >> well, i think that is part of it, carl also, you know, when we have these tremendous volatility events as we did a few weeks ago, it usually takes about three weeks for us to sort of

have everything work through the system, if you will. i think what is happening right now is we're trying to set a trading range, where we will be going forward. so it is not a huge surprise to me we are seeing sell offs in the afternoon. i will say i think it is important we held 2700 on the s&p 500 cash the last two days, 2701 two days ago, 2704 basically yesterday. for those bullish, it is a great sign we would like the see it happen again. it is funny on the opening today, carl, it almost looks like we're watching a third day of the same move. >> yeah. what does the vicks curve tell us about volatility in the future >> vix also trying to get that range. the 20 level seems a little high considering we are trading 1213 for so long. wouldn't surprise me to see us over the next few weeks settle into a 15 to 18 range on the vix if you will. we are just above that right now. the thing about it is we have, even if we stay at these levels, people are starting to fear some

things a little more obviously there's a recession fears, the rate fears. i like to see us go test 3% on that ten-year rate and get it out of the way, if you will. because, you know, everyone's just so afraid of this it seems rather silly, you know. to me, i equate it to somebody who says they will get married, gets to the altar and starts screaming because we asked for higher interest rates for so long because the economy was doing better, earning season is great, which is being lost in this by the way i think. and we're getting the higher rates and all of a sudden everybody wants to back out of it. >> yeah. charles, i want to get your take on what j.j. just said but also this brewing debate about whether or not we can contain inflation to the labor march, mnuchen making comments last night saying wages may go up without any final stage inflation, which then jeff gun lack comes out and says would be a miracle. how easy is that to do >> i don't understand why gunlack said that. he is saying it is a miracle to

have real wage growth? that's silly i mean we had lots of periods of time where wages have grown faster than underlying inflation. it happens with a tight labor market and i think we will have a tight labor market it is kind of a silly comment. a lot of things will contribute to morin flage inflation, one ir wages. we have lots of things, a weaker dollar, people competing to devalue their currencies around the world. there are a lot of forces, not just wages, all pushing inflation up right now >> you know, charlie, almost every guest we have on likes banks. they say banks will do well in a rising interest rate environment. you say banks could do very well or possibly they could do very badly. what is the scenario in which they do badly? i want to get the bear case out there for all of the people in the consensus trade right now. >> thanks for pointing that out, melissa. this has become conventional wisdom that inflation and high

rates are good for banks, unquestionably when did the s n& l industry go ba bankrupt when they went high. if your funding cobsts rise, if you own a lot of the mortgage product that they own that's fixed, you can get an ugly scenario this idea interest rates going up and inflation rates going up is somehow good for banks is not historically true. >> stow are you in -- i guess you're not in banks then, charlie, or are you? are there selective banks that can escape this worst-case scenario >> you have to look carefully at the asset mix, at the interest rate liability for a bank to make this determination. in general we think the asset management industry is better position for higher rates and higher inflation if kkr has a whole portfolio of investments and inflation doubles the value of those

assets, kkr gets 20% of that profit even if there's no real return to the investor so inflation tends to be very good for asset managers. >> finally, j.j., i want goat your take on what some argue are lower quality rallies with deteriorating breadth. people have pointed out the degree to which amazon contributed to the s&p's year-to-date gains, and this morning goldman has a list of hedge fund holdings. guess what is at the top, amazon follow by facebook, google, bac. what dou make of that? zblen, y >> again, part is you dance with the girl that brought you to the dance to to speak. i like charlie's point about the financials one thing that i would say is different is we have all of this tax money coming into the system right now, and i think that that's going to take a while to show up everywhere so to speak you know, this is going to take three to four quarters to work its way through the system

because as you've seen, the companies announced we have all of this extra cash one much the things is there's no plan for the cash so they really have to make sure that those are clearly spelled out. i think right now that's the biggest thing that investors are having a problem with, is understanding where that money is going to be spent, because i think it will be frowned upon simply use it to increase dividends or to buy back stock people want to see that money actually going to work so that is the one thing i think continues to give technology stocks particularly, because i think people forget technology is infrastructure. so i think that gives them a great boost, and i do think it will help the financials, you know, overall because that's the one part about -- i love those comparisons to the past, but that's the one part about this time i think is a little different. the one thing financials have to be careful is the companies that may come to them for loans might not be as high a quality if they don't participate quite as much of the money coming in from taxes. >> good tough on a friday. thank you so much, charlie, j.j.

>> have a great weekend, guys. >> when we return we will go to the olympics in pyeongchang, south korea. also ahead, profits, tax season and tax reform we will have an exclusive with brad smith the company's guidance weighing on stock this morning. looking at futures, dow looking at about 141 on this friday, s&p looking to be up by 14.5 much more "squawk on the street." live from post nine, the new york stock exchange on the other side of this break ♪ mercedes-benz glc

with its high-tech cameras and radar, contemporary cockpit, 360 degree network of driver-assist technologies, and sporty performance, what's most impressive about the glc? all depends on your point of view. lease the glc300 for just $449 a month at your local mercedes-benz dealer. mercedes-benz. the best or nothing. >> since the recent market pull back, those are two of the strongest sectors. >> it is going to pan out that the fed does not do too much in 2018. >> people are concerned about rates. rates are causing a lot of this volatility that we're seeing, and so we're advising our clients to be

♪ let's bring in andrew sorkin for one final morning in the winter olympics in pyeongchang, south korea. so much to talk about, whether it is a new flag bearer or the fact that you tried on south korean makeup. >> y >>. >> reporter: you know, the south korean makeup wasn't a makeup, it was a moisturizer by the way, it makes you paler there's a color in it. anyway, i want to get you caught up let's talk a little sports, get you caught up on the medal board, show you what has been going on overnight here. let's show you right now the u.s. has 21 medals we're going to get a medal no matter what tomorrow when we get to curling because we're going for gold so either way, we're going to get something. germany is at 26 canada at 27 norway at 37

the netherlands at 18. we didn't perform so well, we should say, when it came to what took place on the ice with the u.s. team. we fell in 9, 10 and 11 place. when you look at this tape right here, 15-year-old russian figure skate ah alina zagitova nabbing the first gold medal for the russians in these olympics, zagitova became the second youngest olympic gold medalist by 28 days in the women's singles event, behind american tara lipinski back in 1998 she was awesome. also, earlier we spoke to skier mikaela shiffrin who won two medals here in pyeongchang, just about a number of weather-related challenges which, carl, you know so well about. we asked her how she dealt with all of the big changes to her schedule. >> i would say that was the

hardest part probably for all of the alpine athletes, but for the girls who were racing the slalom and the giant slalom, we were, you know, up and ready to go really for five days in a row, and then finally were able to race we were going from being ready the race giant slalom to being ready to race slalom then back to giant slalom and back to slalom every day you wake up and you're in the zone, you're in race mode, and you're still using that mental energy even if you get nothing out of the day so it is still just as taxing. it is just that you haven't actually done your event yet so we were like, finally, the slalom but we held the gs in winning the gold, that was really, really an emotional day for me and then coming out in the slalom, i was just dead. i was like, i'm so tired i didn't really feel like myself for that competition, and i had much more trouble handling the nerves and the pressure i was

feeling because of that. >> carl, you mentioned it, or at least you alluded to it earlier. we should tell you that jesse diggins will be carrying the flag on sunday that's big news here she had that amazing finish yesterday in the cross country pretty awesome stuff there we should tell you that ivanka trump just arrived in seoul. she is having dinner with the president this evening, and she will be here in pyeongchang tomorrow morning and then she will be representing the united states at the closing ceremony on sunday night. so a lot going on here we got a lot more coming up in a little bit we got a story on a booming business that everyone's got to pay attention to here in south korea, craft beer. it is not only here, it is coming to us very soon so we will give you a taste in the next hour, guys. >> all right we can't wait, andrew. i was interested -- a.p. has a story where they went back and looked at projections by the

olympic committee. >> reporter: yes. >> as to how many medals we would get these games. they thought maybe 37 and we got 21 so there's going to be some soul searching maybe in the couple of years ahead. >> reporter: a lot of soul searching. it is coaching story, it is how do you get the right -- there's a lot going on behind the scenes but, yes, i hate to say that anybody is unhappy, unhappy with the result, but as we've said so often while we've been here, you know, you talk to these athletes who just getting here unto itself is a win. so i'm going to try to put a little bit of a positive spin on it this morning. >> all right andrew, we will talk to you in a bit. andrew sorkin in pyeongchang this morning >> reporter: see you soon. still to come, general mills jumping on the natural pet food bandwagon, agreeing to acquire blue buffalo looking to open higher on the friday trading session, dow

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fidelity, where smarter investors will always be. ♪ big deal to tell you about this morning involving natural pet food company can blue buffalo. only been public a couple of years, but it is getting taken out so to speak by general mills. this is a large deal for general mills, $8 billion, $40 a share for blue buffalo shareholders. it is all in cash. it will have the effect of taking the debt on general mills' balance sheet up, about

4.2 times levered, down to about 3.5 times levered in the not too distant future it is at a big price, 22 times, that includes synergies. if you exclude them, 25 times ebida, about six times revenues. it is a fast-growing company because it has been a fast-growing sector. we are talking about a $30 billion overall market for pet food about 10% is natural this company has been delivering competent annual net sales growth of 12%, annual adjusted growth of 18% over the last three years. general mills making a big statement by making this decision you can see its stock is a bit weak it is not using that as a currency here. so that's simply the response of some shareholders at this point saying, okay, maybe we get it, but it is a big, big price you're paying. we will take them into competition with the likes of mars which owns the pet food brands pet food and actually they did a

deal to acquire bca also you can see some of the names here under the general mills banner, and now will represent i think about 7% overall of the company's overall revenues i got my pie chart i'm looking at yeah, they're saying it creates a compelling additional growth platform >> well, we're reminded of their last big deal for annie's, right? $820 million in cash three years ago, right 2014. >> yeah. >> again, natural. >> yeah, and this obviously a much larger deal, relatively new management there, under relatively new ceo don't -- you know, relevant multiples there, maybe the likes of a white wave even though it is not a pet food, i get it, but sort of the natural. trying to understand a little bit more here to whether it was an offshoot. there have been rumors about it so the premium is large when you look at it overall, but perhaps not as much on the current stock price because it was not

unaffected as we like to say, although you can see good for a 16 plus move. >> stocks in general under pressure over the past year. with this search by consumers for the more natural side of things, organic products, kraft heniz, for instance, campbell saying it has been a tough quarter as they try to compete so there is this sort of pressure, especially as the stock prices for at least campbell and heinz are down by more than 20% over the past 12 months. general mills has fared a little better there, down about 10% over the past 12 months. some pressure here to find ways to the natural food aisle. >> simons told us earlier in the week, he had a 22-year-old daughter but if he showed her a can of food she would be like, how do you open this thing, as a knock against campbell's or any competitor who sells food in cans. >> he also talks about the humanization of pets, which i can now relate to a little more. >> welcome to the party. >> yes, a year or so in with a

dog who we love, of course i think he even -- i don't know what he gets fed think it is blue buffalo. >> would you shun a can of dog food >> yes, i would shun that. >> would you feed him human food >> no, not human food, but all natural and healthy. we want him at peak performance. >> we will get to the oping en bell in a few moments. don't go away. we took legendary,

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"the opening bell" is brought to you by bright house financial. established by met life. you're watching cnbc "squawk on the street. live from the financial capital of the world, the opening bell set to ring in a few minutes a pretty busy friday the parlor game over inflation continues and starting tonight we will have berkshire's results and one of the great weekends for financial twitter looking over the annual shareholder letter we will talk on monday, at least becky will, with warren buffett about what he thinks of the big questions being posed right now. >> yeah, and "the journal" pointing to the large cash position at birkshire, which we have talked to him about in the past birkshire one of the largest

holders in treasury bills. >> it is $109 billion. it is staggering everybody is talking about this mna environment and whether or not it will pick up in 2018. does he join the party does he leave the party? does he sit on bills >> i mean he wants to do something, but he is a value buyer. precision cast parts was the last large deal they did at berkshire. of course they're going to do another big deal, but only when warren sees the opportunity, and doesn't like to compete either let's remember it is not like he's looking for an auction he likes to do a one-off where a ceo will buy in and he will buy it and that's it, come on board to the berkshire portfolio we'll let you do your thing and we'll see. >> meanwhile, some news. goldman sachs raising $2.5 billion to start taking minority stakes in private equity firms as a lot of these

interesting opportunities, maybe aren't public necessarily, but companies that choose to remain private for longer i think it exceeds their original projection of raising about $2 billion for that. >> what does it mean for the ipo market in 2018 as well if there are more opportunities in the private market at this point. a couple of stocks we're watching, fedex and ups in the transports if you are a believer in dow theory it could be important to you. the outperform price target is 290. saying that the growth the company is saying is the company's highest rate in the history of fedex so realpositive note out from bernstein. meantime, the competitor, ups, getting a downgrade over there at bernstein as well. >> yeah. the u.p.s., they go to hold and they argue that the capital intensity expectations have gone two times as a percentage of sales in 12 months

pretty amazing when you think about the base of the company's operations as they play in their view catchup from a decade of under-investment. >> they have no handle as to whether or not u.p.s. actually has control over the spending. that's going on at u.p.s >> opening bell on the s&p at the bottom of the screen the big board today, investments celebrating the listing of industry exposure as service at inaudible. wow, that's a long bell. the nasdaq, financial institutions incorporated providing banking and financial services to individuals, municipalities and businesses. interesting note just crossing now that powell's semiannual testimony has changed to tuesday at 10:00 a.m. from wednesday this is according to a statement from the house financial services due to a schedule change in the house. i'm not sure it means much more than that, but obviously we will be listening tuesday instead of

wednesday. >> yeah, very closely, as we all know worth mentioning, as you note, it is funny, it is first time i haven't talked to meg whitman in probably five years. >> i was just thinking about it. >> on an hp earnings after the bell yesterday, meg whitman no longer ceo of that company. they had a very good quarter, a very good quarter. revenue growth of 11%, 7.7 billion which was well above many of the analysts' estimates in terms of where the numbers would come in for hpe. also announced a plan to return 7 billion to stockholders, increasing the dividend by 50% as well. and giving a little bit of detail on their plans in terms of the benefits of tax reform, they are going with the increase matching contribution for employees for the 401(k) as a wear to share some of the wealth as i said, of course, that plan to return 7 billion also aided in part by the benefits of tax

reform but overall a very strong warter there. hpq, by the way, the other side also had a decent number. >> slower growth. >> well, yeah, the hardware. the ink company as we used to call it, printing and computers. you can see hp ink also quite strong $0.48 nongap diluted earnings, up $0.10 a share compared to last year. a billion of free cash flow. they did return 71% of that to shareholders through repurchases and dividends. not much from them on tax reform interestingly other than a very sort of broad statement they believe it will drive higher net earnings, strengthen their balance sheet and increase overall net near-term shareholder return opportunities. >> sort of folding into the story is an initiation over at staples of some of the hard disk drive makers, western digital resumed over at staple with a buy rating with a price target of 105 there's so many people calling for the death of the pc. it would be a problem for some

of these guys, the western digitals the world, and yet it hasn't been. i mean western digital has been an outperformer. it is about 10% year-to-date still even with the sell-off here so that's stock seeing a profit today so far. >> intel is the top performing dow component at the moment. we had a discussion yesterday about how there's been more efficiency in filling channels maybe we're not living in a period where inventories swing wildly, there's big boom-busts in the cycle, which ostensibly makes it easier to predict how the semis will trade we will see. >> yeah. also worth mentioning micron which is up 3% the ram is a key component of the hardware produced by hewlett-packard enterprises, servers and the like even though the prices went up, hp was able to offset them by having significant controls on operating expenses micron has been a beneficiary of

this cycle jim has talked about it a lot on the show. >> we mentioned snap yesterday for a number of reasons, kylie jenner's tweet and so on news today that evan spiegel is now the highest-paid ceo, at least was for 2017, total pay of $638 million at the age of 27. unlikely anybody is going to top that for the year. forbes now sees his net worth about $3.8 billion, even as we continue to grapple with whether or not engagement is slipping on a redesign or not. >> but kylie jenner wiped off more than a billion dollars in market in one day with her tweet. >> that's right. >> questioning whether or not other people open up their snap app. it is amazing the power of that kardashian clan. >> larry ellison is usually the highest paid guy, you know, but as a founder again, we are talking founders here it is very different compensation mix when you do talk about founders and what they were able to take home.

always worth pointing out in snap, you have no control whatsoever, not any at all i mean at least even some of the other companies where there's fatter control, they have voting shares out there none, no vote. >> tesla is another one we're watching in today's session. tesla notifying a small group of model 3 reservation holders who are not previous customers and not employees that they can begin ordering and configuring their model 3, you know, sedans, the more main-stream sedan, the less-expensive sedan there are doubts whether or not tesla's production was on track or not, especially after january saying that they delivered around 1,500 model 3s -- 1,600 i should say, versus the goal of having 5,000 rolling off their assembly line every week so this is the latest in terms of the production update that investors will latch on to here. so we're seeing the stock rise

here on this, on this notion that they're actually producing, they're able to produce enough to say, hey, if you are a model 3 owner, carl, and you don't own another tesla -- i don't think you do -- you can start configuring. >> the president is going to cpac this morning, and we are expecting to hear some comments perhaps about north korean sanctions. on one hand, he did make some comments to the press on his way to the event where he talked about the shooting in florida. once again said that schools as a no-gun zone, a gun-free zone puts schools in greater danger we don't talk about the gun debate often on this network, but some companies choosing to distance themselves from the nra, either cutting various discounts they give to members i think the list includes best western, wyndham, a bunch of rental car companies, alamo, national, enterprise, and now the first national bank of omaha which will no longer issue co-branded credit cards.

>> and black rock saying they're going to engage the companies and say what is your response to the shooting that happened in florida. you have to keep in mind while they are some of the biggest holders of some of these gun stocks, there's not much they can -- i mean they cannot sell a stock that exists in an index fund that's just the fact of the matter so they can engage, they can press, but they are holders. >> they did say they would make some efforts to carve out companies for investors who choose not to hold or don't want to be invested in companies like that. >> right guys, we don't have a stock chart to show you, but it is worth mentioning a big story in china today, which is on bond. the giant insurer that had been acquiring properties here in the u.s. over the last few years at a torrid pace was seized by the chinese regulators now, you may recall -- and i said this many times on the show -- chairman wu, the gentleman who was behind this company and led it for many years disappeared, as is the case often in china.

not often, but it happens. last june, never heard from again. he actually has now been indicted it would seem by the chinese government enbond which owns the waldorf s astoria, for example, was funding long-term assets such as real estate with short duration instruments it created some are great names looking en bond sure win number one premiums enormously, these are well it management products, very short in duration funding long-term assets a lot of people wondered how long can you continue to do that the chinese say they may hold it for a year, maybe it will be two years, but this was -- is a big story certainly and a very big acquirer for a period of time here in the u.s. >> let's get to bob with the dow up 126 good morning, bob.

>> good morning. nice open once again this happened a lot this week, big opens and we fade away going into the close, seven-to-one advancing declining stocks we are waiting for j. powell's testimony to be released this will be his monetary policy report that his actual testimony will be based on, just to clarify. take a look at the secretators, looks a lot like january leadership group, banks better today. consumer staples are lagging it has been a terrible year for consumer staples i want to highlight how far we have come back in this month it started on february 2ndnd when the jobs report came out and we had wage growth hotter than expect. there's the first circle on the left we lost 60 points in the s&p 500 that friday, and then it started getting really crazy that whole week we dropped big on monday, dropped big on friday. the bottom line is we lost 10% in the s&p 500 there was your correction from the 2nd to the 9th, one week

that friday, that close with down 10%, that was the correction we have come back. you see the far right line, we have essentially retraced 60% of the losses that we had okay so we're not all the way back, but it is certainly calmer as you can see by the line there, a little bit, just moving horizontal and not moving so much in the terms of volatility. elsewhere, let's talk about consumer staples, lagging. david mentioned blue buffalo being bought by general mills here it has been a horrible year for these consumer companies they don't have the cache they used to have, under assault by amazon hershey's new low, kraft heniz, new low. they're all doing terrible and this sector has been notably under performing for a long time we're up 2% for the s&p but we're down 7% as the consumer staple line, that's the orange line on the bottom for the year. meantime, keeping an eye on the fund flows and watching what has been going on. seeing more of a semblance of

normalcy so we've seen inflous in big etfs in the last five days so the vanguard s&p had some inflows. high yield, that's jnk had inflows. that didn't happen a couple of weeks ago. total stock, these are broad stock funds. it has been mixed picture here there's been outflows in some of the really larger ones, but i would say they're fairly modest here the spy, which is biggest out there, had some outflows but it has been going on for a while. the russell 2000, modest outflows i say it is starting to look a lot more normal. by the way, right now we are on the verge of just about break even for the week. we will give you a better report in the next hour or so melissa, back to you. >> we'll look for that, bob. thanks for more on today's movers, let's get to bertha. >> reporter: hi, melissa nasdaq working on trying to break the four-day losing streak, the longest losing streak since the election in 2006 over the course of october to november, down nine days in a

row. the market here, the nasdaq up about 39% since that right now if we were to maintain these levels, the nasdaq and nasdaq 100 would be up for the week and so would chip stocks, which are really leading here in terms of tech. the real heavy lifting in terms of moving this market forward has been amazon. last couple of days it has topped 1,500 dollars a share seems to have found resistance there. that said, amazon on pace for the fourth week out of five moving up and adding really all of the impact to the upside. we have earnings movers this morning. seems like burgers are topping wings when it looks to the outlook with wingstop a disappointing outlook, sending that stock lower in tech, intuit, ricardo lebr

rerks, first solar lower thanks let's get to rick santelli with the cme group in chicago. good morning, rick. >> reporter: good morning, carl. it is a strange day and a strange week you know, the curve is flattening with deals going down today. you have 2s down 1, 30 is down 4 on the day on the week, it is a whole different number scenario. 2s are up .5 you want to watch when you get these type of moves. maybe we are coming to a place to rest. maybe we will fall short of 3% it is not my personal opinion and it is friday sometimes in front of weekends strange things can happen. look at a two-day of tense you see the way we have given it up a bit. it seems to be a crescendo so to speak. if you go to the chart from mid 2013, on the left side you see a slight failure of 3% then our only close above it, the last day of 2013 at 303 and here is where we sit

of course, that area is a major focus, not the least of which is a nice, big, round number we haven't seen in a long time. now, sometimes spreads can get wild they're normally slow movers this has been a wild month for this spread. a month to date, tens minus booms have moved about 20 basis points, meaning our yield versus theirs has widened from 200 to 222. this is significant. put yourself in the shoes of the european central bankers watching this happen they still have lots of negative rates. they've talked about doing things, balance sheet reduction, but much more and it doesn't take hold. it is slow, gradual process. i've heard nothing on rates. you want to pay attention. i know mario droge is. finally as you look at the dollar index year-to-date, what i find fascinating here is that year-to-date we're not acting that well. we're a whisker can under 90, settled a little bit over 92

the dollar is having a pretty good week. on the other hand, the euro isn't even though it is nicely up for the year. you see that one-week euro versus dollar chart with the slight drift basically we lost a little bit from 1.24 to around 1.23 carl, back to you. >> we will see you in a bit. rick santelli in chicago to come this morning, exclusive with intuit's brad smith we will talk earnings and what is ahead in light of tax reform. of course, tune in monday for the season premiere of "american greed. martin shkreli hikes the price of a life-saving drug 5,000%, but it is adshy things that lands him in jail. dow is up 162. the bond report is sponsored by pimco

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take a look at shares of intuit this morning down about 4% or so company reporting an earnings beat with some weaker than expected guidance ahead. they released the first of its two season updates for consumer tax offerings this season. brad smith is the ceo of intuit and joins us this morning to talk about the quarter and season at large.

brad, welcome back. >> good morning. thanks for having me >> there's been some skeptics out there who wonder why we're seeing this slow start to tax season what's going on? >> well, the short answer is congress was able to pass the tax legislation just before the holidays, but that wasn't enough time for the irs to open up on time so the tax season started six days later, that shifted some revenue out of our second quarter into our fiscal third quarter. but we're outd of the gate strong right now the irs has received about 1% fewer returns than last year at this point in time we're actually up 2%, so we're gaining a little bit of share and feeling good about the year. >> so with more of a timing issue, you think this gets made up for in q-3 >> it is in fact, we reaffirmed our full year guidance. we really have strong momentum in our tax business. we grew 12% revenue in the second quarter we reaffirmed guidance for the full year. as i said looks like we're picking up a little bit of share

season to date. >> but you said before when you lowered your fiscal second quarter guidance a couple weeks ago, rad, you thought this would be made up in the third quarter and yet you're lowering your outlook for the third quarter, so what specifically is going on you have a deadline for tax season, so this is going to happen in the next quarter. >> that's true and right now we are out of the gates strong and we reaffirmed the full year guidance and so right now the real question is given the early strength when we raise guidance at this point i can tell you being in tax seasons for quite a few years, there's a lot of game left to be played. so we're certainly out of the gate strong. but we want to make sure we remain prudent and focus on execution. if we feel as good about the tax season on april 17th as we do right now, then we'll talk about the full year guidance. >> so remaining prudent means lowering your third quarter guidance and basically saying to investors, trust us, the next two quarters -- or the final two quarters of the year will be good, we'll make up for it, or we'll beat the third quarter

guidance that we're giving that's lowered >> yeah, well, for me remaining prudent is we've done about 50% of the return season-to-date we still have about 70% of the revenue to be done and once we can see a really good momentum continuing into march, then we'll feel better about how the tax season's going to finish up. >> brad, what are your expectations as far as the percentage of filers who are going to identify themselves as self-employed? and what impact does that have on overall margin mix? >> self-employed is really a strong area of growth in the economy right now. it's about 34% of the u.s. workforce. they predict it will be as high as 43% by the year 2020. it's our fastest growing product line right now we had 490,000 customer who is signed up for self-employed product this quarter that's up from 180,000 one year ago. and the real opportunity is many of them file with turbo tax. we have over 4 million customer who is are self-employed that

have to file a schedule c. many of them don't realize they have to file that tax return so we have an integrated bundle this year that we think is really going to accelerate that growth even faster as we head towards april 17th >> and will be effective for this year how much investment do you have to make in your business to change the software to adjust for that and i'm also curious as to what kind of cooperation you get from the irs given many people are saying they're undermanned at this point to deal with so many of the questions that will be coming their way >> yes we have a very strong working relationship with the irs, more than three decades long. the entire industry works closely together with the irs. and we collectively run our r & d and pull together to make sure the tax season goes smoothly for citizens we have a very rigorous investment in r & d and yet our

margins are strong our tax business has margins in 65% range. and we're able to quickly react because we are a modern technology company and able to make changes on the fly. >> in terms of people who filed, brad, and the impact of the changes to the tax law, there are more individuals who don't need to itemize anymore. how does that impact your business >> it's good news for us because it invites more people into the software category. in fact, about 155 million people file taxes this year, almost 90 million still go to a tax store to a cpa so as more people figure out this is easy, they'll move out of paying that hundreds of thousands of dollars into tax software which many times is free, and that just grows the category for us. and as long as we get our fair share, it's really good news for the business >> brad, we'll see how the stock reacts as the session goes on today. thanks for your time good to see you. brad smith from intuit joining us this morning. >> thank you so much great to see you. when we come back, the

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♪ good friday morning. welcome back to "squawk on the street." i'm carl quintanilla, david faber, melissa lee at the new york stock exchange. dow up 144 being led by intel today. s&p up 15 points busy session as the president is about to appear at cpac. roadmap begins with the markets. dow showing early gains. all three indices on pace for third negative week in four. question is, is a turnaround in sight? >> and blackrock announcing will engage as several companies sever ties to organizations like the nra following multiple school shootings a debate on the social responsibility of ceos next. >> and finally, a big bet on pets hbe earnings, a seizure of the chinese insurer and final day at the winter olympics in pyeongchang. all those stories later this hour. but we begin with the markets here the dow, s&p and nasdaq higher

this morning as stocks trying to reverse course following major selloff that took place exactly three weeks ago. dow now back over the 25,000 mark after closing below it in yesterday's session while the nasdaq was trying to avoid a five-day losing streak, its longest in almost two years. for more we're joined by jim paulsen, and brian jacobsen. gentlemen, good friday to you. jim, i'll start with you you say you expect "further adjustments in the financial markets. you don't mean good adjustments, you mean more volatility events. >> i do, melissa right now markets are dealing with impact of rising yields and what that does for price earnings multiples but i think as the year progresses here there could be a couple shoes that drop yet one of them probably is going to be focus in the second half of the year probably on the chance of profit margin erosion we've had a pretty good rise in

resource cost already. both labor and capital cost, if you look at the wage inflation rate and look at interest rates have been rising up towards 3% and that's almost double from the lows of the cycle. and with some lag that's going to probably pressure profit margins. and then i wonder there's so much optimism on the growth for this year not only here but globally i think it's going to stay pretty good, but what if it slows a little bit it wouldn't be that surprising if it did given how much interest rates have come up in the last year, maybe moderates economic growth. and i wonder what margin erosion and little slower growth might do to earnings estimates in the last half of this year >> brian -- go ahead. >> actually, jim, just let me follow-up quickly on this margin erosion argument though. tax bill, cap x can be written off year one you may see an increase in productivity as a result of that could that conceivably offset

some of the margin erosion you're talking about >> yep, absolutely if we are headed to a boost in productivity, then i think a lot of the problems that the market is facing right now will evaporate. if it's a significant enough increase i just think that's got some odds i don't think it's totally unrealistic to expect that, but i think it's low odds. i'd put that at one in four that we see a productivity pickup this year. i would put it higher maybe in '19 or 2020 than i would right now. >> brian, we're getting to really the crux of the ongoing debate and that is wage pressure with the lack of final stage inflation and what that does to margins, as jim just said. but then the hopes of tax cuts, productivity boom that some say is being underestimated by even the official data. and the deregulatory environment we're in that people say we'll continue to add to earnings. >> yeah. i have to say that i hold jim in very high regard, former colleague, so it's really nice to be on the show with him

and it definitely pays to heed what he says about let's watch for some of those profit margin compression risks out there. we wrote about that in our 2018 investment insights paper about how the change or the increases to wages versus increases in profits is beginning to turn, probably more towards the side of increased wages but that doesn't necessarily mean that just because you have compressed margins that you actually have to have a slowdown in earnings growth what really matters then is what happens to revenues. and i think that, you know, from that perspective you can actually have a slight compression of profit margins and still decent earnings. however, we've been positioning our client portfolios taking advantage of the recent dip that we saw in the markets. we were anticipating an increase in volatility and a possible correction but 2018 could be like walking in the wilderness a little bit here mainly because everybody has gotten so excited about what 2018 earnings per share growth will look like but yet they've ratcheted down

their expectations for long-term growth of earnings so 2018 maybe we're setting the bar a little bit high. i think instead of having to wait until the end of the year to see some of that we'd actually see it more in let's say for first quarter earnings i think that people have pretty high expectations even though we're just getting done with fourth quarter for 2017, i'm a little leery about what we might be setting ourselves up for for first quarter 2018 earnings season. >> so do you actually think, brian, we could see a ratcheting down of eps estimates after so many strategists and analysts out there said there will be a mass reach, a mass race to ratchet higher 2018 eps estimates? >> i do believe that's the case. that's kind of the pattern that we see in the data as well that oftentimes you start the year with very high expectations and then those drift lower as you get closer and closer to each earnings season. and so i think that perhaps we will see a similar pattern play

out. that doesn't mean that necessarily has to derail the bull market. i think that there's still quite a bit of room to run it's just that it's probably going to be a slightly rockier path this point forward. >> all right guys, good to see you, thank you, jim and brian >> thanks. let's bring in eamon javers this morning at the white house. going to be a busy day in d.c. today. good morning, eamon. >> reporter: good morning, carl, that's right the "new york times" is out with a story just posted to its website just a few minutes ago reporting that according to their sources rick gates, the former trump campaign aide, is expected to plead guilty as soon as this afternoon to charges that have been brought against him by the special counsel bob mueller. now, that's significant because the special counsel's been putting an enormous amount of pressure on rick gates, initially indicted october 27th on fraud charges and conspiracy charges against the united states the question is whether or not this is an indication that rick gates may be about to cooperate with the special counsel and then flip on paul manafort, the former trump campaign chairman

it's not clear what exactly rick gates knows that the special counsel is interested in he's somebody worked with paul manafort his entire professional career beginning his career as an intern for a manafort entity and working on the campaign even after paul manafort was ejected from the presidential campaign, rick gates stayed onboard the campaign all the way through election day and worked on the transition so it's clear that rick gates who's been indicted by the special counsel knows quite a bit about the tax fraud and money laundering charges that have been brought against paul manafort the question here for the trump white house is what does rick gates know about any other misdeeds that may have happened during the presidential campaign visa vis russia. that's an interesting and potentially important development this morning we'll wait and see whether rick gates does indeed plead guilty this afternoon with the expectation according to the "new york times" is he will, carl. >> eamon, thank you. we're going to watch that closely with your help our eamon javers in washington,

d.c. today meantime, we have news on pharma bro martin shkreli from his forfeiture hearing meg is live at the white house. >> reporter: this is the first time we've seen martin shkreli since he was taken to prison in september. that of course after a bizarre set of facebook posts he posted about hillary clinton seeming to offer his followers $5,000 to bring him one of her hairs that of course came after he was convicted in august on three of eight counts including of securities fraud today's hearing really has three parts. the first was the defense's motion to acquit shkreli of one of the charges we just got news inside the courthouse that the judge said she plans to deny that motion to acquit on that charge. they're also arguing over the amount of losses that shkreli caused investors and the amount the government will require him to forfeit on the loss amount they were just debating whether to include losses from a count shkreli was

acquitted of count 7 concerning his biotech company. the judge said she was leaning not including that count which is $10 million, and that's important. because the amount of losses they decide on will influence how long his sentence is now, seeing martin shkreli for the first time in months since he's been in prison at the metropolitan detention center in brooklyn, he looked different. he had grown a beard he was pretty reserved, waving to his family very pleasantly when he got into the courtroom pretty quiet not a lot of facial expressions. he is planned to be sentenced, guys, on march 9th so we'll wait to hear more from the hearing today and bring you more news. back over to you >> okay. yeah, that is not -- we were just watching pictures, meg, of some time back i think of mr. shkreli. thank you, meg meg tirrell in front of the krours e courthouse. as we head to break, look at hpe under first quarter under ceo antonio nari company announcing it will return $7 million to

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let's check in with andrew sorken at the winter olympics in pyeongchang as he wraps up a terrific week of coverage. hey, andrew. >> reporter: hey, thank you, carl you know, we want to show you

the leaderboard here in our last conversation just in our last hour we were talking about some of the soul searching that's going on with the u.s. team given where we stand 21 medals, one so far as we talked about last hour according to the usoc report which the associated press got its hands on the expectation was 37 medals. we wanted to give a breakdown for those scratching the heads saying what's the difference, what went wrong here here's what went wrong so originally at least according to the projections, bobsled and luge, the usoc expected four medals, got two. and freestyle skiing and snowboarding u.s. expected 18 medals and this is where things went really wrong and only won 10 that was probably the biggest chunk in terms of trying to understand the discrepancy between the expectation and reality. hockey and cross country were two sports that didn't underdeliver, guys those teams each earned one medal as expected. the minimum medal count expected

in the report was for 25 medals. so we will see if team usa can still hit that target in the last 48 hours of competition there's a chance, but it's an outside one at that. so we did want to give you a little bit of context for what's going on meanwhile, we're all going for beers when this is over. and given that we're going to be having a beer, we wanted to tell you about a new industry brewing here in south korea. we took a trip to seoul where the country's biggest craft beer brewery is seeing sales boom >> korea's beer business is booming. craft beer is only a $20 million market here, but it's expected to be worth 100 times that just ten years from now the industry's explosive growth is largely credited to recent regulatory changes here that have been favorable to small breweries. >> every single year when regulatory change regarding craft beer it was always for the better less regulations in terms of opening a brew house, less taxes, able to distribute to more locations.

>> reporter: the largest craft brewer in south korea, their sales have nearly jumped 300% just over the last three years and now control over 10% of the market, so much so that they just started brewing last year in california. ceo a former financial analyst has raised $10 million to fund the company's growth there are eight pubs in the greater seoul area and widespread distribution. >> in korea and around 3,000 bars in korea. and we're in 1,000 convenience stores on all the e-marts and selected bars in eureka and san francisco. >> reporter: american companies getting in on it as well goose island operates a brew house in downtown seoul. and the company says its south korea business has tripled in 2017 alone craft beer still only has about half a percent market share, so lots of room to grow the ceo told us that social media has been a huge driver of

business for them. and i'm not -- i don't know too much about beer, guys, but it's very hoppy, that's all i will tell you that's sort of the trademark here in korea. hoppy beer i don't know if you're into hoppy beer. >> it's not as drinkable as some but i'll have some i was curious, if you were going to write about your week there, sports, korean people, culture, economy, what would you be saying >> reporter: win for korea i think in a big way for pyeongchang. i do think and you can tell me if i'm wrong, you're all back in the u.s. right now, but there is a sense that this has recast the country, this has recast pyeongchang as being something i think different than sometimes our expectations more modern, you know, the theme, new horizon, i think there really is that the u.s. team obviously came up short in so many ways they'll be a rethink about that

but at the same time as we've talked about, you know, when you're here and you get to meet and spend time with some of these athletes, it is a story about them it's not just the american dream, it's a global dream and it's a dream for so many of them and to see them achieve that whether they go home with a medal or not is pretty remarkable so, you know, i don't want to say i read a puff piece, but i might. i might. it's a pretty great thing to be here >> yeah. yeah fascinating. we look forward to your last couple hits as you -- before you go out for your beers tonight, andrew we'll see you in a bit andrew ross sorkin >>. deal to talk about this morning important to shareholder of general mills and blue buffalo, natural pet food company sold itself to general mills. deal price $40 a share, overall $8 billion in cash that general mills will be spending to acquire this company opening up a new area for in

terms of product portfolio this will represent that is pet food about 7%. blue buffalo been growing quickly in the natural food category pet food itself about a $30 billion a year business. natural represents roughly 10% of that. and they have been a fast grower in that area deal going to be neutral to fiscal year '19 cash earnings per share, accretive to fiscal '20 cash eps and they're going to be adding to their debt at general mills as well. going to go to 4.2 times levered. they do say they want to take that down to 3.5 times by the end of fiscal year '20 and do want to maintain their investment grade rating. but it is a sign, of course, of companies such as general mills in a very difficult environment seeking as we always talk about growth and being willing to pay up for it. right now, melissa, their shareholders seem a bit uncertain as to how to respond stock is down 4% it is a high price given i said

earlier 22 times the company's expected ebitda after you account for $50 million in cost synergies. >> it adds to general mills a very fast growing part of a business, but it doesn't improve general mills' portfolio itself at all it doesn't get to the fact that maybe they're not as leveraged to the natural food trends in their own core portfolio while this does add a growth component to their business. >> exactly green giant, cheerios, i guess they aren't bad. yoplait, a lot of sugar, right >> i haven't checked my yoplait label lately. >> it's quick. these are all names associated with general mills which we know well you point out earlier they did buy annie's a few years ago, price tag roughly 10% of what they're spending here. >> we'll watch that. coming up, pulitzer prize winning columnist jim stewart will join us here at post nine with his take on the social responsibility of business leaders in relation to the recent gun violence across the country.

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time now for etf spotlight three weeks since the selloff began. have etfs managed to weather the volatility storm we're joined by lance humphrey, usaa asset portfolio manager executive director of global multiassets. let me put the question to you, lance, given we seem to have gone through this period of volatility not sure if it's going to continue or not, what about etfs have they held up? >> i think they have well, first of all, thanks for having me. it's a great morning here. and i want to say that, you know, we have seen etfs hold up relatively well given the volatility if you look from the beginning of february we've seen some of the largest etfs in the united states, particularly in the large cap side, some outflows of some $25 billion in certain etfs and even in some of the sectors investors worry about with volatility such as high yield corporate credit we've seen those etfs be pretty well behaved in this

environment. >> yeah. so, i mean, you use them obviously in your portfolio. i would assume then their performance during this period has not dissuaded you from continuing to use them, though i'm sure you discern between certain ones because there are more exotic etfs out there as well. >> absolutely. we use etfs pretty extensively throughout our portfolios for various purposes you know, some of the larger ones we use for tactical shifts or risk management, so we're absolutely discerning amongst the different etfs whether it's by strategy looking at liquidity profile or assets under management and we tend to stick to generally the more basic etfs. for instance, in our portfolios we don't use any etfs that target any type the vix indices or double shorts or anything along those lines. >> do you expect to increase your exposure to them at all or are you happy with the performance you have from them, and specific to how. give an example of how you would use an etf for example for diversification purposes.

>> sure, absolutely. so i think today we have a healthy amount of etfs in our portfolios and as a global asset allocator we're always looking for what is the best instrument that we can use to get the exposure that we need so there's times where that tends to lean more towards etfs. and then there's times where it might lean more towards traditional active management or individual securities. but to give you one specific example was going back to really the beginning of 2016 and throughout 2017 we wanted to increase the weight to high yield within our portfolios. we found when we want to make tactical shifts to high yield for instance it's often easier to do that and more efficient to do that within the high yield etf space. however, as we got about halfway through 2017 we began to think that the valuations were a little high in the etf or high yield space. so we ended up reducing our positions. by using etfs with that type of trade it tends to be a lot more efficient than going to an individual manager or going to an individual high yield market and making those transactions. >> got it. lance, appreciate your time. thank you. >> no problem. thanks for having me

>> lance humphrey. >> when we come back this morning, several companies severing their ties to the nra following a series of recent school shootings in the last few weeks. we'll talk to former medtronics ceo bill george onset next with what ceos should be doing about it markets off the highs, dow up 94 back in a minute i've gotta say, i love the new place. oh thanks. yeah, i took your advice and had geico help with renters insurance- it was really easy. easy. that'd be nice.

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i'm courtney reagan and here is your cnbc news update at this hour ivanka trump arrived in seoul to attend this weekend's closing ceremony of the winter olympics. she attended a dinner with the south korean president speculation is high in south korea she might deliver a message from president trump on north korea. well, the trump administration is considering an offer from republican donor sheldon aid adelson.

looking into legality to for private donations to cover some or all of the costs. and teacher at marjory stoneman douglas returning this morning law enforcement checking ids as cars drove into the parking lot. students will return on wednesday with a modified schedule. and nhl florida panthers hosting emotional ceremony last night for the victims of the shooting the team plays home games ten miles from parkland. its goalie who lives in parkland calls for those in power to take action against gun violence. that's your cnbc news update for this hour, carl, back to you i don't know if you saw a clip of it but it was pretty powerful from the goalie. >> courtney, thank you nra facing pressure. blackrock among the biggest shareholder of gunmakers says it will engage with weapons manufacturers and distributors, meantime first national bank of omaha plans to drop its co-brand nra credit card. and enterprise ending its nra

discount program at all three of ilts rental car brands for more on this joined by former medtronics ceo bill george, a cnbc contributor as well as pulitzer prize winning "new york times" columnist jim stewart joining us onset bill, where is the asset manager responsibilities to take a side here >> i think they can challenge these things but i think they're not going to have a great deal of impact. you can get behind the three things president trump suggested, getting rid of the bump stocks and raising the age to 21 and doing more background checks frankly, i'd like to get rid of the assault weapons myself, whether you can get that ban through i'm not so sure under this congress and this president. but i think ceos can do a lot more locally in organizing coalitions among mayors, governors, state legislatures and coalitions of business people and educators to school boards to make something happen locally. really raise the level of support and protection in our schools. >> does that need to include putting space between you and the nra or cutting a discount? >> absolutely it does.

of course. yes. ceos are not like to support the nra. and, yeah, i think congress afraid of the nra, so i'm worried about getting something done there, that's why i would like to see more done locally. i think ceos can do a lot locally, have tremendous influence. >> as somebody part of the health care industry for so long, is there a benefit as to framing it as a health issue, as a health, you know, overall a key point of the debate about keeping people safe? >> sure. but i think it's really, david, about our children i mean, these are our employees, partner of our companies' families and want to make sure people they won't want to come and work for our company, they have to be in a safe environment. and arming teachers, i think it's a crazy idea. >> ceos are looking after the best of shareholders there's no telling when you sever your ties at the nra, you might be acting in accordance to

what a portion of what your shareholders would like you to do, but against what another portion would like you to do, i'm sure. >> you know, this has been an ongoing issue with all of these social activism movements in the investment world which is what is the purpose here? is it to make you feel morally superior or drive return for shareholders i thought it was interesting recently for example in california that some of the unions out there have come forward now and said we want to invest in tobacco stocks they did a study that showed by divesting tobacco stocks they lost something like $9 billion in pension funds over the last ten years or something and now of all people unions advocating for getting out there saying wait a minute we'd like that money not all the unions are doing it, but it's kind of a controversy now. and i do think we'll see a lot more activism focused on the gunmakers. you know, the student movement has targeted mostly fossil fuels in recent years and have said hardly a word about the gunmakers. but i think they'll be coming up

to the fore. but if you're a ceo, it's a very tough call. >> where do you think, what does the debate sound like in boardrooms there's some directors who will argue the opposite of what you're saying, i assume. >> not so much. >> really? >> no. companies have a purpose the purpose is not just shareholders, it's to fulfill a health care purpose or a financial purpose. that's what they're all about. and i think they have a family that's what they have to put first. i like larry fink's statement. we have to fulfill our purpose, carl and i think that's what -- and the companies that do that are going to perform but if you're only purpose is making money, you're going to run into a million difficulties. you've got to follow the purpose. that's what's going to get your employees around and brings your customers around few shareholders object, so be it. >> it's not necessarily shared widely though, i think, bill there is a view that a company's purpose is largely to generate results for its share owners and that's about where its responsibility ends. >> i don't think so. under law we're there to serve the company as a director, are you there to serve the company

and its shareholders and i think that is a very growing feeling. if you look at the company performed they've been very purpose driven. >> millennials certainly care a lot more about that and as they move into the mainstream perhaps larger owners of equities in general that may become more of an issue. >> exactly. >> one thing that struck me is some companies give discounts to nra members. well, if you take a hard look at that, is that really yielding a financial benefit to shareholders i don't know now the risk is if you get publicly identified as sort of in bed with the nra, is it going to cost you customers, client, revenue, people hostile to it? this is now happening in the gun context, but it's happened in, you know, issues over the years. i've been around long enough to see, you know, for a while it was gay rights, fossil fuels, it's one thing or another. i would have to agree with you that i think most companies in the long run what you should do is the right thing, you know and then hope that public

opinion will go along with you. >> so when people argue it's the ongoing politicalization of the american corporation to bill's point if people don't like it, sell, and they live with that? >> i think the companies are inevitably being drawn into this debate although they don't want to in some cases you just can't avoid taking a position. and if you've got to take a position, then come down on the right side of it >> exactly and i don't think it should have anything to do with the nra unless maybe you're a gunmaker but i do think this is what inspires your employees, what motivates them, inspires customers, you're creating a larger family. that's why i'm arguing ceos have to look at it that way and their communities that way. >> but there are so many issues. it's not just whether we consider guns a public health issue. you can run the gamut of issues important to your share owners and your customers and your employees. you can spend nothing but time on that. >> so you have to choose the issues most important to you and your company certainly if you're in health care company you're going to be interested in that but if you're a financial services company, you have to

choose interests best interest of all the people you serve. >> initially when the reports that credit card makers would not allow the financing or use of credit cards for the purchase, excuse me, of the assault rifles, i thought there's a slippery slope here, isn't there? you do this and then what's next here does amazon -- is amazon allowed to sell goods to the nra >> right. >> are they allowed to ship products to an address that says nra? you know, you can go down the line in terms of what the impact is where do you think this will ultimately fall? >> now, all these things are some kind of continue -- continuum. flip side like the nra, maybe i don't see a lot of signs this pressure yields big results, but maybe it's time for the nra to rethink some of what are some of their more extreme views, like any gun regulation means, again, slippery slope taking guns away from everyone. i think to take assault rifles away does not mean hunters can't continue to have guns, that

people can't have guns, but they don't see any nuance maybe it's time to rethink its position. >> the gun manufacturers, right, and not the gun owners of america. so there's a different they're looking out for the interest of the manufacturers out there who make the assault rifles so they might not be looking for that greater good. >> i'm the first to acknowledge we're not going to see the proposals for change coming from them but if the pressure gets to be big enough, maybe they will be open to reason. >> yeah. i think you're onto a key point. and i think that -- but frankly the rest of us, you know, we're not going to -- visa's not going to really have much impact trying to exclude the nra. i think they have to be very careful about taking those kind of positions i think they are there to serve their customers. >> as we're talking the president is speaking at cpac and being quoted, by the way if you would only have choice of one, rather have the second amendment or tax cuts? >> thank you, carl. >> i ask you that to frame this, bill how do ceos learn how to work

alongside this president >> first of all they're thrilled by the corporate tax cut then there's the individual side and i think they've learned to kind of work, you said alongside, but they're going to go ahead and do what they're going to do. all the stuff about buy america, no, they're going to have their global supply chains i've talked to the big auto manufacturers, they have to have a global supply chain. they can't supply more cars in china than the u.s. unless they do that. so i think you'll find them doing what they need to do and realizing sometimes president's bark is greater than his bite. and just continue on >> jim, usual lip we spend time on your column today you're going to have to give a tease for it. but i thought it's worth a read. you call out college endowments for just the enormous fees they're paying to private equity and hedge funds without getting the returns you would expect. >> exactly what i'm really calling out is the alternative investment arena, which i think a lot of individuals need to look at as well and say are they living up

to what their promises are i think the answer now we know that the answer is no. why these big endowments including some of my own alma maters are still 50, 60, 70, in the case of yale almost 90% endowment remains in alternatives and they have underperformed now solidly for ten years. that included financial prices. >> a conversation for another day perhaps as well. >> thanks, guys. >> thank you for having us. >> jim stewart, bill george. >> we want a quick check on where we stand in the markets and we are holding onto our gains though off session highs dow up 95 points, s&p up 13.5. nasdaq adding about half a percent in today's session and on monday be sure to tune in early for "squawk box" when becky quick will sit down with warren buffett in omaha for an interview you will not want to

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the chinese government seizing control of this morning saying the company violated laws and regulations which, "may seriously endanger the sovereignty of the company." our robert frank joins us with more on this story and just in general the amount of chinese money that has been flowing into the u.s. led in part, robert, of course by the aforementioned auban. >> they are charging its billionaire founder with fraud and em bbezzlement now what happens to the real estate it company bought on epic shoppi shopping spree in recentyears. anbang bought it making the most expensive hotel ever sold in the u.s. it's currently closed for

renovations and anbang won't comment on its future, but industry experts tell me it wouldn't be surprised if it comes back on the market probably for a lot less. now, anbang also bought strategic hotels and resorts group in 2016. that was a $6.5 billion deal and that included new york's essex hotel, it included the famous hotel coronado in san diego and the four seasons hotel in d.c. now, anbang was just one of several companies that used cheap money to buy american trophy assets in recent years. and now they're scrambling to sell as all their fortunes have turned china's hna group trying to offload office buildings in new york, san francisco that it bought less than two years ago as part of its $40 billion spending binge it also owns the radison hotel chain in part of the hilton worldwide chain. another company to watch bought amc theaters, bought hollywood studio legendary entertainment, now they're in selling mode.

it's trying to unload a $1 billion condo project in beverly hills. and it's shopping around the vista tower in chicago that's a big project that was a $900 million project now under construction then if you look at their chairman once china's richest man, he sold off his theme parks in china and real estate in australia. so a lot of assets not just in the u.s. but globally that they're trying to sell off very quickly. unclear whether they're going to get the same prices and of course it's a very different environment for the chinese than it was two or three years ago. >> yeah. you know, it's funny, it's reminiscent somewhat robert of the japanese when they were huge buyers of similar types of raelt e real estate based assets including i believe rockefeller center in the late '80s only to have to turn around not too long after and sell many of those as well but for me anbang hits home also in m&a they were a key bidder for starwood, i'm sure you remember that. >> yes. >> competing with marriott

and marriott shareholders -- or i should say starwood shareholders happy to thank much higher price than marriott had to pay there but that shows how crucial they were and expansive they were in terms of desires around the world. buying long-term dated assets here, robert, with short-term money over there, things as i said earlier like anbang longevity sure win number one wolf management product. >> that engenders confidence, doesn't it you're absolutely right. remember mitsubishi in the late 1980s spent $2 billion on rockefeller center and they effectively walked away from that entire investment in a bankruptcy and a lot of people likened the shopping spree with the chinese inc.companies to the japanese. we'll see whether we see a similar fate in the next year or two. and you're right about starwood, they were a competing bidder it will be interesting to see from an m&a perspective whether starwood comes back in for those strategic hotel and resort assets which again include the new york essex hotel, hotel

coronado, four seasons in d.c., there's a lot of good properties that somebody's going to bid for but probably not at the $6.5 billion. i mean, as you put it this was just cheap easy loans from the chinese government and other competitors didn't have the luxury of that financing. so the prices that they'll get for all of these things, i mean, the waldorf $1.4 million per room key that is so far and away above what anyone else will spend. but there will be buyers for all these assets because they're good assets at the right price. >> right right. yeah always financing short-term with high yielding products and buying long-term with low yielding assets not necessarily the best robert, thank you. >> thank you, guys. >> robert frank covering that story for us, carl. let's get to rick santelli in chicago get the "santelli exchange." hi, rick. >> hi, carl, good morning. peter in chicago in person. >> great to finally meet you.

>> great to finally meet you we've had a wild february. as i look up at the screen i see about 120 points above the middle of the range if you look at the all-time high and the low and the 23 and change from volatility so i don't think this is completely over yet, we'll do some consolidation the point is is that we've seen a lot of activity in the credit markets, we've seen movement in high yield and corporates. how do you put them all together in this new world? >> you know, i think high yield has been relatively contained. the investment grade side is barely budget, we're seeing issues do very well. they've been pricing throughout this whole crisis. so it's really restricted to first the volatility is in the vix that's pressed directly to equities but the bond markets hanging very well and people looking to the bond mashlgt for problems i think they're fighting 2008's battle that's not where the problems are this time around. >> that's a great analogy. we had a lot of volatility, equities included, but the spreads widened. the etfs fell. it's different this time

you know, if you look at the hyg or lqd and look at barclays spreads, what do you see >> i see more activity in the etfs because we're what we call beta products, they see equities go down and they'll sell that, but one step removed from what's going on in the bond market. we're not seeing selling pressure removed it shall -- >> that one step is huge. >> and that's why there's stability and people want to point to high yield as a possible catalyst what's wrong, first, high yield much more related to the russell 2000 than s&p 500. there's not the leverage we saw in the past. >> there was this notion that there were a lot of distortions created especially in corporate securities anticipating tax reform at the end of '17, are you seeing any remnants or leftovers that we should be cognizant of now that we're in 2018? >> i think one thing one of our big views had been that you're supposed to buy the bonds of companies with a lot of cash

overseas because they would slow down issuance and so far we're doing that we're seeing some tech companies not issue at the pace they have in the past and that's good for bond markets there's less supply and with treasury deciding to issue at the front end there's strong demand for 10 to taxes, you also lower write offs i know i'm oversimplifying is that going to make a difference i had sources say that the next eight years is going to be more about equity than debt do you agree with that >> i think that's part of it i think what we're seeing is almost the privatization of the u.s. we're going to see continued stock buybacks we're going see some of that from cash and on going debt issuance this is about equity i think we'll see m & a pick up. that is where the supply comes from the credit side we'll see -- i hope we see big m & a deals later this year. >> last half minute, let's talk directly to those investors that are not huge but not really retail or too small. is there a place for them to invest when the conventional wisdom is rates are going up is there something in the corporate or high yield space

that you think deserves attention? >> i continue to like high yield bonds and leverage loans the floating rate equivalent both cases, i give that to the managers i would want this to me is a six month to a multiyear trade you want managers. they can pick and choose the credits. they can be selective. the etfs to me, they're fund to trade. if you want to rebalance or overweight or underweight, they're great trading vehicles but for high yield and leverage loans, you want someone picking the credits for you. the leave ran loan doesn't get enough attention the floating rate is great >> peter, it's been a pleasure thank you for joining me today david faber, it's all yours. >> okay. and i'll take it thank you, rick santelli now it's time to send it over to jon fortt and get a look at what is coming up on "squawk alley. >> david, well, especially in the wake of tragic events, ethics and standards and information distribution are top of mind. we have former employees of google and facebook going to join us to talk about what needs

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conference kicking off in boston in what is the premier conference for sports business we have more from the interview with washington wizards and capitals owner hi, eric >> how you doing that's right we're here in boston we talked to a former aol executive, leonsis he is bringing that perspective into how he runs its wizards and capitals this is how he feels about his ownership. >> we no longer thinks of ourselves as sports teams. we think of ourselves as the big media commerce data platforms. and it's why the value of teams have gotten so big and important. >> so it's interesting he talks about those valuations going up you press him further, he compares himself to the tech reoccurring software companies, software as a service company like salesforce.com. here's what he said about that >> i look at our team as not a four time revenue kind of

business we're very much like a sas business about 80% of our revenues are reoccurring. we look like salesforce.com. >> and so we also asked him about sports gambling and other growth area. he said it's only a matter of time before it's going to be legalized across the country that we're not protecting anybody by keeping it illegal. he also said a lot of people think that the big media companies like turner and espn may have overpaid for nba rights he said they were able to block out apple and netflix. it is better to overpay and keep the big giants out than to let the giants win those rights. that's the conversation here going on at the mit sloan sports analytic conference. back to you. >> all right, thank you so much, eric chemi taking a check of the markets, we're green across the board. the question is here on this friday, will we see that fade as we have in the past couple of days in terms of movers that we're watching, i'm watching wing stop that stock is down by 8% reported a good quarter. it's a guidance that really is

torpedoing the stock right now we have the ceo coming up on "power lunch." we'll ask him about the quarter and what he seize ahend for wing trends out there >> all right when we come back, wired called in the france ferdinand of facebook, the human influence behind facebook's trending topics he'll join us on set next with more on the pressure the company is receiving to control the fake news problem first though, a check on where we do stand on the markets. p 0 aos17ging on to 126 s&50uplmt i know when i hand them the keys to their first car it's gonna be scary.

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good morning it is 8:00 a.m. at facebook headquarters it's 11:00 a.m. on wall street and "squawk alley" is live ♪ good friday morning. welcome to "squawk alley." i'm carl