♪ ♪ take a look ♪ at the kids on the street tha never miss a beat ♪ >> live from new york where business never sleeps, this is "squawk box. >> good morning, everybody welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along. let's take a look at the u.s. ek fit futures. after closing modestly higher with the dow up about 100 points just over 17, and the nasdaq up by 84. you are looking at green arrows once again today dow futures at this point are indicated up by just over 154 points nasdaq has indicated up by about 37 points. then the s&p has indicated up by 16.5 overnight in asia, you'll see that markets there for the most part ended higher. nikkei up by .8% hang seng was up by just over .1%. the shanghai composite was down by about a quarter percent all of this coming as trade talks continue we'll talk more about that in a little bit in the meantime, take a look at

what happened -- is happening right now in europe and some of the early trading that's taking place. biggest gainer is the cac in france it's up by 1.14% in germany the dax up .6%. the ftse up by .8% stocks higher in italy and spain. finally, take a look at treasury yields you'll notice at this point the ten-year looks like it is yielding 2.694%. pushing back towards that 2.7% as yields continue to pick up. president trump is going to be delivering a primetime address to the nation tonight. it's going to be aired live by the major broadcast networks the president expected to speak 9:00 p.m. eastern time about the importance of protecting the southern border as part of the big debate over the government shutdown democratic leaders are demanding equal air time following the president's address. in the meantime, in japan we're following a story this morning ousted nissan chairman cal yoes ghosn making his first and dramatic appearance since being arrested back in november.

he has been in prison now, i believe, for at least seven weeks. kiko fujita is live with more. good morning >> good morning to you as you rightly pointed out, since carlos ghosn's arrest, he has been re-arrested twice leading to now 50 days of detention so far this was the first time we have heard and seen him he was visibly thinner as he entered court with his hands cuffed, a rope around his waist. he was certainly defiant he gave a ten-minute point by point rebuttal inside that courtroom against the allegations that have been put against him. he says i have acted honorably, legally, and with knowledge and approvalof the appropriate executives inside the company, and he added that he had been wrongly accused and unfairly detained based on what he said were meritless and unsubstantiated accusations. this court took the hearing today, and it was one of ghosn's lawyers demanded saying the defendant had a right under the japanese constitution to hear why he had been held for so

long the tokyo district court judge saying they believed he was a flight risk and that he would tamper with evidence if released defense lawyers argue that he shouldn't be detained in the first place. especially on this most recent allegation of a breach of trust. the allegation that he used company funds to cover personal losses two specific cases they point to, this accusation that he used these foreign exchange swap contracts and forced nissan to take on that contract. now, today we heard from defense lawyers who said that this is something that wasdiscussed in a board meeting and the minutes proved to the fact that nissan, ghosn, as well as his bank, signed on to this. so long as ghosn would not pass on the losses to nissan. there's also this accusation of the money that he transferred or prosecutors say he transferred to a saudi businessman in the amount of $14.7 million. prosecutors allege that was to cover personal losses, but today carlos ghosn, as well as his lawyers saying that this was to

cover services that this businessman provided for nissan, including expending nissan's network within the kingdom as for what comes next, the current detention period ends this friday in january 11th. if prosecutors don't come forward and indict carlos ghosn, he could walk free today his lawyers said they do expect him -- expect the prosecutors to push forward with charges, which would keep carlos ghosn behind bars. he would have to push for bail questions about whether that would be granted, especially that he hasn't confessed to any of the wrong doing so far. if this goes to trial, it could be another six months, and let's keep in mind city very end waiting all of this is the violation of financial here in japan comes with a maximum sentence of ten years in prison. back to you. >> what was the body language reaction from the judges in the room do they say anything that gives you any indication of the way they're thinking >> there's no indication on that

front. the judge did just simply spell out the fact that they believed he was a flight risk he could tamper with evidence, and they believed that he would try to influence some of the witnesses that could be used in the case it's tough to get a sense of what the prosecutors believe their case would be. his lawyers today in their very first press conference since in a arrest back in november, making it very clear, they believe there are a lot of holes in the case against carlos ghosn. they a they have already applied for an end to that detention, but it's still questionable whether that will be granted given its detention period is up this friday, and prosecutors are expected to push forward with an indictment >> akiko, weave learned an awful lot about the japanese legal system through this case, and you've been watching things closely. we've heard that there is usually conviction rate flort of 99% in these cases people sign confessions oftentimes what happens in the cases where they don't sign confessions?

what kind of conviction rate, if there even is statistics that are kept on a situation like that >> what exactly happened in that case could be that he is kept behind bars indefinitely you point to the harsh criticism, the japanese criminal justice system has come under since carlos ghosn's arrest. this is an opaque system he has been questioned by prosecutors for about two and a half hours a day without his personal lawyer in the room, which was certainly not the case over in the u.s. as well there have been allegations here that carlos ghosn was forced to try and sign some kind of confession in japanese this is something his son, anthony raised in an interview with french media. his claurz clarified that saying that has not happened. what they did say is, you know, what life is like for carlos ghosn inside that detention center they said that he has been treated fairly, that he has been

very business-like in the meetings they have held with him every day. very foeked on the questions, the allegations at hand. he hasn't made a lot of complaints about terms of how he has been treated there it could certainly be a long hurdle for him when you consider just how the justice system runs here in japan. >> i know we were showing courtroom drawings of this my understanding was there was a debate yesterday about getting cameras potentially including cnbc cameras in the court. i haven't seen -- >> they didn't allow any they allowed four pool reporters to go in, including one cnbc reporter >> there was some debate around whether they were going to do cameras and whether we would get an image of him. you haven't seen one yet >> why would you want a camera to get images like we just saw the courtroom drawings >> did you see him he looks like -- i mean, i'm ready to -- >> the public wants to see what he looks like. >> we don't need a trial he is guilty you can see it

>> there were cameras outside. they were hoping to get shots that would either get him going in or coming out >> i like the drawings, where kevin spacey was in court yesterday, and they just, i mean -- i would not have been able to keep a serene expression because the camera had -- just got a close-up of him and just stayed on him for, like, 15 minutes. he tried to -- you know, it's hard to be in that position when you are going in or out of a courtroom. you never know what to do. mugshots just say you don't want to be laughing, but you don't want to look go ahead, and so you just have to have this -- he is an actor. he ought to be able to do it >> i never thought that through. >> yeah, okay. he just had this very serene sort of, who me? almost like at the end of psycho >> the one moment where he laughed because his lawyer was talking to him i did think that at the time is, wow, should you be seen laughing >> that lawyer is a big deal i kind of checked him out. he has been in a lot -- he was a prosecutor and, you know, anyway, trade talks between the

u.s. and china are wrapping up in beijing and nbc's janice mackey frayer joins us the top aide stopped by the meeting. did he just stick his head in? was he there no are five minutes? do you know, do we read anything into this that it's gotten higher than midlevel >> well, as far as ween, there is no word that has come out of these meetings two days of talks. working level involving that u.s. trade delegation with chinese fifls. not one word that would hint at constructive dialogue or even progress now, nobody was expecting a break tlooun in these talks. the fa account that they happened was seen as a success the best case scenario is that there would be some sign that chinese officials in the koong weeks will head to washington for another round of talks

the differences between the two sides are very deep and very fundamental. the u.s. is effectively looking to change chinese business practices, and there's the march 1st deadline that is looming in terms of reading into the situation, our best guide here is usually newspaper editorials. that give a sense of how the political leadership is thinking, and the editorials today were all effectively warning the u.s. against demanding too much from china, and then there was that other side show, which was a very strong message from china. kim jong un literally rolling into town on an armored train to have his fourth meeting with chinese president xi jing ping on his birthday, no less the timing of this is no coincidence. with the u.s. trade delegation here, this was perhaps a way for china to remind the united states that if it's looking eventually for any sort of nuclear deal or a road to negotiation with north korea,

that road is going to go through beijing. this seemed to counter point to those comments by president trump that the u.s. hell the advantage in these talks because chinese economy was slowing down it's true. growth is softening here this was definitely china trying to reclaim the upper hand and that if it is going to offer concessions in any sort of trade deal, those concessions are not going to come quickly or easily. >> thank you thanks to janice mackey frayer you know, we have ken spacey took a private jet he travels like you. up to nantucket, back to reagan, got in his beamer with his lawyer in his shotgun. he got pulled over for speeding. yesterday. got a warning, though. apparently didn't. we're following his every move, i guess, at this point apparently got a warning

>> they do a good job. the folks at jetblue zoo like them. >> do you have any evidence? a pictures of you sitting? >> we do have the one picture. by the way, now even the extra leg room part. i'm talking about the -- >> we have pictures -- >> the real part >> kid screaming on the many egga phone you are in one of the pods in the they knew he had arrived because there was only one private jet scheduled into nantucket yesterday. when it arrived and -- you don't want people knowing about your number a lot of times because they can trace it back -- >> what's a tail number? >> okay. plausible deniability.

we're not going to make 610 again. >> no. >> that was from the carlos ghosn stuff. we talked about that too sources telling cnbc that sears believes lampart's bid falls short and that the two parties have been unable to come to a resolution. without a fix, sears will liquidate. a decision is expected before the bell today we told you yesterday that analysts were forecasting a weak forth quarter for sam tongue sung the lex trorngs giants released estimates that were even worse than had been anticipated. the big headline is a 29% drop in quarterly profits because of weak chip demand samsung said that profit would remain subdued in the first quarter, but expects the market to improve in the second half of the year because of the release of new smartphones you can check that out, though samsung shares down by 1.6%. a big shortfall, and it has

people asking a lot of questions about what else you might see in technology another big miss from a south korean electronics company. lg said that its fourth quarter operating profit plummeted 830ers approximate from the same period a year ago. revenue probably fell 7% analysts blame thinner margins for high-end tvs and a smartphone business that continues to lose money, and that stock was off by 3.5% when we return, gene case is the chairman of the national geographic society she's an investor and an internet pioneer she's out with a new book about being fearless in your work and life she will join us next. right now, though, as we head to a break, take a look at the biggest premarket winners and losers in the dow. looks like boeing is leading the way. it's up to close to .9%.

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>> our next guest's new book says the path to success is usually lined with failure national geographic society chairman and acasa ceo she's also author of the new book "be fearless. let's start off talking about the book and the lessons in it. the idea of be fearless and that failures are kind of the way to success. how did you come up with this? >> well, i'll tell you, i have had the extraordinary opportunity of traveling around the world and around the nation, and what i see everywhere i go are people with really great

ideas about how they might make a difference in the world or just make the world a better place, whether they be companies or movements often, what stops people in theirtracks is a little bit of fear, and especially if they've encountered failure anywhere along life's path. based on research we did at the case foundation some number of years ago, we really debunked the myth that failure can stop you. we debunked the myth that it takes something really special you know, it's not a genius. it's not a wealthy person. it's not big budgets that often drive innovative new ideas i wrote the book really to encourage people everywhere to think about how they can push past failure and really embrace a way forward. >> is it fair to say that we have nothing to fear but fear itself >> i think it really is. what we say in the book up front is being fearless is not the lack of fear, but the ability to look it in the eye and keep moving >> let's talk a little about the about your own experience too. i have known you for a long time i didn't realize you had been at ge for so long beforehand where, what were you doing at ge? what were you working on >> my career started in the technology sector, and i

actually, first, worked for the first pure play on-line service which we would call an internet company today. then i was recruited by ge to come build an on-line service for them i was thinking big company, big budgets. great brand. what i discovered when i got there was that big brand was very much in a comfort zone. they had businesses that were just thriving, number one. number two in their markets. they really didn't have much of an appetite for taking the needed risks that were needed as the new market was emerging. i got a call from a start-up down the road that was to become aol, and i jumped. i never looked back, but at the time people who knew me thought i was crazy to leave what was really a good thing for what i believed would be a great thing. >> what made you do it >> well, it really was, i think, a set of goals in my own mind about what i wanted to see you know, aol really embraced the mission of democratizing ideas and communication. that mission was alive in the hallways i could tell this company was on to something, and probably would

have more success in finding, you know, markets in this new emerging field than a really big company would. >> let's talk about your role at national geographic too, because if i think about a place that's kind of a big brand that's been around for a long time, you know, people may think of it as being stayed i did not realize that photographs were a big issue for them to actually start doing photography. >> national geographic made a decision to put some photographs in the national geographic magazine and board members resigned saying, you know, that's a fad that's not serious science well, of course, fast forward the tape today you know, between photography and video, it's given us the

largest social media footprint in the world with our photographs and our videos you know, we did a business model innovation as well where we did a partnership with fox to bring forward the national geographic channel at a time when cable news was the new media disrupting everybody >> how much are the business of national geographic or revenue comes from tv -- >> about $100 million a year comes over to the national geographic society as a revenue share in the venture that we have with fox, and, of course, now that disney is acquiring fox, we are set to embrace disney as our now partner, and that's very exciting >> i'm so afraid i have fear. i wake up -- >> why >> i wake up, and i'm afraid i have fear. i have fear of age i have fear of, i don't know, future, millenials taking over i have fear. i'm afraid can i read -- will this help me? >> what i'll tell you, the surprising thing to me was i spent a lot of time on college campuses, and i'm used to kids kind of feeling daunted by their future >> that's me >> i just got a note this week from a top executive at a large

successful firm, and he said, you know, your book, i had gave him an early manuscript, and he said your book really made me think about why haven't i pushed myself more in things that i want to do, whether it be at work or in my personal life? i think it's a message we've found resonating with a lot of folks, and, again, we've been out there talking about these principles for some number of years now, and it was really the encouragement of people who are moved by them, motivated, basically, to take the next step that said you guys have to spread this word more broadly where. >> change is a good thing. >> change is a great thing >> by the time i feel -- right don't you ever wake up in the morning and go, oh, i'm afraid >> usually go, oh, it's monday >> don't you get afraid? i know you get afraid stiemsz. don't you? is it anxiety? maybe it's anxiety >> maybe it's anxiety is a better word. >> listen to that, joe no great things come from the comfort zone it's when you are uncomfortable that some of the greatest ideas --

>> i need to -- i just need to -- i need these five principles >> jean, thank you for joining us >> thank you for having me >> the book is called "be fearless." jean case, national geographic society chairman >> anxious okay when we come back, a lot more new investigative report on wework we want to tell you what's going on there one of the world's most valuable start-ups just got some new money, but there's a twist on all of it. we're ba wh atn st mentitth iju a [leaf blower]

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thursday i don't know if you have focused on this deal softbank now has total $10 billion in they were actually going to put even more money in, but saudi and some of the other big investors in softbank's vision fund basically said we're too concentrated in this company now. this is crazy. we have too much money in this one company. this is a real estate play it's not even a technology play. >> a real estate play that a lot of long-term real estate investors, like samhave trashed. >> have big debates. separately, so the $2 billion, though, in this particular instance, not coming from softbank's vision fund, coming from the softbank group which had ipo, as you know, just a couple of weeks ago in japan now there's very confusing sort of co-mingling of soft bank money and soft bank vision money and who is getting what and how it's all going, but it's very interesting to see what happens at wework, and i think this is almost a bigger story about the internal machinations. >> i hadn't realized that. when i saw the original headlines on this, i thought,

without, there's a lot more to dig into here. this is going to be something to watch. >> interesting story >> it is we're going live to london for a look at this morning's biggest stock movers overseas. right now as we head to break, here's a look at yesterday's s&p 5 50000. winners and losers we'll be back. w?w?uhi?só'ñó

welcome back you are watching "squawk box." among the stories front and center, ousted nissan chairman carlos ghosn making his first public appearance since his arrest kim jong un is visiting china today, and that marks the fourth summit now between kim and president xi, and it comes zbreefrmts there's a 29% drop in quarterly profit due to weak chip demand. company expects business to pick back up in the second half of the year as it hopes new smartphones get released in that

and improve their fortunes dow looks like it will open up higher 156 points nasdaq looking to open higher at 34 points higher in the s&p 500 up about 16 points check on the gloelk markets. let's get over to london juliana joins us right now with more on that juliana, good morning. >> good morning, becky so after a lackluster performance yesterday, which saw the stock 600 close marginally lower, today is shaping up to be a much stronger day. as can you see behind me, the stock 600 is now up just shy of 1% also, worth noting that the euro has retraced some of its gains it's now trading slightly weaker versus the dollar. now, looking through the regions, as you can see, france has the best performing region across europe this morning up 1.3%. those gains are being seen across the board in terms of what's driving markets here in europe today, the market continues to be dominated by u.s.-china trade

negotiations investors, if you are hopeful that beige and washington will eventually reach a resolution. we've also got brexit headlines coming back into the fold as we approach next week's parliamentary vote on theresa may's deal now, one corporate story i think is worth highlighting, you guys, have been talking about it all morning. renault. carlos ghosn speaking in his first public appearance since his arrest in november as you have just mentioned, he has said that he was wrongly accused, unfarley detained, and on the back of this we are seeing renault shares trade higher up about 1.7% as our cnbc tokyo reporter said earlier today on your show, this is a story that will continue to roll on. far from over. certainly one to keep an eye on renault. back to you, guys. >> juliana, thanks for more on the markets to continue along this vein, let's before i in jack, founding partner in cio of crescent wealth advisors, and jeff, chief investment strategyist at raymond james. you need to be honest with me, because last time you were on,

you were very bullish. when we saw those lows in the s&p and we retested what was already pretty scary, did you ever -- was your faith in your outlook ever shaken? did you wake up at 3:00 a.m. did the demons ever come, jeff were you scared? i'm talking fear, again, but we were down in the 23s on the s&p. did you ever think, holy crap, this is worse than i thought it was going to be? were you shae shaken at all >> no, not at all. in fact, we called the top on this show, actually, on october 4th. the decline went lower than we thought it would go. we were wrong when -- we were wrong when we thought the october 29th vote of 2600 was the low. admitted it in writing when you broke the low that 2603 october 29th low the three days of intense selling, you saw in mid december were about as bad as i have seen in 48 years in this business that wash-out low was followed

by two 90% up side days where 90% of the total volume came on the up side and 90% of the total points traded came on the up side joe, that's historically how lows are made. i think the lows are in. i think they were made in mid december >> yeah. i mean, think about that if you thought it was going to stop at 26, it went to 23 or whatever it went to, 2350, that was just wrong on -- to do that on christmas eve, i don't know who was selling, but that was just wrong for people to do that i'm still mad at -- yeah, the grinch the grinch was selling the snapbacks seem significant i don't know whether that means everything is in right now, but, you know, this year is starting off a little bit better. especially, you know, we've had another, what, a 700 point day, again, and really not -- i don't know whether it changed the earnings outlook, but, you know, a couple of comments from jane poul and a jobs report, and here

we are, and it feels better. doesn't it >> last year we came in to the new year everybody was way too bullish. we actually had a sell signal at the end of january of 2018 this year everybody has come in to january in our opinion way too bearish given the fact that it looks like we made a significant low in mid december. >> k on. jack, i -- we've talked about it i remember back during the election you weren't sure how things were going to work out. did you ever get really bullish before you got bearish >> i never got hugely bullish. >> you are more bullish now than you have been in a couple of years. >> yeah. i would say more bullish now of valuations here in the u.s you could argue are fair value maybe you have to squint a little bit pretty much close to fair value. international is down right cheap. emerging markets if you take price to sales and project it out three years, you are looking at a 9% annualized return for the next three years based on history

from that perspective, i think things are pretty good i agree with jeff. i mean, sent meant was near an all-time low going into this year, and sent meant was near an all-time high going into 2018. you know, if in a market where it's an intersection of reality and expectations, it's great to have very low expectations i learned that in high school. >> what about your grades? >> prepared your -- >> dating life. i'm glg to shift from u.s. large caps into emerging markets

emerging has been cheap for the last three years the relative strength is pretty powerful for the last couple of months it didn't share that october down trend if we can just get a little more relative strength in the international space, and also, this year if the fed is really back pedaling, which i expect that they will, that's -- that's certainly not bullish for the dollar you get a double whammy of the valuation plus the currency. emerging could set up and an international could set up to do reasonably well this year. >> jeff, most of what we talked about with you souned like a lot of technical analysis. fundamentally, are earnings going to, you know -- they're going to be just average based on the tough comps that they have from last year, or will they outperform where people are? i think we were at 8% s&p

growth, and then we got down to where some people said we're at zero or below, but now we say it hinges on trade talks, hinges on the fed. do you think it's going to be an okay year for corporate america? >> i do. i was reading a report from a firm last night that had $1 73 in earnings estimates for this year it suggests over 3,000 on the s&p 500, and they had 185 earnings estimates for 2020. if those estimates are anywhere near the mark, stocks are not that expensive, and they're not going to go down very much barring black swan type of event. >> yeah. >> which, you know, the black swan is just lurking i always -- i know he is there he or she is there somewhere. anyway, how you about? you think fundamentally -- >> i'm -- i wonder if maybe

we're going to see that shift to value. if you think about how this is really similar to the tech bubble in many respects, greenspan read -- was reading back in 1999 remember, he start flapping his arms with the exuberance and didn't raise rates because he was reading on y2k, and he didn't think the lights were going to come on he kept -- we kept liquidity in all the banks and perpetuated a tech bubble, and that was a large cap growth. >> i think people -- >> history never repeats

it rhymes. because all the tech companies this time had natural underpinnings of fundamentals, and actually we're making money and, you know, there are some of the valuations that weren't even excessive, but whenever you have five stocks or six stocks that are in the moment and everybody loves them, and they get over $1 trillion in value, it doesn't matter if they have fundamentals it's still similar to 99, even though -- >> the ratio was -- if anyone mentions the peg ratio, then i know we're overdone. >> you can be in a bubble territory even with earnings >> certainly overdone yeah, absolutely >> i think we just got too in love with the fang stocks or something. there's a lot to love there. obviously. you know, old -- jeff, you are a brave man. we're talking fear that's the theme today anxiety, fear. you held up well even in the middle of the night. thank you. >> all right, jeff

you found -- how long you been there? >> i ayear ago over $4 billion. >> no way. >> yeah. >> you have made that? >> haven't made it we brought in assets under management i'm not ready for the 400 list yet, though. when we come back this morning, wheat get a new read on the health of small business in america. then several new warnings this week about the harmful effects of marijuana use we will talk to the author of the new book about the impact of cannabis on long-term mental health and former congressman ron paul has been telling us for years that he wants to end the fed dr. paul will tell us why he thinks it's time to let the free markets dictate interest rates stay tuned you are watching "squawk box" right here on cnbc anything but typical. that's why we designed capital one cafes. you can get savings and checking accounts with

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monthly read on small business sentiment. kate roger has more on all of that it's great to see you. >> hi, becky good morning optimism taking a very minor dip this month .4 points to 104.4 this is the fourth monthly decline in a row after hitting a new all-time high back in august this month's read, though, still well above the index's historical average of 98 this wall behind me is a look at how optimism has been tracking over the past year now, this month the biggest declines were in those who expect the economy to improve. those who believe now is a good time to expand and plans to make capital outlays. gains, though, were seen in plans to increase inventories, current job openings, and current inventories. labor quality, as we say, every month, it's in the number one spot yet again it's responded to the single biggest issue since record highs at 23% government regulations in red tape have edged ahead of taxes this month as this second and third biggest issues a reported 39% of small business owners said that they have job

openings right now that they can't fill 60% of owners reported that they were highing or trying to higher, but 90% said that there were few or no qualified applicants for those open positions. to hang on to workers in the tight labor market, main street is reporting wage increases with 35% saying they've increased compensation and 24% planning to do so in the next few months back to you. >> kate, thank you very much it's gra et to he so you kate rogers. >> okay. coming up, when we return, a more states look to legalize marijuana, new warnings are popping up about the long-term effects on mental health there's a debate about it. we're going to talk on to the author of a new book "tell your children, the truth about marijuana, mental illness, and violat violence." back with that in just a minute. as we head to a break, a quick check on what's happening in european markets right now we have green arrows across the board. we are back in a in a moment

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welcome back to "squawk box" this morning a new book out about the dangers of cannabis. it's titled "tell your children the truth about mann: the mental illness and violence." it's a controversial topic you've gotten heat on all sides of this. but effectively you're saying marijuana does not have the benefits that the -- not only does not have the benefits but is actually much more dangerous than anybody thinks. >> i bothered to read a report that came out two years ago from the national academy of medicine that nobody has bothered to

read the nam did a five-page report that said nearly all the benefits are unproven or don't exist and there's a true link to schizophrenia and psychosis, which are terrible diseases. >> we have more and more states legalizing it, companying on the stockmarket. >> good luck with that. >> why do you say that >> because the first time there's a case of a -- a really bad case of -- there are really bad cases of psychosis linked to marijuana all the time the first time a nurse throws a kid off the roof -- >> the pro-marijuana people are going to think you're madness. >> reason i wrote the book is because my wife who is a forensic psychiatrist said she's

known so many who years for years that had become schizophrenic and psychotic. i didn't believe her. >> you make some good points in the book too. i wouldn't have equated it with that. >> it's coffee, it's good for you, that's how it's sold. >> it's culturally because of high times, cheech and chong. >> right absolutely that's fine. it's a drug, okay? it's an intoxicant. >> so is alcohol. >> alcohol causes violence frankly there should be higher taxes. if it's going to be legally

sold, i can promise you the companies are going to have to put more warning labels on it. >> you were one of those people who thought this was fine before you did the research too. >> that's right. i was sort of a libertarian on drugs. people should make their own mistakes andrew was right, and i was wrong. >> wait a second. >> i know, i know. >> about what? what was he saying >> he's saying the risks are more serious than people realize. i don't think they should put people in jail for using it. we're not going to put 40 million people in jail but should we have a big advertising-style campaign, this is real. >> here's the issue. there's a lot of money on the line and people behind pushing the legalization of cannabis. >> yes. >> how many people or how much money is on the other side of this debate? >> very, very little there's a small group called smart approaches to marijuana.

the thing with drug abuse, they're worried about opioids because opioids are killing so many people. >> i'll tell you what you need to make clear. it's the first thing i asked you. what's the incidence versus placebo. i went to boulder, so i never had a psychotic episode. not everyone is going to identify with a psychotic incident because they're going to say i smoked pot for a long time and nothing happened. what's the incidence. >> if you start using in your teens, you have about a 3x. >> three times the low new bumb? >> yes not that i'm going to become mentally ill all of the people who wind up in the e.r. from smoking are basically psychotic. >> how much of this is age-related? okay, you can't use it until you're 25 or 30, do you --

>> do you think that's going to work >> i don't but i'm looking at the industry. most of it is under 25 years old. >> you start when you're 15, you stop when you're 30. >> that's right. if you haven't stopped by the time you're 30, you probably have a real problem if you're using frequently, with the drug. >> in the old days. >> alex berenson go out and get the book. it's called "go out and tell your children. it's alesson to tell your children about the risks involved. >> there's two sides to it, but it's one that needs to be read. >> i agree. >> it's a dwindling minority. >> i did bright twrite the book parents can talk to their kids. coming up, stocks on the move ahead of the opening bell u.s. equity futures trading session highs. we're going to talk market

strategy and later former congressman ron paul has been a critic of the fed for years. y is the time to end the fed. we'll be back. rebekkah: opioids has taken everything and everyone i've ever loved away from me. everything. i blew my ankle out and i got prescribed pain pills by my doctor. if making my detox public is gonna help somebody i'm all for it. i just wish i would've had a warning.

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china trade talks continue markets remaining optimistic deals can get done as the world's two largest economies negotiate. the latest on what the deal can mean for your money. it's right ahead.

it's lights out for sears unless eddie lambert can sweeten the deal 50,000 jobs on the line. we have the details ahead. larry ellison's bet, why he's pouring money into tesla as the second hour of "squawk box" begins right now good morning welcome back to "squawk box" right here on cnbc we're live at the live site. take a look at the futures at this hour. dow is opening higher, close to 200 points higher. s&p looking higher, over 1200 points and nasdaq over 51 points

higher. president trump will speak to the nation tonight about the partial shutdown that decision from the network has not been announced yet the president will visit the u.s./mexico border on thursday. ousted nissan chairman ghosn appeared in court. he's been charged with underreporting his income and shifting investment losses worth about $17 million to nissan. and the nfib taking a very minor dip this month 0.4 to 104.4 this is the fourth monthly decline in a row after an all time high in august. a record 39% of small business owners said that they have job opening that they can't fill

right now. 60% say they were hiring or trying to hire but 19% said there were few or no qualified applicants for those positions. samsunging had worse than expected quarter they site lackluster demand in the memory chips business an competition in the smartphone business and one more jaffray is downgrading jpmorgan. jpmorgan reports quarterly results -- oh, my god, next week it's the beginning of earnings season it's time for that honestly no, i'm looking forward to it. we're now up over 200 on the dow. kind of interesting to watch the reason it's kind of interesting to watch is that i

don't know whether you can really feel a difference when you're opening down for six weeks but you had maybe a little bit of the fears of a recession, maybe a pushback because of the jobs number. maybe a little bit of the fears over the comment now maybe things are seeping out from this trade talk in china. that's like the third stool of the bearish case -- not third stool. third leg of the stool of the bearish case let's speak with our guest host from jeffries for the hour we'll be with you in just a second let me start withu urio.

there was an unmistakable tone. >> there's a difference in tone. you said three things. the feds who were tapping the brakes a tiny bit, no movement on china, and we believe there was a slowdown,. the thing they want is the fed to be cautious apple and samsung, we were willing to forgive that. i know that samsung's problem wasn't really involved with that as much as apple's was if we come out of this and there's no headway being made, all of a sudden, those stories become serious i think the stockmarket -- the s&p wanted to go back up to the 2600 level that's very, very important, but beyond, that we need something really meaty, and that's going to be tangible, at least some

things the market believes they don't have to be real. >> right the headline is a little bit disturbing today it's like we want to make sure that they follow through on the agreement. it's like wait a second. an agreement would be great, but no one really things that we're going to be able to enforce anything. >> i don't yeah it has to be believable. >> what? you're not verifying this is happening? that will never work. >> exactly. >> we need to accept something that sounds good at this point. >> amen, no doubt. >> it would be good if there was some way to guarantee that any concessions that are made are actually tangible. that would be good because you might actually see some positive results from that, right. >> good luck with that yeah. >> yes cynic. all right. what do you thing, john? what are you looking for to get more positive? >> well, i also agree that the relationship with china's going to be a longer term unwinding.

it's gong to be a decoupling, and to actually expect much from xi jinping is very unlikely. at the end of december there were no high yield bonds and the capital markets with closed. that's almost always a sign you're having problems with the real economy when you can't refinance. that's always going to be an issue. hopefully the recent bounce and change in the sense of it is going to a loullow companies to reopen. >> what if they revise the last one 100,000? what got us thinking about a

slowdown and does that one number take us completely off the table? >> i think what happened, we had this risk evaporation in the company and the money that would go into the areas of the market just literally evaporated. this sort of shatter financial system that the u.s. economy has had have been big drivers for the economy. >> not to mention we've heard from some of these companies, samsung and others, apple, just talking about profits, revenue that never showed up. >> the other thing is the wealth effects as well. you've had tangible drops in share prices and you've seen house prices rolling over, australia and other economies as well. it's not essentially what's been happening on profits but the wealth effects that have rolled over in the last quarter. >> quick question. we talked about the wealth effects, but we did hear the fed saying that asset prices were important to them. was that a seminal moment in fed

policy, do you think, johsean >> i think it might have been. you don't want to have your bank sheets with npls or have partners do write-downs particularly if there's leverage yes, i think there's a seminal change, but ultimately for the real economy is refinancing starts to come through again through the capital markets. what will happen in post-2015 when we had a similar correction is the first quarter of 2015, lackluster data. the capital markets took a long time to reopen, and you had about two quarters of very, very weak growth in the u.s. as well as globally as well. >> tim, you don't think the fed really knew in all the rounds that they were antarcticas assets in asset markets while they were doing that

you're allowed to do it when you're faced with like a negative outcome like -- you're allowed to do it then, to juice asset prices for the wealth effect, but suddenly they don't realize they need to watch it the other way? i think they know it >> there's no question about it. i would underscore that. i believe it was in august of 2015 where the fed had talked about tightening the s&p dropped 8% or 9% in two days i believe james bollard came out and said the case for tightening ha has changed. from there on out, i know the fed cares. obviously there's wealth and extra things like that they don't want to be the ones in charge. >> they're both looking smart. they're both looking good. and when they came out with what they were saying, you know, people said, what are you? like our last segment, what are

you smoking? >> i think at the end of the day, they don't want to be at the helm when things fall apart. everyone has ptsd from what they saw in 2000 and 2008 every time the stockmarket starts to climb, those scars become more visible and even starts to get freaked out. >> i think the other thing is where financials trade that really was much a signal when we have the t-bills rising at the end of last quarter and the financials plunging that actually the credit markets were going to start to seize up so it's not just the general market. >> we have seen bond yields bounce back rapidly over the last few trading sessions. >> remember, it was coming down 20 basis points a game. >> you're not helping, s.d.

>> that's been a reflection of the market in the last quarter you've had a big move in the yield curve, which has been the worst thing. >> did you listen to the jpmorgan call? >> no, i didn't. >> can you call the guy to change his mind? >> this is not just a u.s. effect it's actually a global one everyone follows the u.s. yield curve. you can see it in japan where the jgb euros were going down to zero unfortunately the fed sets the policy for everybody now and that's ultimately their responsibility as well. >> all right, ur yeo, thank you. it's been a long time. >> it has. >> do you get that coat dry cleaned? >> when i retire, i'm going to send you this coat.

>> it's like a costume. >> it's hot on the floor i put it on before i came here remember when you traded in the pit, you wanted to have a wild colored jacket so everybody could see you. his cow colored jacket had a purpose. >> i don't know why that two-toned lapel look never caught on. actually i know why. it looks like crap. >> it's going to give it a couple of weeks. >> okay. meantime sears planning to announce its decision on eddie lampe lampert's big save we were talking about the sears tower, of course, the largest building in the world out of chicago. courtney. >> reporter: yeah, it's pretty iconic, andrew good morning

about 125 years give or take since its founding looks like eddie lampert's $4.4 billion bid will not be enough to save the once dominant department store sources with the matter tells cnbc.com that sears had given eddie lampert's hedge fund until this morning to sweeten its bid before filing for liquidation. as of late monday night it was not sufficient esl declining to comment. when they fooled for bankruptcy, eddie stepped down he owns 31%. his hedge fund owns 19%. he and his fund are both the largest equity and debt holders for sears holding. before the bankruptcy filing, lampert had proposed a plan to restructure to avoid it but that came only years after

complicated financial plans that lampert and his hedge fund took to keep things going sears hasn't made money in several years. shoppers have complained of empty shelves and racks for some time kmarts, too, for some time at its sales peak in 2007, sears was raking in more than $57 billion. last january, they pulled in about $17 billion in revenue but when they filed for bankruptcy, they had liebltds or money than $11 billion and assets of just over 11 it's going to be a sad day. >> the great ironry that amazon became the most valuable company in the world on the same day that sears -- >> reporter: you know what else

is ironic? sears was one of the most well positioned companies to actually fight amazon think about the catalog like you guys were talking about. it had an infracenter uk tur to sell directly to consumer to shift the catalog online, all of those facilities, and they just didn't take the opportunity to do so. >> jeff bezos is always telling his employees about potential for failure and we're always looking around going, maybe he's overstating it maybe you want to take a picture of these articles today. >> doug mcmillon carries around the list of resalers sears has been at the top of the list but not for a long time. when we come back, wheel talk about the government shutdown find out why former congressman ron paul says we're on the brink of a recession. but up next, oracle's rrlay

ellison, he's betting big on tesla. we'll have more in just a moment whelp "squawk" returns i consulted with your grandmother's doctor. we can do the screening at her house. hi. this is the man that's going to check your eyes grandma. cognizant ai solutions are helping healthcare companies advance diagnostics and prevent blindness in patients with diabetes. everything looks good. you have beautiful eyes. ♪

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this morning, and so far we have green arrows across the board. down futures up by almost two points the dow ended up close to 100 points yesterday. >> and larry ellison is disclosing a steak in tesla. the oracle founder and long time friend of elon musk joined the electric car's board in december to show regulators the board is providing effective oversight. we can talk about that in just a second ellison, 74, the world's ninth richest man. worth noting, the s.e.c. basically said put two independent board members on your board in part to provide oversight. larry ellison is a long-time friend of elon musk.

>> right. >> but you could say he's independent from the fact that he owns a billion dollar in tesla, so maybe his interests are not always going to align with elon's. >> for a long time james murdoch who's also on the board was not considered an independent director because he was considered a friend of elon musk. >> does he own a big share >> some shares to me it's less in this case about the money. larger question -- look. >> because a billion dollars doesn't matter >> no. he's putting his money where his mouth is i suggest that if you get your best friend to be on your board, to then say this is an independent board member to provide oversight is a bit of a stretch. >> a billion dollars is a lot of money, even to him, but it's like a bitcoin >> the other thing worth noting about larry ellison, and i wonder how he's done it,

typically he's one of the more cash-poor people in the world. >> because he has a boat worth a billion. >> the real question, has he taken loans against oracle stock to buy tesla stock, which is very possible. >> how much was his yacht? $600 million, right? >> excuse me. >> he had a yacht. it was more than half a billion dollars. >> his story is, "i wrote the bigger check." no one on the planet could do that >> he gets everybody to invest in everybody's business. it's not too unusual that was a big problem in china when things started to inwind. huge market course yeah, i think it's more elements of investing in each other's

business. >> when we come back, a lot more to talk about. lighting up the las vegas strip with electric cars julia boorstin is there and has a preview of what's coming up this morning julia. >> reporter: well, andrew, this car certain just electric. autonomous it's entirely self-driving we're now driving down the las vegas strip, and there's no one at the wheel we'll tell you about everything going onere hat ces coming up after the break. after months of wearing only a tiger costume, we're finally going on the trip i've been promising. because with expedia, i saved when i added a hotel to our flight. ♪ so even when she outgrows her costume, we'll never outgrow the memory of our adventure together. unlock savings when you add select hotels to your existing trip. only when you book with expedia.

welcome back to "squawk box. the ces show kicking off in las vegas. julia boorstin is joining us from the strip good morning. >> good morning, andrew. right now i'm in an autonomous vehicle. we're moving now and driving down the las vegas strip this is a mercedes-benz ergonomic car. there's not even a steering wheel. it's self-driving powered by artificial intelligence. this is debuting here in the u.s. at ces this week.

as you can see, there's a clear roof, this amazing display here that keeps on changing, kind of looks like a tucker to show different landmarks on the strip. it can be programmed to show where people can get off if this is used as a people mover. now, it does hold up to 12 people, but it can also be reconfiguring to transport cargo around now, this year self driving vehicles are going to have their biggest presence ever at the consumer electronics show as the futures of years past come far closer to reality. part of that is because of the growth of the capabilities of artificial intelligence, but we're also seeing the importance of the nationwide rollout of 5g next year. that's connectivity about ten times faster than broadband underlies the platforms that connect to each other as well as

to their surroundings. that enables them to be warned about things that their lasers and cameras might not find themselves starting next year, it's fitting all of its u.s. models, not just the autonomous vehicles with what's called cellular vehicle to technology. that's built on top of 5g. now, we also saw these bmw riderless motorcycles here on display at ces now, this bike is not designed to go on roads, but it is looking to gather data on how to make motorcycles safer 5g is also enabling the next in-vehicle entertainment they teemed up with disney to show how they'll bring games to drivers. the legal framework still has to be worked out. it will be a while before we see

these cars nationwide, but you can be it that the tech companies, the automakers, as well as the telecos are all getting ready to hit the road. >> how fast are you going right now? >> i don't see a sbeeatbelt. so you're not going very fast. >> it's not going very fast. no seatbelts they told me they can go as fast as 60 miles an hour. >> is there someone with a joystick. >> there's no joystick i mean i'm in this vehicle alone with my producer and cameraman there's no one from mercedes-benz in this vehicle right now. self driving it has a little path up and down the strip. i have to say the stop is a little jerky but other than that, it's pretty smooth it's very weird. pretty impressive. i keep looking for a steering wheel, but there's nothing there. >> what do you think

five miles an hour ten? >> yeah, probably five or ten miles an hour. >> okay. >> i think it's up to 60 they're playing it safe. they don't want any reporters to face plant. >> thank you, julia. nice to see you. >> i'm thinking aboutmy kids in coming years. >> when i was a little kid i had a car with a joystick and an antenna. i'm secretly hoping that for julia's sake there's someone sitting in a corner doing this. >> okay. coming up, former congressman ron paul and his message to the fed he says we're on the brink of a recession. we're going to find out why. as we head to break, take a look at u.s. equity futures we'll be right back. hey... saved you a seat.

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welcome back to "squawk box. here are the stories this morning. president trump will address the nation at 9:00 p.m. eastern time to discuss the standoff over his proposed border wall that has

shut down large chunks of the government the nfib small business optimism index taking a very minor dip this month of 0.4 to 104.4. this is the fourth monthly decline in a row after hitting a new all-time high in august. nd a check out the futures right now. markets remaining optimistic that u.s./china trade talks are going well we'll have a lot more on your investments in just a minute. paint and coatings company benjamin moore has a new ceo dan calkins will be the new ceo effective immediately. calkins succeeds mike ciros who is retiring. when we come back, we'll have your morning movers, names

that can bring big returns in 2019 we'll be joined with picks from your portfolio right now as we head to a break, take a look at the premarket movers walt disney leading the way. goldman sachs just behind it up 1.1% home depot with a similar gain too. "squk x"ilbeig bk.awbo wl rhtac

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time for a look at what's moving this morning. dom chu. you did this this morning yesterday. hopefully you have a different list. >> yes, sir, i have a different list. >> some may be the same. they get, you know, a couple of days in a row, they start moving who knows stho that's right. because there are themes we're watching for what's happening. some of those themes could be playing out in markets let's start, though, with south korean trading it will be one of the big corporate stories this morning with samsung in essence tells investoring that its q4 will be below expectations you can see samsung off by 1 2/3 percent after its announcement

how is that playing out with chip makers in the united states as you can see, micron, a big memory chip maker is up. advance mike crow devices and nvidia two names that are not memory chips but indicative of the semiconductor stockmarket. those stocks are up as well. one of the things to keep an eye on is whether one of these chip stocks will maintain momentum. as we take a look at the s&p 500 versus the chip stocks, remember, the chip stocks in orange had been perhaps a leading indicator toward the second half of last year, and those chip stocks have -- you can see here at the right-hand side, bounced about 8% or 9% as a whole from the lows we saw on december 24th. so is the semiconductor trade a key to the overall market, becky? that's something they'll keep a close eye on back over to you. >> all right, dom. thang you very much. our next guest says index returns will be low for the next

ten years, but he says he's downright giddy of stock picks himself. cole smead is with capital management he joins us from seattle he runs the smaed vead value fud cole, i was thinking about your picks. i'm thinking you might be looking for markets, values, stocks trading down. your first pick is a stock that's actually up about 21% over the last year, and that's discovery. why don't you talk about why you like it. >> yeah. well, discovery was a stock that did get trounced coming off their scripps deal coming off of 2017 it did get bead up a lot that was netflix taking over the entertainment and content world and then being a buyer of hgtv and the food network and travel channel. those were all big contentious fears.

john malone on your program and david spoke several times about what the price was and was a buy ore f that stock and you wake up, and like you said, it went from 23 to 30 and came back, but it's still up nicely relative to where it was, you know, a little over 15 months ago it's -- when i say ten years, becky, think about it like this. buffett closed his partnership in 1969 because of the terrible circumstances he saw forward it wasn't until three years later we hit the nifty 50. you looked at it ten years forward. consumer confidence was high just like now as well as households own a lot of stocks and those are very analogous circumstances. taking a risk with discovery with john malone as a shareholder, great content every man, woman, and child is addicted to watching beautiful houses

it's cheap content that looks attractive in the next ten years. >> you also like american skples wh what makes you like american express? >> we got involved after the costco disagreement. from 1968 to today, we grew the number of baby boomers or over 55-year-olds in society. we're roughly peeking that now they were making a lot of money and saving a lot of money because they're preparing for retirement the problem is that wasn't good for economic growth because the savers weren't benefiting society. the three largest co-harts over the next five years are going to be 25-29, 34-39. they have needs, they're spending it like drunken sailors on leave because their kids are so darn cute and fun and that's part of life that's what's going to go on

that's a great thing for the economy. but particularly think about it like this your american express, if more activity's going on, you're collecting more as an example. >> cole, there have been plenty of businesses that have been disrupted by amazon as it moves into more and more different lines of businesses. walgreens is one of those businesses where people think, okay, what happens if amazon actually gets into pharmaceuticals. you're not concerned you like walgreens as one of your top interests. >> very interestingly, they own amerisourcebergen. so this idea that amazon is so autonomous and they think, no, they're very much tied into the integrated business which is pharmaceuticals and regulatory a

ones laid out. why did buffett walk away in 1969 it was price he instead chose to own one stock. if there's any prescription for today with names like discovery or american express or walgreens, its is concentration just like buffett going to only berkshire in '69. >> cole, i want to thank you very much for your time today. cole smead at smead capital management. >> thank you. coming up when we return, the president is set to address the nation tonight about the government's shutdown and the wall we're going to speak theformer congressman and anti-fed crusader ron paul. we'll talk trade and the fed at the top of the hour, bob doll is going to join us thwi his ten predictions for the new year "squawk" returns in just a moment i am a family man.

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like magic. at comcast, it's my job to develop, apps and tools that simplify your experience. my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. welcome back, everybody. the markets have moved from one and done to one and cut. steve liesman is joining us. >> i'm working on that it's not as good as none and done we have to work on that. it's a long way out and subject to change in volatility, but the next move now in forecast by the

fed funds futures market is for a rate cut in 2020 with the fed being on hold until then, warning that my friend rick santelli doesn't like looking this far out with his futures market nevertheles market nevertheless, this is what it shows. going down this morning to 228 everybody's shaking their head like they knew it was coming here's a question. d j did jeremy powell overdo it? do they have to reprice it let's go down to fed really reserve memory lane. our survey saw fewer than three and the fed delivered just one so but that's different, right, from cutting at least that's delivering fewer hikes in 2017 both the market and fed were on the same page.

2018, the fed was more hawk, delivering one more hike than forecast by either the fed or the market this brings us to 2019 where you can see it says 0.1. that's so i could get a yellow bar. it's really 0. i think the fed will come down at the next forecast it was written this morning the burden of proof has now shifted. the data has to prove why the hike is needed, not why it should happen fiscal issues like trade and the shutdown will help determine all of that. still the data is a long way, in my opinion, from suggesting that a cut is needed. >> ron paul thinks there ee going to be going to be a recession. he's been a bear on the debt thing. >> hang tight. >> he's here. >> he's going to be here we've got a 1k07d.

so rick santelli doesn't want to go out to 2020 you tell me that the sea level rises in 2100. >> right i think the forecasts -- >> models, they work so good but rick doesn't want to go to 2020. >> rick has trouble, i think -- >> do you watch accuweather? they're wrong about tomorrow half the time. >> do wu oe own accuweather? >> no. we own weather channel. >> we don't have weather channel anymore. >> we're nothing. >> i bm? >> i bm bought the weather channel for the data piece of it, and byron allen, if you remember, bought the actual channel. >> that's right. i just went out 14 days to see what it's going to be like in davos. >> what did they say >> there's likely to be some snow. >> really. breaking news. >> there's an old story.

>> it's chaos theory. >> a man was moved into the long-range planning period in world war ii he was the uncle of larry summers. he moved there they couldn't forecast long range at all and he was a patriot and wanted to go back to the short-term planning unit he petitioned the high command and said let me go back to do some good. the high command is aware that the long-range planning forecasts are useless, however, we still require them for planning purposes. >> i get it. >> which is true, right? you may not be able to forecast what's going to happen, but people still want to know what you think is going to happen because you need to know that quote, by the way, is from peter bernstein's book "against the gods: a remarkable story of risk." >> the managing editor says instead of cut, cut and run. >> is that nick best

>> yeah. >> that's good. >> we have former congressman ron paul who says we're on the cusp of another recession. joining us is former congressman dr. ron paul he's the author of "end the fed. good morning to you. i don't know if you've had the opportunity to hear what the fed may or may not do next, but your expectation is the fed is going to create a recession, but i can't figure out whether you want them to hike them or not. >> well, you know, that becomes secondary because i think what you think about is that we know the recession is coming because of what the fed has done over the past ten years especially. it's the monetary inflation that sets the standard. and then once that's been done, you can't stop the recession you can manipulate it and change it and delay it and make it last longer, but it's there and it's starting to show signs of it and it will come, but, you know, the

fed is between a rock and a hard place. you know, they talk about reducing the balance sheet and they start to do it and they do it for a couple of months and the markets get hysterical you can't do that. >> if i gave you j. powell's job, what would you do >> i'd resign because that would imply that i know what the interest rate should be. i want free market interest rate you could, now being a little more serious, what you could do is have a policy where the fomc cannot monetize government debt because that's where the culprit is you know, just recently with the new congress, they say we're not even going to vote on the deficit anymore. the fed will take care of the deficit. they'll buy it let's not confuse things by voting on increasing the deficit. >> how much do you think the recession is a function of the fed and what's happened over the last ten years and what may be

happening right now in terms of raising those rates versus the larger potential economic issues globally, potentially trade war tariffs with china >> okay. 100% of the cause is the infracenter uk tur interest rates, keeping the markets too low. now, these other things that you mention are very important one is the cause and one is -- brings it about. but the real cause is the inflation and the artificial interest rates but all these other things are just excuses oh, paul said th-- powell said . a trillion dollars in funding. those are excuses. they're looking for excuses because they do not want you to think, oh, this is the fed's fault. everything is done to try to distract from the federal reserve. they talk about inflation incessantly. one of the things that annoys me the most is we have no inflation, so we're okay

what is $4 trillion of a balance sheet? that's inflation oh, no, we want 2% of the cpi which is always rigged as long as it's under 2%, everything is okay. >> congressman, i just have a question there was a decision made in this country about 80 years ago, 100 years ago that a central bank was a better way to live to avoid financial panics and what you needed was a central bank to regulate among other things a money supply that was a decision made and agreed to all around the world and i get that it's problematic and hasn't been perfect, but what is the better way if you're gong to have a unified currency, you could go back to the 1th century where all the banks were issuing their own currencies and all the states were issues their own currencies, but if you're going to have a unified currency, don't you have to have a unified authority to oversee that currency >> no. yu need the authority of

freedom. it's always picked the precious metals that governments can't manipulate and that's a problem. >> but governments manipulated that currency, mr. paul. >> i know. >> that's where the word debatesman comes from, right >> but the government's actually worse because they manipulate in favor of special interests, you know, for the deficit. it's a big government. they use it to bail out big banks and all the things they do. >> ron -- congressman, before we let you go, i want to get your thoughts on the government shutdown and the wall. we're going to be hearing from the president tonight at 9:00 p.m. where you do substantial and land on this issue >> well, the shutdown is it's not too significant in the scheme of things, but it's another thing that can stir up trouble and people react to it but, no, i think they're completely wrong i don't like walls i'm a libertarian.

i don't want to wall people in and wall people out. i don't want free borders either i think you have to remove the incentives for people to come. they come because there's welfare, easy citizenship, it's politicized. one side wants them because they think they should be able to get the votes. people should be able to come and work, but you have to get rid of incentives. no easy road to citizen ship i'm an o. bmt doctor close to the border people would pop in and have a baby and the next day they would go to the courthouse and sign up for the welfare program. that's not at the way. if they remove that and the easy road to sit extendship and expose the people pushing this because they're looking for more voters, and you don't need a wall. >> do you and rand differ just in terms of -- he's been an outlier, refreshing outlier on all of this stuff. are you in 90% agreement

50% agreement sunny i'm just wondering. we don't talk enough with you anymore. where are you? are you guys pretty close on a lot of these things. >> yeah, we compare notes every single day no, i'm being facetious. he's being his own person. we don't do comparison lists the media likes to do it it was always annoying to me if i had one single thing i disagreed with him on when he was campaigning, it was a big deal i think we like to be our own person and define things and discuss things in a way of talking about the philosophy of government and talking about liberty and talking about the free market, talking about money and getting rid of powell and the special interest to us, i think we would have strong agreement that the federal reserve is way too powerful they're the epitome of what central planning is all about and we don't like central economic planning. >> dr. ron paul, former u.s. congressman. thank you for the conversation

we should also mention while we were just speaking there's a headline that's now officially crossed. sears has asked a u.s. bankruptcy judge to liquidate. a great ironic day amazon the highest in the stockmarket of any company and sears liquidating. we'll talk about that in a little bit. >> we want to thank sean darby for being with us from jeffer jefferees. coming up, bob doll coming up. i couldimagine he's cautiously optimistic and likes health care futures up now 186 we'll be right back. and it really shows. with all that usaa offers why go with anybody else? we know their rates are good, we know that they're always going to take care of us. it was an instant savings and i should have changed a long time ago. it was funny because when we would call another insurance company, hey would say "oh we can't beat usaa" we're the webber family. we're the tenney's we're the hayles, and we're usaa members for life.

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market optimism after a stomach-churning december. suddenly the dow and s&p is poszive fposz i positive past five days. a glimpse of carlos ghosn held by japanese authorities since november, the ousted nissan chairman appears in court. we're going to bring you a live report on his defense. and it's do or die for sears. the all-american retailer gets

its fate this morning. the final hour of "squawk box" begins right now ♪ good morning and welcome back to "squawk box. i that's a circuitous way of saying it. they had been up 200 it's already four out of five days where we've had some positive action, and this would be, i guess, five out of six if this holds up. the nasdaq up 38 the s&p up 15 or so. and -- almost 16 and the treasury market back below now on the ten-year. back below 270

creeping up a little bit, as has oil been a little bit positive recently. >> yesterday, the highest level for oil in three months. >> a lot of correlation that we saw on the downside. a sickening -- if you're wrong the core we saw for six weeks when all news was taken negatively, and now it seems a little different the tone might be different. >> you can point to different stories in moving to every one of these different asset classes. we're watching three big stories this morning one, retailer sears will reportedly ask a u.s. bankruptcy judge to lick question dade. that's according to sources cited by reuters the iconic brand had planned on announcing its bid from eddie lampert to save the business, but it looks like the bid is coming up short. number two, carlos ghosn making his first appearance since his public arrest.

there are allegations of financial misconduct in a tokyo courtroom and also proclaimed his innocence. and three, the dow and the futures. meantime the nasdaq saw its seventh positive session in the last eight. also, a sign in small caps the russell is down. again, the futures pointing to a positive open this morning and there you see the russell 2000 as well moving by two points. >> every year bob doll comes up with his forecast. joining us now from nuveen asset management, bob doll mike is also with us to grade it do you wasn't to talk about last year first. >> let's get the history out of the way, sure. >> what grade are you going to give yourself? >> we don't give ourselves a

grade. we get somebody on the outside to do it they giveus 8.5 out of 10. we got more than half right. >> why don't we call out the biggest thing you think you got right and the biggest thing you got wrong. >> the forecast that came true was above 3% gdp a year ago people were talking 2, maybe a little bit better we got a lot of calls. what did we get wrong? we thought stocks would be bonds, which looked greatnd a then poof. that disappeared who would suggest that cash would be the best performer last year. >> let's talk about 2019 what's the biggest concession? >> our biggest certain that seems to have evaporated from the market is inflation is not dead i've got a lot of people who say there is no inflation. tell me why wage rates went from 2.6 to 3.2 in six months

that goes like that for another si six months we're going to knock on four and when we knock on four, the fed will have to take a stance the forecast for the most part is sanguine. >> what threw people off -- >> wasn't that beautiful >> -- was the report from the labor department on jobs if that increases, it would hold off. >> we could bring women back in. we've got 300,000 new jobs and the unemployment rate goes up and the participation rate does what it does that's an amazing report. >> and then you know about technology we have no idea how the internet still filters through everything and holding down prices and everything else. >> it's what's kept the oil revolution in the united states as well. >> globalization.

>> the oil boom. the president is tweeting. >> here we go. economic numbers going really good, capital with really. can you imagine if i had long-term zero interest rates to play with like the past administration than the rapidly raised rates we have today that would have been so easy still markets up big since 2016 election your boss. you can tweet him back. >> tweet him back. >> there needs to be a reply. >> hey, look interest rates aren't going to be zero forever. the fact that we had zero rates for so long means that some bodies were able to borrow money that shouldn't have been able to borrow money is that going to create a problem down the line? my get is yes. that's an experiment that went on too long in my view. >> where does this end in equities >> we have a 27.50 to 28.50.

up from december 1st. >> what was your target last year >> our target was 2700 last year we got it wrong. we were at the low end of forecasters but clearly we weren't low enough. >> what i find interesting is slowdown has become the bull case, right? if you went back a year ago, bob, acceleration was the bull case slowdown was just a sugar high now prices have come to a level where we can deal with the slowdown we just don't want to tip into deflation or disinflation too deeply and negative growth that's the interesting part where we're at right now. >> we want goldilocks again. >> and you want to be down from the highs. >> yes. >> this ooh is the zone we're occupying. >> that's one of our predictions this year. we failed to make a new high for this year. i don't think we see 2950. >> i understand what you're saying about inflag, but it sounds like a phillips curve

inflation that you're going with there's nothing yet. >> no question. >> you're just assuming. plus, we've had individuals say that if we don't do -- if we don't do something about the inequality and the society, we're going to have a revolution so here you are. we finally get to 3.2, and yet you're ready to get all nervous about 4% because of the slight inflation. it's good that we did 3 -- some people are celebrating 3.2%. that's really going to hurt margins? >> no, not 3.2%. >> it's got to be a wage push. >> correct it's been going on for a few years. >> when will we see it will we see it with euros? look at japan. how lock have you been worried about inflation? >> exactly. >> are you sure that's the biggest concern? are you sure that's it >> i can come up with other numbers. but the borrowing numbers --

there's something else we're talking about. the u.s. consumers is in great shape. 70% of the u.s. economy. it's not 70% of the u.s. stockmarket. it's less than high. >> you want to get us back to the old high what happened to you >> i'm happy to be wrong. >> we're talking about the relationship between wage grouk and overall fed poll sichl i think the bottom line is you don't get liberated from the lake-cycle push/pull dynamic that we've been in for the past year all of the good stuff brings the end point in sight. >> that's correct. >> the growth slowdown, we've seen essentially time this cycle. it's always lead to, oh, we're going to do it again i don't know that that's possible this time, given what you just said. we're in later stages. >> here's what confuses me this morning, though, when you hear from samsung and lg.

they plunge in fourth quarter profits because of shrinking markets and all of these other things happening how come that's not spreading through other chips or various sectors? >> they took some pains last year i don't know maybe it will. i do think that smartphone maturity and a very active semiconductor cycle that make got overshot last year has been well in the market for a while so i don't think the stocks are as expensive as they were in the near highs this is why earnings estimates keep coming down you get one of those and one of those. >> apple. >> right there's enough of them to say -- everybody knows we're not going to have 20% earnings growth forever. the question is does it stop at 6? we had a guy who said plus four but they the market's factoring inmy news four. >> i would agree with that. >> i'll given you a quick apple retail theory. people are not buying phones and

now they're actually buying clothes. remember for a whole period people were buying phones and no clothes. they say fashion was out now no one ice buying a phone because they don't think they need anymore now they need the clothes. bob doll from nuveen and mike santoli. >> now you're saying it is apple's problem. >> oh, i think apple has its own issues. >> you said it was trump yesterday. that was your whole narrative. you said china i said, you're smart enough to know you're smart enough to know apple has its own props. apple has its own problems narrative. >> plus china together nothing is black and white, my friend nothing. >> i'll i'm getting a battery. i'm not getting a new phone. you talk about a clothes horse. >> you're not getting them for $29 anymore, so you have to pay

up. when we come back, china and negotiators trying to reach a deal on contentious trade deals. even if we get an agreement in the short term, is it enough to fix the broad issues standing between china and the united states when we come back, if we come back, we'll debate with yale university's steve roach you're watching "squawk box" on cnbc ♪ memories. what we deliver by delivering.

i am a techie dad.n. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience. my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome.

welcome back to "squawk box. sears planning to liquidate. with want to get over to courtney reagan. courtney. >> reporter: sears is going to ask the bankruptcy judge today to go forward with the liquidation. chairman eddie lampert had put up a bid of $4.4 billion, but we knew late last night it wasn't sufficient and this was the most likely scenario. we don't have any more details at this point, but sources familiar with the matter says in general sears takes on its own liquidations going forward, so they won't be enlists help of outside services, but they'll be closing storrs and selling off assets on its own in conjunction

with abacus. we'll see how long it takes and what it means for the 50,000 or so employees working for sears holding. it's a sad day in this company's history. back over to you. >> courtney reagan, thank you for that we'll, of course, be following the story throughout the day becky. trade talks taking place between the united states and china. they're hoping the two economies can reach a deal we welcome in steven roach steven is the author of "unbalanced condition co-dependancy between america and china. good to see you. >> good to see you, becky. >> what do you mean? >> they want to do a deal.

they want them to go away. they're not going away you have industrial transfer and policy, all the stuff that they have assembled in a big case that's been put together by the trade representative robert lighthizer, a case that is based on flawed and faulty evidence. >> i don't know what flawed or faulty evidence you're talking about, but we have heard from business leader after business leader who's come on and said, look, it's not a level playing field, we can't do the things they do there. these are thinking that were supposed to roll off none of the progress has been made we've heard that not only from business leaders but politicians and others. >> becky, there's always this

notion of dwelliueling anecdote. you hear stories from both sides. we built the first china investment banks i was actively involved and at no point was i taken into a room, blindfolded, twisted my arm, and forced to turn over anything when you do a j.v., you participate willingly to build a shared business based on shared talent and -- >> i'll give you that. any company that's gone in and agreed to do that has -- >> the allegation is forced. >> the allegation is you couldn't be there if you didn't agree to the joint venture. >> we wanted to be there we wanted to involve. >> trump just tweeted talks with china are going very well, just to get that out of the way. >> good. >> in the past before we got into this big brouhaha with china, we always got along.

>> i know. >> i always needle you guys you're on the payroll for china half the tame or at least it seems like it because you're very friendly with their intentions did we mischaracterize their intentions should we welcome that are they our friends you always allay my fears about china. should we still feel that way? >> joe, you always mischaracterize me i ought alwa i always try to put it straight. >> we shouldn't fear china in terms of global domination >> i don't think it's a zero-sum game the way you're putting it we need a win/win. we need a deal for some of our purposes for deals at home they need it for their purposes to stay the course of

development. >> right. >> the question that has been raised, are they doing it unfairly are they cheating. >> you say no. >> becky pointed to one in terms of market -- >> let's forget about that let's talk about intellectual properties. >> okay, look. let's talk about intellectual properties then. i teach a course on china at yale part of preparing for this course, i look at the state-of-the-art evidence that's been assembled between the intellectual property theft between the u.s. and china it's put out by the i.p. commission the latest was 2017 chaired by the illustrious dennis blair and jon huntsman, current ambassador to china the report is not worth the paper it's printed on. there's no evidence of anything. they give you a range between $200 billion and $600 billion of intellectual property theft. >> you think all of this is

bogus? every ceo that comes on the set -- >> no, the ceo talking is unexperienced. i'm not going to challenge them, andrew when you try to generalize the economy as a whole and you have a report put out by something called the i.p. commission headed by two illustrious patriotic meshes and has an estimate that ranges from $200 billion to $600 billion a year, even by wall street's standards, which is where i used to work, is a wide range. >> even $200 billion i look at the last time there was one of those viruses that affected microsoft, it affected particularly china and a lot of cities there because they had never gotten the patch because they were using pirate ed copies all over the place. >> i'm not defending any of that but i think we have to be really careful. we've built a case based on this report of the i.p. commission, based on 182-page documents published by lighthizer last

march that has led to tariffs, trade wars, and great risks to the global -- u.s., china, and the global economy it's not a good case. >> what do you want to see happen in the trade talks? do you think it would be oak if we paper over it these are boogie men. >> the issues raised are important issues that need to be addressed. my solution, you know, if you were to ask me would be to finally make progress on coming together on a bilateral investment treaty between the u.s. and china y ow know what that would do that would eliminate ownership caps, eliminate the need for joint ventures and take the ir of transfer off the table. the issue, again, to make the case for this is spurious at best so take it off the table and get away from joint ventures you don't like them. others don't like them either.

so if you have a bilateral investment treaty, you don't have that requirement. >> stephen roach, thank you. great to see you today. >> always great to see you. >> come on back. i like to needle you have you seen "darkest hour? >> i did it. was so depressing, i really couldn't. coming up, when we return we're going to talk with one of blackrock's biggest marketers. you don't want to miss mar titi sorre sorrell. he will join us. stay tuned you're watching "squawk" on cnbc but which ones target your goals? it's not about quantity. it's about quality. no trendy stuff. i want etfs backed by research. is it built for the long-term? my reputation depends on it. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence.

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is good morning welcome back to "squawk box. president trump will deliver a prime time address tonight it happens at 9:00 p.m. eastern time the president is expected to speak then about the importance of protecting the southern border as part of this larger debate about the government shutdown democratic leaders are demanding equal air time following the president's address. we'll see whether they get that. the fourth quarter was a rough one for samsung, the electronics giant reporting a quarterly drop due to a weaker chip demand. the company expects to pick up, it says, in the second half of the new year as new smartphones

are released a story we're not bringing you, normally we'd have data numbers, but that data is not out yet this morning thanks, yes, to the partial government shutdown. moderna therapeutics went public in december at number 18 today, moderna is announcing several updates to its immuno oncology and rare programs we're hoping to be joined -- he's at the jpmorgan health care conference that's stephane bancel but we're going to wait and see how long that takes. in the meantime, the forecast is what we're going to be talking about. we were doing it off camera with becky. this is a company as i said that's designed therapeutics

interesting. they named the company moderna so they could get the symbol mra. >> that's the royal "we. not us, you. >> it's code for protein which does everything. so the idea of using merger r & a, that's a problem. it's difficult as far as the immune response and getting into the cell where you want it to work if you could do it, it would be great. p it-- it's raised a lot of mon. stephane bancel is here. i dmoeon't know if you were hean us it would be like the holy grail.

it hasn't been up to this point and we don't understand necessarily the platform which allows you to actually use merger rna therapeutics. let's talk about it. is it lip zone-mediate and you change the two "n"s of the rna how does it work have you told us enough? >> yes good morning so the way it works is we encode the message into humans and you use natural machinery to make the protein. what we've done is we have drugs in the clinic, and for more than five, we have already published the outcome of those trials, and so far what we have seen is the drugs are heavily weighted we make the protein we design and this protein is active in humans okay stephane, i mean the history of

the company we were talking about that as well you've raised a lot of money, a lot of seed money, incredible amounts of money in partnership with major pharmaceuticals you yourself came from a blue blood pharmaceutical background, but at one point you actually switched to vaccines because it would be easier than actually developing messenger rna for a therapeutic, and it was pointed out that that might have been a smart move because the technology is so difficult to deliver mrna therapeutics where you can have a naul positive outcome. was that a positive outcome by the company to focus on vaccines because it's easier or does the platform -- will it really eventually result in therapeutics >> that's a great question we believe in this new class of medicines, we notify them not to

go too fast, it's very low quantities and it's safe if you look now, we have clinical trials for their pu puttics. that is fair in 2019 for us it's very important because when we start treating kids with degenerative disease. >> are you satisfied -- i mean there's been skepticism from the scientific community about the platform i mentioned that since watson and crick, we've wanted to use messenger rna to have our own cells manufactured proteins that might be abhorrent or whatever from genetic problems we've been try dog this and there hasn't been a lot about your platform made for

scientists and you don't want to give proprietary information, but do you feel comfortable now that the rest of the scientific community is on board with the notion that you're at a point where you can do this? >> yes so indeed in the early days to protect the company, we did it several years ago we started publishing on websites you will find more than 15 papers with peer reviews including human data so you have big partners in merck. they have four partnerships with us we had a chance to place the technology in their own hands, in their laps, and come back to add more drugs, so we're very excited about that valuation. >> so is this a -- i'm trying to get back to actual platform itself and how widely it can be used

can you give us a couple of ideas? you need to go to a certain cell how do you get the messenger rna to actually enter the cell you need it to enter what about an verse dverse reac it it breaks down very quickly from enzymes. is it in a lipozone? is that how you do it? >> we use lipids to protect it from degree r from degradation. >> how do you get it to the right cell >> we inject it directly the idea is to stimulate we improve the response of the p.d.-1. >> you have seen it trance

affected and into the cell the mrna you've put in, you've seen the end result of the protein that mediates some desired effect. >> correct so once we have seen it and we put it in, if you take the biopsy of a patient before and the biopsy of a patient after treatment, you will be able to look and to measure the antibody the fact that the protein has been produced there, it's very, very clear what we have seen in a couple of women with ovarian cancer is some lesion, something to shrink so it's an early signal, phase one. we look at it to go into a phase two to chase that signal once we have the pd-1, if we have a better impact, that would

be wonderful as you know, ovarian cancer is an awful disease, most drugs do not work we're working very hard to help those women. >> i'll i'm amazed at the number of product tagt targets that y already have you have the sequence. to get it to the specific place, you do it a little differently you customize it every time, i guess. come back. we'd like to see you again at some point, stephane i looked at rossie's credentials. he's out of stanford and he's at harvard now. this could potentially be really exciting come back and let us know because it's very early. these are all phase 1 trials, aren't they? >> sorry are these -- these are early trials, right? very early at this point. >> yes phase 2 and phase 1. >> phase 2 and phase 1. >> correct not yet. we're working. >> okay, good.

and you got a lot of money, that's for sure after that great ipo. >> $1.7 billion for starter. >> this is what you identify with it. it's a big deal unicorn biotech deal. >> it is. >> stephane, thank you we appreciate your time this morning. thanks. when we come back, balancing risk and reward in a votele d environment and market we'll tell you what she's hearing in the market. stay tuned you're watching squauks right here on cnbc ♪hold on, i'm comin' ♪hold on, i'm comin' ♪hold on don't you worry,♪ ♪i'm comin' ♪here we come, hold on♪ ♪we're about to save you i'm comin', yeah♪ ♪hold on don't you worry,♪

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welcome back to "squawk box. the futures back over 200. president trump tweeting again that the china talks are going very well. that was about 15 minutes or so ago. so we're up about 220. an uptick a little since then. we want to talk to phil lebeau right now because nissan's carlos ghosn declaring his innocence in a courtroom phil joins us more on this developing story phil. >> andrew, this is the first time we have heard or seen carlos ghosn in 51 days. that's how long he's been

detained into a japanese jail. he was brought into a japanese courtroom this morning he was handlecuffed around the waist with a rope. he was wearing a suit. they say he appeared to be about 15 pounds thinner. essentially he said, look, i'm inoh senl and he said he's asked nissan in the past to approve some of the foreign contracts he entered into as part of his compensation, protecting his pay. he also defended his actions saying i've never received any compensation from nissan that wasn't disclosed he also says, nor did ier enter into a binding contract with nissan to be paid a sfiksed am that was not disclosed flog the hearing, carlos ghosn's attorney who was a former prosecutor himself said carlos ghosn is expecting to be detained until friday. that's when a bail hearing will be held. during the hearing the judge

brought up the question of whether or not carlos ghosn is a flight risk. he has the means to travel to lebanon, france, wherever he wants to go. the judge brought up whether that's a possibility as for nissan, the company issue aud issueed a statement last night separate from judicial matters being discussed today, nissan's internal investigation uncovered substantial information of misconduct, resulting in a unanimous board vote to dismiss ghosn as representative direct e. he has been indicted once in december he could be indicted on another charge on friday, be re-arrest and continue to be detained. guys, this is going to play out, likely, over many months because if there's a bench hearing, a trial so to speak in japan, a lot of times the trials go on for 11 to 13 months. we have not heard the end of this at this point carlos ghosn says,

i'm not guilty of what they're accusing me of. >> we're trying to do so much. it's so different from the system we have here, phil. but what we heard earlier this morning sounds like they could very well deny him bail if they choose to do that. >> correct. >> for the entire time, he could still be in custody. >> right and the interesting thing, he's not been able to have regular meetings with even his attorney, let alone see his family he's not seeing his family he's not even having regular meetings with his attorney if you're in carlos ghosn's position, you're going, i can claim i'm innocent that's the reason they asked for this hearing so he can publicly say this is not true but aside from that because of the way the legal system is set up in japan, he's pretty limited in what he can do. >> phil, thank you phil lebeau. let's get back to the markets and find out what investors are saying about the market vulnerability

thanks for being here today, heather. >> it's great to be here thank you. >> what are they saying? what do they this between october and december >> so people are nervous it was a difficult year. what people are talking about is where to play it safe. we're suggesting more of a barbelled approach with how we're constructing portfolios today. >> what do you mean. >> yeah. if you think about it, let's take your equity portfolio, you want components that are really working for you. so you don't want anything that's just going to go down the middle of the fairway. you want defensive components of your portfolio, things like minimum volatility, the quality style factor works very well in late-stage cycles, but then on the other end of your barbell,

you want things that can really pack a punch and have the potential to perform well if things go better. >> you're not talking cash necessarily. >> not necessarily we're not talking holding large cash balances here today. >> your thought is the market is looking at this is all risk to the downside, but you think there's an upside. >> we do. >> what makes you think that >> what we saw in 2018 is that the market reacted interest e men doestremendously to geopolil trade. there's tremendous positives if we see trade talks and that's why we see pockets of value in places like emerging markets, and while u.s. earnings are set to abate from their very, very high pace, you know, 24% to something closer to 8%, we still see value in equity markets. >> we just talked about earnings

and margins coming down. while it's still a little north of 7%, most people in the market think it's going to continue to come down from places like apple, lg, samsung. >> right. >> there are some that think we'll see a decline. what would ha p to the markets if that's the actual scenario, door you think it's priced in? >> i think it's one of the risks. one of the risks we need to focus on is while the consumer in the u.s. is strong, internationally, it's not strong when you look at s&p revenues, over 50% are derived from international markets, so it's something to be aware of having said that, a lot of that negative news has been priced in, so we're looking -- we're really looking for -- it's going to be more of a selection and where you're placing your betting from a standpoint of what assets are you buying within the equity markets. are you looking for minimum volatility tragedy are you looking for strategies

but not holding out on equity markets. >> let me ask you differently then in terms of the volatility that's going to happen this year, i know nobody wants to believe in market timing, but to some degree, you have to try to get in when things >> yes >> do we just have that experience and it is over or do you think given what you're talking about, you might as well sit with some cash for a while and wait >> that's actually a very relevant topic right now what we're talking to a lot of our family office clients now is look for the pockets of opportunities where things have declined in value tremendously one we see is in the emerging markets specifically in china. when the worst performing major market of 2018, and we think it has the potential to outperform. >> what would you stay away from right now? >> europe would be an area where we think that the catalyst -- there is no real catalyst to see outperformance

and it could underperform the u.s. should things continue to get worse. >> just the economic concerns, what we're seeing, the slowdown in china, what we're hearing about in other locations as a result of that, whether that's going to wash up on our shores, that's been a huge head wind for stocks >> yes. >> we got a little bit of that out of the way when we saw the stronger than expected jobs numbers, but jobs numbers are backwards looking. what number should we be watching here in the united states to judge what the economy is doing >> right at this point right now all data is very important because we're at a point where this is -- we're at a difficult point the fed said they're going to be data dependent the market is focused on what the fed is going to be doing the market affects the fed to pause, no hikes for 2019 and so we're really -- we're honestly looking at everything, looking at economic data, looking at data out of the consumer, listening to what ceos and cfos are saying about what they are seeing in their own

companies, what is going on in the future. >> thank you for joining us. we appreciate it heather lewis ty of blackrock. jim cramer joins us now. we're hearing about china, lead story in the journal today that's one of the things that is like talk is cheap we want ways of knowing for sure whether they abide by some of the things that we're trying to get them to agree to are you optimistic something happens or is this just going to be down and dirty for years and years between us and china >> no, i'm actually optimistic i think that part of the reason why the market has been so good is that the tenor of things has really kind of softened. i know there is some rhetoric says there hasn't. we have some really good trade people who know we need a deal the only thing that would possibly prevent one is the fed seems to cool. i think for a lot of ways, a lot of times trump really was afraid that the fed would continue to

raise and so therefore he needed to do a deal immediately now i think it is a little stretched out, a little elongated. i'm positive something is going to come of this. >> that would be the third leg of the bear case that gets pulled out a little bit at least, jim i wonder if you feel that way. fed people, just heard our guest talking about maybe zero hikes next year. and then we had the 312,000 on the jobs number, which seems like we're still growing at least more than people thought two weeks ago. and then if you did china, wouldn't that be enough maybe to give the market a better tone? does it feel different to you this year? >> yes, it does. remember, we came in 2019, wasn't a person i know who felt that things could be good. i don't know if you've been watching the housing stocks, some of the retailers, but it looks like there is a restart of the cycle that people felt ended in september and i think that that is very positive, but the problem is, the way i look at it is that you and i are positive,

and then i'm trying to think of someone else who is, but i'm kind of out of other people. >> it's -- it's weird, jim we want to divorce politics whenever we can from just, you know, looking at the world in a real way, but it is impossible nowadays i just keep hearing about how 2018 was, you know, a year we got to get through and it was one of the worst in history and maybe 2019 can be better and i look around and i -- that just shows you people see different things depending on their political persuasion they can't -- i don't know, they can't admit -- >> well, i think that that's crucial, i think that the federal reserve was setting us up to be able to make it so whatever business cycle we were in that got jump started by the administration and by congress had to be derailed, whether it be because of the budget deficit or because of antipathy. maybe there was too much antipathy.

i find antipathy to be the exact opposite of empirical analysis you and i are stuck with the empirical analysis we refuse to overlay politics because we refuse to overlay politics we realize that strong employment and low inflation and the start of the recycle are positive but, see, joe, the problem with you and i are we're looking at the data we're not trying to figure out what's going to happen politically. we're stuck with a positive. and i think that you and i are optimists here because we are looking at the data, we're not thinking about who is running the country. >> if we had a guest earlier, jim, say, we get 32 on the wage growth, if we go to 4, that will be inflationary and it is all going to come to a grinding halt does one follow the other, do you think? how long -- >> no. >> how long can we welcome higher wages >> how about the fact that the biggest company on earth is a company that suppresses all price increases and drives the price down for the working person how about the fact that the

working person has a 3% increase can't the working person after the last decade make a little bit of money i think you and i recognize that putting food on the table for who haven't been able to do that is a positive, not a negative. this philips curve and the model the fed uses of which we actually know they do were targeted on the notion that employment has to cool now, it does not mean they wanted to throw people out of work it does mean that they wanted to temper or perhaps end the business cycle that we know has been good. for what reasons their model showed, that's always bad but the models don't work in an amazon versus walmart economy. >> we're now up 250, jim i don't know, these are soothing -- >> well, joe, i don't know this whole positive rap that you and i are giving, it seems out of place, doesn't it >> that makes me comfortable, doesn't it thanks, jim. we'll see you in a few minutes later today, don't miss a big

interview from the consumer electronics show ibm chairman and ceo ginni rometty will join "power lunch" at 2:00 p.m. eastern time. stay tuned we're up almost 250 on the dow "squawk box" will be right back. . so all... evening long. ooh, so close. yes, but also all... night through its entirety. come on, all... the time from sunset to sunrise. right. but you can trade... from, from... from darkness to light. ♪ you're not gonna say it are you?

join us tomorrow futures right now, looks like the dow will open up 250 points higher the s&p 500 would open up 24 points higher. make sure you join us tomorrow "squawk on the street" begins right now. ♪ good tuesday morning welcome to "squawk on the street." i'm cart quintanilla with david faber at the new york stock exchange cramer is at the conference once again in san francisco futures up better than 200, adding gains for the week. a lot to watch samsung warns on q 4 sears expected to liquidate. ces in las vegas and the president addresses the nation tonight about a border wall. oil holding on to 49 we begin with the china trade trade.