make that policy error in my opinion. and i -- >> where do you put the government shutdown, china, all of that? >> i think president will make a deal and i think we'll make a deal on -- >> thank you. >> thank you >> guys, thank you make sure you tune in tomorrow "squawk on the street" begins now. ♪ put the body in motion start the commotion ♪ >> good wednesday morning. welcome to "squawk on the street." i'm cart quintanilla with david faber. dow futures up 100 points here, stocks on the longest win streak since november optimism on u.s./china trade, but negative preannouncements from constellation and sky works. fed minutes to play at the 2:00 p.m. eastern time. oil back above 51 today. our road map begins with the market and the rally optimistic tone out of china trade. negotiations as the boxing day bounceback continues >> and an important bellwether,

apple's tim cook spoke to jim last night in a cnbc exclusive we're going to have what mr. cook had to say about the company's critics and the long-term future of apple. >> and more clues about earnings season constellation, lennar both out it was last week that am issued that revenue warning for the holiday quarter, citing weaker demand for its products in china. the worst one day performance in six years. but during jim's exclusive with tim cook yesterday, the apple ceo defended the company and spoke out about its critics. take a listen. >> you can probably find the same quotes from the same people over and over again. and i'm not defensive on it, this is america and you can say what you want, but i'm giving you my honest opinion is that there is a culture of innovation in apple and that culture of innovation combined with these

incredible loyal customers, happy customers, this ecosystem, this virtuous ecosystem, is something that is probably underappreciated >> jim, just chalk full of news, whether it is about trade negotiations with china, the ecosystem, services on a tear. health care as their long-term legacy, what did you make of that interview >> i think that what you get is that the idea that this should sell at 11 times earnings seems almost fat with uuous, there isa long-term view we have katie uberti talking about deceleration of services, that will mute what he says. what he's saying is long-term we're a health care company, long-term we have the best ecosystem, we should focus on the service stream that's not going to happen today. what is going to happen today, we'll look at the sky works cut, they supply apple and look at this 10% cut and say i don't

care about what tim cook says because this market cannot weather the storm of any negativity. >> and when is the storm going to end >> well, i think it is a great question, david. i think if you listen to tim cook, he's talking about the possibility we get a trade war resolution and the big decline in what we were expecting from the revenue forecast would be from china, that maybe we would get an uptick. in the interim, there has to be a reconsideration of that apple and what it is, if it were followed by clorox, i did question tim about this, followed by procter & gamble analyst, the stock would be at 230, 250 60% of the business is cell phone. the analysts almost to a person don't like cell phones because they're not growing. so therefore you have this head wind of, well, listen, a cell phone company, versus the tailwind of look what it will be two, three years from now. do people think about two, three years from now on wall street? i don't know anybody that does.

>> we mentioned this line about health care. jim talked with cook about what we may think about apple, many, many years from now, in terms of the life cycle legacy of the firm take a listen to that. >> if you zoom out into the future and look back and you ask the question, what was apple's greatest contribution to mankind, it will be about health it is our business has always been about enriching people's lives. and as we have gotten into health care more and more, through the watch and through other things that we created with research kit and care kit, and putting your medical records on the iphone, this is a huge deal >> that's fascinating, jim for people who own the stock, and are going to hold it for years, and on hopes of media and cars and televisions and movies, what do you make of this, the fact that our -- it is data from

our own bodies that is going to be the company's legacy? >> this morning there was an amazing interview on "squawk," dr. paul friedman, he runs a cardio department of the best place for cardio in the country. and he said listen, there are probably 7 million people out there who don't know they could potentially be candidates for heart failure die and what tim cook is saying, listen, the ekg function of what i have on my watch, that is the read through that is exactly what people need if people, if the 318 million americans were to have the watch, we could possibly cut that 7 million heart failure down rather dramatically there is no handshake between the hospitals, the doctors, and what tim cook is offering on the watch. that has to happen and the legacy won't occur until we realize that 7 million people's lives could be saved if they had the ekg readout and the hospitals, the doctors, and the health care companies could address it and accept it with

that handshake until then, what are we trading on 10% estimate cut that's all we think about is the darn estimate cut for the cell phones and i've got to tell you, wall street is so shortsighted, they're not thinking about the 7 million lives saved. they're going to think about the 10% supply cut >> i don't doubt his passion at all for what he believes they can do in terms of health care interesting they're not a part, are they, of the bezos, warren buffett consortium trying to rethink health care. may want to get in there and think about that, jim. >> that's something i talked about. >> you're right, david >> no, we talked about the idea that the medical establishment is not necessarily in sync with what apple is doing and you need proselytizers who say they should you are absolutely right, david. why doesn't that -- the triad of people trying to help keep costs down address it? but, you know what, david, apple and amazon are beginning to become a level of, let's just

say -- they're not frenemies anymore. it is something more serious than that. it is almost as if amazon has to have alexa be measuring your heart rate and listen in on everything else you do in order to be able to be part of that ecosyst ecosystem. it is time for, i think that ecosystem to embrace the apple ecosystem. and it will be jamie dimon that has to do it warren buffett already knows the stock. it is up to jamie. it is up to jamie if he says, listen, we should all own apple watches, we wouldn't be taking about the 10% supply cut for the 62% that is the cell phone >> right of course, mr. cook would rather we talk about the $41 billion in reoccurring revenue that is growing with the $1.4 billion, i guess, right, in terms of the installed base, jim. which will continue to grow as a percentage overall but i don't know when the conversation really shifts to that to your point as iphone sales don't grow >> david, people want to talk about the 90 days. they don't want to talk about the nine years

they don't want to extrapolate the service revenue and realize it is a raise your rate model. samsung versus apple, that's what the analysts care about until we realize, until this company is covered by someone bold enough who covers clorox and procter & gamble, we're going to be with analysts who view apple as a steel mill and i'm not willing to accept that and i don't think tim cook is willing to accept it, which is why we're discussing the price. 11 times earnings, do you think that does not factor in? 11 times earnings. we're starting to talk about -- next year it will be -- let's say 18 months, ten times earnings, find me a ten times earnings story that has recurring revenue. i can't. >> if they the headlines out of nikkei were that they were increasing production by 10%, would we be giving it more creed ans then >> stock would be at 180 it would be at 180 immediately and it really -- it is fatuous

logic. we have time we get a supply cut, 5, 8, 9%, the analysts are going to bury it i saw apple up $2.25 at $6.05. i know the stock is going to go down today because people extrapolate the estimate cut, they don't think about the service revenue. the shortsighted people always win within the next five days. within the next five months, the shortsighted people will be upgrading the stock, not downgrading it >> jim, look to broaden this out a bit as well, you mentioned china. you shared yesterday during our broadcast day and while the market was open some of the insights that cook shared with you. clearly he's hearing some things from the administration in terms of the progress of the talks on china. much of that i think detailed this morning very much unclear where we actually end up, though certainly does seem to be progress being made. share with us sort of what your take was from him, which seems

to -- he seems to be getting directly from the white house perhaps. >> yeah, we don't know how direct it is because you can qualify that by saying i don't think he knows anything near term that is necessarily more than what is happening in china right now. i do believe his optimism was so strident that it is difficult to be able to recognize that optimism with the idea that we won't have a deal, and, by the way, i don't think the deal on composite is just soybeans there is a deal on intellectual property that's a real sticking point the way to be able to signal that is to say we don't need joint ventures because the intellectual property theft of the joint ventures which is at the absolute core of what i think president trump wants to change >> yeah, we'll talk more about what we may get in terms of readouts from these talks as they did wrap up on a pretty optimistic note it seems finally, as if you didn't extract enough information out of coke, you got them to talk about qualcomm and the back and forth which does continue with that company

take a listen. >> the issue with qualcomm is that they have a policy of no license, no chips, this is in our view illegal and so many regulators and many different countries agree with this. and then secondly, they have an obligation to offer their patent portfolio on a fair reasonable nondiscriminatory basis. and they don't do that they charge exorbitant prices and they have a lot of different tactics they use to do that. >> qualcomm responds we have been consistent for the last 18 months in making clear that we have at various times been in discussions with apple about a possible resolution to our licensing dispute. we also stated clearly on several occasions that we believe it will be resolved. one way or the other, in the near future, either through a settlement or court decisions, jim. where does that leave us >> well, i want to see from

qualcomm a document, any document, any e-mail, that shows that apple in the last couple of months has said let's come to the peace table, let's feel that there could be a settlement here we need to see some sort of document or else i side with tim cook that they're going to trial. a document that says at any level from apple, you know what, we can come to a conclusion, this would change what i think tim cook was -- i would say the narrative. but idon't know, david, have you seen any e-mail from apple to qualcomm that says let's come to the peace table i haven't. >> i have not at this point seen that listen, qualcomm, we should -- the ftc case started on january 4th. so that just began as well you've got the manufacturers of apple's devices out there fairly aggressively at this point,

talking about their case against qualcomm it will be interesting to see, we're getting closer to april when much of this could end up in a courtroom in california too, jim so sooner or later we will get a resolution, one way or the other. >> well, yeah, i was once in a big piece of litigation. i can't talk about the actual settlement i was about to be called to the witness stand. and, you know what, there we were in the -- we went to the court, we went to the steps inside of the steps of the courtroom, can't say much more about what happened other than the fact that they do tend to resolve themselves before tim cook is in the witness box. >> finally, jim, i wonder, we made a lot of fun of sell side analysts for months, really, as they cut their numbers on iphone units. now here in january, give them any credit >> look, i think that you got to hand it to the analysts who extrapolate the supply numbers including sky works warning today because the narrative currently up 62, 63% cell phone means that you have to let's say

temper your expectations stock goes from 200 down to say 140, there we're talking about 11 times earnings. and general mills, they cut their dog food numbers, you get that kind of reaction. this is -- i mentioned general mills because i think that's a high tech company. but when we start talking about a high tech company that had a glitch, and a bit of a -- let's say the trade tiff with china as jamie dimon once talked about, yes, you'll see china come down. what you need to see is the idea it is not patriotic if you buy an apple phone we need that to go away in china in order to get units up right now almost feel like it is not patriotic to buy an apple. got to buy a huawei because here we are saying huawei is an outcast if not an outlaw in the u.s. if the trade -- if they get an end to the trade zbudispute, yol see apple go up, you'll start

seeing those kinds of discounts you need but without it, i think you'll see more estimate cuts, apple and then just have to say, well, i'll pay nine times earnings it is worth 18 times earnings. >> interesting 12 years ago this week, steve jobs unveiled the iphone for the first time, just as a reminder jim, it has been amazing work. a lot more on cook's interview with jim a little later. still to come, an exclusive with zdiscovery's david zaslov micron, b of a, nike, lowe's and more all of that when "squawk on the street" comes back

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i'm in product development at comcast. we're working to make things simple, easy and awesome. morning. we got more optimism about the u.s. and china moving closer to a trade deal after an extra day of discussions in beijing. dow and s&p in the midst of the first three-day win streak since november got the optimism on trade talks, oil prices back above 51, jim. yet, constellation down 10% in the premarket here we mentioned sky works in the prior break. what is more important, getting a deal out of china or robust commentary on the q4 prints? >> we need the deal out of china. we get the deal out of china and

we have no apologies from the fed, they realize they blew it when talking about three or four hikes, you have a first half that could go further. i think the measurement here, you mentioned oil, every time oil goes up, the s&p follows oil goes up because of talks with china if you notice, it is china that is controlling the price of oil. it is the demand side. i think china is in play as the reason why we're going up and it could continue if we get intellectual property deal that's what we have to wait for. >> watch all that. then fitch, jim. this is a little farther out, but they are warning about taking away aaa credit rating on the u.s. if the shutdown bleeds into march, and this whole thing starts to be more about the debt ceiling than the shutdown itself -- >> well, we know that they feel compelled to be able to do this. we saw that, what, in 2011 it scared a lot of people. i think it is great that fitch is out there saying these

things, i think a lot of people want a resolution, but it is just pressuring democrats, republicans to get together. you mentioned earlier constellation, i think this is really interesting, this is a sea change constellation is talking about why and spirits being down single digits, down. you have to start -- and beer depletions the amount of beer being drunk is going to be down. you have to wonder whether the growth rate of beer leveling off and wine and spirits being down, remember, the growth rate of beer that is down, not the actual use of beer, is it pot, is it cannabis what the people like to call it they hate to call it pot, i don't know what that is all about, is that already becoming the alternative in california, in colorado, in other states where it is pretty well available and, of course, we got the hemp law, i don't know. hemp is -- i haven't tasted hemp yet. what is hemp like? >> i don't know what hemp is actually i know other things. not hemp >> we'll go shopping for hemp

together when you come out here. >> sure. >> on your primetime shopping special? >> dispensary in there somewhere. might as well catch that get some edibles. >> bring cash. >> okay. >> we'll get cramer's mad dash in a minute and count down to the opening bell and talk about the calls, including piper on canopy, some tilray research too. ♪ ♪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,♪ ♪i'm comin'

all right, 6 1/2 minutes before we get started with trading on this hump day got to go cross country, though, to my partner out there in california want to talk a little housing on the mad dash, do you now, jim? >> yes you have the largest housing company lennar saying, look, there is a disconnect now

between the price of housing and mortgage rates and what the buyers want, so therefore things aren't going as well as they should, you would expect the stock to be down but instead, this is an example of what happens when the fed goes on hold now, there are some people who come on air saying, listen, the fed really is wrong basically, that the economy is hot. i think when the largest home builder comes out and says, listen, we're not hot, what that says is it is about time for the fed to take a pause, you know what, we're going to have stewart miller on. i think you'll hear, well, listen, the economy is not strong for heaven's sake, there is a disconnect and that's why mortgage rates are wrong to be this high. people come on air and act as if the economy is strong. i don't know, housing is 10% of the economy, punches above its weight this stock is going up, not because of what lennar is saying, but what the fed is doing. i think it is about time housing is so important to this economy, you need it to turn around and the stocks are telling you

it might >> yeah. you've been talking about weakness in housing for quite some time, jim of course as we talked largely overall about the economy at this point let's take a break we got an opening bell, of course, a few minutes away "d serom jim, carl anmylf onsquawk on the street" right after this

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you're watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell in two minutes. busy day, we already covered apple and constellation. the fed will be at an event this afternoon, we'll get the fed minutes. and bostic already on the tape, bullard says the fed is bordering on taking the -- going too far, essentially, and says the committee's view is coming around to his own in this interview with the journal >> yeah. mr. bullard, i think, is the one who is closest to the data that part of the fed -- that's been the place i go to they have the best stuff and what the numbers are showing is that, look, the economy slowed it slowed noticeably and when the economy slows

noticeably, got to give it a little berth, a little room, you won't get a v, you're hoping for a u-turn, but it might actually end up being a flat line so i think you have to listen to bullard. i think that the people who say that the economy is strong, i don't know what that is based on is it based on urban outfitters having a better number anthropology, free people. i am out of companies that are telling me that things are great. i'm out of companies i have some companies saying things are okay. i don't have anybody saying things are great >> we just had a 312,000 job print on friday, jim >> yeah. look, it is -- there is something a little out of sync i wanted a rate hike i figured we would get a good number i wonder now when i look at jcpenney, people are saying that's okay, it is down single digit. eddie lampert is fighting to keep an organization alive and still has 50,000 people. i think the mall is -- you can call the mall moribund you have a lot of layoffs,

layoffs with jeff bezos and amazon and whole foods, let's watch and see what happens i think right now the numbers will be suspect. the data shutdown. i don't like what i'm hearing. >> the opening bell here, s&p and it is aon celebrating the launch of the award challenge, and at the nasdaq, millicom international cellular jim mentions amazon, jpm today, reiterates one of the best ideas for the year, reiterates overrate and price target of 2100 as jeff bezos tweets that he's getting divorced. >> yeah. that was somewhat surprising mr. bezos telling us after 25 years, he and his wife mackenzie are going to be divorced i was talking to you, asking you, carl, is it a news story, i

guess it is in the sense of you wonder -- there is the statement, want to make people aware of a development in our lives, as our family and close friends know a long period of loving and exploration and goes on to say trial separation, they decided divorce and continue to share their lives as friends you wonder any distraction from something like that certainly when you run a hedge fund, your investors care if you're getting divorced, not clear that's the case with amazon, certainly. but he no longer will be the richest man in the world, i guess. is one outcome that one would assume >> yeah. >> of the divorce. >> yeah. i'm told, i guess, laws in washington state are sort of community property-based, so sort of what -- go down the middle for assets accrued during the course of the marriage. >> yeah. mackenzie bezos will become one of the richest people in the world, unclear what -- and where her interests may lie in terms

of that. but don't want to make light i don't care if you're the richest guy in the world or not, getting divorced is never fun, i'm sure >> yeah. meanwhile -- >> how do you know that, dave? >> i don't, actually i would refer to you and some of the experiences of my other close friends, jim, in that space. >> as my wife -- >> thankfully i'm not aware. >> yeah, nobody gets married to get divorced you know amazon stock was up nicely off of an analyst note before this tweet? it is a courageous thing to tweet this and it is -- i don't know what else to say other than the fact that he didn't need to do it it is a bold thing to do but it did reverse the stock and send it down on a day it would otherwise be up. it is impacting the f.a.n.g. stocks apple is up too. though apple's course is trading off of the nikkei story about estimate cuts. but, you know what, i don't know what to say. the man tweeted it he didn't need to. a lot of times you don't really

kind of talk about it. kind of. you know i mean, kind of. you know what i mean kind of. >> yeah. >> i do. >> it is a moment where we'll turn to a man who covers wealth for us and has for many years, that's our own robert frank. robert, got any intelligence on this or any thoughts about it? >> yeah, not so much answers at this point, more about what questions we're going to ask so they live in washington, so washington divorce law and marital law applies. washington state is a community property state, any wealth that he earned during their marriage, remember, amazon started after they were married, will become community property half of it goes to her so let's say his stake in amazon is worth $150 billion, technically she would get $75 billion or $80 billion of that now, it is also a no fault state, so that means whatever he or she did during the marriage that caused this divorce, if there was something like that,

that would not be an issue during the divorce now, one of the big questions that will be asked here is if you divided his share in the company, his stake in the company by half, and that reduced his effective control of the company, that would devalue that asset as a whole. so the question going forward, for divorce attorneys on both sides, will be not just if you split it in half, what is that worth, but what is the premium for his control of that company and if he loses an equity stake in that company, will that effectively reduce the entire asset value for both of them so the value of his control will be what divorce attorneys will focus on, again, maybe they already worked all this out, but it is a community property, equitable distribution state in washington so that means technically she could get half guys >> that's interesting, robert. i try to remember his ownership stake, i think it is high teens, maybe -- >> around 16%.

he's been selling down a little bit to fund his space program, about a billion a year but it is just under 16% i don't know what the voting rights would be, and whether -- >> he has no super votes it is not -- it is not a facebook or an alphabet or a snapchat or anything like that so ownership stake is his actual economics are his vote >> maybe what the market is worried about here is, again, the value of his controlling stake in the company, whether that gets diluted or he's forced to sell shares in any kind of settlement >> right well, it is not a control stake. his largest stake. >> he's by far the largest single shareholder in that company. >> right >> robert, thanks. robert frank, joining us, talking about bezos. jim, in the meantime, a little -- not big notes, but some notes about amazon today, morgan stanley does some survey work, talking about apparel

sales, but argues they're hitting some speed bumps in fashion, in terms of the number of respondents who say they turned to amazon for fashion related items, especially in apparel. but hard to believe that's going to have much of an impact today. >> jpmorgan is interesting, they talk about amazon web services and advertising. the 17% of revenue, but 85% of what the company makes, they're talking about the double digit margins you get in 2022, talking about operating margin expansion now. i think the stock will be up substantially if it weren't for the divorce news and i got to tell you, the divorce news, you can talk about community property, but certainly doesn't mean that she's going to dump the stock. if you think that she's going to dump the stock, that is, i think, a little shortsighted i feel bad about talking about this stuff he put it out there. it feels terrible. >> i know. >> i feel bad for -- i play with an open hand i was married for 18 years

i loved my wife. i'm great friends with my ex-wife. doesn't mean you dump it she believed in me, my ex-wife believed in me with the street i don't know it is very uncomfortable here i am talking about it i don't know what to say i feel bad >> yeah. me too. >> you don't want to get divorced >> let's move on >> let's do that, please. >> i lived it through you. >> you want to do sears? >> let's do temo. >> anything but. talk about stanley, bla black & decker talk about the eagles. >> let's talk about t-mobile >> looking pretty good, the numbers from t-mo. remember verizon gave us a preannouncement yesterday. that was also good and the stock actually moved higher on that but this morning, t-mobile, looking good, fourth quarter,

1.4 million, that was above the estimates of most analysts, post paid phone net ads also above at a million. let's just say overall, good numbers from t-mobile. of course, the key here is the deal with sprint, which continues to be the subject of regulatory scrutiny. haven't heard much been very quiet, the argument as our viewers may well know is this will become a 5g powerhouse, that's what we need, hoping to play as well on the administration's continued focus on 5g and national security implications for allowing that potential deal regulatory, comments i would say neutral to positive in some ways, the antitrust enforcer at the department of justice.

but good fundamentals continue, jim, for this company. the key, of course, will be whether they get the approval or not for sprint it doesn't hurt when your business is doing fine. >> love john ledger. this stock would be in the 70s off the numbers. you get a churn below 1, that's magnificent. it is being handcuffed and i think handicapped by the fact that it wants to merge with sprint these numbers are really strong. the idea that the stock is in the 60s is i think entirely because of the sprint deal stock will be in the 70s otherwise. >> and carl, to he remind people, $58 plus billion deal when it was announced. and no word on when the expected close may come >> all right jim, we mentioned we haven't yet mentioned micron upgraded earlier in the week and again today, this time, bernstein to outperform. that's going to be leading the s&p, even sky works which i know you thought the warning was a little more mild than some might

have expected. >> broadcom is up too. i got to think, the reason why apple is not getting killed, 11 times, these stocks trade, micron changes the lowest multiple in the s&p. lower than ford, and lower than gm the bernstein, the d rand prices are not bottoming yet, but you can't wait for the bottom, you have to buy the stock ahead. that's a notion of why they're doing the upgrade. i share that, the stock was in the 63 then went to the 30s i think that the upgrade makes a lot of sense you have to get into micron one quarter ahead of when d-ram prices bottom and that's been the case many times, it will be the case again >> yeah. bernstein's point is that pricing is the -- the change is so dramatic that you're looking at a quicker recovery than perhaps a 6 to 8 quarter recovery banks, two big upgrades, b of a at ubs to buy.

and citi goes to buy on morgan stanley. 15% upside for the coverage universe they say that q4 could be relatively challenging for the capital markets business >> if you talk to james gorman, the ceo of morgan stanley, he speaks softly and carries a large buyback stick. he's just sitting there buying back stock and buying back stock, taking advantage of the fact that unlike a lot of other companies that bought back stock at 20 and 30 times earnings, he's buying back stock at a discount that is extraordinary the banks, again, i don't think people realize how low little we're paying for re good franchises, because this quarter is one that has been impeded by the fed and by the turmoil in china that has made people more paralyzed. i think that a lot of people, just like micron, micron is a good example i know you typically don't analogize micron and morgan stanley, these are two very low multiple stocks that make a ton of sense to own. but you have to rep this quarter. i don't know how many people can

weather a quarter. i think they should. don't know how many will beyond today, tomorrow, that kind of thing. >> yeah. listen, saying that the fourth quarter was not a good one from the capital markets perspective is an understatement we all know nothing went on in the capital markets in the fourth quarter >> nothing. >> fixed income completely dead. >> how about the journal today on ipos? the shutdown we might go january ipo free january for the third time in, like, 20 years. >> not getting registration statements through the s.e.c. now. they got -- they're work on a skeletal staff from what i understand in previous shutdowns they had seemingly enough surplus of funds, i guess, carl, potentially continue to operate for some time. not the case now so, yeah, we may not get ipos for a while simply because you don't have people there to review the actual registration statements at this point not sure what that will mean for the capital markets. i guess nothing good >> but i've got to tell you, for stocks, historically, you have these droughts, it is a great

time to buy stocks because there is no new supply i was very worried when i come in and we get uber and they were going to flood the market and you had to sell f.a.n.g. to own uber if there is no new supply, but there is the usual buyback of a lot of companies, it gives the market a chance to catch its breath another reason why things i think have been strong but, again, look, if oil were to go to 49, it would erase the whole move >> how about this nike downgrade, jim we don't see that too often. this time over at baird. rising global macro risks, more than half of revenue from overseas, they want to trade into foot locker instead >> foot locker, largely american, when you downgrade nike, you're saying, you know what, again, it is going to be affected by china, which has been a good market are the chinese going to buy a conspicuous american brand right now with the trade talks i don't think so but, you know what, nike has tremendous momentum. and i think if the stock went

down, even a couple of bucks, you still have to buy it there really is -- nike is an incredible technology story. tim cook is on the board i think that selling nike here off of china tensions, it is worth a couple of bucks, not more than that >> jim, we mentioned a couple of times, but before we get to bob, worth coming back to constellation, i also think i heard you're going to have him on tonight, rob sands. >> yes >> stepping down as ceo, right, in a couple of months, i believe. >> i think this is a story about what is happening with beer. it has gotten to constellation modelo and corona the only growth in the total assets of liquor what i'm thinking about this is thank heavens they made this big $4 billion investment in canopy, also on tonight for "mad money." because i believe that you're looking at cannabis cutting in remember, remember the great

taste great, less filling? the miller light i don't remember the taste of this stuff, that's not what i -- dave and i have yet to hit a bar that serves it, i know it is less filling because it has no calories. >> i'm looking at anheuser-busch, they're not down much, you look at -- >> that's crazy. >> a chart of anheuser-busch, oh, my god, what a disaster that's been. >> that can go lower molson can go lower. molson is dabbling with cannabis the beer category and the liquor, hard spirits, really come down. wine has come down a lot, only tequila growing in midsingle digits i don't think people are avoiding alcohol i think they're switching to something that in big states like california, look, i think cannabis is here cannabis is now. canopy upgraded. we had a good piece about canopy from piper i'm going to hear -- let's hear it from what rob sands says. it is still a growth business.

but wine why is wine going down so much that i don't know. i don't know >> i don't know, carl. i do my part for wine. >> not enough, david. >> i guess not i'll increase. i will move up >> do you shop for wine? you should come with me to a wine store. >> the dow is up 135 to bob pisani. >> hello, everybody. happy wednesday. s&p up 8 out of last 10 days, great start to the year. best we had in many years, in fact let's look at the sectors here semis are strong jim was talking about micron, applied material, land health care is doing all right retails on fire. up 6% of retail so far this year not amazon not just amazon. gap, dillard, all strong throughout the year. banks are up about 6% for the year another strong start for them after a huge horrible fourth quarter and staples are lagging. in terms of guidance, we talked about this yesterday, a lot of

bad news priced into the market. talked about sky works lowering the guidance, lennar deferred 2019 guidance. that would have been a disaster six months ago the stock was down almost 20% in the fourth quarter constellation, jim talked about that, wine and spirit sales, the downside and that's hurting constellation. first five days of january are over this is one of the classic wall street chestnuts up 2.7%, the best start since 2010, believe it or not, for the s&p. when the first five days are up, this is an old stock trade, the full year is up 83% of the time. just thought i would throw that in what we care about is 19 times earnings so far for the fourth quarter, 20 companies reported. that includes lennar, constellation, 85% are beating numbers. we don't care about that what about the first quarter numbers? 70% of those 20% numbers are coming down. that's a little more than normal so the little bit more companies are seeing their estimates cut for the first quarter. who can complain with all the uncertainty that is out there. so that's the key right now

here if you want to go on, look about whether we get real or not for 2019, the numbers were coming down 10% earnings growth on the s&p, that was october 1 now at 6.8%, i think that number will come down what side are you on are you at 5% or 6% earnings growth or zero if you're at zero, the market is dead water five or six, people think we could go to 3,000. that's the question. what side are you on you can see where they're cutting the numbers. technology, the numbers got killed in the fourth quarter november 1st, 5.2% growth in tech for 2019. they cut it in half. it is 2.6% that's where the numbers are coming down right now. and energy is another problem. oil goes to 45 in the fourth quarter. that killed all the estimates on energy up 21% for all the energy stocks for 2019 now they're at like 5.6% that's what's going on here. if you look at the companies they all rallied as oil has come back you cannot model any energy earnings estimates

just impossible with oil moving around remember, guys, right now, 10% off the lows for the s&p 500 and the question is how much more juice is left in this rally in last few days? back to you. >> thank you very much, bob pisani let's get to rick santelli, talk about the bond market today and maybe dollar index as well hi, rick. >> carl, every one of those has important dynamics going on, those areas in particular. if you look at december 1st of two-year, we had a nice pop. all maturities are hovering at what will be darn close to the high yield close of the year i say darn close maybe half a basis point lower than we were yesterday for two-year note. but still holding the gains. 30-year bond playingcatch-up today. look at one week of 10s. you see how we have staircased higher in yields if you open it -- excuse me that was an intraday. reason i wanted that one is because you can see how much we have given back. the one-week shows how much we climbed. that's a better chart to put in your mind. if we look at the dollar versus

all the other currencies, we know that the euro is doing better, the dollar index specifically, really suffering here in slow mo. we're hovering at levels we haven't seen since mid-october and we're drifting lower from that 96 level. from that 96 level. the dollar versus the yuan, the dollar at the worst level since september. that's something to pay attention to carl, david, jim, back to you. >> as we go to break, some of the top performing names on the s&p. largely about chips today. you've got micron an western dig near the top micron upgraded for the second time, this time over at bernstein. the dow is up 110. we're back in a minute ♪ ♪ the unknown beyond the horizon.

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take a look at this. one-week return on crude, almost 10.5% as we're above 51. got started in earnest this week on some of the headlines regarding the saudis, targeting 80 we'll see erwhe it goes. for the time being dow is up 73. back in a moment

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hey, batter, batter, [ crowd cheers ] like everyone, i lead a busy life. but i know the importance of having time to do what you love. at comcast we know our customers' time is valuable. that's why we have 2-hour appointment windows, including nights and weekends. so you can do more of what you love. my name is tito, and i'm a tech-house manager at comcast. we're working to make things simple, easy and awesome. jim, what's on "mad" tonight? >> constellation brajds, can any and dexcom, one of the best stories out here in jpmorgan healthcare which is why i'm out here initially. >> you are coming home

eventually, right, jim >> i don't know. i'll see my daughter and my wife is flying out. i'm going to take my time. >> we miss you it's going to be good to have you back on this desk with us. >> can't wait to see you guys. >> kraim e, tonight "mad money" at 6:00 p.m. when we come back, an exclusive with discovery's david zaslav livet aces in las vegas with the dow up 165

because the players wanna play, play, play ♪ ♪ and the haters gonna hate, hate, hate, hate knott ♪ baby, i'm just gonna shake, shake, shake, shake it off ♪ >> good wednesday morning. welcome back toes on the street. i'm carl quintanilla with david faber and sara eisen here at the new york stock exchange. the dow is up. the vix is below 20 and oil is well above 51. our road map for the hour is going to start with the continued market rally stocks up four days in a row we're reacting to optimism from trade talks in china. >> a new report suggests apple may cut production for new iphones by 10% tim cook sat down with jim cramer in an exclusive to address his critics. we'll get more on apple. >> jeff baezos and his wife

mckenzie are getting a divorce it's a personal choice but more on how it could potentially affect amazon and the stock. >> day 19 of the government shutdown the markets continue extending strength though, now in the longest winning streak since november corporate earnings and d.c. policy help the momentum from here we're joined now at post nine by the chief u.s. equities strategist at credit suisse and a public policy strategist at morgan stanley michael, since this is your bag, did the president move the needle forward in any way after his oval office address last night when it comes to ending the shutdown >> i don't necessarily think so. i mean, you really have two sides that are pretty well dug in i don't think this is sort of a real, meaningful disagreement, and -- and i think for markets really this is more kind of evidence of the problem than the problem itself, right, so the gridlock that it's evidence of is basically telling us that the types of things that the u.s. government could have done in

2019 that would have alleviated some of the pressures that markets are feeling now from policy choices in 2018, ie, putting in fiscal stimulus and, therefore, putting pressure on the fed's dual mandate in 2019, those things are very unlikely to happen, right so i wouldn't look at the government shutdown as problematic in and of itself even though it doesn't seem like there's a resolution coming any time soon. >> is there a point at which it starts to matter more for the markets? >> yeah. well our economists say that, you know, basically the -- the max direct economic effect in any -- in any given week is about.02% off of gdp growth. it's probably quite a bit smaller than that because it's a partial shutdown, so if this drags on for months, i think the answer is yes, but this is still going to be -- this is emblematic of a drag on a market that will continue for 2019 because it's telling you that there's really no path towards any meaningful legislation, like infrastructure expansion or anything like that that's going to undone some of the downsize of fiscal stimulus we'll feel this year. >> doing anything to shake your confidence, jonathan

you're still one of the biggest pulls on the street even though you took down the original forecast where were you at 3350 >> yeah. i upped my number right about the time when the market was peaking in september, and then we pulled it pack down. >> still 2925? >> it's about 14% upside or 13% upside the answer is. no one of the things we care about. we care about corporate profits. we care about the fed, and i think the big story out of washington this year is that the fed is going to be done with this cycle the futures market is telling you right now that the fed will not raise rates again. they are finished, and the next move will be a down move in 2020 that's not the credit suisse view that's what's actually baked into the market, and when investors and equities realize that that is in fact path that we're going to go on, i think that you get further upside. that along with the fact that the earnings are going to be not stellar but fine. >> so does the data have to shift for the fed to stop raising rates, or is this already a done deal? >> i don't think so. i mean, first of all, right now

what you're seeing is the inflation data is not running away, and expectations are that the economy is going to be a little bit weak they are year and weaker again next year, and -- and i don't see, and i think the marketplace agrees, how the fed raises rates further into a decelerating economy without an inflation problem. >> what about earnings how much sort of warnings that we got like from apple is baked in at this point >> it's a good point there's really two things that are weighing on the earnings revisions, if you will the first thing is that oil prices were down a lot recently, and that's brought oil prices down you've had a nice bounce in oil just like the stock market over the last couple of weeks and then a the question is apple an apple problem or a contagion that we're going to see more broadly? right now the market is treating it as if it's apple specific i think that's probably true, but if we see it as a more broad-based economic issue or

china issue that's a different story. right now it's not. >> people are trying to draw strings between apple and fedex, and i would argue a relatively small number of preannouncements we got is there a narrative there. >> i think there was 2019 you're experiencing some of the downsize policies that were created in 2018. even though we think u.s. and china and trade tensions will ease heading into march 2nd, some of the damage has already been done along the supply chain. apple is a good example of that. we think you'll see more surprises like that. so the easing of u.s.-china tensions, that's something that's pretty helpful for equity markets in the near term, but you'll have a continual drug from that plus stimulus pressuring the fed's dual mandate. that's the reason why markets have been hanging on powell's every word, and that won't change during the year it will be hard to break out of the same range that we were in for most of 2018. >> german ip yesterday was ugly. chinese auto salesdown 19 year on year. i mean, that's --

>> listen, we are -- we are -- as much as i'm optimistic on things, we are seeing the global economy decelerate i mean, if you look at u.s. earnings this quarter versus non-u.s., the non-u.s. is really very, very weak. the u.s. will be, you know, probably close to 18%, 19% eps growth so pretty decent, but carl you raise this question about the pre-announcements which are negative pre-announcements are always -- are only negative. companies don't say, by the way, i'm telling you early -- sometimes they do, but usually it's anythingtive. the overall tone of this is extremely average. we actually track what does an average quarter look like in the mix of pre-announcements very different some of the names are big names or they are larger in market cap, but short of that there's nothing unusual. >> finally, michael, what about this idea that the trump administration has now a lot more incentive to make a trade deal with china because of what the market has done over the last few months? >> yeah. >> do you buy that, and if so, is there really a trump put in

this market? >> i buy the idea that the administration is a lot more motivated and that china is a lot more motivated you can see evidence of the administration's sensitivity to markets in giving iran oil sanctions last year and not could be firming the g20 meeting until the u.s. equity markets were down 10%. narrative got better when the u.s. equity markets were off 20% from their highs maybe the u.s. administration felt like it can press its advantage more when u.s. equities were outperforming chinese equities that. advantage effectively evaporated in year end. we think they are sensitive to markets and more motivated i think you'll get easing of tensions which allows you to avoid escalation of tariffs, at least for the time being. >> we'll see about that. gentlemen, thank you >> well, local business leaders at the u.s.-mexico border are saying the new border control efforts are leading to delays and costing more than $1 billion. aditi roy joins us from the busiest checkpoint between the

u.s. and mexico. aditi? >> reporter: hi, david the president says that this border wall behind me is a source of a national crisis, causing the government shutdown. 800,000 government workers are not getting paid, and in his primetime address president trump says it's imperative that congress provide the $5.7 billion needed to help pay for that barrier >> the federal government remains shut down for one reason and one reason only, because democrats will not fund border security my administration is doing everything in our power to help those impacted by the situation, but the only solution is for democrats to pass a spending bill that defends our borders and reopens the government >> the president has been talking about this wall since 2014 last year he visited the border

wall prototypes in san diego county while he has talked about a concrete wall in the past, he's now referencing a barrier made of steel, and we spent some time at the san ysidro crossing it's the busiest international border crossing in the western hemisphere retailers here depend heavily on customers from across the border in mexico. one report says a delay of 45 minutes per crossing costs the county nearly 8.5 million trips and $1.3 billion in lost income per year pack in 2017 beshowed you these prototypes fewer than ten miles of here. if a wall of this nature were built it could cost between $21 billion. that's the dhs estimate and $70 billion is what senate democrats estimate the president will be making his case again tomorrow by visiting the board, and in the meantime it appears the shutdown is also affecting legal immigrant workers. the e-verify system has been shut down. that means that companies have no way to verify the i-9

credentials of u.s. workers with government documents. >> big story we'll watch that stormy. thanks, aditi. getting a bit of a readout on the u.s.-china trade talks from the u.s. trade rep and for that we go to ylan mui. >> reporter: we do have an official statement from the u.s. trade representative's office and it says the u.s. and china discussed ways to achieve fairness, reciprocity and balance in trade relations between the two countries. it said that any agreement must be subject to ongoing verification and effective enforcement. the statement says that the talks also focused on china's pledge to purchase a substantial amount of agricultural, energy, manufactured goods and other products and services from the u.s. it said that the officials conveyed that president trump is committed to reducing the u.s. trade deficit with china no raw characterization though of how these talks went.

chinese officials have said that the talks were serious and that they hoped they would be productive and constructive. the next step is expected to be higher level meetings, perhaps cabinet level meetings, but the official word from the ustr is that next steps have not yet been decided back over to you >> ylan, at first glance does the fact that the talks focused here on the chinese buying stuff sound like a disappointment? does it not attack issues that are more structural, do you think? >> reporter: i don't know that it's a disappointment, carl. i think it's really sort of just the groundwork for more talks later on these were intended to be sort of technical talks with mid-level officials, with staff, and so i think some of those more intractable, more difficult problems will have to be addressed later on >> we'll look for more clarity out of the u.s. trade rep. thanks, ylan yewy in washington today. when we come back, could apple be cutting down on production for new iphones what 2019 may hold for the stock. plus, tim cook taking on his

critics sitting down with our own jim cramer we'll bring you the latest from that interview on "mad money" last night back in a moment i am a family man.

i am a techie dad. 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. shares of apple are ranging higher reports that they will cut their production by 10%, the second time in two months that apple planned its production despite its recent stock fall, tim cook tells cnbc how he

believes the company's outlook is bright. >> i'm never surprised by the market, to be honest with you, because i think the market is quite emotional in the short te term, and we sort of look through all of that and think about the long term so when i look at the long-term health of the company, it has never been better the product pipeline has never been better. the ecosystem has never been stronger the services are on a tear >> joining us today david rolf, chief executive officer at wedgewood partners and longtime apple shareholder as well as our own jon fortt in las vegas at ces. jon, let's handle the short-term supply chain stuff the headlines have been coming for a long time. does it have more credence given what apple has formally said in the past couple of weeks >> i think it absolutely does, carl you know, we were skeptical. i was particularly skeptical around the reports of production cuts before saying let's wait and see if that actually pans

out. it did, and in light of that and in light of apple's warning i actually think this 10% production cut is a good sign because this isn't so much about the future i believe, but it's more about the past and inventory management if really that's all apple has to do in order to stay within its target inventory given that miss that we saw, it means they have been managing their supply chain pretty well. when you see hardware companies have misses based on their guidance and expectations, it's not uncommon to see massive production cuts in order to rebalance the supply chain that's not what we see here from apple, carl. >> that's interesting. david, do you agree, and are you trading or buying or selling the stock based onsome of these inventory adjustments or more about the long-term issues that cook addressed with cramer last night? >> well, certainly in our position it's more about the long-term outlook. we've been owners of apple now going on for 14 straight years, but i will say the stock, it

feels like he is been a death by a thousand supply cuts, and i do agree with john's assessment, but i think, you know, and, again, we can, like cramer did earlier today, i mean, we can -- longer term holders we can wax poetically about this amazing future in health and services, and we certainly get that, but i think we need to unpack this china story a little bit more. you know, i understand economic weakness, tariffs, you know, manufacturing is down. i get the patriotic thing, you know, maybe huawei versus an iphone at the margin, but one of the things we need to think about is that when you look at some of the consumption tax receipts in china and the v.a.t. tax receipts, they plunged a couple of months ago i think the consumption tax in november dropped 70%, and that's on the higher luxury, higher end

goods. >> yeah. >> and i they we need to introduce the narrative or the thought of what's going on in china in the real estate market in the real estate market is very different in greater china than it is in north america. it's almost like an element of a savings account, and we've seen weakness in there. we've seen some price drops just over the last month or so, so if -- yeah, go ahead. >> i was going to say. you don't sound very positive. i don't think this is leading anywhere good? >> no, i mean, i think this whole idea -- when the stock was as 233 and now we've fallen to 132 and clawed back ten points of that, the narrative went from a consumer staple multiple to a steel mill going, you know, in runoff mode, but i think predicated on that higher sustainable multiple was this idea of a relatively stable iphone business, maybe 210 million iphone units a year. that's been the case for the last four or five years.

it looks like consensus right now is about 190, and we had a price increase last year of about 18%. and so until this iphone story stabilizes until, again, captain obvious here, until cuts in the iphone franchise taper off, i think we're going to have a hard time for this stock over the near term maybe climbing back if we get that, it's, you know, open fuel running to gain back a lot of those points, that 39% drop that we had from september highs, and the stock could post a really good return this year we've still got some work to do on the china front. >> you know, on the china front, jon, i thought samsung's numbers were notable a big miss across the board citing china weakness. a big disappointment in revenue guidance as well put that in context. how much is just macro economic,

u.s. trade war, and how much is some of the larger concerns that people are talking about with iphones and inowe sflags do we have a better read on an answer? >> i think that's a great point. a lot of it seems to be macro. maybe not just the chinese economic so much as what's happening at the high end of the chinese economy and what's happening at the high end of the smartphone market in china and globally, but the important point here i think as far as apple is concerned is, it's not as if somebody is beating apple at its open game, so the question for an investor becomes do you believe in apple's game when you look at the china market longer term, do you think the chinese middle class continues to grow, to consume technology, to be very mobile-focussed in how commerce takes place, both digitally and omni channel in stores as well, and then who in china is positioned to do what apple has done which is bring together hardware, software, services in a device and by the way the retail food print that they have

locally in china and really compete head-to-head with apple for that premium customer. that landscape has not significantly changed, and so apple's strategic position in china beyond the short term is not necessarily challenged at the level that i think some investor fears might indicate based on how the stock has reacted in the near term. >> interesting we went many months and quarters wondering whether china would be a focal point for investors, and we're here now, that's for sure. david and jon, thanks, guys, we'll see you soon. >> thanks. >> whenny with some back, day two of ces is under way and we've got big guests discovery ceo david zaslav will be joining us for an exclusive interview comep xtw une dois up 150 points "squawk on the street" will be right back

now for our etf spotlight. dom chu, taking a look at movements in high-yield etfs as pond king just gundlach

commented yesterday saying using strength in bonds as a gift and get out of them. dom chu has more on them dom? >> the bulls are still in the process of staging the comeback from the lows and the high-yield debt market is one place where volatility has fallen, risk assets bid two of the large junk bond etfs have staged stunning rallies over the past couple of years. the ishares high-yield fund has gained 5% since the lows on christmas eve. a big move and similarly the spdr high-yield junk is up about the same amount. a lot of fear about the market's turmoil and maybe a signal of larger scale flight to risk from safety based on yields on treasury debt and corporate debt the etfs are now back to where they were in the end of october, early november theseverity of the drop as wel as the bounceback have been catching trader attention. it's also stoking debate on how much the moves were

fundamentally traded certainly a move to watch is junk bonds as they become one. tea leaves in the market. >> thanks, dom let's get to the las vegas where julia boorstin is sitting down with a special guest hey, julia >> good morning to you, carl i'm joined now by david zaslav, ceo of discovery communications. thanks so much for joining us here. >> how are you >> good, good. it's been a big year for media looking back on last year, your biggest rivals merged to become even bigger. now we're looking ahead to them launching streaming services this year. as you look at the landscape, are you concerned about losing both subscribers and ad revenue and these new bigger giants? >> okay. the media business has started to consolidate, but we also consolidated we acquired scripps last year for $15 billion, and together with hgtv, food and travel, when you put that together with our discovery portfolio, we're the second biggest tv company in the u.s. in terms of reach on any given night in america, and so we feel

like we have good scale, but more importantly the majority of the media business is about scripted content and movies, and so whether it's what disney is doing with buying fox. they will create a great competitor to netflix. you look at netflix, amazon, hbo, they are all on the right side of the media portfolio. scripted movies, scripted series we're really powering people's passions that's what discovery is about we have natural history with discovery and animal planet and science. we have home and food. we have travel we're the leader in crime in america, and so within the u.s. we think we have a -- we're the largest in quality, passion brands. >> but your directive consumer strategy has been about nis products such as golf which made a big announcement against cycling, but you're going up the bundles and people will only subscribe to so many services. aren't the smaller more nis one the first ones that will go?

>> we see is differently we have something that no one else has which we think is quite valuable we own all of our content globally so we can launch natural history around the world. we can do it with apple or google or do it ourselves. we launched on january 1st golf tv outside the u.s. where we have the pga tour and the european tour and tiger woods, and so we're about passion groups we're going to let the other side, with very expensive contempt, try to be the big aggregator of the everybodies, and for us we want everyone that loves golf to hang out with us, everyone that loves cycling or everyone that loves oprah, and some of the brands that we have like food, you know, here we are at ces, and the big buzz is 5g and who is going to own the home, but when you think about 5g, what 5g really does for that side of the media business with scripted and movies, it's speed and download had a movie in three seconds versus 15 seconds. what we can do is with food and cooking and recipes and all the

talent that we have, we could work with verizon or at&t or -- or apple about owning the kitchen with food or owning the home with -- with hg and diy. >> but when it comes to 5g though, you have at&t, they have made billions of dollars in investment in 5g they now own a media company, warner media new verizon which just announced a content exploration partnership with disney about streaming more content via 5g, do you need to make more acquisitions or be purchased to really compete when it comes to this space >> we really look at the business as -- they are all -- what 5g is doing, what hans is doing with disney is great because he's saying how can i offer more streaming movies and scripted content but, you know, we've spent a lot of time with hans and his team and we'll continue to and with randall and with t-mobile where they look at us very differently. we have functional content now that we have 5g in the home, what can we do with your food talent, with the food network,

with cooking, with your short norm show that we can own the kitchen together do we do that with amazon, or when you have 5g, the ability to take hg and all the talent we have around home design and home renovation and create something that's really meaningful in the home, so i think the -- the right side of the media business, the very competitive scripted movies and -- and scripted series, they are all fighting over how do you get people to spend $10 on this big bass yet and maybe 5g makes it faster, but we think our content which resonates globally is going to really benefit and we're real different than those guys. >> david, do you want to jump in mere >> sure. thanks, julia. david, it's david faber. >> hey, david. >> following up on julia's question. >> hello, nice sweater >> following up on her question about scale. you know, you did the big deal with scripps, but there does seem to be a continued belief that you need even more scale. now i believe based on my

reporting of viacom and cbs will take another shot at getting together and maybe be successful this time and one could imagine discovery being a part of that in some way, or our parent company comcast which has taken a big presence internationally through the ownership of sky, discovery being a part of that when you think of the long-term future of your company do you think of those kinds of consolidation opportunities? >> well, looks, one of the great things about the position we're in now having just absorbed scripps is we're a free cash flow machine over the next four years we'll be generating $9 billion, $10 billion, $11 billion in cash and we'll have an opportunity opportunistically to get bigger, but one of the things that i think is misunderstood is we are the number two tv company in america. we're the leading tv company for women in the u.s we have more exposure internationally than any other media company in the world we're in 200 country, an -- and

we're the leader in sports between golf and the olympics and eurosport and tennis and now cycling, and so we have very quietly become the leader in sports outside the u.s. and we're the leading international company, and we're the leader in this -- these passion baskets that we're starting to take around the world and most importantly unlike any other media company we are a global ip company. we own all of our content, and so whether it's the mobile guise in europe or in asia or whether it's apple or google, if someone says i would like to do something with you with food or home everywhere in the world above the globe, well, let's do something in natural history where we have the leader. >> right. >> let's offer that on every device everywhere in the world we're the only company that can take all of our ip and we can deliver it starting next month everywhere in the world, and i think that -- we're looking at the content that we have, and we say we don't want scripted in movies because people still spent 45% of their time

consuming content that's not that stuff, and with that basket we got the best stuff and we have the most stuff. >> given your perspective because you're number two, dave, i'm curious. julius interviewed randy fuhr and they grew quickly and added a lot of subs. we'll watch closely people disconnecting from their video subscription in terms of the bundle where do you think that's coming, from and does it matter to you that we watch people, whether it's directv or whether it's comcast saying no more to the video bundle does discovery worry about that, or is that not a concern given your presence on the other ott platforms? >> you know, there is opportunity for us in this sense. subscribers are still growing outside the u.s. 2% because there are entry bundles that are less expensive the u.s. is the only market where you have to buy through sports and regional sports to get multi-channel television so you have everywhere else in the world in the aggregate growing 2%, and the u.s. declining 3 with randy now, we added our

channels to hulu, and hulu is growing significantly. one. reasons is that hgtv, food, id and tlc are four of the top five channels for women, they didn't have them, and if these skinny bupdles start to grow. if hulu grows or directv now grows, it's going to be less channels we have more carriage on those skinny bundles than anyone else. we will be a beneficiary that have. >> but are the skinny bundles and the revenue you get from them compensating from declines in traditional media and declines in advertising from ratings falling? >> the skinny bundles are actually better for us, and we've seen this over the years because we're in skinny bundles everywhere in the world and so in brazil instead of the ten channels we had six of our channels carried, but because there's only 30 channels and there's six of them, we got 85% of the subscriber fees but our viewership went from 20% of that package to 45% of the package and our ad revenue grew dramatically and our brands grew so what we're seeing is the skinny bundles will mean that we

should be able to get more ad revenue because our reach and viewership and the demo of that viewership should be more compelling. >> certainly, will be a fascinating year for the media interest david zaslav, thanks so much for joining us here. back over to you. >> thanks, david. >> thanks, david >> that's a vest, not a sweater. >> a sweater vest, i liked it. >> julia boorstin with david zaslav let's get to sue herera for a cnbc update. >> good morning. here's what's happening. deputy attorney general ross rosenstein is expected to leave his position soon after william barr is confirmed as attorney general. that's according to multiple reports. rosenstein appointed special counsel robert mueller barr's confirmation hearings begins next week north korean leader kim jong-un has left beijing after a two-day visit. kim reportedly met chinese president xi jinping which may have been a pre-cursor to a second summit between the north korean leader and president trump. secretary of state mike pompeo arriving in iraq in an

unannounced stop on his middle east tour to promote the administration's hardline position on iran he met with iraqi leaders including that country's prime minister meanwhile, iran's supreme leader responding to pompeo's middle east visit calling u.s. officials, quote, first class idiots, end quote. he mentioned a u.s. official who once predicted he would celebrate christmas in iran. he didn't name the official, although national security adviser john bolton has told an iranian exile group last march that they would celebrate in iran before 2019 you are up to date that's the news update this hour carl, i'll accepted it back downtown to you. >> all right sue, thank you very much sue herera wall street looking ahead to the release of the fed minutes at 2:00 eastern time. we'll look for clarity on economic growth and economic risk former dallas fed governor richard fisher will join us with some thoughts. a bit of a flush, dow up 72 points as oil prices have come in as well, a smaller than expected draw in inventories we're backn mont ia me

welcome back to "squawk on the street." oil invin tress out in the past moment or so they fell by 1.7 million barrels this past week the expectation was a 1.5 million barrel draw. distillates and gasoline showed much bigger bills. distillates up by 10.6 million barrels. expectations were 2.1 million barrels. crude oil prices, sara, still up on the day but well off the best levels of the session. those oil prices moving on that inventory data back over to you sara. >> dom, thank you very much. welcome back, everyone, to "squawk on the street. i'm sara eisen here with carl quintanilla and david faber live as always from post nine at the

new york stock exchange. about an hour into the trading session. as carl referenced, we're seeing stocks come off their best levels still higher let's see what happened. dow is up 74 points. s&p up a little more than a tenth of a percent and nasdaq in the lead technology is the leading group right now within the market. energy stocks still doing strong with a 2% rise in crude oil but got a lot of the defensive groups like real estate, for instance, under pressure financials are also down. >> amazon's jeff bezos announcing his divorce from his wife of 25 years this morning via twitter. robert frank joins us with what that might mean for amazon down the road. >> reporter: good morning. bezos tweeting he and his wife of 25 years are divorcing. he subjected that this will be an amicable parting saying, quote, we see wonderful futures ahead as parents, friends, partners in ventures and add ventures, but the question is what impact could have this on amazon's share price

bezos owns just under 80 million shares or around 16% of the company. now washington state where they live is a community property state. that means that all property and debt acquired during the marriage will be divide equally by the court if they cannot reach an agreement on their own. the bezoses were married in 1983 and amazon was founded a year later in 1948 so that means mckenzie is entitled to half of his entire stake in the company worth today around $132 billion. now he also has blue origin. he owns "the washington post," lots and lots of real estate, including homes in seattle, beverly hills, washington, d.c. and new york now, my guess is this will be settled privately out of the courts and we may never know the terms and so far the most expensive divorce in u.s. history is of steve wynn and his wife elaine, expected to be around $1 billion in 20 so and

harold hamm wrote the famous check to his ex-wife luann for $975 million but, again, bezos signaling again to the public and the market that this is an amicable parting, and there won't be a litigious court battle for half the assets, so they will probably work it out on their own. i think that's why you're seeing kind of a little upward movement in the share price this morning. guys, back to you. >> robert, real quickly. producer is going to be mad, but she's going to become, mckenzie, one of the most powerful women conceivably in the world in terms of her wealth. do we know anything about her or what her interests are or where she might channel some of that wealth >> no. she's been involved in efforts in education and various kinds of philanthropy. they have done a lot as a couple with the homeless problem in seattle so we may see her ramp that up, but like lore even powell jocks, she's become a force on her own in philanthropy and that's a really good point the not-for-profits today taking

a look at her and her interests as a big donor going forward >> robert, thank you. >> thank you, guys. >> robert frank. next week starts the big bank earnings season. the federal reserve's fomc minutes are out later today with a number of fed speakers over the next few days. to dig deeper into how all of this may play out for rate, financials and the broader market, we're joined by former federal reserve dallas president and senior adviser to barclays richard fisher welcome back nice to see you. >> thank you, sara >> what do you expect to see, or what will you be looking for in the minutes from the last fed meeting released this afternoon? >> i don't think you'll see anything the meeting took place before powell's appearance with his former two predecessors, and i think all that is in the marketplace by now, so i wouldn't real a whole lot into the december meeting they released their projections back then so i don't think there's going to be a lot of interesting news in there but

we'll see, you never know. >> you mentioned the big powell speech or the panel that he did with bernanke and yellen. >> right. >> that really felt like a psychological turning point for the market, totally shifting his tone is there a powell put now? >> i didn't see anything new there, by the way. i mentioned this on a show a couple of days ago if you go back and look at what ben bernanke said, for example, all the way through at the end particularly when we were beginning to taper qe3 or end it, he said we're going to remain flexible, and we're just going to adjust our position according to what develops on the economic front and the u.s. economy, so -- >> but -- >> to me this is -- this is much ado about nothing, and the see thing here is the balance sheet, sara the balance sheet, if you look at the balance sheet, the majority, almost $1 trillion in hold some things maturing in the one to five-year time frame. that's what his rolling off the

balance sheet. that's also where the u.s. government is expanding their issuance, $1.3 trillion the next year this is where you're really seeing the backup in interest rates. the ten-year rate has come down now to 2.70, down to 2.60 after those comments, so i don't really understand why the market is so excited about this a or b, nervous about the fed continuing to proceed we'll see. they will adjust they will be flexible. they will be patient this is standard federal reserve rhetoric i mean, it's been going on forever. >> in the last meeting, rich, he used the word automatic pilot referring to the balance sheet policy you can't tell me that that sounded the same when he spoke last friday? >> bernanke ensaid the same thing. we're not on autopilot we're not on a fixed regime and we'll adjust it according. >> but powell said in the news conference that we are on autopilot? >> he's talking about the balance sheet. >> he said that on friday. >> well, we'll see but he also indicate that had he

saw nothing right now to change the course so, sara i think what this all indicates to me is the enormous dependence markets have on what we did by taking rates to zero, by expanding the balance sheet up to -- it's now at 4.1 trillion, expanded it to 4.5 trillion, and this is what we all feared at the table when we were going through the program are we painting ourselves into the corner will the markets become hooked on this stuff, and how do we get out of it? and mr. powell has the unfortunate duty to unwind and get back to normal as much as possible and very importantly prepare for the future when the economy finally turns, and that's the tension what do you do now for the short term, and what do you do for the long term in terms of having had a little prophylactic medicine here in order to cut rates to ease a downturn which i think the markets should be looking at longer term, but they are not. they are looking hat short-term gratification, and this was

precisely what we worried about at the table in my step years there, particularly when we went through the programs. >> fascinating to hear you talk about that are i wonder, you know, some have said that powell's mission, whether he likes it or not, is going to be to volckerize the fed and wean us from our dependins on asset prize should that be his mission >> well, i think definitely his mission should be try to achieve some normality here. there's a question of how far you go, and how rapidly you go, and, yeah, we created an artificial construct we drove rates to zero we hammered down the yield curve. we poured on a lot to make sure that everybody understood that market bottomed at 666 the first week of march 2009 it ran up 15% per annum until the october peak, now 13.1% per annum and ten and 5/8 of a year run, that's a heck of a record and once you're used to that flow hand no volatility as we saw in 2017, complete absence of volatility, eventually it's

going to snap back, but, you know, i -- i really think they have a very tough job and i keep hearing when i hear all the commentaries what mickey mantle said, you know i never realized how hard it was playing baseball or how easy it was playing baseball until i went into the broadcast booth and it seems very easy from the broadcast booth uncertain difficult task that they have. they are earnest about it. they are going to watch it and will be flexible, of course. that's the way the fed works but they will gear to the real economy but not the financial markets unless market turbulence begins to affect the real economy. >> speaking of the real economy -- >> i'm glad i'm not at the able any further, by the way. it's a tough job. >> speaking of the real economy, given your presence on the board of companies such as pepsi and at&t. >> right. >> a, what are you seeing, and, b, i'm curious, also given your time in government service, do you see any impact here of the government shutdown over time in terms of dislocations or in terms of actually impacting economic growth? >> i think as it is goes on for

a longer time perhaps. we haven't seen a significant impact thus far, but it's just one more factor creating uncertainty. i watched the president last night. i watched the response from chuck schumer and nancy pelosi it's very disheartening, and by the way the only people that poll less popular than the federal reserve are members of congress they are the least liked people in our country, and you can see why. it's just -- it gnaws at the confidence level of financial and market operators and most importantly the men and women that run real businesses in this country, and it undermines our confidence so i don't think it's a plus i hope they get it solved, and whatever they are trying to do partisan-wise i hope they somehow pull back together but, again, there's not a whole lot that's new it's just extreme in our current circumstances. one more comment, by the way you've seen charles evans and james bullard at chicago and st. louis, they are voters this year, and we'll see. they are fairly dovish, and

we'll see how they can impact the committee. >> richard fisher, good to check in with you. >> thank you. >> thank you, sara appreciate it. >> always good to come back and for the. former president of the dallas fed. obviously, we have lost quite a bit of ground here dow up 34 points, s&p has gone red, after we got that inventory number and oil prices came in, as well. shooting for a fourth day in a row, up. but that's now at risk we're back in a minute

investors cautiously optimistic about progress being made on a china trade deal three new-age tech stocks are quietly breaking out find out what they are and if you should buy them on tradingnation.cnbc.com more "squawk on the street" is coming up.

let's get to the cme group in chicago rick santelli has the santelli exchange rick >> good morning! well, everybody, of course, has been very excited that the equity markets aren't as volatile especially the bulls but i look at it from a bit of a

different perspective. i look at the treasury complex and i think how little volatility there was in markets in 2017, 2018 was a bit of a different story. right in february, we could tell i remember, there was many times we discussed, what's the code? what's the way we will understand when we're supposed to challenge the big rise in equities that started right after the november '16 election? and pretty much, after a period of time, most analysts, economists, and i agreed is that it was a volatility change when the stencil of the market turned more volatile, that really was a warning sign. in terms of interest rates, they really didn't take a cue from the volatility in equities until much later in last year. it wasn't until around october that they really started to pay attention. and it was around september that we really started to point out the notion of double tops, and then they were established so let's go through it this is a chart, basically 39 years of ten-year note yields,

but there's only one thing i want to portray to you and we've done it before it's how double tops are such a significant reversal pattern in almost every facet of fixed income trading they're just predominant and the current one is no different. the double top that we had in october and november just shy of 3.25 paid large dividends. you figure the low yield close of this move has been 255. we started out at 3.25 basically, you're up 70 basis points that's a nice run. now, i'm sure you're all asking me the same question as a technician, how do i look at this and then tell you where it stops well, that isn't quite as easy the double tops are much better to trade, because once they're established, you can really keep tight capital management or stops. but the issue here is a little different. so we tried to come up with a variety of ways to handicap.

many have drawn trend lines here, but we did do an extra violation, but i do caution spending too much time on minor violations we have a lot of areas right around 2.5% that may hold. and the biggest thing of all, one, two, three, four. a fourth wave usually gives rise to a fifth wave, and usually the fifth waves take out all the others and they're almost as big as the third so, my opinion, somewhere down here, we're going to find the bottom of the rates. david aber, back to you. >> okay, thank you, rick santelli well, we are just moments away from the end of "squawk on the street" and the beginning of "squawk alley. but first -- >> sarah, what's ahead on the "closing bell" >> so nike got a rare downgrade today to market hold from bear we'll talk to the analyst behind that call, jonathan comp it is unusual for a stock that 70% of the analysts say is a buy

and just came out of a pretty blowout earnings quarter so we're going to figure out why he is warning that the best gains perhaps for nike are behind them. >> all right >> interesting call. we'll see you then, sarah. when we come back, a lot more from ces in las vegas, including a first-on-cnbc interview with micron's chief, sanjay mehrotra. "squawk alley" starts in a few moments. don't go away.

good morning it's 9:00 a.m. in boise, idaho it's 11:00 a.m. on wall street and "squawk alley" is live ♪ good wednesday morning welcome to "squawk alley." i'm carl quintanilla with morgan brennan. jon fortt is live in las vegas from ces a lot more from jon in just a few mo