poor pricing strategy from apple. many of the new iphone models are priced around 25% higher in china than they are in the u.s >> yes, i am >> you are going to? >> that was the question am i yes. >> the eagles is the only game i care about, honestly >> eight teams left. >> i only care about the eagles. >> you don't care about kansas city >> no. >> all right >> we'll see you guys. have a great weekend we'll see you back here. wolf, thank you for being here time for "squawk on the street." ♪ california >> good morning and welcome to "squawk on the street. i'm david faber with sara eisen. we're live from the new york stock exchange jim cramer is out in san francisco. final day out there for him. carl is just out today some news to get to on gm, but first a quick look at futures. you see how we're set up for the open european markets a mixed bag

everything in the red right now. and the ten-year note yield and crude oil, crude has been a real story of late. you can see there, below $52 a barrel we're getting some breaking news this morning out of general motors want to get right to that. phil lebeau just spoke to the ceo of the company, mary barra he is with us at post nine. >> they are raising the guidance for what they told us for 2018 general motors saying it will exceed its previous guidancguide as for 2018, it will exceed what was expected of between 580 and 620 a share. the consensus on the street, 628 a share. also expecting to exceed its free cash flow guidance of $4 billion. for next year, fairly upbeat guidance, general motors is expecting to earn between $6.50 and $7 a share the consensus out on the street now is that $5.86, so clearly

that's going to shift in free cash flow, automotive cash flow between 4.5 and $6 billion here is what mary barra had to say about their optimism about the u.s. market. >> maintain perspective. it was not only a focus on really, you know, capitalizing on the new trucks that we have out there, the light duty trucks, but also the focus on cost reduction so it was across the board every element of the company, one of our philosophies is everything can be made better and i think what we're going to -- we have been able to communicate related to 18 demonstrates that. in 19, we're really excited. now we have a full year of light duty trucks, we'll be launching the heavy duties that will hit in the second half of the year we have got a full year of the chevrolet blazer, full year of the xt 4 and another very exciting cadillac suv launching on sunday. we have a very strong product portfolio in the u.s. market we have a strong product

portfolio coming in china. so when we look at that, that is going to help fuel our 2019 and support our guidance. >> are you worried about china overall as a market? >> well, i think when you step back and look at china, we have been there for 20 years, we had tremendous success, we had very strong brands. we think the trade talks that are going on now are very, very constructive the fact that they even extended this first round to have more discussion, the next is already scheduled. we know there is discussion about durable good stimulus in country that we think will apply to autos and then the fact that we have got 20 new -- either new or refreshed products coming out. we are positioned well and we're really taking a long-term view when we look at china. we think over the next few years, that's a market that has the opportunity to grow to over 30 million units >> we ask mary barra about whether or not china is immediately starting to see a slowdown in terms of the consumer they are seeing some of that, that is nothing that has been

material in terms of the bottom line we're coming up on the five-year anniversary of mary barra becoming ceo look at shares of general motors over the last five years i asked her, are you satisfied with your performance? that stock has done nothing over the last five years, nothing and she said i'm not satisfied with my performance. i'm sure investors aren't either general motors continues to be range bound. 33 to 36 anytime it gets closer to breaking out, comes right back. >> how does it look versus ford or if you were to overlay it with some of the other automakers, not tesla being included. >> better than ford, not as bad as pfiat chrysler. did they have a better strategy? gm improved its performance in terms of truck sales, but clearly that's one of those things you have to look at look at that stock over the last five years if you put your money in there, you're not happy >> part of it the gloom of the

sector, right, phil? it is moving up today here in the premarket, 6% on this news the last we heard from gm, they were laying off 15,000 workers, got in a big fight with the president, who put a lot of pressure on mary barra for that announcement ford yesterday, job cuts the industry at large is facing -- >> too much capacity. >> this is actually very surprising in a good way. >> and i think the question people have is, especially with the other news coming out today, they'll make cadillac their lead brand. they'll have electric vehicles in other brands, but cadillac the lead with the next electric vehicle. can they finally do something when it comes to electric vehicles they'll talk about the bolt, they'll say we learned a lot, the volt has been successful you look at their sales relative to tesla, they're nowhere close. i think people are looking at this saying is this perhaps then getting in the game more. >> jim, you want to -- i don't know, take a shot at defending mary barra in terms of the performance of the stock >> i do want to comment on what

phil said, which is that you can't seem to get a price multiple on the great numbers. phil, she's doing -- she's giving it all she's got and people just simply refuse to believe that other than tesla anybody's growing. what does she have to do to demonstrate beyond this incredible number that gm is here to stay. >> here is the question. do you stem out cruise automation the valuation of cruise, you would think that general motors overall is a company and would move higher. do you spin out cruise what about gm china? do you leverage the strength there and spin it out? because i -- you can't fault mary in terms of profits and what they're doing at profit margins in north america she's -- her team is delivering there. but the investor has basically said, i don't know what the future holds so therefore, you know, why should i invest in this company? >> when young, which was doum d

into yum and yum china, people were really excited about it it turned out yum, the boring old europe and american pizza hut and look at taco bell and kfc, you got -- you made a lot of money i'm wondering right now, i know it sounds like financial engineering, but i think that's a good idea. you can get the growth part of china, not to worry about whether this -- and you get the core, which i think is worth a lot. you see more i would encourage this typically i wouldn't but she does have to do something other than put up great numbers. phil, she's putting up great numbers. >> they are. nobody is arguing that nobody is arguing that at all. >> you're heading into a truly -- i know we use the word uncertain a lot. if you want -- with autonomous coming, with so many different cross currents for this industry and the years ahead that we talked about so often. >> i would understand why investors are not willing to award a multiple player. they own a good amount of lift,

for example. what is the strategy when it comes fully to autonomous? >> revolves around cruise automation they plan, this year, provided safety, their own safety thresholds are met, that they will have an autonomous ride share program starting in san francisco. but keep in mind, that's going to be geo-fenced in a small area, much like way mo down in the phoenix area it is not going to move the needle anytime soon. the question becomes how quickly can cruise automation start to monetize autonomous ride share then you can sit there and say, okay, i see the path to the future >> there is also this question of what auto sales broadly look like the headline, gm expects flat industry wide sales in china in 2019. >> 27 million. >> same as -- very close to numbers of 2018 and it gets back to the question of whether aut sales have peaked. >> i think most people think they have peaked they have peaked, they're going to plateau likely over the next couple of years. we're not going to fall off a cliff, not looking back at

2009-20 10 you won't see the big gains in growth relative to what the auto industry usually does. >> was this a surprise to you, given how closely you follow the company? last time we got news from gm, big news was the factory closings was this or is this guidance a surprise >> the guidance is a surprise given the overall tenor of the sector you look at what we heard from other automakers and their concerns, there is the surprise there. if you think about it, though, it shouldn't be a surprise given trucks and suvs, high profit margin vehicles. that's what people are buying right now. to their credit, general motors is pushing more of those so that certainly helps. in that regard, that shouldn't be a surprise. china is china they get about $2 billion in equity income, probably will drop a little bit this year. but that's -- >> what about layoffs? is gm done >> she says they're done in terms of plant closures for the foreseeable future she wouldn't commit to a date, but, you know, we see a dramatic change in the market two years from now there are some plants that, you

know, the capacity utilization is not as high as they would like. >> jim, for the thoughts >> we remember, you go way back there was a period you bought these stocks because they could continue to raise their dividend over and over. now ford has a 7% yield and people are worried about it because that's because people were -- the stock is going down. that's why that yield is so high is it possible that gm could start returning a lot of capital that you would have the situation where even if it stayed static, you say it 5.5% yield, really large. and income producers will gravitate to the stock like they used to do in the '90s >> that's an interesting point and we haven't seen that, i heard some people say, look, give me a higher dividend. give me a higher dividend. if i don't get it from the stock, give it to me in terms of the cash mary barra will say we feel comfortable with the dividend we pay out. but i think your point is a good one, jim people are saying, all right, if i'm not getting it from the stock, give it some other way. >> phil, thank you for bringing us the news. >> you bet. >> nice to see you. >> good to be here.

>> phil lebeau on, of course, that gm news gm shares up sharply premarket futures pointing to a slightly lower open on wall street new economic data out this morning to tell you about. u.s. consumer price index fell .1% in december, as expected the government shutdown reaching day 21, now tide for the longest in history wall street firms are beginning to take note jpmorgan says the shutdown is starting to impact the u.s. economy and is cutting first quarter gdp growth estimates by 25 basis points. jim, it doesn't look like investors mind the shutdown because the stock market is up more than 7% since the shutdown actually started >> well, we don't want it to go on forever as we saw today, couple of articles about the farmers, the base of the president, really starting to need these payments. i want to be clear on this core inflation. core inflation is down that is, i know some people say, well, that's in line give me a break. that is huge how can cbi -- cpi be down

during a period when we have great wage growth? that's the new economy also there is chatter about how gasoline, that that is ephemeral. we have a glut of gasoline of incredible proportions in this country now. if anything is going to be pressured, down on gasoline, despite the move up in oil this could be a little longer lasting. negative cpi is not a nothing burger it is incredible and we should be talking about that. >> jim, on the shutdown, you talk to a lot of software related companies, technology companies, many of them have large government contracts i realize the idea it will all get made up. if you're in the midst of getting awarded a contract or extending a contract, or even fulfilling it, are we going to see some dislocations in earnings from those who rely on the government for at least some portion of their revenues? >> i think we will if this continues to go on look, we'll see, as sarah talks about, maybe people say the dollar might be peaking. we'll hear that perhaps costs are coming down. more on that later

we're also going to hear it is up in the air with the government david, no one stops to think, those contracts have to come back people start saying, wait a second maybe we should be factoring this in and cut numbers. that's not what you want and i've got to tell you, enterprise software is heavily related. i spoke with sales force yesterday, they have a lot of government contracts, they're telling me, look, business is good i think you're right, the longer this goes on, the more we see dislocations it has to be resolved soon >> and we're going to look into the sentiment numbers first, the surveys, 800,000 federal workers not being paid see if it has impact on consumpti consumption, small business loans, news does trickle through to the real economy. we'll look potentially for any impact >> on the other side, we're kind of -- we don't have any supply coming on. and when there is no supply coming on and had the january surge of money coming in from 401(k), it explains some of this move i think we would have some very big deals hitting the tape now we're not having them.

>> and just jim's point on inflation, i would say it lets the fed pause, the theme of the day again, which i know we'll talk about. >> it is big not a nothing burger we got to stop calling it nothing. that's wrong >> we come back, we'll have some news on fox. it is not going to bid for those regional sports networks for sale from disney disney has to spin them out. who is left in that bidding and what does it mean for new fox? going to be a new independent company very soon. take another look at futures a lot more "squawk on the street" live after this. ♪ [ dog snoring ]

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welcome back to "squawk on the street." an update on an important and large process for a sale of the regional sports networks that disney has been pursuing now for some time. fox, the original owner of those regional sports networks, that has sold them to disney, is part of the overall $71 billion deal, underwhich disney is buying much of the fox assets, paying as much as let's call it almost $20 billion of that 71 towards that rsns fox thought to be potentially the final real bidder for those rsns comes out in an ak filing this morning and surprises many people by saying, we're not going to bid confirming in fact that it has no intention to bid for those regional sports networks why? well, first of all, the filing had to do with indebtedness that new fox will be taking on.

and as a result or part of that process, in terms of issuing bonds, the rating agency certainly wanted to have an understanding of what fox's plans were with regard to those rsns because if it was to pursue a deal to acquire them, it would be adding a good deal of debt to its balance sheet, taking its leverage ratio up to as much as 4.5 times or a bit more and precluding its ability from doing any new deals or additional deals it makes it very clear, it will not bid for these rsns i'll get back to fox in a moment in terms of what we can expect from that company as it tries to fashion itself as a growth company. here is the language fox confirms it does not intend to bid for any fox regional sports networks. it was in disney's attempts to get a timing advantage versus our parent company in the bidding war that it agreed to a full divestiture of the rsns

rather than prolonged negotiation with the doj that might have given it more flexibility. now what you're faced with a -- a difficult sale process at this point. previously i had reported a number of potential bidders, they are now down really for the entire asset to only sinclair. and sinclair clearly will need the help of private equity in order to actually get something done here. previously sinclair partnered with cbc partners. glaxo and apollo hanging around, both getting information, both expected to participate in the second round of bids, which are due at the end of the month. they poeboth also expected they would eventually partner with fox because fox was expected to step up and make a bid for the assets so very much unclear where

blackstone and apollo lie. one clarification/correction from me. my previous reporting on this, of course, had amazon as a bidder for the entire asset. that was not correct and my apologies for that poor reporting on my part sometime back amazon is in partnership with the new york yankees and potential bid for the yes network, which is expected to be removed from the bundle of regional sports networks it does contribute as much as $400 million in ebitda to the overall 1.9 billion or so at the total. but amazon is not or did not make a bid in first round for the overall. a lot of attention paid to that at the time. amazon did investigate it closely. major league baseball, asserting its digital rights and inability of amazon to carry it, for example, without paying an enormous fee want all of major league baseball digitally, probably have to pay $2 billion that's one reason why they did not participate in the bid overall.

will disney be forced to sell in pieces will disney somehow figure out a deal with sinclair that makes some sense regardless it would seem disney is going to take a significant discount to what it paid for these regional sports networks and finally on to fox, very quickly, it is fashioning itself as a growth company in its new found world. right, which basically it is a -- it is the fox news network, it is the number of the other networks and not much -- and it is fox sports it did not want to be saddled with an asset, i'm told, by people familiar with the situation, that wouldn't grow. despite the fact that it might have been a position to pay a very small amount or a discounted amount for it, a good deal potentially economically. over time it felt as investor base, given it wants to fashion itself as a growth company, would be looking at it and saying, well, these aren't growing at all why do you own them? they have chosen to move on at fox, focus on perhaps international acquisitions or

continued distribution in the u.s. including broadcast affiliates, the likes of which are being sold by cox and may also fall off from the nextar deal there you have it. >> i got to tell you, if they hadn't dumped it, sinclair gets it, even though it is not a growth property, it is kind of reminiscent of when inbev had to sell rights to constellation because sinclair can get the properties right and get the ones that are too expensive negotiated a great deal, sinclair, a ho-hum situation, this could be a great investment >> you know, that's an interesting point you make, jim. listen, disney has got to be in a somewhat difficult position here given the lack of overall bidders for everything unclear how many people might step up for different pieces of it, different regional sports networks, selling it in that way. your point is a good one i don't know their capacity,

they clearly have to partner with private equity. those are -- can be difficult to sort of iron out, jim. but we're going to be watching it closely as these final rounds or second round bids aapproach but clearly a disappointment for disney at this point, which it had hoped to get some fashion or all of what it paid for the rsns back in the sale of them >> it is also interesting to think that you -- one of these f.a.n.g. stocks i thought would get involved with these, just because you know the big worry had been when the nfl contract comes up, this is not a growth prospect, amazon likes growth, but the tv sports programming had been the holy grail. maybe only the nfl is the holy grail. and everybody else is sinking. >> it is interesting. >> who else could bid? what about apple isn't apple -- >> they're not there amazon, again, partnered with yes, still trying to figure out if that's going to -- they haven't given the all clear yet. that is expected to be removed from the bundle. there really aren't many names at this point.

liberty might -- would they step up for some? they own the atlanta braves. can make the argument for some stepping up for the entire thing, it is still a big price and it is unclear, there is a lot of, you know, you need somebody who has got the relationship in place with the mvpds already who has some leverage with them because to your point, jim, they're very expensive and in the emerging world we all know about with cord cutting, a lot of people don't want to pay for it who don't watch these sports locally. >> will it hurt disney's credit rating if they have to give it away >> i don't think so i don't k w i don't know i'll look into it. get yourself ready opening bell coming up as well look at futures, we had a good week on the s&p and the broader market we are going to open lower more "squawk on the street" straight ahead ♪ (vo) here's a question.

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all right, we got three minutes before we get to an opening bell time. across country, thankfully, he'll be back soon jim what do you got for the mad dash >> you know something, there is a very quizzical downgrade of starbucks by goldman sachs, saying, listen, the stock moved too much, given the fact there are china concerns what is so interesting, where there is a will, there is a huawei we realize apple is not doing as well in china because of huawei. they're talking about -- we have been waiting for this, luckin, a competitor of growing strength in china what is mo nike, as sara knows, but interesting to watch, because starbucks has

been such -- it has been such a great stock since kevin johnson started using the money for nestle's to buy back stock this is a temporary pause. it is worth watching there is a competitor of note that is finally surfaced that really may threaten the starbucks franchise to some degree luckin not leanin, that's related to facebook >> jim, the same goldman note downgraded yum, which you referenced, also valuation, but they also say that rising interest rates and the exposure among the franchisees and how that's not a good business model to be in when you have increasing concerns about credit and rates. >> i thought that was fatuous. we have seen the franchise model for domino's do incredibly well. when they did theiich said it is up too much, i don't know, the numbers have been extraordinary for yum. i'm going to go against that and say, listen, i'm not -- i think the stock is fine because the company is firing on all

cylinders. i'm not so worried about yum the starbucks downgrade is troublesome. it is troubling, and the reason is because the stock has been straight up. i've been waiting for profit taking to be able to say, you know what, this thing is ready to buy, this downgrade is the first time i got worried about china. i've been very sanguine about china and the delivery relationship, maybe i've been too positive i hope not >> jim, as we count down to the opening bell, we get it in 30, 40 seconds from now, anything you're watching, any key to this market for trading today >> well, i am watching tilray and watching tilray because we all knew there was an expiration for tilray they said, listen, we're not going to sell -- >> and here it is, the opening bell for this friday

s&p 500 will probably reflect that the big board, the united states energy association, over at the nasdaq, willis tower, insurance broker risk management. and advisory company miss eisen, what are you keeping a close eye on >> opening trade, gm, big winner phil lebeau brought us that news at the top of the hour upbeat profit outlook, talking about cadillac, their electric vehicle. more comments from mary barra, from phil lebeau throughout the day. i'm looking at the repair done in this market since christmas eve, which was really the low point in sentiment and overall markets. and really it is across the board. two fundamental changes have improved sentiment increasing optimism about u.s./china trade talks, which continues, and the complete tone shift from the federal reserve, which we heard again from powell msci world index is the highest in more than four weeks.

the dollar has been cooling off for the last four weeks. oil hit almost $53 a barrel. the chinese currency is actually set for its best week since 2005 put all the pieces together, and you see why the u.s. stock market recovered more than 10% off its lows it is a much better feeling out there. you get cpi data, jim referenced earlier, like today, which shows that we don't have an inflation problem, even though we have a relatively healthy economy not getting too hot out there. powell's patient they are doubling, tripling down on this. >> they are. >> easing a lot of concerns. >> yesterday, jim powell changed his language yet again, it would seem in terms of the balance sheet or some people saying that i'm not quite sure how you read it in his conversation with david rubenstein >> yeah, look. that caused the big downturn, eight points in the dow. in the end, i come back to this inflation number and it is just very, very positive gasoline, oil by the way, reversed this morning and i

think that that's been a negative, whenever oil goes down we have to watch how we get rig count. i do think that oil remains in glut i think gasoline is in serious glut i think that oil could pull back a little and, david, i wanted to correct one thing, you asked for the key to the market, i was focused on tilray, i think that netflix has a bunch of people saying, listen, it is time, buy it and david, netflix is up huge. why is it time now to buy it i'm not so sure that's so great. >> this thing has almost a quarter of the market cap in the last whatever. what does is it, the 11th? i don't know how many trading days now it is time all right. it is the -- it is such a momentum name, isn't it? up is up. >> tesla and netflix yeah. >> since december 24, netflix is up almost 40%. >> listen -- >> enough, enough. ubs, i know you like the evidence lab and follow closely. >> i do.

>> they're both very strong. >> coming soon to cbs as well is the ubs evidence lab a new -- that's must viewing >> how is cbs doing, david, in terms of the structure, the stat ous there? anything new >> we got stocks that are up cbs and viacom up sharply on continuing reports not talking -- how many months have i been saying they were going to likely try once again they haven't yet nobody reached out to anybody yet specifically but there is an expectation they are going to give it another shot and to your point, both stocks have been up i guess the nfl on cbs doing pretty well too. >> yeah. the only s.e.c. that is open is the -- the s.e.c. on cbs and i do feel that cbs is one of the properties that seems like could it be undervalued because the nfl is so strong this year that's the bright spot in tv >> it is you're going to have people

already saying, well, how much do they have to pay for the rights to keep them? a few years down the road, you want to have an understanding of that an do they need more scale in order to actually compete with the likes of, if it comes to an amazon or apple or any of the other potential entrants when that nfl contract comes up >> yeah, very good point i keep thinking that alphabet will do something. but alphabet, they barely ever show a pulse or maybe they have a pulse and they just don't talk about it. they have so much cash, when are they going to do something >> i don't know. i don't know >> strange. >> good question. >> strange worth thinking about netflix, what can i say? there is four different notes talking about how strong domestic numbers are going to be amazon, by the way, a note about how domestics will be strong international is weak. f.a.n.g. remains a bright spot at a time when we kind of buried f.a.n.g. >> right >> one bright spot in today's action in the s&p, consumer

staples, p&g is leading that charge you've been a fan of the changes going on. >> sure have >> it is a winner today. evercore initiates with a 105 target and a buy. >> also, i've got to tell you something, sara, kroger has gone all in with sales force. kroger, third biggest retailer i think that -- i know you have been -- you watched the transformation of kroger procter has gotten much more aggressive unilever seems sunset there. this cincinnati company is doing better than the baseball and football teams. >> yeah. i'm actually excited i've got robbie mcmullen speaking at the national retail federation annual meeting this weekend. we'll talk about the shift that is going on there. ever since amazon got into the space, jim, and everyone was worried about kroger, it lit a fire under kroger and led them to make all these deals, with sales force, which you were talking about in your ceo interview last night, really beefing up the digital grocery

presence the click and collect and also actual delivery. and nobody has won that war yet. amazon whole foods is nowhere near winning, because the consumer is not there yet. when the consumer goes there, kroger is going to be a major player with walmart and amazon it is sort of this three-way race right now and, by the way, walmart is another gainer on the dow. >> these are stocks that tend to reflect a slowing in the economy or maybe there is no trade deal is this hard to figure out there is tremendous obscurity about what is going on i thought kroge weae kroger wasg the their heels, it tells me the digitization is starting to broaden everywhere it is worth following. >> i wanted to share a little bit of news on caesar's entertainment, the gaming company, known as harrah's a few years ago at this point.

carl icahn, the noted activist investor, according to numerous sources who are usually quite familiar with his moves, tell me he has been building a stake in caesars. and you see from the volume in the stock, and the way it moved up lately that very well may be the case now, it is unclear how large that stake is. mr. icahn has not returned my calls to offer me comment on this but it is worth noting in part because, of course, you may recall a number of months ago reporting that we had, others had as well, on the interest of tilman fratita and an offer he made at the time to caesars. it was an audacious bid he was proposing. it would have been followed with a dutch tender for roughly 30%, $2 billion to $3 billion in some ways, many ways, using caesar's own balance sheet to help and merging his entities

with them. mr. fertitta is still interested according to people who know how he's thinking about things he hasn't gone away. the question is whether caesar's has any interest in engaging with him why is it of importance that perhaps -- not perhaps, why is it important that icahn is building a stake and may perhaps actually come public in some fashion? well, if he were to choose to do that, he potentially would be in a position to influence or try to influence some sort of a negotiation, perhaps even with mr. fertitta remember mark left the company this is in many i was a compaway controlled by apollo many of those who own the bonds in the bankruptcy are now the equity holders we'll see how it goes. certainly did want to point out, again, that mr. icahn building a stake, unclear how large it is, or where it will end

he's not unfamiliar with gaming. and in fact, even has a various approvals for gaming licenses in certain jurisdictions. so did want to bring that to people, sara, this morning. >> a big pop off that news with the stock. i think in the interest, continued interest and from fertitta and the fact that carl icahn is in there. >> yeah, yeah. up about 7%. it has been up sharply over the last few trading sessions after having come down quite a bit when there was a lot of speculation as to whether they would engage with mr. fertitta about his potential deal or offer, i should say, to try to acquire the company >> jim >> well, look, i felt that people should be favoring the domestic casino companies, but as david has always reported, caesars is a dead play it does have so much debt. the companies that are levered to china in the casino business, really not so great.

wynn no longer has steve wynn, a miracle man. i'm following this from the point of view, gaming, caesar's, when do we go domestic versus macau. worth following closely. and carl icahn, look, this thing could be undervalued >> we'll see it comes back to vegas, back to the nfl, jim, people believe there will be areal resurgence once you get nfl team there and in general and for gambling as well and many other ways. 2020 i believe >> so glad you brought item. people are ignoring the fact that what a catalyst that can be and gambling has been, look, legalized gambling, i think that's also really helped the fourth quarter of the nfl. people start doing it with draft teams and now back with gambling important to look at gambling underrated as a factor, just like pot. these are things where the -- you look at the bookies, they were making big money. look at the profiteers and now

the privateers in tilray making a lot of money now you got it legal i'm watching this tilray, is it a hard borrow. it is just going to be explosive. worth following. >> all right did want to come back quickly to fox, up ever so slightly this morning. against the general downtone of the market here with the s&p down a half a percent. fox fashioning itself as a growth company, to quickly recap, not going to bid on the regional sports networks from disney interestingly, we'll have balance sheet capacity once it is a separate -- once the deal with disney, not far away from being completed, is done the question is, what will fox do as it fashions itself again as a growth company, what acquisitions will it make, perhaps looking internationally, but also with some distribution assets here in the u.s. that will be for sale in the form of broadcast affiliates and the like, local broadcaster. worth noting that fox shares, let's call it flat on the

morning. >> just an update on the u.s. china trade talks. jim mentioned referencing casinos and where we go next from here, the midlevel meetings happen this week we're hearing from secretary mnuchin, spoke to reporters yesterday, that it looks like a higher level meeting is going to happen in the last week of january in washington. if you're looking for signs of optimism, there you go next meeting in the works, that includes china's top trade negotiator, the vice president so that could be a potentially good news. we're halfway through this deadline to march 2nd where the tariff rates go up if there is no deal reached. >> yes. >> pretty ambitious. >> we have to watch this last night, we were waiting for them to rationalize this one part of calvin klein not doing so well. the stock is starting to act well they have china exposure we're trying to figure out who is still selling well in china, nike, pbh, update in tapestry who is not selling well and boeing and caterpillar, watching

those. boeing stock has been a rocket, coming off today, maybe it was just ran up in anticipation that we knew there would be a higher level talks and now we're getting them and people are saying, all right, that's what we said would happen and there is profit taking in the groups. >> one name not profit taking is gm, shares up over 8%, bob phil lebeau brought us that news at the top of the hour what else is moving? >> 3 to 1 declining to advancing stocks running out of steam, but an extraordinary run in the last ten or 11 sessions the sectors that are moving, consumers staples, they're leading, defensive has not been a big mover in this rally that we have seen and when they look down, that's a sign of the defensive nature of it. banks not doing anything energy that had quite a run as well if you look at what we have been doing here, want to remind everyone, we have been up nine out of 11 days

best start for many, many years, volume is trending lighter as we get further into january, huge at the end of december volatility, the vix, down 44% since christmas eve. we are 20, 37 back on christmas eve. best start to the year since 2010 no surprise maybe where it started to consolidate a little bit at this point here, we had some amazing market leadership the energy stocks which were written off, everybody wrote off all of 2019 earnings, slashed their estimates and out in markets come back dramatically here airlines up, and retail is up nicely since christmas eve and this includes the declines we saw yesterday in airlines i keep pointing out, not a good day yesterday, but overall, the markets come back in a big way the bad news is the shutdown is starting to get a lot of people nervous on wall street there is an awful lot of notes in the last 24 hours from analysts in their sectors saying this could happen here, this continues for another week or

two. kalyns had some of them out here, talking about this is about airlines and the impact on government movement. the government shutdown will impact the industry's corporate travel business, the longer it lasts. we believe government contractors are not traveling during this shutdown and the long terre goes on, the greater the impact they're talking about airlines and the impact on american, for example, they're big in washington but there is a lot of other notes out, cowan had -- talking about the delayed paychecks, delayed tax rebates, delayed snap benefits, nutritional assistance programs, food stamps, essentially. there is a lot more on this. trader talk.cnbc p..com the bottom line is, it is getting a little louder on wall street one other sign, though, i think of optimism, and sara was talking about optimism on the trade talks, we kept say nothing junk bond deals since november there is one overnight, targo,

midstream oil and gas company, they priced $1.5 billion at 6.5% and a lot of people are saying, wait if this market reopens, they'll pay -- everyone will pay substantially more i don't think 6.5% was substantially more i think a sigh of relief and maybe, maybe, guys, more normal junk bond market we haven't had -- this is the first one since november longest in many, many years. back to you. >> mini glimmer of hope there. bob, thank you bob pisani stocks selling off, bonds and the dollar in demand let's head over to the bond pits, where rick santelli join us from chicago. good morning, rick. >> good morning, sara. yesterday afternoon rates really popped up a bit. they certainly had some giveback, just consider right now 253, two-year note yields down 5 on the day, up 4 on the week, at 269 10s are down 4 on the day, up 2 on the week. let's look at one week of 2s been a bumpy ride on the short

end, it vacillates between lingering memories of a more aggressive fed and the kind of moon walk strategy of the current fed. look at one week of 30s, much more buoyant to the upside it isn't a huge amount of curve steepening going on between short and long maturities. but it has steepndened a bit we seem to have stopped flattening look at year to date of 10s. the year is still young. the long end had some volatility early in the year. it seems to have righted itself to some extent getting more confidence that goes with bob's observation regarding issuance and do remember there has been a lot of nervousness in the volatility equities, raising costs with regard to capital, especially less credit worthy capital, and as all of this starts to simmer down, issuance will follow if we lock ok at two-day chart f the dollar index, all of a sudden it just popped from down

about a quarter of a cent to now up about a quarter of a cent so a rather large reversal whether it is time zone issues, theresa may taking a stand on no delay, the euro getting a bit too strong, close to a three-month high but it did pop a bit here is something that is really unusual. look at the dollar versus the yuan all of a sudden, the dollar is at the weakest level since july. something to pay attention to when you think about the talks and how they're progressing. david, jim, sara, back to you. >> rick, thank you as we head to break, let's look at the top performing stocks on the s&p 500. there is gm, right at the top. gaining more than 7% jim mentioned pba is up there as well we'll be right back. [leaf blower] you should be mad at leaf blowers.

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up next it's stock trading wi j thimquk on the street" right now.

so lionel, what does being able to trade 24/5 mean to you? well, it means i can trade after the market closes.

it's true. 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?

all right. time for stock trading with jim. >> this stock has gone from 85 all the way down to the 40s. they are turning over the rights back to a developer of the

destiny game destiny in 2014 was the best-selling new video game and a lot of people felt like this could be grand theft auto. we have a new winner champion which is take two and activism from blizzard has faded really right into obscurity wow, what a come-down. activism blizzard will question where the future is. take two has got red debt redemption that's a good seller winner is take two and loser is activision. >> man, i'll tell you. when fortnite came out and shorted ata or evi, the model has changed. all the free games. >> it was the letter. >> yeah, yeah. >> totally right totally right. >> smart guy i want him to walk down here in the 40s.

>> no. >> what have you got >> i have uber freight tonight it's the beginning of unveiling of what's going on in uber lior ron is incredible he's changing the face of a very important entity of the american economy which is how much it costs to ship things you're seeing shipping costs come down. a continuing theme for to 19, a and a lot of it is what because lior is doing at uber. >> such great work happy to have you back. >> markings you don't sleep at all when you're out there? >> i really hate sleep, you know that i don't like sleep it's kind of a big waste of time it's a time crunch it's a suck, you are know. no good. i'll teach you all david, we'll take the time that you allocate to sleep and we'll shop, and we'll do some-at-leisure fsome-at some

athleisure for you, sara. >> i'm always set. >> jim, safe travels see you on monday. when we come back, washington dysfunction. pulitzer prize winning columnist jim stewart. why he says trump's unusual leadership style is not working in the white house stock ss aloesre selling off a bit with the dow down almost 200.

♪ baby, i'm sorry, not sorry >> good morning and welcome tock to "squawk on the street." i'm sara eisen here with david faber live as always at post nine at the new york stock exchange carl is out today. let's take a look at the markets. half hour into trading, the rally pauses after five straight up days. the dow is down 147 points s&p 500 down about half a percent. same thing with the nasdaq definitely more of a defensive tone to today's rallies, but keep in mind we're coming off of a 10% sort of pop from the lows. all sectors are lower. our road map for the hour starts with general motors raising its guidance this morning. after 2018 earnings exceed expectations, an interview with

ceo mary barra in just a moment. >> a nice bounce in stocks over the week, lower across the board in the first hour of trading. >> and government shutdown, day 21 as it enters its fourth week, just what is the true economic impact let's start with stocks lower this morning which would snap that five-day win streak for the day. major averages all higher for the week, poised for their third week of gains. it is day 21 of the partial government shutdown. economists and strategists are really starting to enumerate more of a direct impact. for instance, jpmorgan trimmed its forecast for first quarter gdp by about a quarter of a percent. likely to have a temporary effect we should say when it comes to the economy the shutdown is out there, but really, david, i would say the fed is item number one for this market and the repair that we have seen across stocks, bonds, currencies and commodities, and that was just reinforced by powell yesterday

clarita, his number two, using muted inflation and patience in one sentence that's the new mantra of the federal reserve, and by the way the cpi number this morning reinforced it, down .1%. there's no pressure this. >> no pressure on inflation and potentially worrisome news about the balance sheet? >> potentially they have news on patience and pause and still kind of pursuing their policy of shrinking the balance sheet. i think that was a little bit brushed off because of the new-found flexibility from fed presidents i mean, a number of them have been speaking over the last few days saying they are willing to look at it and paying attention and getting the message of the markets and that's i really think the important point. i would note there's a funky move people are chattering about around 9:00 a.m. in the euro dollar getting the spike up which took some steam out of the stock market moves because what's been reassuring certainly for u.s. corporations and

profits, and we're expected to hear a lot about the dollar is that the dollar has weakened over the last few weeks here, set for its fourth week of losses that's going in the other direction. that's something we'll watch carefully today. >> something else we're watching carefully are shares of gm we got news out from the company at 9:00 a.m. raising its guidance after 2018 earnings exceeded expectations inciting stronger sales in china. with us now phil lebeau who sat down with the ceo of gm, mara barra not long ago. >> when you look at the stock moving higher it is because of the guide abs. it's better than expected. for 2018, most people on the street were expecting a stock that was going, you know, to come in at $6.26, 28 cents going into today the guidance is now for the company to earn 5.80 to $6.20, higher than or exceeds that is what general smoets saying, and then for 2019 the guidance there is better than what most analysts are expecting guidance for 2019, earning between 6.50 and $7 a share.

the analyst expectation by the way is at 5.86 with free cash flow between 4.5 and 6 billion here's mary barra talking about what's behind the guidance. >> from an '18 perspective it was a focus on not really capitalizing on the new trucks that we have out there, the light-duty trucks but also focus on cost reduction, so it was across the board every element of the company you know, one of our philosophies is everything can be made better, and i think what we've been able to communicate related to '18 demonstrates that, and then in '19 we're really, really excited a full year of light-duty trucks we'll be launching the heavy dueties that will hit in the second half of the year. we've got a full year of the chevrolet blazer, a full year of the xtf and another exciting cadillac xte that will be launching on sunday so we have a very strong product portfolio in the u.s. market. we have a strong product portfolio coming in china, so when we look at that, that is going to help fuel our 2019 and

support our guidance >> while the stock is moving higher this morning, take a look at shares of general motors. over the last five years, we point this out because we're approaching the five-year anniversary of mary barra being ceo of general motors this stock has been basically been stuck between $36 and $37 a share. we asked mary barra are you satisfied with your performance or should investors be satisfied in here's what she had to say. >> we have much more work to do. clearly, you know, we come in and work and focus every day on creating shareholder value and making sure that we're providing a sustainable general motors for the long term. we have much more work to do, so we've made progress, but my focus is on the work we still have in front of us. >> but are you satisfied with your performance >> i'm never satisfied. >> and if you look back, somebody said, look, the stock hasn't done anything over five years, what do you say to that investor >> i share that frustration and that's why we're working so hard to distinguish ourselves in the industry and, again, with the

outlook we're able to provide because of the decisions and the actions that we have taken over the last few years, our investment in the future of technology, we're focused every day on providing shareholder value, and as i said we have more work to do. >> and when do you think the shareholder finally gives you credit for the progress that you've made because not only you guys but the rest of the auto stocks they have gone nowhere. >> we're going to work and continue to demonstrate that we're investing in the future. i mean, i think when you look at our ev technology which we're talked about and our av technology and when we've accomplished in cruz, the way we're going about autonomous vehicles, we have everything integrated focused on safety, the speed of iteration. there's a lot to be excited about at general motors. we're going to keep doing that and focusing on the future and focusing on the right things and i think it will be recognized. >> and with regard to cruz, you'll talk about that in a little bit when do we see, first of all, these vehicles out on the road and second of all, cruz being

spun off in some fashion >> we're still focused based on our iteration and we'll be guided by safety, but we're moving as fast as we can to really deploy driverless avs in a ride-sharing environment that's our continued focus, and as we do that, we will -- we will focus on what maximizes creating shareholder value, so i'm not going to give a definitive answer because we're in a segment or an industry, a technology that has much to still evolve, but we'll do what maximizes shareholder value. >> there is no doubt that mary barra an general motors have delivered in terms of the performance, in terms of sales, in terms of profit margins and in terms of profitability, and yet that stock has not done anything which raises the question do you have to become more creative? do you have to spin off cruz or perhaps spin off gm china, do something to unlock the value that's within the company because while the stock is moving higher today, you look at the investor and they kind of

shrug their shoulders. >> i just wonder are investors looking out many years i guess, and i know -- and you know better than i to the autonomous future of fleets of vehicles which means overall sales are way down and discounting the multiple long-term out and, therefore, that's why -- >> i think it is that. it's also when you look into the future with autonomous vehicles, how are you monetizing that? nobody knows nobody knows, and so as a result if you're an investor how do you say well i think general motors will take $7 billion a year in 2030 there's no game plan there's no business plan at this point, so if you're an investor, yeah, we know that autonomous vehicles are coming and autonomous ride hair is coming but you try to put a multiple on that. >> it's definitely outperformed ford, 15% over the past 12 months. >> and ford, they are way ahead of ford in terms of evs and what they are doing with autonomous vehicles, so it's easy to see why they are outperforming

look, they are performing in terms of generating profits that ford is not generating. >> phil, thank you good to have you here with the interview of the day. >> for more on the news with gm, let bring in emanuel rosner, the deutsche bank lead auto and technology analyst we were sitting here yesterday and asking whether macy's guidance cut reflected weakness about the consumer does gm's guidance upgrade reflect anything about the u.s. consumer >> so i think a lot of what gm is saying today is things that they control as opposed to a bullish call in the environment. i think the biggest surprise probably between investors and we're very pleased with their announcement today is the amount of savings that they are able to get from the restructuring actions that they announced recently including closing four plants in north america. that's a huge contribution to 2019 that's what investors have been underestimated and it's also the contribution of the new truck, the full-sized pickups which are rolling out in dealerships as we speak, so a lot of these things that are doing rather than an actual call, if you look at the assumptions in terms of the market, they are calling for

flat u.s., flat china. might be a little bit on the optimistic side and you've got to get some knocks from the bears today on bullish assumption, but honestly these are things that gm control, and it's actually extremely impressive >> do you think, you know -- phil asked the question, of course, and made the point the stock hasn't done anything in five years. does the multiple actually move up at any point, or is this simply about continuing to mine the margin there and increase that as a way to get earnings up >> so, yeah. it's an interesting question i think would i first point that in 2018 this was the best performing stock of autos. now, obviously, within some 60%, 80% declines, ford down way more, and gm and investors are noticing gm's actions. i think that that's certainly a fact in terms of when will the stock actually rate in the absolute terms. some investors say look, we want to see how they perform during a downturn what gm is performing today, by unlocking $6 billion of action

from the cost savings actions and being more efficient these guys will generate free cash flow even in a pronounced downturn if that's what it takes, that's what it takes. it will show investors it will keep generating money and generate positive earnings even in a downturn and that's the reaction they are taking today we feel their outlook is essentially pointing the way for the next few years where they will offset a lot of of the macro industry pressure through internal actions and product. >> and so you're a buyer of the stock. i mean, it's interesting it seems like the market has sniffed this out a little bit. it was actually outperforming as we entered this sort of upswing in the beginning of 2019 after way underperforming in 2018. where does that leave the valuation? >> so there's been a lot of debate going to this investor. an investor we spoke to between 50/50, and is it going to be a cautious day because of some of the political scrutiny around gm, the outlook, will it be cautious will it be bull strategic defense initiative ended up

very, very bullish gm is still incredibly cheap we're talking about something around the range of three times ebitda the things that it can start to improve that over time, obviously the earnings are growing a lot. you're seeing a little bit in 2019 and you're going to see significantly for 2021 when we have the full restructuring benefit, and phil mention that had before a potential monetization of cruz would force the market to attribute value to this autonomous driving, a peeves gm, which currently is not really well reflected in the stock price. >> all right thank you. >> thanks for having me. >> thanks for joining us on your call, lead auto analyst at deutsche bank. when we come back, shutdown day 21 tying the record for the longest one ever a new analyst forecast starting to sound the warning about the potential economic impact. just what sectors are most at risk we're going to dive into that, and as we head to break, take a look at the top performing stocks on the s&p 500. gm as we just talked about, topping the list, 9up% almost "squawk on the street" will be

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the guidance they previously issued last fall the shares down 11% in early trading. back over to you. >> was it weather or consumer spending did they specify >> it's consumer spending. they said people weren't spending as much there was a drop-off in guest traffic. what they are attributing it to is perhaps a little bit of trepidation by guests who go to a resort given two years of prior poor ski conditions during that pre-holiday period, so maybe not necessarily an overarching consumer spending issue but one where they don't want to go as much because they are worried about bad snow possibly in those areas. >> sort of a little of both. dom, thank you a big slide in veil resorts. the fed continues to massage its message to the market. we've got chair powell, evans, clarita all out yesterday. slightly different tones our senior economics correspondent steve liesman is back at hq with what it all means. you're like a linguistics professor. >> a deluge of fed speak, sara, as you know, but let me focus on

the vice chairman richard clarita. we went closer than any other top possibilities and it's a possibility under the right conditions of a rate cut if the economy weakens. he said if the crosswinds are sustained, appropriate forward-looking monetary policy should seek to offset them to keep the economy as close as possible to our dual mandate objections well, what would that be, that would be some kind of easing clarida said the fed will not hesitate to make changes on the balance sheet if they are found to conflict with the dual mandate. his speech came after fed chairman jerome powell said the fed can afford to be patient and flexible sara pointed out that's the new med mantra but powell took some heat when he said the balance sheet will end up substantially smaller. markets expect the balance sheet to fall from $3.5 trillion to

the current level of 4 trillion and the fed would finish up by mid-2020 let's do a quick reality check on the balance sheet while the fed said it would allow more than $700 billion or 650 billion to roll off, it won't do that this year according to its own estimates estimates from the new york fed said 442 coming off this year, plus or minus and 300 billion next year in no month will the fed do a $50 billion roll-off this is maybe been poorly communicated by the fed and the media. the fed put this cap in place to calm markets down, but the roll-off would never be more than 50. instead it was taken as a target and the market did the multiplication to 600, but that's not the way it works, sara >> i mean, that's a really good explain on that. >> thanks. >> they are still trimming though i guess is the bottom line. >> sure. >> steve, i wanted to ask you about the inflation number today. so it showed, that you know, they are not under a tremendous amount of pressure to keep raising rates as a forecast. >> right. >> does do anything to alter the view on 2019 >> well, i think you hit it

right. were you talking earlier let's parse it out minus one on the headline. the core rate though remains under changed, 2.2, and there's some questions as to whether or not some of the forward-looking indicators in the markets, those tips inflation spreads do a really good job of capturing the market's outlook so i think the way to think about this is pretty simple. there's no urgent inflation threat pushing the fed's hand. in the face of the uncertainty suggested by the market and the global economic weakness, the fed can afford to wait to see where things go. i think the market would make a mistake to say, well, that means they are going to cut, but it only means they are going to cut if the economy weakens materially more than they forecast if it comes in as forecast, you might expect them and the market stabilizes, you might expect them to start talking about a rate hike or two this year, 2019. >> yeah. >> steve, thank you. >> pleasure. >> steve liesman summing up the latest message from the fed.

>> joining us at post 9, ben mandel, global strategist and noah wiesberger, a.b. bernstein, director of portfolio strategy and the chief executive officer at oppenheimer funds gentlemen, nice to see all of you. ben, how much of a game-changer is it that the fed has shifted its tone on rates this year? >> i think patient is a wonderful word it can mean a lot of things. you know, there's patience in the sent that you're patient waiting for your subway. there's patient in the sense that a parent is patient with their toddler which is extreme patient and there's an entire range of things that that can mean i think we're kind of in subway patient at the moment where there's ban tail risk priced into markets, the risk that this sharp and abrupt deceleration of the u.s. economy keeps going past trend and so that tail risk has influenced fed rhetoric and potentially fed policy in the future, but if we're correct that this is actually a no recession outcome this year, the pricing of that tail risk

recedes and i think the fed does get not a couple of hikes again. >> noah, given that backdrop, what do you do we've seen 10% or so recovery in the s&p since the christmas eve meltdown would you still be a buyer >> yeah. i would still be a buyer here. i think the challenge, of course, is that the market may be over anticipating like you said patience like in the toddler context. i don't think that's the right attitude to have that said, we think the market way overdid the nervousness relative to where we see the economic backdrop and relative to where we see fundamentals the tricky thing here is that i don't think this is a time for high beta cyclical real. you're asking the market to rally in the context of what's a slowing economy which is what we've been expecting, but you should overprice it a little bit too much to the downside we'll still be a buyer here but cautiously so because the environment isn't great. >> how are you feeling today are you a buyer? >> from my perspective the conclusion is relatively straightforward. in the current environment where policy in 2019 is going to be far more supportive than it was

in 2018 despite slowing rowth, the outcome for equities is really good, and i think the action is real going to be in emerging markets because the dollar is going to weaken and emerging market equities, which had a terrible 2018, will end up being significantly better performing in 2019. >> we've already seen a preview. emerging markets, msci, highest in four weeks. >> yes, indeed, but given the drawdown that they had last year, there's still more to come on emerging market we're talking about 15%, 20% type of returns as opposed to 2%, 3%, 5% type of returns. >> how do you position yourself for a slowing economy? >> it's a tricky bounce. you don't want to be overskis but we've made the argument that being defensive too early carries opportunity costs. we'll look for strong companies, strong balance sheets and strong and defensive margins. margin is a big theme for us, and in a world where eps growth probably scales more closely to revenue growth than it has in the past, any increment a.m.

source of expansion or growth there we think is really, really valuable so places that have a little bit of operating leverage left, places that don't have too much labor market exposure to us, that's a real sweet spot in the u.s. market. >> ben, tomorrow we're going to be if i think record territory for the government shutdown or just about. >> yeah. >> everybody seems to or many seem to dismiss its long-term economic consequences. >> yeah. >> but we're kind of in uncharted territory. any concern on your part >> i mean, i wouldn't count three weeks as long term by any means and so i think political noise, the shutdown, it's all a red herring. that's going on here is much more fundamental in nature it has to do with that abrupt deceleration of the economy. half of instances in the past where the economy has decelerated by two percentage points have led to recession so that's the question here that's the signal extraction problem for markets. i agree with noah. this is probably too early for a higher beta more cyclical real we're positioned somewhat cautiously in the interim, and looking for evidence that we see some stability, some, you know, evidence that the economy is on

track and, you know, to christian's point i think we're looking to the rest of the world for more evidence of better growth we're not seeing it at the moment. >> the european numbers continue to come in weak, spain, italy on top what have we got out of france and germany on manufacturing. on the shutdown though and the political approximate should investors be worried about the debt ceiling which is a lot more potentially market-moving and impactful? know it's not until maybe the summertime, but if this is what it's going to be like in washington, that's not a good thing. >> but it isn't. we've dealt with debt ceiling issues a few times though mr. trump throws a curveball every opportunity he gets but i think we'll get through it the point with respect to europe is very important. europe is slowing down, and i think the real rally in europe will come about much the way it has come about in the u.s. which is when the ecb gives an indication that they are going to get into a more accommodative framework than they are today. it's come. it's coming this year.

it's imminent. let's watch for it. >> imminent or coming this year? it's only the beginning of the year. >> imminent is three, six months in policy terms. >> they are not talking about that yet. >> they are not, but they will be because the economy is slowing down much faster than they had anticipated a year ago. >> is that priced into the u.s. valuations, the slowdown that appears to be worsening in europe >> you've seen little bits of the big drawdown obviously had lots of ingredients that went into it. whenever you do the math, china is always a little impact on u.s. eps and europe also it's a little bit of a death by a thousand cuts. you have seem son underperformance in global parts of the market. that was most apple and a knockoff on the apple commentary in china which as an aside was oversold as china and undersold as other factors i don't think it's priced in, but i don't think it's a big thing to price in to be honest. >> last year, everyone was saying buy small caps. you don't have to worry about a china slowdown or europe

slowdown they actually outperformed in 2019 is that the place to be. if you at allied it up at the end of last year, they did a lot worse than the market? ben? >> yeah, that's true a lot of things happen at the end of the year that weren't necessarily indicative, you know, of what we see as being right, so emerging markets was a good example of that where you had that outperform for the last few months but for the year as a whole i think you're still better served income had a more defensive higher quality market like the u.s. so as we're positioned we still view that action the right place to be. >> small caps? >> no, not small caps. >> u.s.-oriented large-cap and higher quality and higher return on equity until we see evidence of things turning. >> good discussion, guys thank you, for coming in with the dow down almost 200 points, ben, noah and krishna. >> thank you. when we come back, airlines have been taking it on the chin. this week, a brutal week for the sector, after american yesterday cut its outlook. "squawk on the street" will be right back

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time now for our etf spotlight. mike stoly is here at post nine

and is taking a look at high beta stocks. >> yes so the riskiest, fastest moving and most aggressive stocks in the market, they have led the way since the low we reached on december 24th. just like at the sphb. the s&p high beta stock etf, a subset of the s&p of the fastest moving and most aggressive stocks a lot of them are leveraged. a lot semiconductors netflix is a big component, capital goods companies, very cyclical companies some of them with a lot of debt. up about 15% just in less than three weeks. you see the s&p 500 up almost 10% and splv is the flip side of high beta. low volatility stocks. they have obviously underperformed and dial it back one year it's the opposite story. the high beta stocks were relatively depressed in the overall market they have made the biggest bounce there in white here still down 16% on a one-year basis, but more than double the decline in the overall market and the s&p volatility index and the etf have done their job.

they have basically protect it had you from a lot of the downside here. the question is how do we interpret the fact that it's a very risky high beta stock leading the way? it's probably what you want to see after you have the strong reversal to the upside you kind of want to see people raise their risk appetites and go into the most beaten down stocks it's not clear though that from here on out if this rally were to continue that would be the way to go. they probably have the sharpest bull back if we get one and within the high s&p beta you want to see what starts working. is it going to be the capital goods companies, the industrial cyclicals or is it going to be more, you know, the high-tech sem irks and things like that. >> netflix is up 25% this year. >> the only phang up today despite poo-pooing the analysts. >> this is not unusual that's why basically -- it's an equal-weighted etf but netflix at the moment, because of its performance, is now the highest weighted >> it tells me, mike, that this is largely about the fed versus the optimism around u.s.-china,

because then we would see industrials and the china tech names, those with the most exposure leading the way the momentum trade has been died to the fed liquidity trade. >> to a degree, yes. look, it's obviously tied to credit conditions because they have a lot of debt, but i think in general whatever people were most worried about that created the panicked selling, the is concentrate the panicked selling in december, the reverse of that is what is working right now all we've really done is take back that big overshoot to the downside if you say it was mostly fed on the downside, then i guess the relief hand what you've heard from the fed since is what's driving it now. >> yeah. >> i think it's more -- >> you think it's more multi-factorial? >> exactly. >> mike, thanks. mike santoli with the etf spotlight. now time to get to sue herera for a cnbc news update good morning, sue. >> good morning, sar ark good morning, everyone here's what's happenings at this hour the u.s. military says that it has begun withdrawing troops from syria days after national security adviser john bolton said that pullout was

conditional on circumstances that could leave american forces there indefinitely, and that followed president trump's announcement on december 19th that the troops would be withdrawn. secretary of state mike pompeo in the midst of a nine-nation mideast tour aimed at reassuring allies that troop withdrawal does not mean the u.s. is abandoning the region or its fight against isis he met with the king of bahrain today. a spokesman for the syrian kurdish military allied with the u.s. says it may be difficult for them to keep control of isis fighters that they have detained over the past few years if they have abandoned by their ally, and he warned washington that isis remains dangerous and has the potential to reorganize. china has released a panoramic photo. far side of the moon taken by its lunar probe. take a look at that image. it was created by stitching together 80 photographs taken by the camera on the probe. a first glimpse at that. you're up to date.

that's the news update this hour guys, i'll send it back downtown to you. >> all right sue, thank you sue herera. up next, could the president's leadership style actually be prolonging the government shutdown? our next guest says it's no way to run a government or anything else "new york times" columnist jim stewart with his latest column out to explain "squawk on the street" will be back with the dow down 183 ♪ [ dog snoring ]

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everything is in the red at the moment. >> if you're keeping track it is day 21 of the government shutdown and president trump has been unable to strike a deal to get funding for the border wall and it's further proof that president trump's usual leadership style is no way to run a government or anything else joining us at post nine to explain, "new york times" award-winning columnist jim stewart. >> we're almost two years in, almost to it the date of the trump administration, and you're taking a look at exactly his -- you say his unusual leadership style and what it's meant. >> i've done a few columns over the past few years about what an unorthodox management approach he has which, you know, pretty much defies all the textbook rules that are taught in american business schools, but now i think two years in -- you know, people were saying, well, you know, it's unorthodox but maybe he knows something we don't. it worked in his business and we'll see what happens two years in we're starting to

see what happens the thing that stains strikes me and whether you like the wall, don't like the wall, hate the wall, kind of don't like the wall, let put that aside there's no reason there need to be an impasse over this. the wall, first of all, the amount of money is not that huge in the national budget we have walls all over the place along the border it was a signature promise of his campaign i talked to leadership and management expert and they all say any other president, we would be having a wall now >> and the republican congress for two years. >> i know. >> well, i mean, admittedly there were enough democrats in the senate to block this, but you didn't need to bring many over, so let's talk about the art of the deal. the art of the deal, trump has said i always win. well, you don't always win or the best kind of deal, though he disagrees, people have said for many years, the best of the deal where somebody on each side gets something and that requires some

compromise this is an eminent area for compromise and so he's got to give the democrats something they want. he could have peeled a few off and it takes preparation and by the way it takes team-building and leadership you don't suddenly bring this to an impasse you lay the groundwork, if not in weeks and months. he had two years to do this, to build a case, to cultivate people, to bring people on to his team and explain why this is important and to satisfy his campaign pledge. this was to me eminently doable. it's basic politics and yet here we are sitting through a government shutdown with no end in sight. >> one appealing aspects people thought when he was running that he ran a business. >> right. >> he was the ceo. he was a successful businessman. does that translate in the white house? i mean, if you're one of those ceos out there that's looking with political ambitions, does the trump presidency show you anything about what it's like to run a government versus a business >> well, i think, yes, it does, particularly the kind of private

business that he ran where experts had pointed out to me that he had no real checks on him except the bottom line by the way, his bottom line was somewhat checkered over the years but let's concede he made a lot of nun that business he didn't have shareholders, some regulators, but didn't have people hovering over he didn't have to answer to the s.e.c. he didn't have to do all his disclosure requirement. >> a very small staff. >> a very small group of employees. >> but this is one of the perplexing things about it it was -- yes, it was small, but it was relatively stable, and it seemed very loyal to him he did seem to be able to build a team here. that has not carried over to the white house. the brookings institute has been following turnover and the top 12 white house appointees, the turnover rate hit 83%. that's not counting like the chief of staff where there have been multiple people this is like each of the 12 jobs, 83% have now been replaced there's nothing close to that in american presidential history.

this kind of churn, this kind of turmoil, use the word chaos if you want this is not -- there is no team. it doesn't -- it just isn't there. people who are there have to be constantly anxious, worried, what does this mean? where are we going from here who is my boss how long am i going to last? this is not a way to accomplish things. >> it's interesting thinking of the legislative hack publishments tax reform, but that was clearly just -- there was no democratic participation in that, hence no real deal or compromise as you say, jim i wonder whether the most important negotiation going on now, how that goes, which is with china does this mean that he has to have a win, or is there going to be that compromise that conceivably will be so important? >> well, i don't see how we ever accomplish anything with china without some kind of compromise. i mean, again, if you're going to quote, unquote win in some kind of negotiation, then you have to have enormous leverage or power to do that, and -- and to be able to negotiate

something like this requires a sophisticated intelligence assessment of your strengths and weaknesses and maybe more importantly the other person's strengths and weaknesses we're talking about an extremely complex global situation, a very complicated political and economic power on the other side of the globe you need teams of analysts, teams of people, a tremendous amount of information to interpret and digest you need people you trust to help you with this you cannot do this entirely on your own and you can't do it with a gut feeling that you have just come up with based on the last person you spoke to and that's what i think worrisome about all of this, and makes me a little apprehensive. on the other hand, maybe, you know, maybe we'll be surprised i mean, i want to give trump some credit. people are very quick to dismiss him. he does have some traits that have clearly stood him in good stead. he is -- he can be very decisive he sets big goals, whether you agree when them or not he wants to win. he wants to succeed.

those are all positive attributes, but if you're not going to put the time in to build a team if you're not going to manage people well, if you're not going to let other people take credit where credit is due, and most importantly if you're not going to acknowledge the mistakes and learn from them, you're never going to be a successful leader of a business or a government. >> well said jim, thank you >> sure. >> jim stewart heading to break here, let get a check on the major averages still up about half a percent apiece dow is down 139 points energy stocks getting hit the hardest and crude oil dips below 52 bonds and the dollar in demand we'll be right back. to buy or sell? time with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity. open an account today.

stocks standing stopping in. new year, up about 10% from the december lows, and wells fargo says there's one surprising group of stocks that could turn out to be big winners this year. find out more on tradingnation.cnbc.com

more "squawk on the street" coming up. ♪ (vo) here's a question. was it necessary to create a luxury car more teched out than silicon valley? with a cockpit fit for aspaceship. hang on. radar that senses things the human eye can't. busted. and the ability to make a thousand decisions before you even make one. was all this, really necessary? what do you think? ♪

there's been a lot of focus on fed chair powell's communication. we noticed the way a different central bank communicates its interest rate policy take a look. ♪ ♪ using an implemented and targeted strategy ♪ >> that's a recent video from the central bank of jamaica which created a twitter account back in november. >> i like they worked the words inflation and targeting strategy. >> they have a 4% to 6% target inflation and are cutting rates, just looked that up because inflation is coming in below target yes, there's numerous ways for central banks to communicate with the markets. >> apparently. >> and i like the humor of this one. >> well, we learned yesterday that powell does play the guy tara bit. >> he does. >> and maybe even sings. >> so who knows.

>> and he can also spell words backwards in his head. >> yes. >> when he sees them which i think david rubenstein said is not a necessary skill. >> i can read backwards but i'm not that great at spelling backwards. >> i did like the personal anecdotes and tidbits about chairman powell and lends to his credibility at a time when investors are kind of wondering what exactly he has planned and the way he's communicating it. it shows that he's a smart, prepared guy who has done his homework and is listening. >> yeah. i enjoyed that who knows. >> not to make it too serious as we go to the bank of jamaica anyway, we'll leave you to think about that one let's get over to the cme group in chicago rick santelli with the santelli exchange rick >> reporter: good morning. thank you, sara. remember, if it's earnings season, it's rebecca corbin. corbin advisers welcome. happy birthday >> thank you very much. >> reporter: in terms of happy, there hasn't been a lot of happy. last time you were here your

survey really does quite well in predicting there's a certain type of angina that showed up and it showed up in heaps. >> investors are generally in line with consensus earnings but they are expecting downbeat outlooks rell i have to 2018 remember, 2018 was a high water mark, so i would characterize sentiment as certainly chilling but not freezing >> now, when it comes to guidance, most companies and most investors obviously have shown us had a little darker glimpse of the future, but a full 58% think guidance is going to be weaker in your survey. does that shock you? >> no, it doesn't. we're seeing signs of slowing growth higher input costs, interest rates, tariffs these are all coming to fruition. >> these were all issues last time so the fact they haven't been resolved and in terms of interest rates, i don't know how corporations could understand where they are going to go if the federal reserve is flexible and understand decided because it's not sure how the economy is

going is flexible. >> on top of those when you have a period of uncertainty, headlines say recession, recession, which have been exacerbated, companies, big small businesses are closing the purse strings on cap-ex. 40% of those we survey think we already peaked. >> when it comes to fears and optimism, both extremes in the survey, give me what investors are most afraid of and what's the most optimistic areas. >> optimism is in health care, technology to some extent, buildings, products, saw a massive selloff. and we're seeing 87% placing more emphasis on balance sheet stream 85% look for companies with strong operating muscles. >> hence so little in the forms of issuance of high yield, that would flow into that what's the biggest fear?

>> the biggest fear is coming to fears around global growth coming to fruition that's why guidance and earnings will be a massive amount of information they're going to be looking at executives should be tackilking about how they're paying down debt and risk strategies there are companies seeing growth, not seeing massive selloff, they're seeing deceleration >> almost out of time. based on everything you compiled, what would you tell an investor watching in a couple of sentences as to how they should invest with questions that you have risen >> i look for companies that cycle tested management teams, that have been able to move with agility in terms of cost cutting, position the company for good and bad times frankly, we're moving into worse times than we have been in. >> rebecca, thank you for your thoughts and especially for the participants in the survey david faber, back to you.

>> thank you, rick santelli. now it is time to send it to jon fortt for a look at what's coming up on "squawk alley." >> good morning, david believe it or not, it is kind of stark thinking about earnings, particularly in tech by the time we're at friday next week, we'll be done with the first half of january. given everything going on with the consumer and apple, other stocks, how should you be sion ahead of earnings we'll talk about it coming up on "squawk alley. the engine management systems coordinate with autonomous vehicles. financial data, so now we can predict the future. our new flexible propeller design. by collaborating with public schools on a program called p-tech, ibm is helping students build the skills they'll need for tomorrow. revolutionizing. aerospace industry. it's an entirely sustainable approach. any questions? when you rethink education, everyone can put smart to work.

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here's a look at the markets. the dow off a half percent as is the nasdaq all three broader averages are down time to get to sara. "squawk alley" is coming up in a bit. but sara, what's coming up on "closing bell" >> you say it so much better than the voice of god. thank you for asking coming up later on gm, stock shooting higher. big upbeat guidance from the company. a lot to talk about there, bucking the trend of weaker than expected forecasts is this an end to doom and gloom in the auto sector we're going to talk to bob lutz, former gm vice chair, reacting to some of the news of the

interview with mary barra, and find out what to do with auto stocks and what the lackluster performance as we have been talking about really means when it comes to the consumer and autos and the forecast >> nice move for gm this morning. somewhat move up in guidance apparently the cost cutting initiatives they announced late last year will have significant play when it comes to margins and free cash flow. >> which is a gm specific story and follows that structured announcement we got similar word from ford when it comes to european operations more than any sort of upbeat comment on the u.s. consumer and we're going to continue to get corporate signals. we had a number of unlike gm guidance downgrades. putting it all together, assessing the state of corporations right now and

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good morning, it is 11:00 a.m. at gm headquarters in detroit, michigan, 11:00 a.m. here on wall street. "squawk alley" is live ♪ good friday morning. welcome to "squawk alley." with me, morgan brennan and david