"worldwide exchange" begins right now. ♪ motoring >> announcer: live from new york, where business never sleeps, this is "squawk box. good morning, everybody. welcome to "squawk box on cnbc we're live in times square let's take a look at the u.s. equity futures at this hour. they're under pressure dow futures indicated off by about 238 points this is coming as we've seen some weak economic numbers coming out of china. s&p futures are down by about 26 and the nasdaq off by 80 points. of course last week was a strong one for the markets. dow was up by 2.4% the nasdaq was up by 3 1/2%. again, all those questions about what's happening with the global economy picking up once again as we got weaker than expected china trade data. overnight in asia, japan's

nikkei was closed for coming of age day. they fell after the government data showed december exports and imports both fell unexpectedly the hang sang off by 1/3%. shanghai that is off by .7%. kospi down by 5% of the three major averages the biggest decliner is the cac off by 1%. the dax is off by .75% stocks are weaker in italy and spain. look at what's happening with the treasury markets here. yield last week sitting above 2.7% for the ten-year and this morning falling below that to 2.655% just happened the last hour, newmont mining buying goldcorp for $10 billion in all stock for stock deal to create the largest gold company in the world in

terms of reserves and resources. there's been a lot of consolidation in this industry, barrett gold bought rand gold happening in september so we will watch for this. warren buffett won't be interested in this because he doesn't like gold. in corporate news the ceo of utility company pg and e has stepped down from catastrophic wild fires in california now the company making bankruptcy preparations. analysts estimate that the company faces up to $30 billion in liabilities from last area's campfire in november as well as other blazes in 207 the company said its liabilities would exceed its insurance company if it is determined that pg&e equipment caused last year's devastating fire. boeing 707 this was a military cargo plane crashed in bad weather today west of iran's capital killing 15 of the 16 people on board the plane. made an emergency langd but exited the runway during that attempt hitting a wall and

causing a fire flight engineer survived and was taken to the hospital. earnings season kicking off today with citi group's quarterly report due at 8:00 a.m. eastern time. good morning. >> good morning, becky last year earnings were not really a driving factor that led to share price performance five of the big six banks saw eps improve during 2018, but all of them saw significant share price declines despite that. jp morgan was the best performer down only 9%, but most declined more like 20% plus but banks are now much cheaper, having started last year valued around 80% of the s&p 500 average, they're now valued at around 65% of the average. this week therefore a small beat could spark share prices higher. what should we look for? credit quality tops the list are there signs of a worsening economy? number two, trading, was this a quarter of good volatility or bad volatility

and third net interest margins with the rate outlook fairly volatile during q4 citi kicked things off 8:00 a.m. eastern time we'll be looking for that. >> i'm glad you're here today because on the way in i was hearing all about this brexit vote that is taking place tomorrow is this time really different for theresa may? she's making it sound as if if this time doesn't happen, there may not be anything at all that takes place? and brexit may not happen? >> that's certainly the message she's using to try to convince people to back her brexit deal if mps continue to vote, bekesy, as they've indicated publicly, then tereheresa may's deal will defeated likely by a big margin. the chance of some kind of vote that could possibly then or turn the decision, some kind of second referendum is probably now more likely than a no deal hard brexit. as i said, and as you rightly point to, that is the message theresa may is using to

encourage brexiteers to back her deal no brexit if you don't type message. sterling over the last week has risen for that reason, as you can see. but an actual second referendum is still quite unlikely to arrive any time soon where as a full general election could do so theresa may won a vote of confidence within her own party last month, but she could face a vote of no confidence across the whole house of commons if she loses the vote by a big margin tomorrow that will be down to the leader of the labor party jeremy corbyn to call for that a lot of moving parts. that vote takes place tomorrow. >> are you headed back to the uk any time soon? >> i'm not i'm staying here for banks and with some perspective on brexit from here. >> i'm glad we have you here for both these questions. >> priorities. >> we have a lot that's happening. we need you all for all of this. we'll see you at 8:00 a.m. thank you very much. meantime in washington the government shutdown stretching into its 24th day.

all of the action and breakdown what's taking place over the weekend. >> andrew, it is now the longest shutdown in american history and there is no end in sight, but there is a lot of finger pointing a new washington post abc news poll say that trump and the republicans are getting most of the blame. but the survey also found that support for the wall it's growing. it jump from 34 to 42% over the past year, 87% of republicans want a wall and most of them feel strongly about it now that suggests that the president may not be winning over the public but he is certainly firing up his base he tweeted this yesterday, i'm in the white house waiting the democrats are everywhere but washington as people await their pay. they're having fun and not even talking. now the administration is also dealing with reports that "the new york times" and washington post that president trump hid details of his conversations with vladimir putin from even

his senior advisers. they're weighing whether and how to investigate this. all talks over russia or the shutdown or anything else they're all on hold today because, guys, we got 10.5 inches of snow here in d.c. over the weekend. so, is part of the government that weren't affected by the shutdown, they're all now closed any way because we have a snow day. back over to you >> okay. thanks to ylan appreciate it very, very much. coming up, ford ceo teasing a big surprise coming next year. figured it's not going to be like a fancy flex or something it probably has to do with electric vehicles. phil will join us live from the detroit auto show with that story next as we head to back, here is a look at the biggest prewinners and losers in the dow. ♪ minimums and fees.

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unstopand it's strengthenedting place, the by xfi pods,gateway. which plug in to extend the wifi even farther, past anything that stands in its way. ...well almost anything. leave no room behind with xfi pods. simple. easy. awesome. click or visit a retail store today. the motor city for the detroit auto show. we spoke to the ceo of ford and phil joins us now. hey, phil. >> hey, joe. you know, when we talked to jim hackette, he admitted that investors have a reason to be a little bit looking forward, like when are things going to start to turn at ford. but he is still saying that be patient. it will come around because most of what you're seeing with the

stock that's now under $9 a share is because of pressure on the company's margins. here is jim hackett. >> a lot of what you're seeing in the margin to margin performance is because ford's more future ready in the design of the existing vehicles with regard to fitness, i think they want to believe that it's happened so in the last -- >> you think in the analysts want to believe. >> they want to believe. and the last 30 days they're starting to see our plans in europe, which was something that we hinted about. and common sense would say that a plan like that that is as extensive like that needs to be highly choreographed you have really important constituents that you have to have in synch i challenge people who have never run an industrial company the way you run that versus a tech company where you have a lot of fixed assets and how you manage that but i'm really happy that last year was about designing and thinking these ideas. this year is about them

happening. >> about executing. >> executing. >> part of that is you have a wave of vehicles coming out this year. >> 70 -- >> certainly help the revenue and the bottom line as you're informsing in further restructuring over the next year are those investments, when do they pay off in that restructure? >> that's an important insight you would get covering the industry do you realize some of the pain were because the vehicles were old. we had the average oldest fleet in the industry. we'll have the average newest fleet. 75% of the portfolio is being turned over. so, explorer is an example of that this product has gone through nine model years it's had mid cycle reviews but this is the first time in nine years it's been re-engineered and redesigned like you're seeing today. >> tesla clearly shown there's demand in the market and general motors is investing heavily there. when people look at ford and electric vehicles a lot of people who say i'm not seeing enough when do we see more? >> well, we talked about a huge investment in electric vehicles.

we have 16 models that are in design and development we have a pretty big surprise coming next year and we have actually inferred something more important we said those early generations of evs, were science projects and they attacked a narrow segment of the market that had a good head about society and the performance environmentally, these are products that are going to appeal to car owners and car lovers and they meet both of those other objectives >> so jim hackett saying there's a big surprise coming next year when it comes to electric vehicles most people believe ford will finally announce an all electric vehicle maybe a mid-size type sedan or small suv do they do something with the f series in terms of electrifying it, more than what they have right now? so those are the options that are out there. the other focus for investors when it comes to ford, what will be announced with regards to a

potential partnership with volkswagen the two sides have been talking. likely he'll hear something in the next couple days where ford and volkswagen collaborate in terms of some facilities will be building ford in europe and volkswagon will get collaboration with ford here in the united states as they try to use up capacity in both continents back the you. >> the story on "the wall street journal" that this will be the last time that the detroit auto show takes place in january. why it's been there in detroit are you going to miss it >> not in january i'm not going to miss it anybody who has spent time in detroit in january does not like it you get into the loading dock at 4 in the morning this year we don't have snow usually you have snow. you're trudging around it's not a very pleasant environment in january it is a great show and certainly for the domestic auto makers this is home for

them and this is the show where they put most of their emphasis in terms of the annual auto shows around the world so that's starting to shift increasingly over to china has been for several years so, i will miss it in january. june that will be interesting to see what it's like to be around here in june. be a lot more outdoors than obviously what you have here >> michigan weather is wonderful in the summer. people from ohio all go to michigan you know that. but you know who got all your snow this year, the alps it's in davos, where we're headed not kidding either >> no. >> you love it you love it. >> avalanche warning. >> i love surviving. i love coming back just one of the things i love. i'm bringing a snorkel how big can you get -- you can't get a 10 foot snorkel just in case. >> i can get you a beacon. a snow beacon and a shovel >> there's -- it wasn't at our hotel but might as well been,

there was a crew of people shoveling snow out of the lobby of a hotel. >> you're saying on pictures this weekend, yes. i think becky tweeted it out. >> i did looking forward to it. >> that's where all the detroit -- apparently it got -- took a wrong turn somewhere at albuquerque or something thanks, phil we have a week for things to melt no >> i don't think -- temperatures aren't going to get above. >> it's in a valley. when we're there, you look up, they have all those things up there to try to keep it from -- >> they do the explosions. the controlled explosions. >> are you going to ski? >> if i could. if we ever have time, i want to. in the old days when there was a saturday >> all right go on. no use whining about it, i guess. >> not that it will stop you >> that's right. coming up, this is huge. >> update on ousted nissan

chairman carlos ghosn. treatment about his japanese jail it doesn't get better. don't forget this, earnings season kicking off this week we'll bring you those results happening at 8:00 a.m. eastern time we have instant reaction from the street "squawk box" returns in just a moment

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box. this morning, an update op a story we told you about pg&e says it intends to file for chapter 11 bankruptcy on or about january 29th, according to an 8 dlts k filing bankruptcy is the only viable option to restore financial stability. >> this is a story that you've been kind of knowing was coming for a while. this stock is off another 50% of this in the past, the california legislature has stepped in and protected the company. i don't know that you can count on that this time around because legislatures there in california have been so angry that this happened after they let them off the hook essentially the last time around. it would be surprising to see elected officials stepping in to say, yes, we'll put ourselves in front of this when you consider the lives that were lost the damage that was done this time around. >> yearly high on the stock 49 headed to 8 today. at 18 the yields 18% so, i mean, it's not obviously you're not going to get a yield,

but this morning it's going to be when it opens the yield is going to say 35%. >> then the question is whether these shareholders are protected or not and what happens. right now this is just for most investors just a bet on what the bankruptcy court is going to do. >> yeah. >> pretty unbelievable to see, you know, how you think about utilities. the wife of ousted nissan choirm carlos ghosn says her husband has endured harsh treatment during detention in a japanese jail. carol ghosn wrote a human rights watch as the organization to shine a light on her husband's treatment. she said ghosn is held in a 75 square foot unheated cell and being denied daily medication. she said he lost 15 pounds since being detained and eats only rice and barley. and she said that prosecutors interrogate him for hours each day with no legal counsel present. i read some crazy stuff about you can get better treatment if

you confess. >> that's the point. that's why they have a 99. -- >> that's why they do this. >> what if you didn't do it? >> but that's the entire system is kind of set up that way >> 90% of people >> it's north of 99%, 99.something are found guilty. because so much relies on these confessions that take place. it's a very different legal system and that's what this case has showed us. we thought that it was probably set up more similar to our's or at least executives who travel there think that but it's not the case. >> rereferenced per capita lawyer representation in the united states i forget what it is, it's a lot we have a lot of lawyer. and it's always contrasted with -- iguess you don't need any japan. they can't do any. there aren't nearly as many attorneys in japan that's not a good system so the whole world isn't innocent until proven guilty we used to be that way we aren't anymore.

the whole world isn't innocent. >> you don't think about it in the whole world but democktized societies. you feel like there's a similar legal system there canada, britain, certain places you expect you would receive a certain type of treatment. that's not the case here just hitting the tape, newspaper publishers mng enterprises the the bidding $12 a share in cash for gannett. they reported a bid was pending after mng amassed a 7.5% stake the shares are up by almost 18% this morning a gain of 1.75 to 11.50. >> mng owned by aldone global capital private equity firm in new york, they own "the denver post." i don't know if you recall there was a walk-out of the denver post last year and i believe an editorial calling them vulture capitalists after they effectively slaughtered half the news room.

their model has been to go into these news organizations and to, i don't want to say decimate the place but that's been the argument about what they have done that's why i think, well, we'll see how this is received by gannett. >> decimate. it's only one out of ten, right? >> no, that's the official -- >> that's true >> decimate would be. >> slice 10% off the work force. >> decimate would be okay. that goes without saying obliterate is the worst. but that's one of those words that's just used but it would be bad in war, obviously, if you're -- >> decimated. when we come back this morning, we'll talk about stocks under pressure this week's big market drivers will be on our agenda from the government shutdown to the kickoff of earnings season get your portfolio ready for a busy week. this morning, you're going to look right now and see that the futures are indicated down by about 244 points s&p futures off by 27. the nasdaq off by 83

and as we get ready to head to that break, let's take a look at friday's s&p 500 winners and losers losers ♪ when you retire will you or will you just be you, without the constraints of a full time job? you can grow your retirement savings with pacific life and create the future that's most meaningful to you. which means you can retire, without retiring from life. having the flexibility to retire on your terms. that's the power of pacific. ask your financial professional about pacific life today.

♪ ♪ don't you dare look back just keep your eyes on me ♪ >> announcer: welcome back, you're watching "squawk box. live from the nasdaq market site in times square. ♪ good morning, everybody, welcome back among the stories that are front and center today the fallout from the government shutdown tsa officers, air traffic controllers and thousands of other government employees are working without pay. airports in houston and miami each shut one of their terminals over the weekend because more tsa officers have been calling out sick friday marked the first missed paycheck for many of those employees since december 22nd. tomorrow is a critical day for

brexit with less than 80 days until britain is supposed to leave the eu, lawmakers will vote on prime minister's may's withdrawal deal. checking the pound right now, you're going to see that the pound is at 128.48 we'll see what happens with that theresa may is warning if brexit deal, if her deal is not approved you may very well see the uk not leave -- not go with brexit at all based on what happens next deal news to tell you about this morning, newmont mining is buying goldcorp for $10 billion in stock this will create the largest go gold company in the world in reserves dow indicated down by almost 230 points s&p futures indicated down by about 25 and the nasdaq off by 78. surprising trade data out of china over night let's get over to eunice in beijing right now. >> thanks so much, andrew.

the debtor reaffirmed that the economy here continues to decline. the december data for exports and imports both missed expectations exports dropped 4.4% from a year ago. analysts expected it to fall to 3% rise. imports shed 7.6% versus a forecast of 5% growth. trade surplus jumped to $57 billion and exports to the u.s. slid by 3.5% the surplus to the u.s. was the highest on record for the year going back to 2006 so there's some important take aways from the data. first of all, tariffs had affected the exporters the companies had -- a lot of companies had front loaded orders earlier in the yore and the expectation now is that that is going to taper off. demand globally is softening shipments to the u.s. were the only ones that were affected shipments to europe and japan also fell. southeast asia looked relatively okay domestic demand is struggling a lot more than many analysts had

expected and that's despite the fact that the authorities here have been putting in place a lot of different measures to try to stimulate the economy. so at this point, most analysts are now expecting beijing to step up its measures either policy easing as well as other different types of measures to try to boost economic growth guys >> all right, eunice, starting down again this morning. last couple sessions that's tried to battle back i don't know about today but eunice, thank you. the broader markets now joining us scott nations president and chief investment officer at nation shares so this is your company. that would be too much of a coincidence, i think you didn't join a place called nations share, did you >> i interviewed at a place called kernen shares they wouldn't have me. >> good. and president of global strategies some interesting things here that you're talking about. one is that the shutdown adds to

uncertainty which is bullish for treasuries which is not what people think because we think that our credit quality of the when fitch talks about how that could be a problem you think that's bearish for bonds you think since there's no data being released, investors have nothing to work with so it's actually bullish for treasure ris. >> i think it's a great question i would say it is bullish for treasuries for two reasons one for the reason that you mentioned the data becomes cash, data becomes uncertain and you have to do it without good information. the second major reason go back to august of 2011 when the s&p downgraded the united states from aaa to a aa plus and i was asked on cnbc what it will do, it will push the yields down because the u.s. risk has increased because it's an increase in global risk. >> okay. >> the same thing is happening with shutdown. what is happening in the united

states, you don't believe that you're not going to be paid on your treasury bill but it has increased the risk globally and that's what will happen every time you have a shutdown it's going to be negative for risk perception but the yield will go down. >> is it something you will not be perceptible in the near term, you're talking long-term perceptions on these things. >> long-term may be worse, becky. the next year to two years if you have a continuing shutdown into february, lit pushdown th yields further so much so my 250 -- 2.5 i told on your set a few months ago looked outlandish is within reach, 66 this morning. >> it's falling off a cliff obviously. what i want to know is it indicating that there's a global slow down or is it indicating that inflation is quiet? one doesn't always follow. we keep having this discussion

about whether strong growth always causes inflation or not but something caused yields to come down. sit that there's a global slowdown coming because of china or that inflation stays so low. >> both of them act on it. if you look at what determines a normal bondyield it's your expectation for inflation and your expectation for your real rate of return you want to get both of them have gone down. as we know, joe, we have discussed repeatedly the fed has been wrong time and time again looking for inflation to go up it's not going to go up because the 2008 financial crisis so petrified the number of investors they are not going to increase spending. so when that happens, you are in for a period of continued low inflation rate and that's going to reflect low bond yields as well >> you mentioned inflation and you notice it too, scott it is going to remain very low,

but earnings is more important, i think, in your world the fourth quarter will be okay, but where are you now for this year or the first quarter or whatever >> expectations have come down 11% growth. >> it will be positive >> absolutely. the market would be stunned if it wasn't positive although it's not going to be the 17% growth that we had hoped for in the last quarter. >> people thought it was eight and then they went to 4. someone as low as 0, you're still saying 11 for the year or for the first quarter? >> for the year. >> for 2019. >> absolutely. because that's actually not that big a step let's look at it this way. for most people who are users of energy, the energy picture is still really good. energy prices have just collapsed. interest rates are still low who does that hurt well, that hurts banks which are a big part of the economy, absolutely but it helps almost everybody else so china is certainly a problem. okay, that hurts apple but helps

almost everybody else unless you're john deere. all in all things are good and interest rates will remain low that puts the economy on steroids it puts earnings on steroids >> you hate andrew he hates bitcoin hates it he uses the h word so you say below 2,500. >> it is the stupidest thing ever i've actually come to a realization that you and i, joe, we have seen bubbles in the past we saw the housing bubble before that we saw the tech bubble. >> you're older than i thought i gave you a little more credit than that. if you're 25-year-old, you didn't experience either of those. you were a teenager during the housing bubble you weren't a teenager during the tech bubble and you have to really feel these to really recognize one when it's going on hey, welcome to the world, baby. this is a bubble >> can i just go back to your equity call for a second. >> sure.

given that i don't know if you want to call it a sugar high but that the tax benefit is really rolling off. this is probably the last quarter we'll see citi group reports. this is the cliff, if you will i don't know if you think of it as a cliff how do you think that's going to effect comps for the rest of -- not this quarter for going forward? >> well, you mentioned banks i think it's really unfortunate the banks front load earnings. because they're a big part of the economy, they're not the bulk of the economy. you remember when alcoa was the first company to report. i thought that was silly it was like figures out who was the front-runner in the presidential election based on new hampshire. that doesn't make any sense either the banks are headline, i think what happens with apple and amazon. >> apple -- this is you. apple tried to blame trade battles but the fact that an $1,100 phone is a tough sell everywhere, particularly in china, apple's problems are unique to apple.

so that was a lot -- there's two obviously two different camps in that dan niles came on pretty smart, got a negative in may, three phones costing over $1,000, gdp is $10,000 >> they certainly shouldn't be surprised. early in last year they tried to expand their product offering to offer more mid-priced phones it simply hasn't worked. part of that is some of the trade tension. but how often do you buy a phone? i buy a phone every two and three years. >> now it's every three years and might turn to four. >> exactly. >> soi will be the first to admit that apple has some problems, but it's still a great company. i think maybe the most interesting story of the year would be if amazon were to spin off amazon web services because they're really two very different businesses and i think that would be fascinating if they did that.

>> we'll see if mckenzie decides she wants to do that. >> if there's ever pressure on the company, that's what they would do. >> that story is unbelievable. the more that's coming out theless i want to follow it because i'm uncomfortable. >> national inquiry? >> it was in the post actually but reading the actually -- is that a new word, o.e.d., sexts, not texts. that's like carbage. >> there's not a lot of shame going on anymore. >> i know. that kind of stuff -- do anything else for the weekend except delve into? >> i did not not interested in this gutter of a place. can i ask one apple question, though i actually heard a very good rational bullish case on apple, which is we all think that we're not going to be buying these phones every two to three years you believe that 5g is coming in the next year o two, there will

be at least one to two to three year sort of newfound breath of fresh air behind these phones because you're all going -- because the technology innovation will be there it listen will be there for all the phones but you think apple will be able to take advantage of it. >> that makes a lot of sense but let me ask you this, what can you not do on your phone that you want to do that 5g will allow you do. >> faster. it will change your life fundamentally. it will change all of our lives. >> 5g is -- you can download that quickly. >> you didn't need 4g. it's crazy >> i wish i still had my blackberry. >> okay. have you seen -- i'm look at one right now, called color commercials. the apple commercial where it's this scary landscape and people start running out and they're all different colors 100 people in yellow outfits and 100 people in blue outfits come running at you

it look like world war z and zom si zombies people come running out of mobs of people. any way. >> tv business we should get to a commercial. >> you know, we're going to do that can we call that up. then at the very end, it's like you're dead because these zombies are dressed nicely buzz they're coming after you thanks to scott nations. that's your company. nation shares. >> there are 13 of us, joe. >> do you remember armen hammer bought armon hammer. who is his son do you know? >> mr. hollywood. >> you know he's an actor. >> yeah. but i don't know >> it must be his son. how many armon hammers are there? this is a millennial movie i know your name call me -- thanks to scott

nation and sri-kamar. >> when we return, more movie magic and the head of the national retail federation will join us to talk about the holiday quarter and the reason behind last week's selloff later, citi group is the first major report this quarter. we'll bring you the numbers and instant reaction u' wst ted yoreatching "squawk" right here on cnbc his family. his steinway, which met a burst pipe.

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♪ let's play some -- i mean, they don't look like they're friendly, to me. it looks like they're -- i would run the other way if i saw that. they're breaking down fences they're all in different colors. i'm out of here. i don't know -- >> this is an apple ad we were talking about before. >> that's just a lot of work >> you remember the 1984 ad? >> how about filming this? they went through a lot of trouble. it's not computer generated is it >> i bet you some of those people are. >> they're pretty acrobatic, though. >> if you had seen -- you didn't see world war z. it was a big movie. >> fast zombies. >> yeah, 28 weeks. >> 28 days >> 28 days i think

>> both of them. >> to me, that looks like those people are deranged and looking for human flesh. but i don't know apple thinks it's worth -- running a lot. >> you know what, it's not just a 30 second ad. >> we're talking about it for free. >> it's over a minute long i don't really understand it >> for the x-r >> see, maybe it's not a great i don't know what it's for. want to tell you about our executive edge right now gasoline prices are falling. the price of a gallon of gas fell 12 cents over the past three weeks to a national average of $2.31 gasoline prices are down 66 cents in the past three and a half months. there you go, joe. >> we killed the other stories but made time for this. >> facebook for you and the apple story. >> what if i hadn't done that. there would be huge holes in our program for the last ten years >> that and the beer drinking. when we come back -- >> i'm going to get me a beer.

>> retail stock selling off towards the end of the week. we'll talk to the national retail federation about the holiday quarter and the reasons for a saleoff. quick check of what's happening in european markets right now. ftse is the biggest decliner just over 1% stick around, "squawk box" will be right back. ♪ at&t provides edge-to-edge intelligence, covering virtually every part of your finance business. and so if someone tries to breach your firewall in london & you start to panic... don't. because your cto says we've got allies on the outside... ...& security algorithms on the inside... ...& that way you can focus on expanding into eastern europe... ...& that makes the branch managers happy & yes, that's the branch managers happy. at&t provides edge-to-edge intelligence. it can do so much for your business, the list goes on and on. that's the power of &. & when this happens you'll know how to quickly react...

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macy's had its worst day ever on thursday with a drop of nearly 18% joining us now to break down what's happening in retail after a strong holiday season is matt shay he is national retail federation president. thank you for coming in. >> nice to see you >> i realize it's the annual event taking place, but it's happening at a time when the

stock market is definitely questioning what retail strategy is out there we did see pretty decent numbers overall for the holiday season, and yet you have all these concerns about retailers that are not going to be able to remake themselves and that are dealing with a really shifting genre right now. how do you respond to that what happens >> we are in the middle of a really big week. we've got 30,000 people here lots of senior executives, many of whom we've had conversations with andrew and i were just talking about the conversation i had yesterd yesterday. and thing, i guess i would put it this way. what we saw last week seemed to be a mixed bag in terms of the way the street reacted to some of the performance but in talking to these ceos and virtually everybody i had a conversation with, there's agreement that the consumer remains at a very strong place and that the industry's positioned to continue to do

well >> hey, matt i would push back on that. i would say it didn't seem like there was a mixed reaction to what happened. i thought the numbers that came in were pretty decent overall. yet i think the street started punishing by saying we don't know what's going to happen next >> i think there was an overreaction i mean, you saw at least one company increase guidance. one company goes to the high end of their previous guidance somebody reiterates. somebody lowers. >> the street punished everybody. even people who had decent numbers, i think, got punished because investors are now looking at this and saying this is an inflection point do you think it's an inflection point in the industry? >> that's not what we're hearing. i don't think the ceos feel that there's a real -- certainly there's been a bifurcatiobifurc. the companies able to execute the digital strategies well, use the store as a real hub.

brian and target have talked about 75% of fulfillment came from their stores. >> the problem is the street figured out even if you are catering to the digital side of things, that's great but the margins get compressed there. how does the street deal with this -- or how does your industry deal with the idea that customers want it, how they want it, when they want it, where they want it that's an expensive proposition. >> that was a conversation that andrew had awhile ago. but remember the promise of e-commerce was -- >> supposed to be the higher margins. >> i think that's something as everyone gets better at this and they bring new technologies to bear, they understand how to use this all more efficiently. we've got ai and robotics and things put to work many demonstrated at the show this week. i think the efficiencies are going to increase. so there's a period of transition that's going through. some companies are further along than others. that's why you saw the separation of some winners and losers you know, just to use target

since it was out there, their digital sales increased almost 50%. they're up almost 6% and they get pulled down. they're like, what do you have to do? it doesn't make sense. >> even when you're putting up decent numbers, you're punished pretty strictly. what about the tariffs and the overhang what do you hear from retailers? are they prepared for this if the talks don't well and the tariffs get increased? >> i think it's certainly a question you know, when we did some visits last fall in hong kong and china and talking to the sourcing, one thing we know is there's an acceleration that pre-dates the tariff conversation about diversifying the supply chain that's happening across the board for other reasons related to input costs, that sort of thing. the general recognition is if it happens, number one, we all have to deal with it. so if you're efficient, you're going to have an opportunity to separate yourself from the pack.

it could be a competitive opportunity. we'd like to avoid any self-inflicted wounds like a government shutdown, like a fight over the debt ceiling, the kinds of things that fit in the category of tariffs. so economy is in a good place, consumers in a good place. >> matt, thank you for coming in >> thank you. >> matt shay coming up, fallout from the shutdown we're going to talk about the impact on the economy and the outlook for a deal then later, citigroup set to report around 8:00 a.m u.s. equity futures at this hour are weak down 220 on the dow. congig bk.mi rhtac i'm ken jacobus and i switched to the spark cash card from capital one. i earn unlimited 2% cash back on everything i buy. and last year, i earned $36,000 in cash back. which i used to offer health insurance to my employees. what's in your wallet?

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so you can take on the markets with confidence. don't get mad. get e*trade and start trading today. government shutdown weighing on the markets earnings season set to kick in we'll walk you through what you need to watch straight ahead automakers hit the road in detroit. the buzz from the showroom floor coming up. and read all about it. news breaking this morning about a bid for gannett plus all your morning movers as the second hour of "squawk box" begins right now. ♪ live from the beating heart of business, new york, this is "squawk box. >> good morning, everybody welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square.

i'm becky quick along with joe kernen and andrew ross sorkin. let's look at the u.s. equity futures right now. right now dow futures indicated down by about 210 points s&p futurines down by 23. the nasdaq down by 72. there was concern about china's economy and global concerns about the economy too. we have some deal news prominent in the headlines this hour the first one, newmont mining buying goldcorp. it's an all-stock transaction. it's the second big gold related deal in just the past few months then we have mng enterprises offering to buy gannett this morning. its bid, $12 per share in cash a 23% premium over friday's close. "the wall street journal" had reported over the weekend that a bid was pending. that company is owned by alden

global partners. they also own about 11 other newspapers there's been a lot of controversy of their ownership over those newspapers. and of course gannett had tried to buy the old tribune that merger didn't happen. so it's been in play for quite some time. separately, ab inbev may do a partial npo which reports that such a raise would raise billions of dollars and help the company pay down its debt. the government shutdown carries on ylan mui joins us with more. >> everyone is asking how much longer it will last. nbc news reporting the white house is preparing for it to go into possibly february that's all part of prudent planning, but it does give a sense of what the white house is bracing for. president trump had no official events on his schedule over the weekend and he tweeted that he was in the white house just

waiting for democrats to make a deal he said the damage to our country from a badly broken border is far greater than a shutdown which the demes can easily fix as soon as they come back to washington right now the polling shows that trump and republicans are getting most of the blame for the shutdown 53% compared to 29% of democrats. and the president's disapproval rating is up 5 percentage points since december when the shutdown began. today the president will head down to new orleans, my hometown, to speak to the american farm bureau it's a chance for him to focus on his previous wins like tax and regulatory reform, the new farm bill. trade will also be a big issue there, but trump himself has said it's easier to deal with president xi than with chuck and nancy. back over to you >> all right we're going to continue along this conversation with more on the economic impact of the government shutdown. let's bring in center for american progress senior fellow

seth hanlin and stan voyger. seth, just in terms of actual impact on gdp, have you -- would you say at this point that we've seen anything that's actually material and when we would expect to see that in your view? >> well, i think there's a number of private sector estimates. and also the council of economic advisers that said they did for a little bit, but that every two weeks that the shutdown continues we lose about a tenth of percentage point of gdp we've looked at the numbers. of course the most direct impact is the 800,000 federal workers going without a paycheck they've already missed out on one paycheck and we've calculated that's about $2.2 billion per two-week period or paycheck that's not going out. i think the longer this goes on, you will see impacts on consumer

spending and ripple effects throughout the economy >> we're hearing a lot you know, craft brewers can't get their product out. and tsa terminals have been closed down. and the national parks, waste of all kind is building up. when does the average american see this and say, all right, it's affecting me and something's got to be done when do you think, seth? >> i think in every way. you have plenty of businesses that rely on federal workers you know, people in just very indirect ways whether they're looking -- you know, trying to get a mortgage loan or trying to move into section eight housing. as we get into march, you start seeing the effects on the nutrition assistance program one out of eight americans or almost 40 million americans are served by food stamps. receiving about an average of $250 a week. i think the longer this goes, you will see impacts throughout the economy affecting average

americans. you know, of course, there's 800,000 average americans that work for the government that are being directly impacted and even more contractors who serve the federal government who are going without pay and may never get back pay >> stan, in your view and you're at aei, kind of the polar opposite of the -- do you want to go backwards? if the center for american progress wants to go forward, are you interested in going backwards? how does that work, actually >> i think i mostly agree with what seth has said so far, actually and, you know, the administration itself when it put in its fiscal year budget request, really only asked for the amount of money the democrats have been willing to offer all along for border security remember that a couple of days before the government shut down, senate republicans were perfectly comfortable going along too.

this whole shutdown is driven by a hissy fit the president had when he got a push back from some rabid supporters in the media. >> right so how do you see it -- is there ever a way to do this where -- without just saying, all right open the government and we'll work on a negotiation for border security later >> that seems like the obvious path forward that's what senator lindsey graham who has been very supportive of the president who's repeatedly called for a national emergency to find funds not directly appropriated by congress for this. even he now supports that solution and basically adopting the legislation that the senate passed in december and that the house has passed again you know, look no one is benefitting from this situation. >> so how do you see it ending do you figure at this point i

don't think president trump would let it get to where the -- he loses people in the senate. and they actually say we're going to vote on it. he would probably fold before them >> at some point, you start running into things like the tsa. the usda is in large part shut down >> seth, it has given democrats some nice time in a warm, nice place. it's given them time off there in that respect, it's been a positive, i think. puerto rico is beautiful in january. >> i don't know. i mean, i think they want to get back and reopen the government >> i think they were planning to go before the -- >> i know. you saw menendez >> i saw it. >> tsa -- >> he's my senator >> tsa workers are working without being paid and you've

also got air traffic control working without being paid that's what -- >> we know that. >> if you're flying right now, you may be nervous >> i know. we're trying to fly next week. what's the end game? >> iwould be surprised if this continues. republican members of congress are getting an earful from tsa agents as they fly home. you showed that polling. there's just an avalanche of polling over the weekend showing that they -- >> what's the tipping point? what pushes those republican senators to walk into the white house and say, mr. president, we can't do this? >> i think they need to stage an intervention just go to the white house and say this thing is over this is on mitch mcconnell at this point he's supposed to be the leader he's been completely awol during this shutdown. he needs to show some leadership i think he will when it gets too hot for the number of republican members that are up in 2020.

then i think they need to find a face-saving way to get out of this >> what does that look like? >> well, you know, one thing that president trump has shown is that he can declare -- like, he's capable of declaring victory even when he's completely lost. i don't know exactly what that looks like whether he says, you know, i'm going to look at a national emergency, threaten that sort of thing. i mean to declare a national emergency for a wall is illegal. i don't think the lawyers will -- >> i've seen both sides make a case for that. i'm not sure that you can just make a blanket statement about that let me ask -- while i have you stan, chuck -- and we just heard chuck and nancy in terms of reference to china would chuck and nancy have any reason to ever offer even a dollar for border security even if it was -- even if daca was included they're just going to say no no matter what, don't you think

>> politically they don't have a reason of course there's a real pain being inflicted on people. i mean, the problem for them is they might be willing to offer some money in this particular negotiation. the problem is we're going to have the same problem every month. because we know this is the president's one negotiating trick. he blows everything up he makes extreme demands and unless you give into him, ultimately he backs down we saw that with nafta which he was going to get rid of. which now has been renegotiated in basically the same form we've seen that in negotiations with the eu. we may see that in the trade negotiations with china. i think just holding the line and waiting for him to back down is probably the way to go in the long run too >> nobody knows. all right. seth hanlon and stan veuger.

i think both of you were from the center for progress. i don't know thanks when we come back, phil lebeau is at the detroit auto show we'll hear from him and guests in a minute. meantime, look at the futures at this hour. down right now down off 212 points, that would be the dow s&p 500 off about 23 points. we are back in just a minute you're watching "squawk" on cnbc the latest innovation from xfinity

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welcome back to "squawk box," everybody. we've been watching the futures this morning and they have been under pressure check this out right now it was weak news that came out of china, weak economic data, that put pressure on things. imports and exports down below expectations dow futures right now are indicated down by about 217 points s&p futures indicated down by 23 then the nasdaq off by 73. p grg&e planning to file for bankruptcy this according to an ek filing the only way to restore financial stability. the ceo stepped down over the weekend. the liabilities could exceed $30 billion if it's determined that the equipment caused several wildfires including last year's

camp fire in california. the legislators in california are not going to be helping them out this time around all right. coming up, check back in with phil lebeau at the detroit auto show and hear from the north american ceo of volkswagen after the break. plus, we're getting ready for earnings from citigroup. we'll get the numbers and reaction "squawk box" will be right back. [knocking]

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phil lebeau joins us at the detroit auto show this morning talking to top executives in the industry he's got a special guest with him right now. hey, phil. >> hello scott keogh the head of vo volkswagen is here you're going to be showing the new passat people would say it's all suvs, but you have a different take. >> i have a different point of view 1.9 million cars that's bigger than some country's markets. there's no way we want to walk away from that we're a german engineering company. we make great driving cars there's still an audience who want sedans. >> people still want a passat. >> 100%. we want to be there. >> a lot of questions swirling

around voex klkswagen and ford. perhaps ford helps you the the united states you help overseas. where do things stand in those potential talks? >> it's interesting. we'll hear more as the days and weeks proceed. let's not confuse anything i think it's good to get an economy of scale it's good to work on these but frankly, let's let it play out. >> the history of alliances and partnerships, most have not worked how would you make sure this would work we've done some partnerships in south america with them. so we know each other well i think that's going to make this successful. at least more assembly lines where do those plans stand right now? >> we're close we're close. we know we need manufacturing in

the u.s. we know we have a big future with lexry vehicles. >> how far into the future before we actually see a fully electric vehicle built in the u.s. from volkswagen >> our first vehicle will be coming from europe that will be coming next year. i would say some time '22, '23, cars in the u.s. >> when you look at the market right now, people are saying we're seeing a plateau here and the consumer might be getting hesitant are you seeing any hesitancy are your dealers seeing that >> this is not new news to me. the business has been peaking since for years. there's some good signs but also caution. >> saying the price points now and the average transaction

prices >> this consumer wants a great car, great technology at a great price. america is the most come pestive market place in the world. the lowest prices in the world are here the reason they are is the american consumer is savvy >> you know the average transaction price is going higher >> they're going up in segments. certainly in suvs. this is where you have to be careful with the average of averages if you look at the entry level, price is stagnating in many regards. >> and you've got the passat on the way. >> we do we're excited. >> scott keogh joining us today at the detroit auto show >> thanks very much. >> good-bye! when we come back, we're going to talk about "fast money"'s profile of softbank the money he is pushing through the vc fund. let's take a look at the u.s. equity futures dow futures down by just over 200 points s&p futures off by 22 and the

nasdaq down by 72. this comes after a big week last week for the markets last week alone dow was up by about 2.4% nasdaq was up by 3%..5 stick around "squawk box" will be right back. a luxury car e 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? ♪

♪ welcome back to "squawk box. we are watching three big stories this morning number one on the list, the record government shutdown does continue with no new talks in sight. number two, amid that shutdown, an increasing number of tsa screeners are calling in sick as they continue to work without pay. and number three, an upset at the box office as "aquaman" was knocked out of the top spot. the price of a gallon of gas fell 12 cents over the past three weeks to a national average of $2.31 that 12 cylinder car, that uses a lot of gas gasoline prices are down 66 cents in the past three and a

half months. let's get to carlos ghosn, please >> the wife of ousted nissan chairman carlos ghosn said he has received harsh treatment in a japanese jail. she wrote a letter asking to shine a light on her husband's treatment. she said he's being housed in a 75 foot unheated cell. he's lost 15 pounds since he was detained and eats only rice and barley and he is interrogated for hours each day with no legal counsel present. when we return, we've got the market movers with dom chu dow futures down by about 203 points right now s&p futures off by 21. the nasdaq off by 68 we've got wall strt tieeci earnings due at the top of the hour "squawk box" will be right back.

welcome back to "squawk box. want to get to this morning's market movers. dom chu joins us he's got more on that from hq. dom? >> good monday morning, andrew let's look at some of the analyst calls this morning you've got shares of snapchat

this morning a down market in thanks part to an analyst at citigroup to a neutral rating they cited among other things an expected upgrade to its app for android smartphones. that target price, by the way, goes to 7 bucks. it was $6 before also watching now shares of western digital. they are not helping matters with a downgrading from a prior inline rating citing what it calls structural competitive issues so those shares off by 5% premarket. and then we have analysts over at bank of america cutting delta air lines to a neutral from a prior buy. looking at a lack of difficulty of expanding the multiples for the stock. we'll get more on the delta story tomorrow in a cnbc

exclusive here on "squawk box." >> thanks so much 3. >> krishna, let me start with the idea of earnings season. for a long time we've been looking at earnings season and past earnings cycles saying we're going to get some outlook from ompanies. earnings season and the outlooks is that good news or bad news? >> i think in here is the fact that earnings growth is slowing down but that is because we had a really special year in 2018 because of tax cuts. overall, economic growth is lower and probably slows down some more. so i think pitching your market expectation off of earnings alone is probably not how things are going to pan out >> i think this time around the

outlook is what wall street is so concerned about what could we, what should we hear in terms of the outlooks from the companies >> so far earnings guidance overall has held up well, so i think what companies are saying around china, what companies are saying around tariffs, so far so good up until this quarter it's been an impact on industrials. >> my thought would be as ceo confidence has come down, ceos are probably not going to feel comfortable sticking their necks out saying here's what we see. what you hear will be limited in terms of the scope on blaming problems on china or slowing something else >> it's interesting. when we looked in december which is typically a lighter month for instances of management guidances. the instances of guidance were

lower than usual, so we saw only 25 instances of s&p 500 guidance in december. and that was a record low. you've seen a secular down shift in a shift in guidance over time >> krishna, what do you think the biggest risk to the market is right now >> well, the biggest risk still remains trade. so if you kind of take a step back, coming out of 2018 into 2019, it was going to be about slowing economy and better policy better policy on two fronts. on rates and trade and i think on rates front, the fed has effectively backed off that's a good thing. even if they're one or two times more, i think they will put enough color around it to not spook the market trade is an open issue, but we will find a resolution because of the data flow we're seeing today. which is chinese economy slowing down meanfully u.s. economy slowing down meaningfully that gives incentive to come to

a conclusion we have to find that conclusion relatively quickly if it doesn't come about, that's probably the biggest risk. >> if you think we do find a resolution to trade and that's the biggest risk and we've seen the fed move out of the way, is that a reason for being sharply positive here? >> absolutely. i think valuations are better. there's no recession imminent. i think five more years is what we are talking about valuations are meaningfully better and sentiment improvemes with te trade talk so i think if we could find that resolution and the federal government opens up again, i think we'll be home free >> are you waiting and seeing there are resolutions or telling people to buy right now? >> we're telling people to buy right now because we expect these resolutions. the reason for that is basically the economy slowing down and putting pressure on the politicians. >> okay. that's a cyclical argument i'm with you i see getting a resolution to these things but if the economy is slowing down and that's why the

politicians are pressured to get to that point, are we going to be looking at an economic recession? >> economy is slowing down, but in the u.s., it's still going to grow north of 2% in china, things have slowed down but they have started easing so things will slow down but not slow down to a catastrophic level. >> jill, you are a little more concerned about things and reluctant to put money to work now, am i correct? >> we're positive on u.s. equities we have a 2900 target on the s&p 500 for year end we think it's going to be a bumpier ride and you want to pick your spots within equities this year. because we are later in the cycle. we are in a period where high quality stocks, we think, should outperform but it's an fierenvironment whe you want to own large caps over small caps we've seen a good bounce recently in small caps but we think there's a lot of reasons there even though valuations are much more supportive, we think smaller stocks look riskier. >> why >> they've been seeing weaker

fundamental trends so lower earnings revisions and growth weaker guidance. that's been one area where guidance has been a bit weaker then leverage is a concern there as well where they have more floating rate debt, record level ratios relative to large caps. >> that's interesting because they escape some of the pressures like small caps aren't selling to china >> right i think for some small caps, that's true bras for others with ab lot of these companies are suppliers to the multinationals or they don't have enough pricing power. able to shift supply chains. i think they're not as completely insulated from a purely domestic company. >> fair to say you -- >> we're not pencilling in a recession for this year. the market does typically lead the economy. we see risk the economy could peak out in 2019

but we're forecasting upside to equities as we look at cig analysis like the yield curve typically inverts at the end before the market peaks in a recession. one thing we haven't seen is equity euphoria. you haven't seen the typical everyone into stocks >> that's the argument we get again and again from people saying we're not done yet. do you have to get to that euphoria before you see a major pullback >> that certainly would be an crea indicator, but i think this time around if it's going to end, it is probably going to end because of bad policy rather than anything else. that is the overall growth trend on a global basis is significant lower than it has been in the past and therefore, if somebody whether it's the fed, president trump makes a mistake in terms of implementing policies or forcing policies, i think that's how things will end. otherwise, it's going to go on for a long period of time because inflation is not there and that sort of provides a

cushion that we need for the markets to continue to do well >> jill, you said you need to pick your places this time around where are those places do you mean sectors or when there's a pullback buy >> i think both sectors and styles what happens when the u.s. economy is leader in the business cycle, what happens when you're a leader in the later stages of a bull market? the investment styles that typically work are larger stocks over smaller stocks. you want to own higher quality stocks over higher risk stocks and we measure quality on earnings stability that translates to sectors as well so, you know, you can find higher uality, more stable earnings stocks, and probably surprising areas like industrials. the large cap industrial sector isn't super cyclical aerospace and defense is the biggest industry we think more of the cyclical industries are pricing in a worst case scenario at this point.

and financials is an interesting spot where that sector has cleaned up its balance sheets. looks a lot more higher quality today than it did going into the last recession >> and we'll start hearing from those financials today starting with citigroup at the top of the hour thank you, both, for coming in and a couple of deals that we've been talking about this morning. one is newmont mining is buying goldcorp, right? yeah i think. >> yeah. that's why it's down >> yeah, right well, that's not what we're saying there valued at $11.46 a share newspaper publisher mng bidding 12% a share.

"the wall street journal" had reported over the weekend that a bid was pending. all right. coming up, fast company profiling masa san plus mike pompeo meeting with mbs. details of the meeting coming up "squawk box" will be right back. this is stonington, maine, a town where almost half the population is self-employed. lobster fisherman is the lifeblood of this town. by 2030, half of america may take after stonington, self-employed and without employer benefits. we haven't had any sort of benefit plans and we're trying to figure that out now. if i had had a little advice back then, i'd be in a different boat today, for sure. plan your financial life with prudential.

bring your challenges.

the latest inisn't just a store.ty it's a save more with a new kind of wireless network store. it's a look what your wifi can do now store. a get your questions answered by awesome experts store. it's a now there's one store that connects your life like never before store. the xfinity store is here. and it's simple, easy, awesome. in geopolitical news today, mike pompeo meeting with saudi prince mohammed bin salman

hadley gamble is live in the region with more good morning >> reporter: hey good morning, becky. so what we've seen over the last few days is a whirlwind tour by mike pompeo. today all eyes on what was going to happen in riyadh. we know he had the chance to sit down with king salman for 30 minutes. there have been conflicting reports about what went on during this meeting. we know from state department officials that they were really hoping to put the khashoggi murder at the top of the agenda. in a tweet mike pompeo saying they discussed yemen, iran, syria, afghanistan they were grateful for saudi arabia's support for the u.n. and the process in yemen, but no mention of khashoggi now, i do have to say over the weekend here in abu dhabi, we were hearing from these energy ministers. one of the things they kept saying to me is we are concerned about the geopolitics going into

2019 as it affects the oil markets. one of the executives i spoke to, he's the number one man at opec he's the guy that everybody here in the region is listening to for when it comes to the next year let's listen in. he said he is worried about volatility >> i've been decisive. i've talked repeatedly to my colleague from iraq. they've already taken action russia has started slower than i like, but have started, and we will i'm sure as they did in 2017 ultimately catch up and be a positive contributor to rebalancing the market >> another thing to point out that was quite interesting, this was the atlantic counsel's global energy forum.

you had opec secretary general many different members of the oil and gas industry meeting here in abu dhabi. one of the things that kept coming up again and again is how dependent saudi arabia and the oil minister is from the trump administration because there are a lot of fears over the last several months that they were really allowing washington to call the tune. it seems to me over the last couple of days the energy ministers were putting their best foot forward that, hey, that isn't what's going to be happening. in terms of more news we've heard over the weekend that the saudi oil minister telling me they are planning to stick to that 2021 timeline in terms of an aramco ipo they do expect to issue a bond in the coming months in their attempt to purchase from the public investment fund that bond should be in the $10 billion range. they do continue to assume they're going to be tapping international debt markets down the road so a lot of news coming out over the weekend. i have to tell you, speaking to these energy ministers and

industry insiders, one of the things they kept saying to me is they know they have to do a better job of communicating their message to the markets, communicating about what's going to happen next it seemed to me as if they really wanted to do some kind of opec or opec-plus rebrand. andrew >> okay. hadley gamble in abu dhabi, thank you. speaking of saudi, this is related. on the cover of "fast company" this morning, masa san the softbank vision fund supported by saudi arabia. joining us now is katrina booker who interviewed dozens of people connected to the executive for this story and to me what's so fascinating given the land grab they've made, but the future of that land grab because it has been historically supported by saudi and unclear given some of the

wework news we were talking about in the last week or two. there seemed to be a fight among investors in softbank about whether they would actually be able to invest more in wework. how much support actually he has in the future. >> you know, it's interesting. back in september, the prince gave an interview where he committed another $45 billion to a seconds vision fund. and talk of that has completely stopped. my sources have told me that for the moment, that is not on the table. i mean, whether or not it comes back, it's hard to say i mean, you know, events in the middle east are moving quickly i think the prince has sort of that tour where he was sort of trying to resuscitate his image. it worked for a little bit but the news kind of keeps coming back to saudi it's hard to say >> but go to the wework deal for a second then i want to get to the larger issue around what masa's doing

and his impact but wework, this investment last week we had newman on this was a $2 billion investment not made by the softbank vision fund, but made by softbank itself one of the big questions i have, actually, about masa is sort of the mix between what's the vision fund and what is softbank proper if that's what it's called >> i think a lot of people have that question. especially softbank investors right now. two years ago when he launched, i think it's about two years ago now when he launched the vision fund, he made it clear the vision fund is the future of softbank i think this change with the wework deal, it raises these questions. and also what's interesting about the wework deal is that for months prior to the announcement, there were all kinds of rumors of it being of a much bigger size you know, now that it's -- you know, it's still $2 billion.

but it is significantly smaller. >> how much pressure is there around the masa son team at softbank vision fund which is the people you interviewed to put this money to work as fast as humanly possible? >> i think there's a lot of pressure i think they've made a big commitment it's -- the vision fund is $100 billion. and to put that to work in start-up land is extraordinary. >> do any of them say to you this is crazy? >> no. that's a great question. >> size is supposed to be enemy of performance people say that all of time. do people internally either even whisper to you, i work here, i'm making money here, but this is -- >> so externally lots of people say that right before i went in to do my interviews at softbank, i had all of these vcs who were taking me to lunch saying ask this question they all are so flabbergasted and confused how you put this much money to work

internally, it's so different. i mean, it's -- >> i was going to say the same thing. is it because they know something and they feel the power or is it a kool-aid thing? >> i think -- you know, you've interviewed masa i did not get a chance to meet masa personally. but when people who know him talk about him, it's this -- well, he's referred to himself as yoda. i think he's told people to feel the force. it's -- i don't want to say they're drinking the kool-aid, but they really do believe that if they kind of keep pushing forward, i think part of it is if they move fast enough, they're going to out-pace everyone else. >> and the idea is buy everything in sight and hope >> i think the idea is there's this wave of ai we're on the cusp of. or moving quickly towards. going to have huge returns in the future >> to give the viewer a sense, though of masa -- and you just mentioned this interview i think we have a clip of it

he talks about ai and investing. do we have that, guys? can we run that? we don't have it i'm sorry. i thought we had it ready to go. when you think, though, about what it's going to do to all the other venture capitalists out there, some of whom are trying to raise funds like this but there are others. what's going to happen to the whole industry >> it's really funny when you talk to vcs now. one guy told me they view the vision fund as the stay puft marshmallow man from ghost busters. it caught them off guard and i think a lot of vcs wsh saying we've got to raise more money. there's going to be a shift. because we're seeing what's happening in the markets >> two other quick questions

one is around cfius. because of his relationship with huawei, huawei is part of inside softbank inside softbank they use huawei servers. there's been questions about whether they're going to be able to continue to buy technology everywhere did people talk about that at all? >> you know, this past week i have -- i've been hearing more and more of those kinds of conversations. i don't know that i have more insight than you do. but it's now coming up which is why i think that 2019 is going to be -- there's going to be a lot of questions around softbank and its strategy that might be different than the questions we were asking in 2018 >> then the final question goes back to saudi. they committed the money to the first vision fund and then the second vision fund put the second vision fund to the side do you think they're going to struggle in the future making new investments? meaning even though there's technically a commitment by the saudis that there's going to be

continued pushback on any investment or do you think it's specific to wework i've heard over times there were times softbank tried to make a deal, called up the saudis and everybody else and said you have ten days to make a commitment. literally it's up until the last second the saudis hold the money and don't send it. >> i think my sense is that now softbank is trying to figure out its way forward without counting on the saudi money and so i think this is why this recent ipo was incredibly important. we'll see how it plays out i think that there's, you know, a question about what the relationship between masa and the prince is right now. i don't know i don't have insight into their personal relationship. but i think what's happened, i imagine, has put some strain on that relationship. >> okay. thank you. great story. >> thank you >> go check it out katrina brooker at "fast

company. got a few stocks to watch this morning western digital was downgraded at evercore which says the market is underappreciating the impact of chip prices. also structural competitive issues at the disk drive maker well, those were shares of general electric which are also down this morning. delta air lines was downgraded to neutral from buy at bank of america. the firm says it still considers delta an industry leader with best in class fundamentals but feels that others have more upside potential delta down 1.2%. we'll be speaking to the ceo tomorrow on "squawk box. and lululemon raising earnings and guidance increasing sales momentum they now expect to earn $1.72 to $1.74 a share in the quarter that would be above the street that stock is up 2.8%. sherwin williams was upgraded at

wells fargo which thinks investors are underestimating the paint producer's potential upside stock's down by about 83 cents coming up, we're waiting on earnings from citigroup. the numbers and reaction coming up after the break here are the nuchsfutures aheadf those numbers. we had gotten less than 200 poimp points but we're back there more "squawk" when we retu rn rebekkah: opioids has taken everything and everyone i've ever loved away from me. everything. i blew my ankle out and i got prescribed pain pills by my doctor. if making my detox public is gonna help somebody

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futures under pressure stocks set to open in the red as the week begins with a shocking china trade data and concerns over a weakening global economy. earnings begin in earnest. citigroup reporting this hour. and the instant analysis coming right up and a trio of big corporate stories this morning a multibillion-dollar gold deal. a bid for a newspaper publisher. we will bring you all the details as the final hour of "squawk box" begin right now ♪ live from the most powerful

city in the world, new york, this is "squawk box. >> all right citigroup's fourth quarter earnings just coming out let's get to wilfred frost what do you see? >> so this is a beat on the eps line $1.61 per share versus $1.55 expected but the revenue missed the forecast was for $17.6 billion. so the eps beat is driven by cost control expenses were down 4% year over year people expecting expenses to be down about 1%. so the efficiency ratio has improved and that lower cost is what drove the eps beat now, if you're looking for the strength overall credit costs did improve. they're down 7% year over year down 2% quarter over quarter either way, that improvement

does suggest the overall economy is doing fine. a big concern for people coming into this quarter. the weakness, of course, is this big revenue miss that was down 21% year over year the forecast was down single digits down 7% so the big miss in revenue coming on fixed income did just speak to a senior source there, and suggests that things have improved as we've gone into january. an aspect of people sitting on their hands in december. if money managers were down already, they didn't want to get back into the market that really hit the volatility in particular. the volumes of trading particularly in december and earlier indications only a couple of days into it is that january has been a little bit better but overall, this is a beat on eps but driven by cost control after revenues miss. >> any of this benefit from the tax? >> well, i mean, we've had that benefit -- >> this is the last quarter that benefit would probably be in

there. >> it is the last quarter that would be in -- >> took a charge >> already priced in, of course. we've seen the tax benefit over the prior three quarters i think the encouraging thing -- the worrying thing is revenue missed nobody wants to see that when they're worried whether banks or economy is growing but the revenue miss kind of core parts, the consumer was decent the credit card had a decent amount not pointing towards a hurting u.s. economy >> a year ago fourth quarter 2017 they took a charge of $8.66 a share because of the tax cut program that went in this time around it was a benefit of 3 cents a share >> thanks, wilf. for more details on the earnings, let's bring in kenneth leon initial first blush is down a little bit, but the market is obviously weak today ken, you said you'd be surprised

if you said it's a disappointing quarter. >> first of all, it's courageous to be the first one out. like, i don't recall when citi has been alone to kick off large bank earnings. >> is there anything surprising here >> the surprise is really related to friday with the value line the area of weakness is the capital markets. down this quarter. q3 up 9% the areas to look at is what did they do to drive loan growth what is the risk with the positive from thefed and q3 on senior loan officers, we've seen that it'sgotten really competitive on the commercial side we've also seen that kcovenants have lightened up.

cost ratio, the efficiency ratio. it's been about 56%. not much more opportunity looking to next year so then we say what's the bold case here? we're cautious on the fundamentals for next year but you got stock trading below book value you have a return of capital of $22 billion since last june. that flows for the first six months of next year. and so many things can be indicating of slowness earnings growth for this bank and others for 2019 are going to be slower. the earlier comment just related to the tax rate. the year over year comp starting with q1. typically the first time might be challenging because it's not going to be so easy. >> let me ask you about the volatility in the markets. that's something you said and citigroup points out in the release. it said the volatile quarter had affected our businesses.

we were looking at all of those that they couldn't get the volt tilt is it a situation where it's bad news and have volatility and bad news to have no volatility depending on if you're good traders or not >> two tales to the story. equity so typically with more volatility you would expect clients to get in. but that may not have been the case in q4 protecting your capital, not taking as much risk, right sizing the business. citi did that, i think, fine what we're seeing here is both on educational background and fixed income, a lot on the sidelines. >> i'd be disappointed if i were just managing one of these banks. because you've got sub-4% unemployment you've got a strong consumer you've got wages improving

where is my steep yield curve? i demand my steep yield curve. why can't i make money that way? why do we have a flat yield curve when everything is so great? it's not fair. >> it ties to two things how do they make money on net interest income. the economic environment now, citi has less revenue coming from the u.s. this is a global play. their story and the beauty is we're well networked to tie into institutional flow you know, so citi's doing a good job. >> is citi an indicator of what we're going to hear from everybody else or do you think they're an outlier >> i think in the capital markets it's going to be similar for the other large banks. i think to joe's point on why you can't make more money why it relates to yields. it's going to be really tough surprises that you can get

anywhere here that's different would be just some slight gains or losses in market share in the lead tables. >> look at this list coming. jpmorgan which we'll hear from tomorrow i imagine goldman should be in a different place depending on the trading revenue? zblit may ar may not be. when you look at goldman or morgan stanley, it's more from the hedge funds. was it automated trading in december or was it, you know, lots of participation? that's just the trading call then you've got to look at these stocks they're down a lot goldman which we have a buy on has sold off the most. i think they have more of the delta on the upside. >> you look at this list in front of you now, who do you like the most and least? >> we have buys on goldman sachs and also jpmorgan. goldman because it got really beat up last year and i see upside

jpmorgan executes beautifully. we have a sell on wells fargo mostly because brand damage, the fed asset phrase at the end of the day, it's hard to run a business and have all that attention ci citi's fine but you've got that emerging market risk we essentially have a whole recommendation on that >> all right, ken. thank you. thanks to kenneth leon wilf, we will see you a little bit later this hour. coming up when we return, a big west coast utility contemplating bankruptcy we'll bring you all the details after the break. "squawk" returns in a moment what do advisors look for in an etf? don't just track an index, help me meet a client's need.

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box," everybody. been watching the futures. all morning long, we've been in the red. dow futures have been down as much as 250 points right now indicated down just over 200 points. s&p futures are down by about 21 points and the nasdaq is off by 66 if we could take a look at shares of citi, citi the first of the big earnings reports this week if you want to look, it was light on the revenue side. that stock is down by 1% they did talk about the volatility in the markets. particularly the fixed income markets for that last quarter. and that was something they struggled with a little bit. you can see right now citigroup shares down 59 cents government shutdown nowthe longest on record. president trump says it is the democrats' fault we want to get to ylan mui in washington this morning with more details >> there is still no clear end in sight to this government

shutdown and the president is holding fire on calling a national emergency. there's been a lot of debate over what existing funds the administration could have in order to build a border wall without congressional approval lawmakers have been pushing back on using disaster money. that would have been politically fraught. alts using asset forfeiture funds. there may not be enough money in that pot to pay for thewall. it's unclear if it can even be used for construction. no negotiations are expected to happen today but the president is tweeting. here's one of the latest he wrote, i've been waiting around all weekend democrats must get to work now border must be secured now, there is not much work being done by anybody here in washington today in addition to the shutdown, it is a snow day. so the rest of federal offices are closed president trump meanwhile heading down to new orleans. he'll talk to the american farm bureau there but it's unlikely that he'll

make any big announcements from down in the big easy back over to you >> hey, ylan, i have a washington question. how much are businesses in washington talking about the government shutdown, the impact just on themselves >> they're talking a lot about it when you talk to uber drivers, taxi drivers, cafe owners, restaurant owners, all of them are saying that their business has been hurt by the fact that workers aren't coming into the office they're losing out on a lot of business i will say traffic is better that's one silver lining there but a lot of businesses in the area are hurting >> ylan mui, we haven't talked about the other weekend's tweets and reports, but we will leave that there thanks as the government shutdown drags on, what analysts dismissed first as having little impact is starting to hurt industries we'll look at how it's hurting the airline industries joining us is david vernon david, this is probably one of the areas that the american

public is going to feel the most if you have tsa agents that aren't being paid, air traffic controllers that aren't being paid and that turn leads to sickouts. what are we seeing so far? >> we're seeing an impact in a couple of areas. tsa agents calling in sick, not showing up so i think houston and miami airports had had noticed shutdown terminals at points and it could have been a lighter flight activity in those days swem but i think what you're starting to see is the natural reaction if these guys aren't getting paid, these are workers that make 35 grand a year >> are the airlines thinking of doing anything i was wondering if the airlines could end up trying to fund this on some kind of almost like loan basis and hope they could get paid back later given the fact there's other services now that are privatized versions of security >> if i was an airline, i'd tell

you i'm already paying for it. all the fees and licenses and gets put on every ticket so i wouldn't imagine they would. >> is there a lawsuit they can pursue if they're taxed with these fees and they're not getting the services they're being taxed for? >> that's a little bit outside of my sort of area of discipline but, you know, i certainly think they can exert lobbying pressure they can push for those types of changes. i think the up front stuff you're going to see from the passenger level is going to be problematic. everybody's going to have that but there's also a lot of stuff that happens in the background to keep air travel safe. certifying training program, registering new aircraft >> that's now all slid down? >> the faa are not working right now. they're on furlough. >> in terms of ticket buying, though, is this a 14-day situation? you still have another two weeks before -- i think there are people now who would be thinking

about traveling in two or three weeks from now that have not purchased a ticket that you think they would hold off. >> i think it's possible you could see that but if you show up an extra 20 minutes early, it depends if you have to go business travelers aren't going to stop traveling because of the potential for longer lines it's inconvenient, but you're going to get through it. if it's a marginal trip you might want to talk, you might think about pushing that off >> we're talking about what the consumer is going to feel. the pain they'll potentially feel the pain the airlines might feel, is it relevant is it significant? is it something you really have to think about terms of the stock valuation >> if with start to see that forward buying slowing down, absolutely. >> at this point there's no impact on the airlines >> i spoke to a couple of airlines on friday specifically they have not seen anything show up in their numbers yet. obviously as it compounds, as it gets longer, you increase the risk of this happening you increase the pain that you

might have at the check-in line. so i think those things are happening right now. you haven't started to see it bleed into the numbers i think it is a risk for the industry >> let's talk about the airlines stocks overall what it means when we've talked about the potential economic slowdown are you seeing that show up? >> what we've seen from the airlines so far is in this first quarter period, the momentum in unit -- that's driven the stocks into a down drift here. >> is that mostly international flights or is that within the united states? >> it's within the united states but there's some context around it, right? you're in a period where oil price decline of three and four and five months ago is going to show up into those fairer numbers. if you do start to see a slowdown in bookings and things like that, that will exacerbate that you do have this happening at a time that isn't great for the airlines you're already seeing some moderation

>> do you distinguish between the airlines is there one that's better run than the others or is it the macro environment? >> i distinguish between the airlines in our house view, you've got the network play thaers will get you anywhere in any class of style. the lower cost guys that get you places at a lower fare and the premium value guys i would say the network operators is going to be a delta. lower cost guys, southwest it's probably not one of our top picks right now because they are extending into hawaii at a time when there's a weaker travel environment. eventually they'll get that right. >> i have a news you can use question which is as a traveler, are there certain hubs you think are more susceptible to tsa problems just generally meaning are you better off out of atlanta better off out of jfk? >> that's tough. you'd have to sort of look at

the local wage conditions and stuff like that. i think it's interesting we've seen houston and miami with problems opposed to a new york or l.a. so far so i think the tight ness of the local labor markets, it's -- >> you think these people are calling in sick to get other jobs immediately >> they could be out there doing uber jobs. the gig economy kind of thing. if you're living paycheck to paycheck and the paycheck doesn't show up, you've got to do something >> david, thank you very coming in david vernon is with bernstein he's research analyst there. we want to get to david faber. mr. faber has details. david? >> yeah. interesting. you don't typically get a 15-day notice to file bankruptcy. but this is the result of a law that was passed in california in

september which was done to help pg&e as part of that legislation, they have to give 15-day notice. they had done that telling us on september 29th, the company does intend to file for bankruptcy under chapter 11 of the bankruptcy code. it indicates it's really the only way it can deal with so many of the different factors and challenges it finds coming at it. whether it's the $30 billion-plus it sees from the 2017 and 2018 fires. whether it is the need to spend billions more to try to protect the grid in a better way from future fires and whether it is simply to continue to have power and gas available to its 16 million customers. and so pg&e this morning, a long ak worth a read if you have any

interest in this situation it indicates the many reasons why it has chosen to follow this path there are still those who are going to believe that this is some sort of a bluff to get the legislature to do something to save them. it is fully the intention of pg&e to file bankruptcy on the 29th it has secured or at least has highly confident letters from a number of banks to secure $5.5 billion of debt or financing it sees no other road here starting with last monday. and we have watched the stock weaken significantly over that period of time as news has continued to build but you can still see there is a good deal of equity value left here will there be in a bankruptcy? unclear. there are certainly many assets

at the company including a headquarters building that could be worth a great deal of money in san francisco that said, people looking back to the bankruptcy that pg&e went through at the beginning of the aughts that's going to be one debate here as we examine this plan to go bankrupt and then see it happen two weeks or so from now, guys but really, a fascinating set of circumstances. tragic as well, of course. >> hey, david -- >> for this utility, customers, and those who have been the victims of the fire, of course >> david, the people who were thinking that this was some sort of a bluff, good luck with that. the idea the california legislature was going to swoop in and bail them out given what happened the last time around. given that legislators are angry they feel pg&e didn't step up and fix the problems that they knew about two years ago with

some of those fires that broke out. i don't know why you would think that california legislators would come to their defense on this >> it's a good point, becky. of course, the legislature is trying to do the best it can one would expect for the rate payers, for all the customers out there. you don't want the utility to not be able to be in business. >> right. >> there's a key element here as well, though, that i think is worth pointing to. the legislation i had referenced did enable or seemingly enabled pg&e to securitize the bonds that would be paid back from higher rates but even there, it was unclear according to the cpc's read of it and they say they think that's related to those fires would not occur at all until they've actually paid the claims relating to the 2017 northern

california wildfires pg&e therefore does not expect the cpuc to permit pg&e to securitize costs relating to the northern california fires. point being they can't issue the bonds to pay the claims. they'd have to pay the claims first. even if the legislature was to come to their rescue on this, they'd have to pay the claims first. >> they're supposed to be safe utilities. reminds me of -- remember gpu? they're safe until they're not safe, really and then they're so not safe that it's like, crazy. >> yeah. listen these guys are still dealing with, as well, the natural gas explosions in that neighborhood. >> you called it the early otts. >> they're supposed to be widow and orphan stocks. not supposed to cause people to be widows and orphans.

>> no. >> thank you, david faber. you had that early i know you were tweeting about it >> yes >> you like twitter? >> yes up early tweeting. it's an effective means for distributing news and nothing else >> good way to put it. all right. when we come back, big weekend at the detroit auto show coming up, we're going to take you there. we'll hear from the ceo of ford ocs he business in china, it stk price, and more. stay tuned you're watching "squawk box" on cnbc wall street guy. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade hey, how ya doing? uh, phil.

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involved in this and had been framed it was a strange story had a 15-year prison sentence. but literally over the past, i guess, month or now couple days, the courts have now come back and sentenced him to death there's a lot of questions about whether this is part of this skirmish between the canadians and china. >> are there really questions? >> the way this story has been framed over the past several weeks has now turned into a story as much as anything else we've been talking about huawei and everything else. we should note in this particular instance, this gentleman was accused of smuggling methamphetamine. so it's not clear he's innocent, if you will. but going from 15 years to a death sentence and whether there's something to that. we'll keep our eyes on it. >> there are certain countries, i guess, that do the death

sentence for drug smuggling, but that's not common anymore. >> senior american executives who had trips planned to china who now are very wary of these trips. they're calling their lawyers. they're calling people in china to find out whether it's okay for them to go if they go, this goes back to the burner phones. in the last month it's completely changed the dynamic between the u.s. same thing for canadian executives >> okay. coming up, big corporate stories hitting the tape this morning. including results earnings from ci citigro citigroup. as we head to break, take a look at u.s. equity futures been a little worse, little better down 216 now on the dow. 23 on the s&p. quk x"the nasdaq "sawbo will return in how long it is ♪

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good morning and welcome back to "squawk box" here on cnbc couple big stories front and center right now we're watching shares of citi group this morning beating consensus by 6 cents although revenue, we should note, slightly below forecast.

another retailer may be about to disappear "wall street journal" reporting that children's clothing chain gymboree may be seeking protection this week with plans to close all of its stores they filed for bankruptcy two years ago but emerged after closing some stores. gannett is one stock to watch this morning it is a winner up close to 20% mng says the gannett management hasn't demonstrated an ability to run the company effectively gannett has yet to respond to the offer. gannett had tried to team up with the former tribune company. that deal did not happen already controversy on twitter this morning about what's going to happen to the employees at usa today and others if this transaction takes place.

they have made the denver post and some of their newspapers, the most profitable newspapers but they've done that in large part by slashing staff another big deal to tell you about this morning goldcorp is being bought by newmont mining that deal is valued at $11.46 a share. it's a $10 billion in stock deal randgold was bought back in september. you can see shares up by 9%. newmont down our own phil lebeau is sitting down at the detroit auto show >> it is nice weather. >> in june >> it is >> you can't beat that >> yeah. it's a good idea >> that'll be happening next year this year a lot of the focus is on not only what's happening with the business here in

america. but for ford, what's happening in china where things have been under pressure here's jim hackett talking to us about that >> well, china's optimism is still high with us we had a false step this year that we blame ourselves. we take full accountability. but what we found as we started to see that is the market wasn't as strong for everybody. so i'm now willing to give our team a bit of a break and say some of this wasn't all you're doing. but we've taken steps to fix much of what wasn't working there. with regard to ford, it's the opposite of maybe what you read is the brand is one of the highest ranking brands in the country. people want attainment in owning a ford-branded product so it's actually a huge advantage for the company. even at the highest levels of the government, they see it as something middle america loves chinese want to relate to

american businesses like that. so everyone's very inviting. we've just got to get the design of the business right. i think you're going to be really pleased with what they got coming there >> what do you say to investors saying it's down $9 million. the restructuring is taking hold but i don't know i have the faith to wait until when it finally pays off what do you say to those investors? >> i tell them they needed to be a little patient with some of the long-lived problems that hadn't been addressed that i'm going to represent in less than 19 months i've addressed every one of them. i actually have plans on every one of them that some have taken four decades to come together. the other part of it is, it's an extraordinary franchise in the f-150 that's in the face of other competitors. they gain share yet again this year price realization was yet again higher so we have some products that are extraordinary.

our commercial products in europe are really successful and you know that mustang has been lauded forever and it's getting higher praise now. all those we're now building around in terms of the optimism. i say to the investors, it all sits there it's going to be a more fit company when we come through this that's moving faster that's leading with understanding what users want. and it's the first to actually embrace the way technology is going to come together and change the way this whole system works together they'll be the first company to interpret all that >> jim hackett talking to us he's going to take the stage here in a few minutes. the press conferences are just beginning. a busy day we'll have more from you from executives you want to hear from back to you. >> what's the sense you get in terms of the street's patience for execution on ford's plans?

>> wearing thinner we're a year and a half into jim hackett's tenure he asked for a little bit of patience in the beginning. wall street gave it to him now they've got a wave of new products coming in this year that will help generate new revenue, help profitability. that buys him a little bit of time here, but the question becomes what are you doing with your investments in electric vehicles that's got to be clear over the next six to nine months then pay off over the next couple of years. >> the next detroit auto show is in 2019 or 2020? >> next year june of 2020 but we're done in terms of january in detroit this is the last one >> going to miss it. phil, thank you very much. great to see you phil lebeau. >> thanks, becky citigroup, the first big bank to report today posting a mixed fourth quarter this morning. when we come back, we've got more on the bank's earnings and

the financial sector as a whole with howard lutnick. stay tuned you're watching "squawk box" here on cnbc who says our bank isn't tech enough?

everyone, look at your phones. the design thinking, the digital engineering, security, blockchain, and we will be first to market! yes. when we do we launch? unfortunately, in 2 or 3, hours. why the delay? cognizant is helping banks use digital technologies

at scale to advance speed to market. joseph >> all ight. welcome back to "squawk box. check out the futures which have been down all morning. i think the last two mornings are kind of similar. throughout the day, they paired the losses and didn't close as nearly as low as they did on these morning sessions but we were still down almost

200. and we are watching the shares of citigroup this morning. the bank beat consensus. although revenue was slightly below forecast and citigroup shares have paired their markets down here's a look at the other banks. jpmorgan and wells fargo report tomorrow bank of america and goldman sachs on wednesday for more on bank earnings, the state of financials, the economy, where things are headed, we want to check in with an industry leader howard lutnick is here from kanter fitzgerald. he just got back from puerto rico doing good work we'll o talk about that in a minute we want to talk about bank earnings and where you see the economy. >> i like the economy. i think, you know, everybody talks about this late cycle. but they don't remember that this is the easiest monetary policy in the history of modern

finance. i mean, even after quantitative easing sure, getting a little bit harder but it's still easing monetary policy. i think our economy's got a couple years to run. i think that's way too pessimistic. >> we just got citigroup's earnings this morning. you like the banks they've been battered. >> spreads widened when spreads widen, it's good for banks tomorrow bad for banks today. you own a lot of stuff that goes down today bad fourth quarter marks right? tough first couple of weeks of january. but then the world of bigger spreads are better for banks so that helps them in the fourth quarter this year. so i like it i think they're going to do much, much better. >> volatility is the friend or enemy of your business and of these guys >> so bcg partners loves volatility we love volatility you know, quantitative easing

which was like a bomb blanket on volatility taking that blanket off, coming back >> talking about your company, speak to this. you're now working with who ran deutsche bank. what are you trying to do with him? >> you know, cantor fitzgerald is a great market investment bank so we try to live right below where the big banks go but we can be high touch, high service, really care about hedge funds in the $500 to $200 billion range. we have a spectacular practice where we focus on raising for health care companies. focused on our -- >> that's the kind of work he's doing? he's not working in the trading business with you? >> we're a distribution

business i think we've got big plans for this year. feeling really good about it >> deutsche bank has struggled and whether -- and he sometimes gets some of that blame. >> the guy left in 2015. it's 2018 and they're still blaming the guy. >> it's 2019 >> true. 2019 and they're still blaming the guy. it's nice to blame the past, but he is a spectacular executive. one of the great financial service executives of the world. and to have him as my partner is one of the great pleasures i've had for the last two years >> tell us about puerto rico you just got back. what were you doing down there >> all our employees wave their day's pay and our clients do tons of buzz so we give about 150 different charities money. but we try to set aside one big chunk to do something important in the world and so this year we just came back my wife flies down and meets the mayor and we sort out everything

we pick out head start programs. that means children are getting lunch paid for at school, in elementary school. we give them -- we pick their families 4,000 families we told them on thursday come to the convention center. we have 200 volunteers floating down and we give them each a thousand dollars. gave away the respect, the kindness, and expect nothing in return they didn't apply, didn't ask. just gave them a credit card with a thousand dollars on it and said moms, go use this to take care of your families >> what was the reaction you got? >> it's -- you get so much love. like, i don't know who gets more them or us because it just fills your heart with love. i mean, this woman comes up to me and hugs me and says i'm going to buy mattresses for my family we haven't had mattresses since hurricane maria. it's wow then she skips out and they all bring their kids and families it is the most beautiful thing

because we seek nothing. right? we went. we took care of these families and we left. >> you took your volunteer team to see "hamilton"? >> i did lin-manuel is down there and he's a friend of mine. so i made a big donation to him to say thank you to all my volunteers who go for two days and just work their tails off. i took them all to "hamilton." it was beautiful. >> what's your sense of the economy down there i know there were a lot of bondholders who got killed some of whom -- i know you traded the bonds probably on behalf of clients. >> i think the tourism business is coming back hard. i took a tour around and saw all the hotels and the hotels feel good occupancy up i asked all those kind of questions that you would ask how's the travel doing so tourism coming back hard. let's face it. i was there yesterday. it was 82 and sunny. here it's 25 i think the commercial side of the island, it's now back to

being an island and you can't fix it with manufacturing. you can't fix it you have to fix it with intellectual property. or classic commodities and we know commodities are having a hard time i think it's going to struggle i think fundamentally the economy is going to struggle tourism good rest of the island, i think it's a big challenge. >> we started this conversation talking about interest rates let's end it what do you think jerome powell is going to do this year >> i think he's got one in him they continuously want to move away from zero let's face it. if you don't get interest rates back in the fed's hands, what you got? you're like thanks for the squob, we got no more. >> you think that's later? you think that happens in march or later in the year >> i think he wants to push it i think he'll wait a little bit longer because the economy's a little bumpy now but i think he puts one in there. afterward they'll appreciate it. >> that assumes that the economy gets through kind of this

turbulent area >> i think it's going to be a little bumpy the fact is our economy feels good from my perspective >> is it still a positive in 2019 or are all the benefits rolling off so that the comps are going to be bad? i asked that question. >> you have trillions of dollars in europe, we have to keep our money where we made money. i had a big gain, $400 million, couldn't bring it back to america. now you change the rules, i can bring it back to america whenever i want. you think it is back no chance it is all back there are fundamentals still out there that you lower everyone's tax rate from 35 to -- >> but -- >> it is going to be good for our economy. >> the question is are they bringing it back and pursuing buybacks, which might be property of the market, not saying it is a bad thing, but that relative to actually capital expenditures hasn't happened yet. >> i think building cars in america, you know. you discounting factories and

manufacturing? i do think -- i think from my perspective, the economy, people think the late stage part of the economy stuff is just overdone this is just not your grandmother's economy. it is different now. >> what kind of growth rate do you think you can have >> mid-2s. >> that doesn't really pay for itself let's be fair. >> i'm not saying -- did i say we paid for ourselfs i mean, by the way, i'm in the bond business. i love the deficits. you know i love the deficits we're running deficits we trade this stuff all day long. >> you live that litmus stuff. thank you. it lasted for all eight years, the financial crisis you weren't alive in '87 you don't remember 19% interest rates. 19% interest rates okay >> howard lutnick, thank you. >> got to pay for itself,

howard got to pay for itself. remember the shovel ready, cash for clunkers, got to pay for it. the new york stock exchange, jim cramer joins us now. it was a great season. it was a great season. you saw how many people tried to -- not placing any blame, the -- i thought the pass was pretty -- it was pretty hard, wasn't it, jim could have been caught should have been caught, but i don't know, just -- everybody was on edge i think because the path was clear, the path was clear to a one-point victory i think they might have come back with, who knows, with our guy from new orleans he might have gotten a field goal, might have had time for that we'll never know, will we? a great season. >> i kept thinking there is too much time on the clock after we get the touchdown. look, a alshon is fabulous. they have a great rapport. should have been caught. he owned that. we never should have gotten that

far. we got -- this was a close game. a lot of fun a lot of fun versus the previous game, unwatchable. >> a lot of heart and a lot of regulars weren't in either it was -- >> brandon brooks, by the way, one of the great intellectuals, gave a great speech for commencement at miami of ohio, was -- is the wharton guy, going to a major bank. and there he has the achilles heel, does he come back? i don't even know. i got to tell you, i'm thrilled about the coach. thrilled that we got this far. thrilled about the team that howie put together got to move on. >> at least it was a good game i feel bad if i were -- the home team certainly did well, but at least, you know, there was a game to watch at least i think actually you covered the spread you could have bet on the eagles and still won, right >> look, everybody thought it was going to be 8 1/2. people think two touchdowns. i'm so proud of that team. they're just great they're fun. and they'll be back.

>> great so what did you think of citigroup and the results first out of the box >> look, everyone knew that this was going to be bad. everything else is pretty good the numbers are in line. i don't know anyone who really felt this was going to be a great quarter. got to start showing revenue growth i like the fact that value act is trying to make things happen there. the main thing is, it is just so darn cheap, there is no reason to sell it can't think of a reason to buy it other than the fact it is cheap. we know there is a lot of stocks that are now cheap the market selling at about 14 times forward earnings and no one seems to want to do anything, joe. and yet i keep thinking the market is too cheap to ignore. let it come back a little bit, and then buy >> so this -- i wonder what is going to happen over the next four weeks with earnings whether we -- are we in that period of selling the rallies or are we back to buying the dips, i don't know. >> i think we're dip buying. i think we had the bear market

i know it was regardless of correction there are too many stocks just too cheap. there is a couple of outliers, but this is our kind of market if we get a trade deal, you will say why did i sell citi? why did i sell micron? the trade deal could be -- within reach and i think that the numbers we got out of china last night shows, you know, what they needed, as much or more than we do and i think that's really what we should be thinking about at all times. >> and i wonder where foles is going to go. someone is going to -- >> someone is going to get him someone is going to get him. congratulations to the saints. they're a very good team. >> no kidding. 40 years old, the old quarterbacks, shows you we're young. >> i have one cramer question. i was watching him on friday when you made the comment on mad money about the chinese consumer going after, not going after, buying american products and i was curious whether that changes your view at all about

the negotiations >> i think that our weakness can be the companies that do well. unfortunately it can be sacrificed i don't want that. there is a good way to push peace, saying apple has to cut numbers, has to cut prices but i think there is a couple of companies we have to worry about. in the end, i think that the chinese cave i think the numbers are really abysmal. i think their balance sheets are really bad i heard howard talk about our balance sheet. their balance sheets are miserable. i think there will be a deal in the interim, we'll keep selling down the companies that need china and that's tough. >> tim, thanks who will win the super bowl? >> i think that the pats are going to >> that was a rowut, wasn't it, watching a clinic. thanks, jim. see you in a few minutes don't miss a big interview on "squawk box" tomorrow, delta

airlines ceo ed bastian at 7:10 a.m. eastern time. bank of america downgrading that stock from buy to neutral this morning. stay tuned u'ating "squawk box" on cnbc estion. 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? ♪ i'm off to college. i'm worried about my parents' retirement. don't worry. voya helps them to and through retirement... dealing with today's expenses... while helping plan, invest and protect for the future. so they'll be okay? i think they'll be fine. voya. helping you to and through retirement. is it because so many go after it the same way,

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final check on markets now show you what's about to happen in a half hour dow opens off about 200 points right about now. nasdaq would open off 60 points. we have citi's earnings, pg&e's news, banking news and earnings reports to bring you throughout the week join us tomorrow "squawk on the street" begins right now. ♪ ♪ oh yeah, yeah oh, yeah, yeah ♪ good monday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. dow down 200 as q4 earnings season kicks in. day 24 of the shutdown weakest xh esest china export n more than three years. ten years around 269 we begin with china and the global slowdown worry. stock futures point to a sharply

lower open investors clos