2019 "squawk box" begins right now. >> i'm becky quick along with joe kernan and andrew ross sorkin our guest host from the next two hours is noah blackstein it's great to have you here today, notice wra. let's take a look at the u.s. equity futures yesterday stocks were off once again. second day in a row. they did pair their losses that we saw earlier in the session with the dow ending down just about 86 points. earlier in the morning when we were looking at things it was down by 250 points in the premarket. you can see this morning that it looks like futures are indicated higher this morning. dow futures indicated up by 83 points s&p futures up by 5.5, and the nasdaq up by 25.

overnight in asia, china signals more stimulus measures could be coming in the near future. this comes as china's economy shows fresh signs of a slowdown. that stimulus idea is enough to really rally stocks in the asian markets. the nikkei closed up by 1% the hang seng was up by 2%, and the shanghai composite was up by 1.25%. we do have the brexit vote today, but ahead of that stocks in london up by quarter percentage points. the cac up by 2/10%. finally, take a look at treasury yields the ten-year treasury yesterday, the yield pushing back above 2.7% this morning it's back below at 2.692% >> we got breaking news. dow components united health is a dow component. that's the breaking news for me this morning you realize that, of course? all right. united health is a dow component. reported $3.28 a share

that is above the estimate of $3.21. adjusted $14.40 to $1470 for the year i guess that's for next year puts that right at 1,462 as the estimate all right. the revenue number of $58 billion looks like it's above $58.42 billion it's a little above the 58.012 that we were looking for we're going to talk to anna about this in just a moment, looking, they've got some breaking out revenues and the united health care revenue the net margin all these things resulting in a 1% gain premarket in the shares which have, as can you see, were not immune to the recent sell-off. they were selling the overall averages they had a tough december, to say the least. >> no comment from the ceo just about the broader economic

environment. that's what a lot of people are going to be looking for in this earnings season. >> and obama care type, you know -- >> nothing about that, though. just saying that the 300,000 employees are positively impacting soetd by pushing this, so really not p any commentary on any of the broader issues >> we look at as we do the medical loss ratio, which is the inverse of a profit margin i don't see that broken out right here trying to take a look at that as well okay meantime, the government shutdown, we are now on day 25 shortages of federal airport security workers prompting several large airports to close security lanes yesterday the shortage affect willing armts in washington d.c., atlanta, houston, and miami. travellers departing from atlanta were advised to arrive three hours before their domestic flight. you're looking at lines there. the front page of the "wall street journal" this morning with a sign checkpoints north. 60 plus minutes. tsa screeners have been calling in sick at higher than normal rates after many missed a

paycheck on friday due to the shutdown we were talking about the fact that federal workers actually worked in canada on his way down here >> what -- >> u.s. customs -- there are federal workers in toronto do they get paid do we know if they get a paycheck >> i mean, there's a collection bucket, i guess. they get paid by the u.s. government they're not getting paid >> in fact, some of the canadian tsa workers -- >> you pass rand paul heading up there? >> are you guys hernia -- what are you? is canadian health care good at hernias? usually don't you -- >> now rand paul is headed up there. >> that's what you said. you said it too. >> you made me say it. >> i induced you perhaps normally don't you head down from the mayo clinic that's very close. >> of course >> that's -- i just thought maybe a hernia >> also -- >> did you understand that rand paul. >> i know where you are going with that. >> no, i'm not going anywhere.

i just don't know why, you know -- you could have a decent hernia operation down here i don't know >> perhaps the greatest hernia doctor in the world is in canada >> that's what i'm asking. >> you like la guardia, by the way. >> he is probably one of the first people in the new terminal zbloosh when you go to la guardia, does the u.s. need inf infrastructure spending, and you used to think this is the 19 50z, and now it's like the 1990s. >> they put a runway right next to some water too. >> it's -- things are happening. >> things are happening. this is the most positive thing i heard all morning. >> we are headed over in dallas. >> see auns? >> i don't know what it is if you have -- is that andrew ross sorkin line you just go right around everyone do you even have to go through one of those >> it's called global entry.

>> you have that, don't you? >> yes >> do you? >> no. >> is there a global exit, too you are not worried about tsa at all, are you >> sure. why not? >> you don't have any economic plan >> no, you don't have any special way to get right through to the "new york times"? yeah, something. i mean, global -- there are certain things that united that you get a better -- >> no, i don't think i have that >> anyway, it's a big day. what's going to happen today i'm reading very dire things it's a big day for the future of the united kingdom parliament will vote today prime minister theresa may's divorce deal with the e.u. steve sedgwick joins us now from london is it a foregone krks or is there a chance that there's a thumbs up here, steve? we see things over here. i'm not sure whether they know, but it looks bleak, doesn't it, for the -- for this plan it does?

>> i think it looks bleak. i spoke to several mps who will be voting behind me. 650 of them will be voting later today, and not one of them has said they're going to back mrs. may's deal i have spoken to a conservative hard brexiteer who said we would prefer to run the clock and actually go for a no deal brexit and actually leave on the 29th of march without a deal. i have spoken to a representative of the dup. their brexit spokesman dup the northern irish unionists who have such big reservations about the backstop, the irish backstop, and a softening of the border between the e.u. and northern ireland and are putting up a barrier between northern ireland and the rest of u.k. i spoke to the labour transport secretary as well that said not only will they vote against it, but he believes -- this is a real scenario that will happen soon after the vote if mrs. may loses that there will be a vote of no confidence in the prime minister, and that has to occur within 14 days now, just run with me on this one. if we get a vote of no confidence and he loses and on one else is able to put together

a government, a minority government, a different party or some of the conservatives and get a vote of confidence, that leads to a general election, which just increases the mess that we're having of british politics at the moment other scenarios, which she could win this vote again, but it's very difficult to see how she could do two, she loses by a small margin and actually small enough to think that actually there's some wiggle room with some of the mp's she voted against, and then she will try to go back to european union leaders, back to a yourp even council meeting that could be convened by the weekend and say just give me something. give me some assurance that i could go back and say i've negotiate and got a little bit more out of you as well, and then she would put this withdrawal to another vote and maybe scrape over the line we could see another referendum as well. it's an outside scenario at the moment there is a part by which the labour party, which is led by jeremy corbin at the moment don't want a second referendum, but they could see a way forward and saying, yes, we'll go for a

second referendum, and then it's anyone's guess how that would go as well, and then there's the most likely scenario in many people's eyes that we're going to get an extension of article 50 don't forget, i'm sure our viewers know this by now we told them march 29th, the british are supposed to be out of the european union this article 50 process. quite frankly, we're nowhere near ready in terms of getting the legislation in place as well so there could be an extension to article 50 which would then be extensive more dialogue with the e.u. as well one thing i can say to our viewers, most of mp's, a majority, appear not to like mrs. may's plan. the problem comes in the fact that they do not have a plan b that enough of them can get behind as well there are things about leaving without a deal as well, which would mean we would use wto rules as well. we could perhaps get a canada style trade deal as well again, not a lot of people in favor of that. or it would be like norway, which isn't in the e.u., but takes a lot of e.u. rules, pays into the e.u. budget as well

we could have that relationship based on some form of customs union as well. i can assure you not one of these scenarios commands a majority at the moment, and that is why we have a quagmire, an absolute opaque mess in british politics in parliament behind me back to you, guys. >> okay. that beautiful building, though. you got that -- >> what about all those e.u. flags? are those just protests behind you? >> yes these have appeared in the last 24 hours what you have got -- this is fascinating. you have the e.u. flag these remain, obviously. a lot of people who want britain to remain in the e.u actually, you have also got some brexiteer flags. the purple with the pound on it there, basically what they've been trying to do all day, very pure that's british politics. you get an e.u. flag for this level and then a brexit flag a bit higher, and then someone will put the flag a bit higher trying to get the predominance there as well. many of them are deputy e representing people who want to leave and they want parliament to continue with this.

kwofl, you have the e.u. flags there's been a lot of barracking voluntary there was a contention last week where one of the tory mps was aggressively abused verbally by protests what we've got now is we've got a better cordoned off area for the press, for the politicians, for the politicians and around the periphery you do have a protest and demonstrators on both sides i have to say, i have been on the green many times dozens of times over the years i have never seen any violence here we did see an attack on westminster. a deadly attack where a policeman was murdered in the grounds of westminster a couple of years ago the police are very, very conscious of the fact that was -- barracking is one thing they don't want to see any potential problems as well it's pretty good humor at the

moment that we're seeing protesters on both sides of the divide as well, but police are very aware that things have in the past and can potentially get out of hand. >> we've already seen this is from a zero hedge, but decline and fall of the european union the decline and fall they're writing these already, these types ofthings, sedgwick i don't know whether you can necessarily go to that this is deep right now i don't know how this plays out. if you can't keep -- they never went to -- the euro anyway, but when will we know exactly what time today >> i can give you a rough idea basically there's an order of business as well they'll be potential amendments and people -- private members putting forward amendments to try and push their view, maybe give me some of the ideas of what the government is trying to produce.

basically, we expect the vote to take place around 2:00 p.m. eastern time, okay around about 7:00 p.m. here in westminster, and then within the hour we could get things moving really quickly this is the thing. things could move very, very quickly. if it's a devastating defeat for the prime minister, she could walk she could walk, and then we don't know who would be the prime minister next. i spoke to various people about the options, and there's every scenario you can imagine all kinds of cabinet ministers all kinds of ex-cabinet ministers like mr. johnson, boris johnson, who came to the foreas well. we could have a vote very, very quickly as well. lots of different scenarios. >> steve sedgwick, thank you, sir. >> that would be interesting >> we didn't get a chance to talk to noah >> well, we're going to take a break and come back to noah. >> yeah. >> he busted through that. >> when we come back this morning, dow component united health just out with earnings as we mentioned we'll break down the company's report right after this. three more big reports still ahead this morning jp morgan, wells fargo, and delta airlines we will bring you those numbers

as they hit, and the cnbc exclusive interview. delta ceo ed bastion, that interview coming up at 7:00 a.m. eastern time as we head to a break, let's take a look at the biggest premarket winners and losers in the dow. united health leading the way aafter those numbers that just hit. that stock up by just about 1.2% this is stonington, maine,

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results. normally sometimes it's like immediate. we're expecting some really deep info from you here just anything stand out to you either positively or negatively at united health care that was more or less what you thought? >> they beat on the top and bottom line. they reaffirmed guidance there wasn't any expectation that they would raise this time of the year. they also beat on the medical. no red flags, i this i just bodes well for the group. >> i didn't see the medical loss ratio. this was 80 -- >> it was 81.6, and i think the street was at 81.8 i think they would wait for the first quarter to raise i this i they're going to see very strong raises in 2019, and then they're closing the deal with the devita medical group, and that's not in guidance that's a nice positive as well >> why do you think they didn't

say anything about that as well? is it an anxious time for ceos right now? >> it terms of the dmg close >> no. in terms of -- >> oh. >> -- any potential outlook? why not say anything about the environment sf is it just too hard >> when do people sign up? does it matter when people sign up if exchanges, et cetera >> i think that should be commentary that will get at the call the medicare advantage selling season will be definitely on people's radar the exchanges not for united because thief left united. for others they should -- >> utilization is a weird thing. sometimes in weak economies, people put off stuff, and it -- i don't know in a strong economy, do you see that in, like, united health care numbers people have more procedures or something? >> well, they're defensive in the recession. now, my view is that it's not a cyclical call at all on utilization. they're seeing utilization moderated because people are

doing their surgeries and procedures outside of the hospital in the work cost site service. they're not going to the ed, but urgent care. in a recession, skps i don't think we've seen any of that yet, if anything it should be a bigger tail wind for managed care >> the nip and knee replacement. we've had people on saying nobody is getting anything done during that week economic period >> oh, you know, it's -- at the very start when people think that they're about to lose their jobs, they may go in for surgeries and procedures these days deductibles tend to be very high there's a nice out of pocket, you know, kind of impedestrian meant in terms of the pairs not seeing a pick-up in out liedsation i don't think we're seeing anything to do with the economic down turn. >> what happened in the stock? that was a market in sympathy with the equity market look at a longer term chart.

in december stock -- i mean, went from over 300 down do 250 what was that? anything specific to united health care? >> i this more policy risk they held up pretty well through the third -- through the end of november right around i day. they were outperforming. then in december we started, i think, to have some worries about the aca and now with the new congress we're seeing headlines about drug pricing reform and nancy pelosi is talking about an aca fix. we've got sanders now in the mix. >> i guess that lawsuit as well. >> exactly exactly. >> the whole group towards -- >> absolutely. it was on the 14th of december around the 17th you saw a pretty big sell-off, and i said in my last spot with you that it's a huge buying opportunity. i don't think that they're going down in sympathy with the broader market, though, joe. to your question >> if -- let's say aoc runs for

president and wins just, you know -- >> she can't run >> all right >> let's say that we change that and let her run. >> we're not going to -- >> okay. any of your other favorites? bernie, liz. let's say what would single payer when we adopt that or medicare for all, which, i mean, main stream democrats are talking about medicare for all now. they are, andrew they're talking about medicare for all, right >> keep going. >> okay. what would happen -- >> anyway -- >> you tell me it's ridiculous it's hypothetical. >> what would happen to -- what would happen to all of these >> of these stocks >> they would do okay, wouldn't they, if there was medicare for all or no? >> if it's a viable county, i think, you know, and then i think it would be -- that would be sort of a worry, but, you know, my view i think warren and sanders and all, they're just too much to the left, i think, you know, to make -- >> not going to happen >> just to -- >> now you are disappointing some people on the set here. >> when you -- when i told you bloomberg -- >> are you disappointed? >> when i said bloomberg couldn't run again for mayor,

you know, that wasn't true, right? we can change this >> you can't change -- >> you could easily change that. easily >> three-quarters of the -- they're. >> besides, she said it only said he, and, in fact, it actually does say person it doesn't say he. although thank god gillette is trying to get rid of some content. masculinity. >> masculinity >> we'll talk about that front page of the "wall street journal. we'll talk about that story. >> oh, we're really going to >> i'm going to talk about -- >> you got a really clean. hope springs eternal a lot more coming up when we return space-ex announcing layoffs of 10% of its work force on friday. we're learning more about how the company handed out those pink slips it got emotional we'll explain after the break. right after this

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welcome back to ""squawk box."" we talked about it before the break. proctor & gamble's gillette brand generating a lot of controversy over this new advertiseme advertisement. take a look. >> bullying. >> the me too movement against sexual harassment. >> is the best a man can get ♪ the best a man can get >> is it >> we can't hide from it >> sexual harassment where. >> it's been going on far too long you can't laugh it off >> the ad called "we believe"

debuted yet. it addresses the "me too" movement and what it calls toxic masculinity, playing on the brand's 30-year-old tag line, the best a man can get gillette says the ad is not political, but a statement of self-reflection from a brand that caters primarily to men clearly it's getting attention it's doing something right in that regard. i don't know if it's necessarily going to be persuasive per se to men. it's a difficult conversation for a lot of people, and it's an interesting approach for a men's brand to go down >> you don't feel like -- >> i mean, i felt the same -- i kind of felt the same. i'm sure you do. you have very virt with us all i'm saying is to try to sell more razors based on something that's been a problem, it's weird that it's proctor & gamble too. they're very conservative. >> i like edgy ads i liked when colin kaepernick

was -- >> that's what i'm talking about. >> they're going to be right long-term. the point of marketing is to generate a conversation about a brand. when is the last time we talked about gilletteon this show i can't remember guess what, they won the day on that count the question is whether, therefore, you are going to run out. >> they push a button. you don't mind responding completely to the button pushing? the exploitive nature. >> that's the business of marketing. >> you are right it is kind of -- >> exploit or demean >> exactly >> what about shaving? >> shaving these are real issues. >> to sell more razors that's what -- >> you don't -- >> the question -- >> well, the question is whether -- the question to me, and i don't know the answer yet because i think this ad has only been out 24 hours. >> i have never seen -- the only part of this ad i've seen is -- >> whether it actually does generate -- what you are hoping it does is two things. for gillette's sake, obviously to generate buzz around their brand, but more societial real

sake the hope would be that it would generate a real conversation at the office when you are talking about the ad about the actual topic now, if you say it doesn't actually do that, then it's exploitive, and that's the question right? >> where do you land there >> why not just instead of spending money on the ads, give the money to people who are working in the fields to try to reduce these things because your brand is now all over this ad. you are associating your brand with this. it does feel exploitive, but we'll see what happens >> i want to see the whole ad. i don't want to have judgment until i actually see it. >> we are having the conversation >> the squawk planner. we'll have a rundown of the earnings, data points, and potential market moving events on the day's calendar. u.s. equity futures at this hour are about to back -- getting almost exactly back on the dow what we lost here's a look at yesterday, the aforementioned yesterday's s&p 500 winers and losers. we'll be right back.

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welcome back you're watching ""squawk box"" live from the nasdaq market site in times square. ♪ hold on ♪ i'm coming >> welcome back. time for the squawk planner. it is a very busy day. we have a lot of earnings to tell you about we're going to be expecting results from jp morgan that's going to come in 15 minutes from now 6:45 a.m. eastern time we'll then be hearing from delta. that's at 7:00 a.m we'll then bring you an exclusive interview with the ceo of delta ed bastian. then results from wells fargo. then the government shutdown it won't impact the release of the price consumer pricing index. they expect a slight decline in wholesale prices it's a busy day for fed speaks minneapolis, dallas, and candidates are all scheduled to have speeches on the calendar today. we'll be listening for those plus, we're now just hours away from that crucial vote on the u.k. prime minister theresa

may's brexit divorce deal. this is the vote that was delayed from december because it faced certain defeat parliament is expected to make its decision sometime after 2:00 p.m. eastern time. a quick look at u.s. equity futures at this hour dow does look like it will open up higher. about 91 points higher nasdaq up 27 points higher, and the s&p 500 up a little over six points >> money-wise, it is a big -- it's a big deal. >> second only to the bezos -- >> divorce >> i think in terms of total dollars. at 130 there's more today look more today on this >> we continue we'll continue to hear about it, because it is an issue for amazon shareholders. >> i'll say. >> in a big way. >> light >> goldman sachs says it does not expect recessions and major economy this is year, but as forecasting low profit growth in the united states and europe that's according to comments by the bank's chief global equity strategist to cnbc at a kvs in

germany overnight. goldman's peter oppenheimer says that he sees -- he expects to see a pretty sharp slowdown in the united states, but that markets got too far into pricing a deeper down turn than goldman expects. with that in mind let's turn to the markets right now. joining us is ryan pain. he is president of payne capital management our guest host this morning, noah blackstein of the dynamic funds. i want to start with you because we haven't gotten a chance to talk about it. last year with all the tumultuous activity, your american growth fund still managed to close up by more than 23%. >> right >> it's really impressive. >> well, it's easy you go up 46 to the end of september. then you get the crap kicked out of youin the last quarters that fourth quarter was difficult. for sure, we had some big gains in the beginning part. >> why were you at 46% through september? >> a lot of the stuff that we have in the secular growth areas, be it technology, there's a lot of areas that, you know, are growing very rapidly and seem to be gaining share in

health care and retail, for example. certainly with technology as well there's also a biforcation the u.s. market is so much better than the global markets last year. it was very difficult to make any money globally last year the u.s. -- the u.s. was strong, and, you know, we'll see what the earnings season holds. to me it looks like the growth is going to continue to a certain extent the problem is that when you get these big sell-offs like you had in the the fourth quarter, the fundamentals of the company is our secondary to everyone's desire to gross down risk and take things off the table. especially going into year-end when everyone is trying to panic and then we heard that from citi earlier. you know, clients would just try to lock in other gains or minimize losses in the fourth quarter, and you get a exasser base by year end i don't think it's as bad as the fourth quarter >> you can't help yourself to measuring things in years, and you really shouldn't it's like a ceo measuring himself in quarters. >> but you still felt the pressure at the end of the year

to lock in certain things? >> i don't, but i can deal with everybody else >> maybe that -- signing up for 2019 maybe december is the best thing that could have happened to set you up for next year, right? >> yeah. i mean, if -- >> this year >> if the fed has actually -- i mean, if they've done -- i think they blinked finally, and they're probably on hold for the first half, and probably all of 2019 i think they were the main cause of this fourth quarter sell-off. >> it's the american -- what's it called? >> power american growth fund. >> you didn't even think about making it dynamic powerful canadian growth fund, did you? you're up in toronto and down here buying all our stuff? >> you're welcome. >> let's talk about that you look around the globe, and you think that everybody else, the rest of the markets around the globe, are on sale by comparison is that where you are telling people to put their money right now? >> i feel like a kid in a candy store right now. you know, you might feel the same way things just sold off so grossly in december that you just have to look at the global markets and if you look at valuations

overseas, they're even cheaper than the u.s. right now. you're getting dividend yields of over 4% then you look at growth rates around the world at maybe close to 3% this year. i think you just have to think globally right now when you are putting money to work in your portfolio. you can't just be u.s.-centered. >> do you agree with that or not, noah? >> i don't know. if you look around the globe, i would say that you look at -- you know, we've been big investors in china for a long period of time a lot of people i think attribute the weakness in china to the trade and tariff war. that's somewhat true they're missing a whole piece of the china story, which was the regulatory environment last year, whether it was on video games or after school education or health care, the regulation every day i walked into the office there is more regulation in industry which china i've never really seen that before in all my years of investing there. the government really cracked down on business very hard at the same time they were in a trade war. then i look at europe. fiscal policy doesn't work you need tax incentives in europe you need capital formation you brought in a million workers at economies growing less than

2% you need the tax incentives, and i don't really see any sort of regulatory relief or incentives in europe right now. sure, there are one-off or two-off companies, but, you know, we need to move away from monetary policy and maybe get some fiscal stimulus certainly in europe. china has started. that's for sure. >> i think you're right about that >> it's cheaper than normal because i have to think at this point there's got to be some value there because, you know that, i know that, the rest of the world knows that >> china is about 40% of the emerging markets, and if the stimulus goes through and if the regulatory regime is paused, then the em could work well. the fed has paused, and they get dollar relief, and that could drive that too what's the case for europe >> you had record unemployment it's the lowest in ten years, and, again, i just think looking at valuations overseas, i mean, gdp at grown at 22 quarters in a

row. it's not all bad, and i think the headline risk right now is probably weighing on prices more than the actual economies overseas snoo thank you for coming in today. >> are you going to stick with the -- >> i saw that gillette commercial i can't shave it now >> you're not rethinking the -- you're not rethinking it you haven't waivered at all just listening today? >> i mean, it may have -- >> are you a good person deep down >> i like to think so. my mom thinks so >> the beard, i don't know >> that's just me. that's just -- think about it, ryan yaep anyway. >> ryan -- noah will be with us until 8:00 this morning. >> jp morgan quarterly report just minutes away. we're going to bring you the numbers. delta airlines ceoest bastian will join us in an exclusive interview just minutes after the report that's coming up at 7:00 a.m then at 8:00 a.m. we're expecting results from wells fargo. stay tuned you're watching "squawk box" on cnbc ♪ saved you a seat.

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included with many medicare plans. call the number on the screen now or visit getsilversneakers.com welcome back new this morning, earlier today it was said his company has never speed for the chinese government and never would he made a rare public appearance following the arrest of his daughter, the company's cfo in canada his company would not answer to such requests. his appearance comes just days after the arrest of a huawei employee in poland that was charged with spying on behalf of china. this soap opera takes a new turn huawei has been under a lot of focus by the u.s. government over potential spying. the view inside the united states government has been that h awei has done exactly that

a war of words we will see where that lands, but when we come back, a lot more to tell you about jp morgan expected to report in just a couple of minutes we will get you those results and bring you the instant reaction in 60 seconds back in a moment

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results of jp morgan coming out just now as we look through the numbers, though, we want to bring in marty mosby, the director of a bank in equity strategies. good morning to you, marty >> good morning. >> we are going to be getting the numbers, i think, hopefully as we speak. what do you expect >> what we're expecting to see a little bit of what we had yesterday. the money center banks are going to have trouble with revenues because of the capital markets that's a temporary phenomenon given what the markets we're in in the fourth quarter. what we're going to see underneath that is tangible book value growth returns continuing to go up. in the share accounts going down and accelerated pace because the stock prices got lower there's benefit from what we

went through in the fourth quarter where. >> were you surprised at the results from citi which were a little bit weaker on the revenue line >> not really. we actually talked about in our earnings preview that the money center banks were going to lead off, but yet we have the weakest kind of hand to play we're going to get to the super regional banks where the margins will be expanding, and we'll see a little better re new growth because of loan growth accelerating which we did see in citigroup's u.s. bank. >> by the way, i'm just looking on the screen there. revenue coming in a little lighter, it looks like, than the expectation. that's in a similar place. >> yes, it is. >> historically when you look out and sort of -- take what we're going to get the numbers in just a second, but when you look at jpm relative to what we're going to hear about later this week, we still have wells, obviously, which is its own situation, i manual. >> right >> in terms of extrapolating out bank of america and everybody elsewhere. >> away we're looking for is a couple of nuggets that the market has overlooked. first, will net interest margins continue to round higher

they'll be going up as fast as when they were lagging deposits, but you still see asset yields that are going to start to go higher we'll get that benefit and margins will get better. we should see share count going down faster. we saw that yesterday with fast. we saw that yesterday with citigroup. another 2% of share count decrease because of the stock prices being lower those are the two things you'll see right off the bat. >> you seen the numbers here >> no. >> i'm looking at numbers and i'm seeing that they reported 1.98 that is three cents worse than the analyst of $2.21 does that make sense to you? >> i would imagine that there is some one times underneath that so when you get to the kind of pulling that out, you'll see that they're probably core earnings were closer to the 2.20ish range that we were lo looking for. i was looking through the wire services >> i'm not getting it on the wire services. >> couldn't find it there.

>> i tried to find it through the web link it doesn't go. >> stock down 3% premarket. >> the form that is on the wire is when you try to hit the link to it, it doesn't work >> so anyway, as we go through this, assuming i'm looking at the right thing and i hope i am, this is january 15th, 2019, 6:47 a.m. which is now this is it jamie diamond commenting saying it will be slower and assets increase for the year on record net new money flows. credit and debit sales volume was all up double digits despite a challenging quarter we grew markets revenue in the investment bank for the year with record performance and solid performance in fixed income fees were a record for the year driven by strength in the cib and commercial banking asset and

wealth management. >> right so what you're talking about there is the core banking element that's we talked about still strong they're still growing at double digits fixed income is going to be a delta. in the revenue side and in the bottom line earnings then you also got year end, you know, different types of events, restructurings that come in. so there is some things that could still be embedded in the numbers that we'll see once we unravel that >> how do you break apart jpm versus morgan and goldman sachs which again are in their own separate baskets to some degree? >> when you have j.p. morgan, you have a consolidated bank that has commercial banking as well as the trading mechanisms so they have a little bit more like we saw with citigroup that is in core lending and deposits. deposit growth is slowing which is to be expected. loan growth is accelerating a little bit

we're seeing those come through sfwlch >> your take, if you could buy one bank, which one? >> if you look at the money center banks with, he would look at citigroup the bar is so much lower given that trades at a discount as tangible value that the guidance we had yesterday that 11% return on tangible common equity is going to go to 12, all they have to produce the excess return aun you'll see the premium, the t tangible value turn positive again. >> what you are seeing >> you know, we flashed it it was $1.98 i think we still need to see what the details are in terms of whether that's actually -- that would be -- analysts are not usually off -- companies don't let analysts be off by 24 cents. >> trading revenues were missed by half a billion dollars. >> that could be it. >> that's a big delta. >> that's what was expected -- now we're down 3%. just like yesterday with citigroup, what you had is

initially when the revenues came out that the stock traded lower. and then you kind of parse that out and say, look that, was capital markets and for a market in december. then you look at the core banking metrics and they turn out to be positive >> it's not on the website yet i still can't even find the actual revenues. >> you know, my bias is growth they're not growing fast enough. you always want to look at the health of the consumer and economy. from what i see, it -- >> it's not on the website. >> where the miss seems to be and the fourth quarter with credit and trading that is reflected in pretty big miss on that side. >> does that mean everybody is going to lose on the trading side >> citi did. >> i mean when you see goldman sachs and morgue an, they'an, t going to be the same story >> they don't allow them to make a market you're not going to have one bank get a big positive and another bank get a negative. the actual volatility is minimized given the new rules. so it's all about just volume and transactions

and then fixed income because interest rates were moving up. you have to remember back in the summer, you had a 340 treasury yield. and then it shoots down to 3%. yield investors freeze up and begin to say now what is the path what am i investing in and that made the whole fourth quarter turn into kind of a wait and see approach for a lot of the investors. >> you have the new numbers? just looking at the release for the first time it finally appeared on the website. >> there is no other number that they're putting out. >> i said the $1.98. we thought there was something off with that number apparently that number is off but not wrong. >> normally they do a better job of getting analysts closer to -- i mean i don't credit analysts, sorry marty, but normally, you know, the body language of the company is $2.20 is too high then you get closer to where it was. >> the issue with citigroup is they said december is the worst month out of the quarter

>> the chaos that happened at the end. >> how often does j.p. morgan miss a bottom line estimate by 10%? not very often >> not very often. but we also don't have the freezeup that we had the fixed income market that we had in december which was historic in the sense we saw with just lack of trading and fixed income. so that is back end event that happened again, temporary it's not related and we'll begin to thaw out which is what we heard them talk about yesterday. >> even reuters, it's not immediately clear if the reported results are comparable to the number. >> you need to hear the call a lot of the credit spreads tightened and rebounded in the last -- >> the company said it was a 67% increase in fourth quarter profit because last year they took a $2.4 billion charge due to the overhaul of the tax code. >> 2018 was another strong year for j.p. morgan chase is how he starts out the comments. >> right >> it's bounced off down 3% now down 2.4%. >> despite a challenging

quarter, we grew markets, revenue and the investment bank for the year with record performance in equities and sol it performance on fixed income banking fees, record for the year >> yeah. >> we will continue this conversation, marty, thank you for hanging out with us. noah is going to stick with us we have a lot more we'll talk more jpm after this >> i'll finish reading through this it literally just hit the website. phil lebeau is in atlanta and he's going to join us next to talk about the company's earnings which are due out shortly this morning too and heidi hidecamp is here to talk about the federal government shutdown. the trade war and much more. stick around squa "squawk box" will be right back sfx: [phone ringing] you still have service? call the insurance company it's them, calling us. it's going to be a week before they can get through on these roads shhh, sorry, i didn't catch that. i said ask how soon they can be here not you. right now?

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earnings season is here. we'll break down this morning's movers and a "squawk box" exclusive with the ceo of delta moments away and will insiders sell tilray we talk about the company's stock. the lockup expiration and a new branding deal. and the shutdown enters day 25 former senator heidi hidecamp joins us with her take on washington's agenda, the fight over the border wall and so much more as the second hour of "squawk box" begins right now. ♪ why can't we be friends why can't we be friends ♪ ♪ why can't we be friends >> live from the beating heart

of business, new york, this is "squawk box. good morning welcome back to "squawk box" here on cnbc we're live from the nasdaq market site in times square. i'm becky quick. let's take a look at the u.s. equity futures at this hour. we're under a little pressure. we were up by about 85 points an hour ago you can see right now that we're still up but only by 13 points that came as we got earnings from j.p. morgan, a dow component that, were not what the street were anticipating the stock is not down as much as it had been. we can look at the shares in just a moment. we'll talk about that you can see the s&p 500 is barely positive and the nasdaq is up right now. >> at one point down 3%. now down 1.8%. j.p. morgan reporting results just a short time ago and both earnings and revenue were light of expectations. wilford frost joins us with more

trading again. tough trading for a lot of people the first two that have come out is reflected in the results. >> ernl is the capital markets included within that the trading is tough, joe, you're right and that team was citi and also in j.p. morgan the core u.s. consumer is fine and that theme is in both of these sets of banks reports. i would say the revenue is actually in line, $26.8 billion as expected. but eps is a miss, $1.98 per share. the expectation was $2.20 per share. but just to focus on that core part of the u.s. business, the lending, the saving. the comments saying that u.s. consumer is spending, saving, investing. they had decent loan growth. core loans up 6% year over year. up 1% quarter over quarter a little ahead of expectation. we were expecting about 5.1% there. so again, that kind of core part of the business, really heavily linked to the economy, looks okay why therefore didn't with he have a decent eps beat like citi did yesterday?

that's because citi's expenses were much better managed that is pretty much in line with expectations perhaps a fraction higher. so the revenue is in line. the eps did miss now the trading, as you said, was disappointing. it cut somewhat priced in but was disappointing on fixed income, commodities and currencies, we came in at $1.9 billion down 18% year over year. excluding the one off. it citi was off 20% year over year. he can wi equity was in line. up 3% when you exclude the one offs investment banking revenue, $1.7 billion that's just down a little bit year over year fractionally behind expectations so, yes, that capital market performance, a big challenge for all of these banks whether you're talking fixed income, certainly, or equities or so and that no doubt will continue to play out throughout the rest of the this quarter of earnings.

citi and j.p. morgan feeling it. guys >> when you look at the earnings, what do you think this is going to say about what we hear later in the week from the other guys >> i was talking with this with mike and sarah in closing bell yesterday f a yesterday if all of the banks did what they did, would it be taken as positively as yesterday in i think probably you saw a big jump in citi's increase because people were hoping okay, citi's a one off on the revenue line a big beat on the eps. clearly today j.p. morgan showing that's not case. that's why we're seeing the banks give up the gains from yesterday. >> and on j.p.m. specifically, i mean there is some good points/bad points. one thing that happened was they grew their reserves because the credit card business actually was growing and mproving that's an interesting issue. how you decide as an investor effectively to account for that.

you have the private equity business which had losses in it as well. >> definitely an important one to focus on. provisions for credit losses, $1.5 billion, increase of $240 million from the prior year. and yesterday, again, one positive that citigroup had was that credit costs remain very low. again, a sign that economy was fine so you're right. we'll have to listen to jamie diamond on that point on the call on the point of jamie dimon, we always listen when he touches on the world of politics and he did say this, he said as we head into 2019, we urge our country's leaders to strike a collaborative constructive tone which would reinforce a strong consumer and business sentiment. so that ind coo kind of balancet could be better if the politics is more constructive >> if the stock was almost 120 and the recent is down at 100, so it's got some stuff in there,

i guess. worries about whatever yield curve, financials and all that and then on a normal day, i think if j.p. morgan missed the bottom line by 10% they might be happy with a 1.75% -- so who knows where it ends today. that's no the that horrific. whether it is because of it's already down from 120 or because, you know, trading, that's not core. >> to his point, i think they got killed in the fourth quarter. >> that's right, joe and you're also right to point out that, you know, last year it already pulled back a lot. but it outperformed everyone out. it was down 8% last year >> we want to get to the delta numbers as well. is there a bold case to be made for banks given that we had -- we now have a dovish fed, right? i don't know what you think, plus the soft capital markets? >> well, i mean, like a lot of the credit measures rebounded very, very quickly in year to date you have like almost 10% decline and 10% rally. a lot of that credit spreads are back in.

so i'm curious what they're going to say about how january's low is >> have you made up for all this >> right does it come back or whatever? because that's what we're going to have to hear what they have to say if you look at a read on the u.s. economy, look at loans, credit cards, look at delinquents. it doesn't show an economy going into recession from citi or j.p. morgan >> we're going to am come back to the bank earnings and what it means for the economy in just a bit. we have another big earnings report just crossing the wires it is delta and phil lebeau joins us with the numbers. he's also got a special guest with him. phil >> hi, andrew. let me give ut numbers firyou t first. for the quarter, delta earning $1.30 per share, three cents better than expectations the total revenue for available seat mile, remember they had lowered the guidance down or came in at 3%. growth at 3% actually came in with growth of 3.2% you look at the margin, 1.5% for t 12.5% for the fourth quarter

the consensus is at 94 cents a share. there is a number of factors in therein flunsing t therein flu there influencing the expectations capacity growth of 4%. let me bring in ed bastian, ceo of delta airlines. you had a rocky quarterer in terms of how the analyst community looked at where you are. so many concerns about the revenue picture. give me your perspective >> i thought it was a strong quarter for us we anticipated at the start of the quarter that we were going to grow the top line revenues by 8% which very, slhealthy. we missed by a point part of that is driven by the fact that fuel prices had fallen so rapidly during the course of the quarter. we were anticipating some fuel driven pricing momentum building as the quarter went on obviously that, didn't occur fuel prices were down. but it was grate quarter i think the thing about the quarter to me that is most impressive though is we had a

25% increase in fuel prices. yet grew our margins it was -- so from our perspective, we accomplished what we were looking to do >> but at the same time, you mentioned fuel prices coming down does not allow you or your competitors to get the pricing power that you would expect in terms of increasing fares. and that's the concern that's out there among anl iflalysts you're expected to be flat up to 2% s that a fair expectation that you're in basically a less growth oriented era for revenue for seat mile? >> i don't think so. fuel prices are where they were exactly this time last year. for a year over year perspective, prices went up and down last month at our investor day we said we expect revenues to g grow about 5% in the year. we're still expecting this em to grow 5% in the year and in the

first quarter. >> northatlantic traffic going over to europe you have some headwinds there. not just you but the industry, whether it's brexit, whether it's france. you are concerned about that segment? >> it's interesting. we're cautiously watching what is happening over in transatlantic. but if you ask me what one of the real surprise factors for us in 2018 was, was our revenues to europe were up double digits so we're lapping a very strong year we're going to be cautious with our capacity into particularly into the coming shoulder period. but, you know, from my spesh perspective, europe is doing okay >> what have you been seeing in terms of the government shutdown, what that means, with tsa agents not being paid, what that means with air traffic controllers not being paid are you seeing problems in terms of your passengers being able to get to planes on time or your planes being able to take off? >> becky, certainly we're seeing longer lines in the airports

this past -- yesterday, actually in atlanta we had some very long lines. 90-minute waits at the security which is substantially longer than anticipated but broadly, i think it's sporadic most of the airports are report nothing material change in the line waits tsa actually published a stat yesterday that they had about a 7% unscheduled absence rate which compares to the normal rate of 30%. puts it in context i think houston to miami reported over the week they had issues atlanta had some long lines in the morning. but over the course of the day, that actually settled down this morning we're anticipate being being just fine in atlanta. delta stepping in. we're providing a lot of people into the cues, helping take any of the nonsecurity functions off of the tsa's ahands hands to ttt that we can. >> you are frustrated? you're paying taxes. you're paying taxes that are supposed to be paying for the costs. the government is not turning around and paying that what are you saying to

government right now >> well, we -- in our published comments today, we encouraged our elected officials to do the very best to resolve the differences as quickly as possible you know, we're not taking sides on the debate. but we need to get the business moving again one of the other issues for us is that we're seeing a reduction in revenues in the month of january. not huge but about $25 million due to the fact that government contractors and some government officials are not traveling the way they would anticipate because of the shutdown. we're also having some certification delays in getting our new aircraft brought on to our operating certificate because the faa has shut down some of the inspector functions. >> in terms of just modelling out how long this lasts and therefore what it could mean to your business, if you sat in the war room, i don't know if you have one on this particular issue of the government shutdown, what does it look like meaning, if this lasts multiple weeks both in terms of the federal lows that you're talking about, the tsa issue which may

not be -- i mean 90 minutes is something. i don't know what that grows to over time, if this goes on for multiple weeks and then actually if you have people whether they're business travelers or retail consumer travelers that say i don't want to put up with the line. i'm not going to book. people are planning on booking stuff in a couple weeks from now to say, you know what? i'm going to either drive or not doing the trip >> well, the revenue impact i mentioned is about a $25 million monthly rate we would anticipate that continuing in our business you know, we're going to work closely with tsa we're talking to the administrator. we're seeing what we can do to continue to off balance, off shed line waits and what not i think from our perspective, you know, it will be a manageable situation hopefully it doesn't last too much longer. >> it is manageable if this goes on for months? >> well, we'll see, andrew >> ed, one last question here. you mentioned certification issues you're supposed to begin flying the a-220 at the end of this

month. do you still believe that's going to happen? >> i hope so i hope so. we'll see in the coming days if the resolutions, you know, you're asking me to speculate what is going to happen in washington which is a thankless task but if we get the faa certification back on schedule in the next week we will if not, we'll delay it until the faa inspectors come back to work >> one last question for you there is a growing theme if you will or discussion amongst analysts and investors and that is whether or not the best days of growth for the airline stocks and the airline industry if they've already happened in other words, questioning whether that next leg of growth is going to come from. what do you say to that concern? >> i don't think so one thing about 2018 that i was most impressed by is we delivered a $5.1 billion profit for the total year despite the fact that fuel prices were up 30%. the last time fuel prices were up 30% for delta, that was in 2011, our earnings came down 25%. this past year, they were down

3% so i think that we built a very different model, a model of resiliency and i think with stable fuel costs and stable nonfuel costs we are pushing for a very nice 2019 >> ed bastian, ceo of delta airlines on a day that company post $1.30 per share earnings. back to you. >> okay. phil, thanks for that. coming up, pot stocks are under pressure since legalization and today the lockup expires last week the stock rallied after a top shareholder said it doesn't have plans to sell its shares tilray's ceo and co-founder brendan kennedy will join us after the break. let's check the shares of j.p. morgan quickly because the dow is now down. j.p. morgan off 2% again we'll be back. stay tuned the future of technology investing

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that beat the street's expectation business 7 krens cents. can you see the stock is down by .5% right now to $246.08. when we come back, the tilray lockup expiration happens today. the ceo will join us right after this break and then former senator hei heidi heitkamp joins us.

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welcome back, everybody. the cannabis company asserted they will not be selling tilray shares for six months.

tilrai tilrays announcing a global marketing group. they own 50 brands in entertainment, fashion, health and beauty joining us first on cnbc is more is brendan kennedy, the ceo of tilray and the executive chairman of privateer holdings let's talk about this branding deal this is the news that was just announced this morning this is a branding deal with abg and as i understand it, you're going to be paying somewhere between $100 million and $250 million in cash and stock for the exclusive rights to be commercializing cannabis infused products what does that mean? what things will you be developing >> we found a great partner in authentic brands group they own over 50 iconic brands they have the products in over 100,000 points of sale, over 4500 free standing and shop and

shops around the world so if you can imagine a nine west foot cream where we put samples in over a million pairs of shoes that are sold by them every year, it introduces new consumers to cannabis based products cbd primarily. with the passage of the farm bill, we're hoping to move quickly to get the products into market and our thesis is that brands matter and no one knows brands better than abg >> they've got brands like nine west as you mentioned, greg norman, a lot of different companies and names that are familiar to consumers. what kind of products aside from like a foot cream do you anticipate what themes do you see cannabis infused products being >> you can imagine a greg norman muscle balm. you can imagine a tennis elbow cream. they own juicy couture, so you can imagine a beauty or

cosmetics product branded powered by tilray that will inthe deui introduce consumers to cannabis based products. >> how big a business is is this a side business or is this the main product line of cannabis itself? >> you know , we announced partnerships with abi, the world's largest brewer we announced a partnership with the unit of novartis, the world's largest -- one of the world's largest pharmaceutical companies and no one knows brands better than abg i think they're second only to disney in ermz terms terms of r brand revenue. and so we think that we can introduce significant revenue into our revenue stream from this partnership >> hi. it's noah black did is stestein. it looks like a $100 million up

front and $250 million you're going to spend you mentioned a commitment of hemp in new york i'm curious in terms of the capital needs over the next few years those are pretty huge capit capital commitments that you're making on the existing revenue base how do you plan on financing these things do you need to do another share offering how do you think this is going to be financed >> so we don't currently have plans for a traditional capital. we raised $150 million in our ipo. we did a convert back in october where we raised an additional $450 million so our balance sheet is healthy. the $100 million investment in new york wasn't us, that was investment by the hemp farm. but we're confident we can continue to arrange additional partnerships and continue to expand our footprint globally with the balance sheet we have

>> for how long do you think the balance sheet can carry you? the next couple years? >> for the next few years. our share price is healthy we've been approached by different opportunities to improve the balance sheet if needed >> what does that mean >> so additional -- there is potential for, you know, a year from now, two years from now we've been approached by additional potential strategic investors. there's additional investment from none strategic, so private equity firms is an option as well as additional share offerings. >> let's talk a little bit about the lockup we did see the stock up by 20% after it was announced last week that privateer is not selling the stock in the next six months that's a big deal for the markets. how does that kind of play out can you speak from your role as

privateer too what the plan might be in terms of ever selling any of those shares. >> there's lots of different option there's the main objective is orderly and patient distribution to privateer shareholders as was mentioned in the release on friday, there is no intent to sell, distribute or register the shares in the first half of 2019 so privateer believes in the long term viability of this new sector we've been doing this for 8 1/2 years. we're very patient and we believe that it's a massive global opportunity that still in the very early days >> all right brendan, separate question privateer and tilray spent a lot of money lobbying in the united states over cannabis for quite some time. there was a report earlier this year that you stopped lobbying in the united states s that

true >> we lobby occasionally in the u.s. not so much on the state by state basis anymore. primarily with the federal government in d.c., you know, majority of congress now comes from a district where either medical cannabis or cannabis for adult use is legal and so that's an important point to convey to congressional leaders. >> how much are you lobbying around the financial system in terms of payment payment processing is a huge issue related to cannabis. >> not a whole lot you know, the banks, investment banks are doing a lot of that lobbying for us, global partners are doing a lot of that lobbying for us so for us it's a matter of just being patient and watching and waiting for new regulations, new clarity to emerge. it seems like this is one issue where both sides in congress are in agreement that something

needs to be fixed here >> your stock up is 4.6% right now. we pointed out that it was up more than 20% on friday based on the news that you would not be selling into the lockup expiration we did have bruce lenton from canopy speaking with jim cramer back in september. he made comments about tilray saying the stock run is impressive, can by growth has the largest capacity in the industry it has the largest inventory they're the only cannabis company that is working on beverages for the last three years including that initial partnership with constellation brands are is there room for lots of players in this industry or do you think it's going to be a winner takes all >> i don't think it's going to be winner take all i think that constellation and altria came in and bought two competitors in canada with our partnership, our agreement with the unit of novartis, with abi and now with authentic brands

group, we have great global partners and i couldn't be more pleased to control our own destiny like we do today as i mentioned earlier, it's early days in this industry. we're not interested in giving up control today >> brendan, thank you very much for your time today. again, brendan kennedy is the head of tilray coming up, bank earnings remain in focus for investors today. we heard from j.p. morgan. at the top of the hour, another data point wells fargo will report results. full coverage of market reaction straight ahead and then tomorrow, blackrock's larry fink will join us at 6:30 a.m. eastern time we head to break take a look at u.s. equities futures now negative on the dow. although we're still positive barely on the s&p 500. nasdaq nicely higher we'll be right back. sfx: [phone ringing] you still have service? call the insurance company it's them, calling us. it's going to be a week before they can get through on these roads shhh, sorry, i didn't catch that.

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at comcast, it's my job to develop, apps and tools that simplify your experience. my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. we're watching three big stories this morning number one, j.p. morgan chase reporting profit of $1.98 per share. it was shy of the consensus, more than shy of the consensus at $2.20 number two, cvs health says walmart pharmacies are expected to leave the pharmacy benefit network in a dispute over pricing. number three, wells fargo going to be out with quarterly results

in 30 minutes. we'll bring you those numbers as soon as they cross of course, instant wall street reaction when we return, former senator heidi heitkamp joins us to talk about the border wall, economy, and high stakes game of political posturing in washington "squawk box" wl rhtac ilbeig bk. hey, what is it? i realize i love you, but as long as you're with jessica, there can never be anything between us. listen cassie, there's no need to cry. besides, i've got really great news. you're leaving jessica? no. i just saved a load of money on car insurance by switching to geico. i saved. i thought that meant something to you. geico. 15 minutes could save you 15% or more on car insurance.

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good morning there is growing frustration over the shutdown on both sides of the aisle a bipartisan group of a dozen senators met informally last night to talk about a plan b now there was no breakthrough but at least they started a conversation >> i was in the meeting. i'm not going say that it will be different this time but you -- dialogue guarantees nothing. the ab sense of dialogue guarantees something bad >> the president is hosting a lunch with members of congress today at the white house he's inviting some moderate democrats like members of the blue dog coalition the thinking here is that they might be more open to a deal on border security. but it's unclear how many of these democrats will actually go to the lunch and one lawmaker rejecting the officer as representative lou correa. he will be happy to talk about the border once the government is reopened. so democrats do appear to be holding the line with the shutdown likely to stretch through this week. now one unexpected side infect of a side effect of this, most of the

essential staff is furloughed. no one was there to make and serve the food for the clemson tigers instead, the president ordered fast food, pizza, 300 hamburgs and many, many french fries. the president said he paid for it all out of his own pocket >> i keep looking at that. i would have been very surprised. >> i did see a couple of those big clemson guys just putting trays of big macs on >> let's talk more about the on going shutdown with our next guest, senator heidi heitkamp, former u.s. senator. we're going to keep calling you senator. from north dakota. >> you can call me heidi >> are you sure north? >> yes i'm absolutely certain north dakota

you're on "squawk box" a lot finally, all that hard work paid off. >> i'm glad i can help to your education, joe >> can you start -- really >> there's a difference between north and south dakota let's start there with basic geography. >> you can teach me how to talk better of she has a new op-ed right now titled "let's focus on real american challenges. honestly, if i had to pick someone from, you know, your side of things, you might be the person that i'd at least consider some of your informed opinions >> well, thank you thank you for that >> honestly. i dismiss -- you must too. where is your party right no you? we'll get to the shutdown. but where is your party? >> i think it's going to be interesting to see a dialogue develop in this runup with the 2020 >> the new members of the house. the liberal wing that are -- i

mean, they're saying we don't, you know, lieberman sends something to aoc she says we party. >> why everybody so focused on this woman >> i don't know. of. >> there are 14,000 votes in new york city. she is not -- right? you know what? i get that but the bottom line is that, you know, so does kim kardashian and so do celebrities that we now have become -- we now have become -- that's the base problem we have right now. politics of celebrity instead of celebrity of ideas politics of getting things done. >> president obama seems to be warming unmore than joe biden it seems like >> who knows you know, this is -- people ask me, who is going to win? i said well, i watched them play it's like the ncaa tournament. i haven't watched them play. my husband says but they're limited to 64 teams. you know who knows. >> did you loan money for the boarder? >> i loaned $25 billion. >> so what is happening with that now is this just a shutdown thing? they don't like the -- >> i think -- let's just --

everybody kind of take a step back from the rhetoric and my idea, people say what would you do if you were the president? i'd get out the maps right? get out the maps i need it here because of this, this and that. this is the old landing map that we want to replace with ballard fencing. this is what going to do here and there. this is how many people are going to hire. >> you think that would help >> yeah, absolutely. i think number one, think about this, this is something that hasn't been reported the president in his budget request for '19 asked for $1.6 billion that's what the senate voted out of the appropriation committee like 22-5. >> he's mad at minick mulvaney about that >> and the bottom line is, what are you going to spend $5.8 billion, that's been a moving target, too now it's $5.8 billion, what you are going to spend it on tell me how you're going to deploy that money in a year and whether that makes sense >> some parts of the wall are

less immoral than other parts of the wall >> we have border structures we have fencing. we have ballard fencing. >> people don't want any fence >> when you look at -- >> what does immoral mean? >> i don't know. >> how many people saying it's immoral? >> no. i heard nancy pelosi call it immoral. what i think she was referring to was the idea that a full on wall of china style wall that is running through the whole thing is immoral and i think that actually a lot of americans believe that. >> think about this, joe you got rio grande meanders, right? north-south, north-south, you have to draw a line across the rio grande you're not going to follow the rio grande or put the wall in middle of the rio grande so now the wall -- >> that is not where the right is though. >> so you're agreeing that there is a wall -- >> i'm agreeing that border security, walls, steel, combination of both, other checkpoints, more agents --

>> you two can work this out right now. >> i know. >> show me the plan. >> they're not even am coulding to t -- coming to the table to talk about it. >> come with maps. come with ideas. >> that won't work >> how do you know it won't work >> i wish it would >> i think my theory on government is make government boring again >> heidi, you don't see -- this is a total political play right now on both sides. but they're not even going in with maps much less let's hire more agents and get nmore judge. >> if you brought in two people who actually served as the chair of that subcommittee -- >> should there be a government shutdown over this issue >> i think just put the basics on the table meaning, the idea of shutting down the government over this issue unto itself makes no sense. >> shutting down all of the other parts of the government whether it's usda or department

of interior which has dramatic effects. as a former senator, how does this get resolved? he promised the wall he won on the wall >> he also promised mexicans were going pay for it. >> anyway. >> yeah. >> the democrats seem to be, no, not a single dollar. >> that is really unfair >> we voted on the daca for the wall deal, we voted for $25 billion for the wall the president couldn't even get enough votes for his plan which was the grassley plan. so there has been an opportunity -- >> but now it's zero >> you get into 2020 so now we have this elevated ratcheted up dialogue. >> this is the longest shutdown in history tsa is calling in sick people, you know, the national parks are closing. how do you this i this gets resolved soon? >> i think it gets resolved the way tim cane says it gets

resolved you have a number of people outside of leadership who start having a dialogue that is outside of that discussion we did that in '13 >> does that force a vote or does that just come up with a -- >> it shows -- so let me tell you about '13. we did this in '13 susan collins, me, amy, but we were up against the debt limit which was really pushing a lot of the panic we had that deadline of the debt limit. we don't have that right now but a number of us actually came to an agreement that presented it to leadership and the only deal they could take it opened up government. but right now you have a president who is saying i refuse to sign anything but $5.8 billion for the wall. >> let's say he really did go to 2.5. is it out of the question at this point i think it is, for schumer and pelosi to say we'll do

that it is somehow giving into him and seen as losing face. and that puts us in a bad place. >> joe, if you sit down with people and say okay, can you agree that we want to replace the landing map border wall here right. >> you sound like you're from the other side, heidi. >> no. >> they're not going to say yes to that. >> what they do is bring people in and say my way or the highway. you've got to bring people in and watch the boring -- >> i don't think so. >> ego is really high on both sides. is there any chance you're going to get the sides to back down? a compromise that is reached and somebody comes up and says okay, how do you get all of the egos in that room to sign off on it >> well, it's not egos as much as it is they now have hardened their base and they have to figure out a way to have that discussion >> they pinned themselves in a corner with this >> there is one person that hasn't and that is mitch mcconnell. he could make the deal but he has been burned once before at the end of the last congress >> so you say if republicans

fwhe went in with maps and showing areas and saying we're going to give some money to i.c.e. and judges so we can consider all the cases more quickly, if you did a comprehensive bill, you think that chuck and nancy would say okay to $2.5 billion >> i don't >> well, you know what -- >> do you? >> i think that presented with the plan, presented with a plan that makes perfect sense that explains why it is that you need new structures here. in fact, there is 22 miles of new border wall which was authorized in the last appropriation. >> from the political standpoint on this the president played in to pelosi and schumer's hands in terms of saying i'm going to take responsibility for it and do it. however, there is such a thing as overplaying your hand even when you're dealt a good hand. i think as this government shutdown continues, both sides are going to be feeling the pressure on this you can't not have a government running without somebody eventually saying throw the bums out, all of them. >> the problem is they're not in a negotiation. and i think when the public has

an opportunity to see what the fight is over -- >> when you think about the inflection points that could come though, is it that republican senators say okay we're going to break with the president? is it that, you know, sh shumers going to wake up and say, you know what? i think we have to give in on this point i don't know come up with something i mean, do you think a trump is going to wake up some morning and figure out some new ways to declare victory? >> i thought lindsey through a life line with a temporary opening which i jumped on and said i think this is great idea because it will take the heat off, lower the rhetoric, you know, we'll move on to talk about brexit or we'll move on to talk about the next challenge that we have in government and lower the rhetoric on the wall or what we call border security. and that didn't happen so clearly the president thinks that he's in the best position that he can be in right now. his answer is no nancy's answer is no we've got to have people who can

broker a deal between those two extremes >> all right senator, thank you are you -- i've heard it suggested for canada we don't need a wall we need a net to keep the geese out the geese you send down, the canada geese, you know, they're mean they crap all over the place would you be opposed -- would you vote any money for -- this is a comedian who does this, ron white. >> have you ever walked up to one when there are babies there? >> they're violent. >> unbelievably violent. >> you have been chased? >> i have been chased. anybody that plays golf, you know, they congregate. i think a net north and wall south. >> i mean -- >> don't you get them in south dakota >> he wnlt what as many canadian hockey players as we can get it's not south dakota. basic geography. geography, my friend >> senator, welcome to cnbc. thank you. >> we'll be right back i am a family man.

i am a techie dad. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience. my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. let's get to the markets this morning joining us right now to break down the banking numbers, marty mosby, director of bank and equity strategies and also covering the broader markets, we have tom lee who is managing partner and head of research at fundstrat global advisors and richard bernstein. also noah blackstein of dynamic funds. quickly, j.p. morgan, what do

you think having time to kind of dig through the numbers? >> i'm going to get joe's confidence and analyst back. $11 billion is what we expected them to earn between revenues and expenses if you net those two things out. the market consensus was $11.5 billion. if you take the numbers, it was $11.1 billion which is closer to what we had but in the range of what you expect. two things we saw that created the difference, provisioning, taxes and unusual items. so that is where you really have the difference happening outside of revenues. >> we have wells fargo a couple minutes. we'll stick around to talk about that richard, what do you think about what we're hearing at the beginning of earnings season i know it's very early jp morgan out there. but based on what you're seeing, what does this tell you? >> i think, becky, i think the story for 2019 as a whole is profits growth is going to slow. slow pretty dramatically as we go through the year. and what will will happen as each quarter, as you get slower and slower profits growth, you get larger percentage of companies reporting negative earnings surprises so i think we're starting to

seat tip of the iceberg on that. and each quarter as we go ath ll -- along, we'll see more and more >> we maybe need to hear how january is going >> for the financials, maybe it depends certainly when the high yield market shuts down, that's not good. yet a lot of the trading desks should have done well. i'm not sure they did. >> tom, what do you think just in terms of how much of that bad news is already factors into what we're seeing in the markets right now? >> i think it depends on how much is like a speed bump because of trade and you have to remember the fourth quarter we had like a black swan in liquid mar markets. there was almost no liquidity. versus shouch versus how much is a slowdown. i think this is speed bump i think even if expectations come down, i think stocks do okay in earnings season. >> who do you think leads the way? which sector >> we just published our sort of like seasonal analysis on this i think that investors are really gravitating towards

quality cyclicals right now. meaning, they'renot really -- they don't want to be in growth or value they want to be sort of in the middle and, you know, i think growth works a little better. people are more comfortable owning soming that can grow even if it they're not sure about the global environment >> richard, what do you tell people to do right now if we're seeing the numbers come down and we've seen a big takedown, so what happens? >> i think two things. one is you do have the volatility from the fourth quarter which i would say was kind of a disconnect from the fundamentals, disproportionately large relative to the fundamentals so, yeah, there might have been a speed bump the question is how smoothly paved does the road for 2019 once you get over that speed bump that tom sent i think there are a lot of potholes i think will are more potholes that being said, the market probably does reasonably well for the year >> noah, last word from you after sitting here with us for two hours, your thoughts on what -- >> without snacks. >> well done >> you know, i mean i agree. the issue is there is secular

growth areas out there certain areas of technology and migration of cloud, ai new medical devices. the problem is when you get the big wooshs down, like in the fourth quarter, there is really nowhere to hide. in a sense that they take everything down even with the good sector. of i think those are the opportunities for the secular growth names but this volatility is here to stay >> thank you so much, noah, for being here tom, richard, we want to get you both back to guest host. marty will stick around. we'll be back. thanks to you, we will. aw, stop. this is why voya helps reach today's goals... all while helping you to and through retirement. um, you guys are just going for a week, right? yeah! that's right. can you help with these? oh... um, we're more of the plan, invest and protect kind of help... sorry, little paws, so. but have fun! send a postcard! voya. helping you to and through retirement.

it's earnings season two dow components already out this morning we're about to get another critical report from wells fargo. recap of all this morning's movers coming up a critical test for brexit british prime minister teresa may makes her final push for a deal as the clock ticks down on a key vote and perhaps her leadership and the biggest risks facing ceos in 2019 h we have dysfunction in d.c., trade tensions and disruptive artificial intelligence, we'll talk to the ceo of boston consulting group on the biggest pitfalls ahead this year the final hour of "squawk box" begins right now ♪ all the seasons for loving >> live from the most powerful city in the world, new york. this is "squawk box. >> good morning. welcome back to "squawk box.

live from the nasdaq market site i'm joe kernan along with becky quick. the futures now down about eight points on the dow. and we are going to take a quick look at treasuries as well wells fargo is right on time with posting results here of -- >> and with the full release. >> $1.21 is four cents ahead they beat on the bottom line revenue is shy of the 21.7 it comes in at 20.98 the stock after the initial drop is now basically unchanged let's bring back marty mosby director of bank andstrategist and he's -- i was just kidding about analysts i love the analyst community are you going to renew my faith right now? cnbc's own wilford frost would you characterize this as

better than jp morgan? >> really the main reason why they may have missed parts of their estimates, just quickly looking at the numbers eps is $1.21 revenue is behind 20.98 versus expectations there is a couple of slight disappointments. net interest margin is 2.94% it is expected to be $2.95%. that's in line rates have not gotten much worse. the efficiency ratio is disappointing. this has been a big issue for them over the last year. they've been trying to get it back below 60% last quarter with 62.7%. the lower the number the better. it's risen to 63.6%. there is also a reserve release which often is seen as a one off, whether it is repeatable or

not and that's gone up $100 million this quarter so just going to dive into the loan growth numbers which will be key and the provision numbers if you come back to me in a moment but overall, the eps certainly beat >> don't hurt yourself marty mosby, wow, that looks like -- >> oh, my. >> scribble more than i do that looks like the unabomber or something. manifesto. what did you write there what do you think? >> we have to keep up with all the metrcs ics of what you're gg to throw out at me so what we're looking at with wells fargo is really not revenue growth yet because it's been, you know, pulling back given what they've been under in the sense of working through all the mandates and the balance sheet constraints. eps being better we flekts whre we've been seeing. they're start took move back down and they've seen that over the last three quarters going into the fourth quarter

>> there is reputational risk. sim sloan says that they have improved the customer service which resulted in what they call customer loyalty and overall satisfaction with most recent visit branch survey scores reaching a 24-month high in december of course that goes back to the lows that they would have been seeing but where do you think they are? >> well, i think that they actually spent more time talking to their employees and their customers than any other bank in the country because of the pressure that they've been under. that will pay dividends. they come in with humility and willingness to hear new ideas. i think they're starting to knack that which will improve customer satisfaction. >> so it's a long way to run i think about the jokes you make every time you see when i say they beat expectations, you say it's because they opened up --

>> they had a bangup quarter opening new accounts some of them are real. some of them actually -- >> it does pay off >> some the customers actually know about >> i think it will pay off >> that's horrible >> it's in the bread and butter. >> why would you drag that out of me? >> because it's a deal for him it's the first thing that tim sloan talks about. >> it is >> the first thing that tim sloan is addressing too. they're working very hard. >> but when you're in a reputational issue that, is the primary thing that matters earnings don't matter. it matters how you interact with customers. if you look at even the well which is not what j.p. morgan's issue is, you think well that was just kind of an ancillary thing related to what wells fargo is going through >> you think about wells before that, the way -- >> the pristine reputation >> yeah. and everything else. and they had it to lose. >> it took j.p. morgan 2 1/2 years to come out from under that to see a stock price actually relatively catch back up >> where are we on that in terms of wells >> i think we're in the inflection point we reached the trough.

we'll start to see that improve. we'll start to see the customer loyalties that were constraints and they begin to come off this year then we look for revenue growth as well as expense savings. >> all right thank you, marty mosby i think it's a composite of the entire financial group and the futures don't know what do now either. now down four points on the dow. >> a lot more on "squawk box." the government shutdown is not necessarily the biggest risk for business in 2019 but it is definitely a self inflicted one. when we return, we're going to talk government shutdowns impact on wall street and other big risks that ceos are facing this year stay tuned u'atching "squawk box" right here on cnbc ♪ saved you a seat.

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welcome back to "squawk box. futures are indicated down roughly 10 points. the nasdaq is actually added to its positive momentum, up 25 and the s&p 500 is up a little over a point this morning. we've got two dow components that have reported earnings already this morning united health reported estimate that's beat -- or numbers that beat expectations by seven cents with quarterly profit of $3.28 a

share. revenue also better than the street was expecting that stock though is down by about $2 decline of .8% last trade for united health was $245.99. also j.p. morgan chase coming in at $1.98 a share that was below the street's consensus estimate of $2.20. it's the first time in 15 quarters that j.p. morgan missed on the bottom line you can see that stock off by 2.5% a lot of that was, of course, because of fixed income. the trading for fixed. >> delta airlines reporting earnings of $1.30 per share, 3 cents above estimates. we spoke with the delta ceo last hour right here on "squawk box" about the impact of the government shutdown. >> we're seeing reduction in rev niz in t revenues in the month of january. the fact that government v contractors and government officials are not traveling the way they would anticipate because of the shutdown. from our perspective, you know, it's going to be a manageable situation. hopefully it doesn't last too

much longer. >> here to talk about the shutdown and perhaps even bigger risk that's are facing ceos in corporate america, we want to bring in the ceo of boston consulting group great to see you ahead of davos where we talk about the big issues >> yes, with he do >> a lot of hand ringing when you get there about what ceos are facing where does the government shutdown rank in your view right now? >> i think it ranks lower on the list of things that people are concerned about. but in a broader theme that people are concerned about the broader theme is the challenge around the world, the geopolitical challenge that's exist between governments, the trade issues, the negotiations, brexit and so forth. and within governments and the challenges and many cases of coming together and aligning in ways that can support the growth of the economies longer term >> you think about your clients, right now when it comes to let's talk u.s.-china, is that one you put at the top of the list >> i think that is probably

got -- again, its so varying by sector, right? they're real issues that you're concerned about between trade and the u.s. and china that is one of the bigger geopolitical ris fak factors, s. >> we're going to be hearing about brexit at 2:00 p.m. eastern time today what do you think is going to happen what are you telling your clients? i assume your clients come to you and you -- they say you have all sorts of analysts and other people who are supposed to map these things out for them. >> what we say to our clients in general right now is actually the underlying fundamental economics are pretty good in the world. certainly good in the u.s. and not so bad other places. but the geopolitical risk factors are real and you have to just do much more scenario planning than we're used to doing. i think if you go back three years, we started with a world where the macroeconomics were uncertain. when i was here and other places, all we talked about were all the macroeconomic challenges here and around the world.

we auto took the geopolitics as boring and not consequential three years later, it flipped. >> you sit inside a lot of these board rooms talking to the senior executives of these companies. just the mood generally, put aside the stock market for a second what do you think the mood, the actual mood is because i've always thought, look, i look at mergers and acquisitions as sort of a forward looking indicator, not a back if you have confidence in the board room, that actually says something. >> right >> in a different way than necessarily what the market is saying so what -- is there a difference right now? >> i think the mood about the macroeconomy is for sure more concerned than it was four months ago that's for sure. but still on the balance, more positive rather than more negative certainly as it relates to the u.s. the u.s. underlying economics, still people feel positive than negative but with more of a concern than headwinds we're nine gleeyears into an expansion. >> where is the greatest

enthusiasm right now >> i think the greatest enthusiasm is unemployment is low. there is a lot of capital investment >> is there an industry where you talk to people and you just leave the meeting and you go, wow, those guys are actually more excited than i would have thought? >> i would say mostly -- no. i don't think there is one industry >> let me turn around the question then. how often or what industry have you walk out of the meeting and said, you know what? they're really -- they're much more nervous than i thought they'd be. then you go back to your partners and say we have to keep an eye on this >> and print journalism. >> it has its challenges, for sure >> except for the on line thing happens. >> that's trump. thank trump every day "the new york times." your stock is worth something again. be happy >> joseph, joseph. >> i think right now what people are actually looking at and one thing that we'll be talking about in davos is what does this mean for decade ahead? we're so focused on the short term and all the conversation. a lot of what we've been talking

about is do you need to do to win the 20s at a time not just about the geopolitical tensions but where technology is just affecting every sector of the economy so dramatically. that's what bewe've been talking about and writing about. honestly, that's a lot of what companies want to engage with. they're not ignoring the short term but winning in the decade ahead is a huge challenge right now. and a great opportunity. >> what were you going to say? >> nothing i was going to ask him about brady, actually. >> let me ask you two consulting questions. are there countries you'll not condition sul consult. there was a big article about mckenzie's role in saudi arabia. there is questions about other companies. it's played your whole world much more complicated than ever before >> i think it'smore complicate but for us it's been pretty clear for a while. there are obviously countries where they're either sanctions in place or there are safety concerns and we avoid those. in other places we will consult

and then we focus on the kinds of work we want to do. how do we have a positive impact positive impact on companies, of course, positive impact on society. >> not so much the legal sanctions but so many of the consulting firms rely on millennials because it's a constant hiring cycle to take kids out of school, smartest kids out of school, run them through the system and then off to business school and what not and because we often talk about companies with purpose and meaning and words like that that we didn't talk about a decade a ago, does that change the kinds of clients you might be willing to take on in a different way than you used to >> so first, i couldn't agree with you more. we talk purpose and values and why we do what we do and our desire to make a positive impact in the world that is an on going discussion >> right >> but has it changed the clientele? >> it's changed -- it's increased the importance of communicating kinds of work we want to do and the kindsof wor we don't want to do.

and how we're trying to play a role in society. in our social impact and in our public sector work and we are so much in that dialogue with our staff so that they understand why we make the choices we make and what things we choose not to do. i think they value it a huge amount i think when we can show them in countries even harder places that we can be a positive impact to create jobs, support young people, create opportunities for women, do things that they really care about to make business and society work better, it means a lot to them >> joseph, before we let him go, what is your brady question? >> were you, i mean, it's unbelievable, is it not? tom brady? >> yes, unbelievable i have split feelings. i'm a steelers guy. >> oh, my god! >> but i'm also a michigan man i'm a michigan man so with tom brady, i thought it was -- i think it's so impressive very impressive. >> i'm not sure that -- there is some side board type stuff happening, isn't there sfw . >> i won't prejeoject side board

>> i won't think that people are counting him out maybe he'll make the super bowl. >> kansas city -- >> i know, they beat them last time >> the nation is finally united. they all -- they all want kansas city they all want kansas city. that's the one thing that united the nation >> thank you, sir. >> pleasure. >> good to see you >> coming up, producer price data will be coming at the bottom of the hour later, the fed always says it is data dependent what about data when it comes from the markets like the stock market when we come back, we'll find out how important stocks should be in the central bas' calculation. stay tuned when you finally stop working, will it feel like the end of a journey? or the beginning of something even better? when you prepare for retirement with pacific life, you can create a lifelong income... so you have the freedom to keep doing whatever is most meaningful to you.

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they feel about the economy but very nervous about where are things headed. >> welcome back to "squawk box." take a look at the futures let's show what you is going on after a number of big earnings reports. and misses from some of the big banks including j.p. morgan. dow jones industrial average looks like it would open off close to 15 points down right now. nasdaq looking to open up about 22 points. and the s&p 500 up a little over one point. joseph >> a key vote on brexit is coming up later today. british prime minister teresa may's plan is likely to be jektjek gentlem rejected by parliament kit allow her to return to the european union to seek better

concessions a loss could open the door to a brexit delay, a second referendum on whether to leave or the hard brexit where the countryleaves with no deal at all voting in parliament gets under way around 2:00 p.m. time eastern, u.s. time >> and more government turmoil here in the u.s. the government shut down for its 25th day, shortages of federal airports, security workers prompting several large airports to close security lanes yesterday. the shortage affected airports in washington, d.c., atlanta, houston, and miami travelers departing from atlanta advised to arrive three hours early before their domestic flights. the screeners have been calling in sick at higher than normal rates, about 7% compared to 3% after missing paychecks on friday due to the shutdown ceo of delta saying it's going to cost the company $25 million just because federal workers were not traveling canadian man sentenced to death in china for drug smuggling will appeal that verdict. robert shellenberg appeared a

15-year prison sentence for smuggling med. the court increased the sentence from 15 years to death following the hearing. we talked about it on the show his attorney arguing the court shouldn't have increased the sentence because no new evidence was introduced during the appeal there is speculation the sentence is politically motivated. although china hasn't linked it to canadian -- to the canada arrest of the cfo. of course, the cfo -- ceo, rather, the parent, the father of her making a case just today speaking out for the first time about the situation and saying that they are not spies. the so we'll continue to talk about it >> meantime, china has asked some of the state run companies to avoid business trips to the united states and its allies and protect their device it's they need to travel canada is also updated the travel advisory warning citizens traveling in china about the risk of arbitrary local laws >> this scary stuff.

the fact that people are telling people not to come here. i was saying there are american executives that are worried about going to china and how to deal i think we're in a new -- really this is a new place. and we talked about what a trade war looks like this is much more -- i would say this is -- i don't want to call it a war this is much, much deeper than a trade war at this point. >> i agree with you. >> when we come back we are just minutes away from the latest ppi data we'll have it for you on the other side of this break meantime, take a look at the u.s. equity futures. we've been trading at this point relatively flat by the way, it's bystanders >> i know it's bystanders. i just wanted less noise sfx: [phone ringing] you still have service? call the insurance company it's them, calling us. it's going to be a week before they can get through on these roads shhh, sorry, i didn't catch that. i said ask how soon they can be here not you. right now? what's now? he says they're surveying our property now they're probably at the wrong house

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>> welcome back. mock the stories up front and center, cvs says walmart is planning to pull the pharmacies from its pharmacy benefit management network

it stems over a dispute from pricing. cvs asked walmart to stay in the networks through april 30th. and one of the morning's big stock losers is paint producer sherwin williams the company issued preliminary quarterly results which are weaker than expected and that is due to weak sales growth in north american stores during october and november. it's down $33s that's not something you see every day. that seems like a good warren buffett company. but not today. he loves paint and -- >> benjamin moore. >> and housing and all that stuff. i wonder if if something similar is happening with benjamin moore. the government shutdown -- >> he likes bricks too >> acme. >> he sent me a brick. that's nice. it was thick as a brick this thing. anyway, the government shutdown is at a record 25th day. according to president trump's public schedule, he is going to meet with members of congress at the white house today.

however that, schedule does not specify who is invited and who might be attending, whether there will be any greasey fast food or not today. >> we would be just about a minute away from december ppi dat yachlt we've be data we've been watching the futures w the earnings news from j.p. morgan that came in below what the street expecting, unh which came in better than expected the stock has not benefitted from it. you're seeing the dow futures at this point down by 40 points when we started 2 1/2 hours ago, dow futures were up by 85 points s&p 500 futures right now relatively flat. nasdaq is still positive it's up by 16 points also been watching the ten year note which at this point is still yielding above 2.7%. it dipped below that a couple days ago rick santelli is standing by at the cme in chicago we may not be getting the numbers at exactly 8:30. the lockup they do to allow reporters to get the data has been canceled because of the snow shut down down there. what are you watching in the

markets? what is catching your attention? >> i think that everybody, of course, is continuing to monitor the fact that we're not getting any onward push with respect to pricing pressures. we all are aware that retail sales in china were at a level recently that they haven't seen in a decade and a half there's many issues emminating from china that are used as canary in the coal mines for the global economy at large. and we're shadow boxing all of this data. not only because the closures affecting things that traders like, data just hit out. parts of it did. okay with regard to our january read on empire, we're expecting 10, 3.9 is the number. much smaller than anticipated. following an upward revised 11.5 now on ppi, it's hitting the wires. of down .2%. headline and down .1 when you strip out food and energy. these are definitely cooler than

we were anticipating we're expecting down .1 and up 2. we ended up down .2 and down .1. don't see any revisions. if you look at the year over year numbers, ppi year over year up 2 1/2 if you strip out food and energy, 2.7. ex-food and energy and trade, up 2.8. these are all exactly as they were our last look and a little light on expectations on the year over year ex-food and energy. but it was 2.7 last time so let's summarize cooler headline data on ppi, the longer term data holding but well off the worst levels of pricing pressure empire is definitely disappointment and we slipped the basis point to 269 treasury yields are going to continue to definitely pay close attention to the equity prices as they look for signals and what i was about to say is things like cftc, oil moves, our traders accumulating positions,

are they more speculative? are they getting out of positions? a lot of the data gets caught in the shutdown >> rick, thanks. cnbc is on drudge. they're listening to jamie die mond mim dimon on the conference call the headline, you know, the headline that we ran says jamie dimon says it could reduce to zero if it continues but then the actual quote was someone estimated that if it goes on for the whole quarter it can reduce growth to zero. so i don't know if -- >> i just saw that report. >> some of the estimates i read. >> the reports, jamie is quoting that >> i think ian shepardson had a report just yesterday, am i right steve? >> yes >> that said, that may that for

whole quarterer? >> it is actually beyond that. administration officials tell me they have now doubles their estimated cost of the shutdown they think they're going to subtract 10.1% from gdp every week that 800,000 government workers are on furlough. and that's up from the previous estimate of 0.1% every two weeks. >> right >> and the reason the increase estimate comes -- incorporating more effects from private contractors being out of work and more impacts from the loss of other government functions that aren't happening. so the administration sees a half point being shaved from the first quarter gdp of the shutdown through january and the negative effects come with global weakness and the waning effects of tax stimulus >> and the effect on the first quarter -- >> it's coming up. >> all right >> it's coming up in this great, very well carefully written report here. in a research report yesterday estimated a less severe impact

a half point if the shutdown lasts through march. but they think it could cause gdp to go negative because the first quarter, the liesman effect is seasonally weaker than the other three quarters so some of the losses could be recovered next quarterer when back pay is remitted to workers. ironically, economists will lack at least some of dat yacht that might show the shutdown because of the shutdown. several key economic indicators not being published. the december retail sales report, the most important of the year because it has christmas in it will not come out wednesday. that makes it unlikely, ready for this, the fourth quarter gdp report will not be published january 30th that is also day two of the fed's january meeting. a official told me that winter weather, they just don't know yet. that bea official had to talk to me on background they were not allowed to talk to me because they're not suppose to be working.

>> so everybody is quoting >> thank you bea official. >> he commented on the traders down there are kind of moving a vacuum with some of these things too. less or more capacity, i should say. >> i don't know. we put a blindfold on then you get -- >> "bird box." >> now other blogs, dimon sees odds of zero growth shutdown is too prolonged. i guess ian shepardson says it is not going to be a headline. but when dimon says it, then it's on drudge and suddenly it's on -- >> when steve liesman quotes a source in the administration, that is the headline >> i can't think of a political reason for the administration to increase the estimate. right? i think it goes the other way. >> right >> the polls show most people blame the administration are republicans. i think they want to tamp it down although maybe it increases pressure on both sides maybe this is a person who is apolitical in that way >> can i say one more thing on the j.p. morgan comments the cfo saying they see a more

constructive tone in the markets in the start of the first quarter. we've all seen that that's the big thing that people are waiting to hear on this conference call the problems, the reason you probably don't see the shares down more is because the fic trading. a lot of people thaep is not the case things eased out in january in the early weeks. that seems like what they're saying. >> it certainly seems like the market is behaving -- you don't care, ayou're agnostic from ut going up and down from an economics point of view. you don't want to see the lurches. we had days it was down 700 at 11:00 in the morning and then we finished up over 1,000 one time. it was that kind of craziness doesn't speak to you of the brilliance that we all otherwise subscribe to to markets. but we do know that the cost of the shutdown, people are getting more worried about both the intensity of it and the duration of it. >> steve liesman, thank you. in the meantime, we have breaking news on microsoft and walgreens. john forward d with breaking nes

>> it's 8:35 and i'm here this is breaking news big news microsoft and walgreens in a tie-up it's a seven year deal and it includes up to 12 digital health centers that are going to be little kiosks in walgreens stores and incorporate microsoft technology and more important for the microsoft perspective, they are moving a majority of the digital infrastructure to azure. now this is the only broadcast interview that you're going to see with microsoft and walgreens boots ceo. they're talking about how this deal came together take a listen. >> i think more or less one year ago we started to discuss and analyze what we could do together and it has been quite a smooth process overall. >> i think that's right. it start tleed three years ago the conversation around the vision and then as he described, they went through a pretty rigorous

process of really finding the right partner who can bring both world class technology but also the trust in order to be able to help them build the ecosystem. ultimately this is about broad partnerships that need to be harnessed by walgreens in order to deliver the services that they're envisioning and they need to find a partner on technology side has the capability to do that ecosystem orchestration and trusted and is that sort of where, you know, obviously we do well in and glad to sort of really bring all that to this partnership. >> this follows partnerships that microsoft announced in the cloud with kroger. just last week you remember microsoft, sorry, also announced a partnership with walmart back in the summer. it's a new motion, i would say, for the cloud. you see microsoft here trying to position this as a strategic partnership. they're trying to get deep on walgreens needs in pharma, talk about the sharing of int

intellectual property. can you see this versus amazon walgreens boots alliance talked about amazon's entry into pharma saying that they're going to be able to scale up technology faster than amazon is going to be able to scale up a real retail presence and address customers. this is putting meat on the bone there. >> yeah. you're going to see a lot of activity as you mentioned just what we've seen with all the players trying to get involved how do you kind of measure any of these alliances or any of these efforts athe this point? >> that's what i asked what are the bench marks we're going to see of this actually working out? and he said after we actually get our legacy systems moved to the cloud, that's when we start rolling out the kiosks in store with that digital presence they say they're aiming for a dozen in 2019. so if you see about a dozen of those in 2019 that, means they're actually able to move those legacy systems >> was there another tech company that would have been competing effectively for this business i assume amazon, they're not

going to do business with those guys because they see them as true competitors would google have been trying to compete for this business, for example? >> ideally google would have wanted this business you really need to see google build out more of an enterprise force, not just the technology but the people who are going to be able to implement helping a customer like this move to the cloud. that's going to be the task for the new ceo of google cloud. ibm in there that is a business that is used to working with partners has that services organization which is kindof what this is a parallel to. >> i was trying to figure out who -- i was trying to figure out who is competing for this business and who is waking up this morning going we didn't get it >> yeah. ibm would have wanted. this you would expect that really the likes of hp would have wanted this in the past they don't have that same mega scale cloud. they're still trying to argue that they're in position to link people up with whatever cloud they would have wanted you know, oracle maybe they're really very much -- force. >> what is the economic value in all of this? >> i asked them. they wouldn't give a pricetag on it important to note this is a

seven year deal contrast with the five year deal that they announced with walmart back in the summer this is probably worth bate more >> okay. john, thank you very much. john ford. fed chair jay powell said the fed is always data dependent. but which data is most important is what is still up for debate our next guest says the fed should watch the stock markets most closely joining us is ed lazier and is currently a seen yonior fellow t st stanford you think that stock market is the data that the fed real why i should be watching you think they're get rg the message on that? >> well i don't know if they're getting the message. but again, that's primarily an empirical statement. if you look at the data over the last four decades and in particular over the last decade, that shows that the stock market and what i use as the s&p 500 over the past three months or

six months, that's the best forecaster of future growth. and as i said, that's an empirical statement. it is pretty much based on the data in addition so that, if you think about it and say is there a logic to it, there is. the market is forward looking. most of the other data, the kinds of stuff that i look at all the time employment data, growth in in the employment population ratio, jobs numbers, unemployment, gdp numbers, all of those things are backward looking. so the market can clearly incorporate those numbers as well but they also incorporate information on earnings going forward. so that's the logic behind it. but again, as i say, the data show that pretty much unequivocally. >> jay powell at the beginning of the tenure seemed to send off the signal that he was not going to be paying too close attention to the market. not ignoring it but not allowing temper tantrums or taper tantrums to dictate what the fed was going to do. it does seem to me though that

he is certainly paying more attention because of the idea that if things get really bad in the markets that in itself can kind of set the path for where we head. kit bring in confidence as it has with ceos. it can bring in consumer confidence and bring that down as well. that in itself can before ring the economy. >> that's a good point i would say it's really on a couple of grounds. first of all, i think when the chairman was looking at this he didn't want to look at the market too closely primarily because he didn't want to manipulate the market. there was concern that past fed movements had been targeted toward manipulating the market that is not part of the fed's mandate. i think he wanted to caution against doing that that said though, again, there is an issue of how much information is in the market and then also as you pointed out, the direct effect of the market. because when market capitalization falls that means wealth falls estimates suggest that for every dollar of wealth decline we

suffer about a five cent decline in consumption as well so that has a direct effect on how the economy behaves in the future so it's probably for that reason that he is become a bit more cautious in his statements >> a sin wocynic would say for r eight years they juiced the market with liquidity and low interest rates and massaged the stock market up. had nothing to do with economic growth now, you know, when we're headed the other way, you live by the sword and die by the sword what do you expect when you -- when liquidity starts drying up? of course it's going to go down. its no the going down because it's forecasting a slowdown. it's going down because they're doing what is necessary to finally, you know, wean the market from all that easy money. i mean that is what a cynic would say to -- i mean that means we would never be able to get out. the minute we try to get out, the market goes down the market told us no the to do this then traders have their way forever. >> well, that's right. and again, there are a couple reasons why the market can fall.

one is that it's forecasting lower earnings and lower growth in the future. the other is that the way it's discounting the future has gone up so, you know, if the fed increases the discount rate, obviously that's going to have a direct effect on the market. i think in this case at least over the past three months the discount factor is probably not what is going on the reason is that interest rates have gone in the opposite direction. they've been declining which would have suggested a higher price earnings ratio, not a lower price earnings ratio >> but then there is the rise of the machines and, i guess if you look past all the noise, the market had is a good predictor. can you blame it on any given day i guess, right >> well, you could but, you know, again, people like to look at things like the yield curve and look at the interest rates you know, the yield curve is not really a very good forecaster except to the extent that the short rate is driving up -- driving down the slope of the

yield curve. when that happens, of course, that's a direct effect of monetary policy on growth. and that's what you were talking about before you know, the problem is there is never a good time to raise interest rates no one ever wants to raise interest rates the question is whether this is a time that is worse than most times. and, you know, given the volatility in the market and given the fact that they're probably a couple years behind the curve anyway, probably a few weeks worth of patience is not a terrible thing at this point >> you think the stock market is a better indicator of the credit markets? >> i do. the stock market incorporates the credit market. and again, that's primarily an empirical statement. the data simply show that if you look at equities, that that's a better forecaster than the credit market, credit spreads or yield curves with the one exception that short rates have a very strong predictive power that is the direct effect of monetary policy. >> ed, thank you so much we appreciate your time. >> thank you >> coming up, we know volatility

spiked in december and now 12% lower on the vix in the last month. we'll tell you about a segment of the credit market that could be indicating some stability for aystks st tuned this is "squawk box" on cnbc [leaf blower] you should be mad at leaf blowers. [beep] you should be mad your neighbor always wants to hang out. and you should be mad your smart fridge is unnecessarily complicated. but you're not mad, because you have e*trade which isn't complicated. their tools make trading quicker and simpler. so you can take on the markets with confidence. don't get mad. get e*trade and start trading today.

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is that the standard amount? yes. feels good. when your partners are obsessed with business and technology, you can put smart to work. wilford frost is listening in to the jp morgan media call they have had a lot to say >> they have and jamie dimon, the chairman and ceo was address rg the government shutdown and he said this, "we need good government policy to help the economy the shutdown is not going to help the economy we don't know exactly what it's going to do. but it's no the a positive" pt he went on to say, "if it were on for the whole quoorter, arte could reduce growth to zero. going back to the earnings themselves, we saw a big miss on the fixed income trading for citi and j.p. morgan

one quarter is certainly not a trend. you wouldn't be drawn on whether january has bounced back but did make that point that last quarter not necessarily going to be repeated and, of course, that was a big reason for the miss from both citi and j.p. and jpmorgan in terms of the credit quality, overall, saying credit fundamentals are okay, we're reasonably sanguine for the overall space there. on the topic of brexit, jamie dimon was asked what he thought would happen in today's vote he wasn't drawing specifically on the vote itself, but did say, quote, we still don't believe it will be a hard brexit because it will be so hard on the uk and the eu so suggesting that he imagines the two sides will reach some kind of transitional agreement whether or not, of course, that is today, he wouldn't be drawing on >> one question because we sort of heard two versions of what jamie said on the call, when he talked about the idea of zero growth and negative growth, was he talking about his own view or was he talking about other views or somebody else's views

we talked about pantheon who put a report out yesterday making the same point. >> no, he was saying clearly if it goes on forever or goes on for a whole quarter, it will have a big impact. could reduce growth to zero. i would say wasn't a throwaway line, he said it, but his point was, you know, if these things exist forever more, they drag growth down. he wasn't saying this is a hard calculated number that all of his economists and himself have studied. just a point, the longer it drags on, the more hit to growth it will be. >> okay, great wolf, thank you. well, a lot has happened since christmas eve the there are some simultaneous lows we saw for more on what we see in credit, let's bring in jim keenan jim, thank you for joining us. we just had lazer on it was interesting what he said about the credit markets sort of being already in the stock market when we look at what kind

of signals to presage a recession. the credit market is so much bigger, i always think, that's where you really look as a canary in the coal mine. it is all unrelated. i think there was something to what he said because the bond market almost looked like the tail that was getting wagged by the stock market at one point. we were 3.25 until the stock market broke and then before you knew it, we were at 2.70 on the long end which comes first? it is all related, i guess. >> i think it is all related the interesting part with the credit markets is they have really evolved over the course of the last 20 years and escalating over the last ten if you thought about historically speaking, credit markets were owned by the banking system over the last two decades, you've seen more and more of that be distributed out to the public or private markets. but the visibility into the credit markets and the ability to reprice those at a faster rate is more visible to the world. i think it is embedded in the

equity markets the other thing is the composition of the credit markets is different today than the s&p 500. you saw in 2015-'16, credit markets reacted quickly because it was a heavy component of energy, you didn't see as much in the s&p you look at the last q4 of last year, think about that is going on with global trade, the big global companies are s&p 500 companies, you look at the high yield market or u.s. low market, it is more like localized u.s. owned entities not as exposed to the supply chain. >> you think high yield bottoming on christmas eve is significant? >> i think there is a variety of things that are significant and going on i think the economy is cycling i would expect over the next couple of quarters for the economic data to continue to drift lower. not fall off a cliff, but continue to drift lower. you'll see that impact with regards to earnings. there is a lot more noise you can talk about in q1 around the

earnings side of things. that being said, i think there are three things that i look at are constructive from the credit markets per se one is just the repricing. repricing of risk, globally speaking, is there is a lot more balance now in risk premiums number two, very important, generally what i see as a shift in policy. now, they have to play through that, but obviously the fed rhetoric of changing more towards data dependency, if they're willing to shift like they are in '16, data gets weaker, that's a positive to where the market was pricing in q3 of last year. and lastly, i would say, just as i said with jpmorgan, credit fundamentals are actually pretty good you look at the underlying earnings over the course of the last couple of years, many cfos have been very, i would say, active with regard to their balance sheet. not a lot of maturities over the next couple of years that means they can withstand volatility in the markets. interest coverage ratios are high, because earnings have been

strong, spreads have been tight, rates low. they have been able to refinance at low levels. you talk about no covenants in the market so in general the -- from a low growth perspective that has volatility around it, the credit markets broadly speaking can withstand volatility around -- >> i wonder if the stock market had just moved through its lows hard, would credit spreads have blown out based on it? they would have. it is a stock market then. >> they are absolutely correlated and, you know, what we always say with regard to the credit markets is essentially you're investing in senior equity so we do like to think about the credit market as a way of balancing your risk, between rate or interest rate sensitivity and equity risk. >> think you did great today he's coming on tomorrow. i'm going to -- i want to mention you specifically tomorrow. >> i appreciate that >> look for something in the next check. >> okay, great.

>> meantime, want to get over to jim cramer down at the new york stock exchange want to get his thoughts sort of rapid fire on jpm, we got wells, i want to hear your thoughts on delta, united health go for it, jim. >> united health, a little better than analysts, i don't know why people are selling it jpmorgan, we like think that trading can't hurt it. that's wrong wells, got to get past regulatory and will be fine. nothing exciting other than it is inexpensive delta, enough already. how many times are you going to send airlines down on the same piece of information like apple people keep selling it down. the valuations are ridiculous at this point a lot of stocks are trading as if we'll have a big recession. we're not going to have a big recession. i like the fact that marian lake said january is better enough we can't keep selling stocks in the same bad news when we know it already >> okay. jim cramer, looking forward to hearing a lot more from you in a couple of minutes.

also, don't miss "squawk" tomorrow, larry fink will be our guest. continue watching "squawk" here on cnbc. hey, how ya doing? uh, phil. are you guys good with brakes? we're ok. just ok? we got a saying here. if the brakes don't stop it, something will. that's not a real saying. it is around here. i wrote it. just ok is not ok. especially when it comes to your network. at&t is america's best wireless network,

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2016 the s.e.c. case i imagine would have to be a civil case. the question, of course, is whether this would be a criminal action i would imagine you would have to be. and if u.s. attorney's office is involved, that should be the case we got big show tomorrow, larry fink will be here. a lot more earnings. join us tomorrow "squawk on the street" begins right now. ♪ ♪ green light i'm ready to go ♪ ♪ set up a good time what you waiting for ♪ good tuesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber. futures in a tight range as the first big day of earnings has mixed results, misses from jpmorgan and wells solid numbers out of unh and delta. day 25 of the shutdown europe is mixed. parliament votes on brexit tonight local time and empire and ppi both miss more fed speak on the way as well we begin with bank stocks falling in the premarket