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 jpmorgan does miss expectations

for the first time in 15 quarters >> holding pattern for stocks. futures pointing to a mixed open as investors monitor the fate of brexit, the washington stalemate, of course, china trade talks, and, well, don't forget growing global slowdown worries. >> and delta's d.c. hit. the airline ceo telling us the government shutdown is costing the company about $25 million this month alone we're going to begin with quarterly results from two of the nation's largest banks jpmorgan chase with an earnings miss, revenue in line for the fourth quarter then jamie dimon called it challenging. wells posted a beat on the bottom line, but revenues just shy of consensus jim, i know you were looking at the jpmorgan numbers down 18. that's the worst since the crisis. >> i guess we should have realized from what citi said that december is just a really bad month. i take heart in the fact that mary ann lake talking positively about january.

but when i look at the numbers, my first reaction, can't you do better my second reaction is i think people are not capable of recognizing that there is this one piece of business that can really offset everything they did. they're making a lot of money. wells fargo, best number in 100 some years wells fargo not brought down by tra trading. i say maybe there is more risk involved i also know why it has been selling since a low price earnings multiple. i would be a buyer here. because this is a one-off. i think december was a very unusual month. i also think that people just say, well, wait a second, how could a group of traders not trading really cause this much of a short fall. that's an issue. it is an issue. >> it is a very profitable business when it is working right. not that it was unprofitable still made $2 billion or so in that particular overall unit but it is the consumer and

community bank that is the engine in terms of profitability. >> yes >> $4 billion in income, up 53%. net revenue, 13.7 billion, up 13%. >> that's not bad. >> not bad not bad. i don't know if you heard, fortress, that word is -- >> balance sheet >> no, no, they have fortress principles now >> can't just -- what is the government shutdown do >> a little custard like. >> a lot of comments on macro. dimon said it could reduce economic growth to zero. it is what it is he goes, as we head into 2019,w urge government leaders essentially to strike a more collaborative tone just looking at the standoff here, also commented on brexit, saying they still do not believe it will be hard. we have this pending vote today. >> he sounds very presidential

remember when we heard chatter about him running for president? >> yes. >> i think why he wants to run for president is he's sick of it when you -- >> by the way you said why he wants to run for president i don't think he wants to run for president. >> why he would like to be president. no one wants to run for president. people want to be president. i think that what he's saying is, listen, this anger, this animosity that causes these shutdowns is no longer just idle david, zero gdp -- >> that would be bad. >> or suboptimal. >> suboptimal. jay powell would be -- you like the suit it is cold outside. >> we got a hell of an array of suits on the desk today. >> sharp. >> infinity count. >> i bought a 180 count. >> way back in the close et for the heaviest suit i had. >> to revert back to what we

were talking about. >> yes, of course. >> i look at all -- what jamie is saying, and i say to myself, maybe i'm not taking the shutdown as really as -- i'm not factoring it in. >> steve liesman with a great scoop this morning that the white house itself has doubled the estimate of the impact from a percentage point every two weeks to one every week as they now fold in the impact on contractors. not necessarily the 800,000 employees themselves. >> well, i do think that it will be resolved, but there is a lot of negative news today a lot of negative -- sherwin williams, tough quarter. 3m, says it will go much lower wells fargo, i thought wells fargo was fine but, again, not what people want there were pluses and minuses. and i keep coming back to, that's why the stock market is where it is. the valuations of stocks have been so xrcompressed because

people are worried about the quarters when we get the quarters, what does that say? we're selling things because smarter people sold at higher levels i would recommend people to be a little more calm here because if you're really going to think that december was an important month, and now we got to start worrying about the government shutdown and the data, don't take a lot of action here. i don't think taking a lot of action on the situations is warranted. >> specific to the banks, yesterday we heard from citi, very early in trading, it was down quickly rebounded. investor did seem to be looking past the fourth quarter, which we know across the board from the capital markets perspective was a difficult one. we talked so often about virtually nothing going on in times of fixed income issuance if you had a franchise in that area, you can imagine being hit hard jpmorgan, will investors look past it, jim, with the stock looking down 2.5, 3% or other things as well, not to mention the commentary that weighs on it today? >> the commentary is almost -- makes you feel like, well, i

refuse to buy this thing, they're telling me that things aren't that great. offline, all i hear about, listen, jim, you'll make a judgment on december and when i come back and say, well, i was going to just say it is just december, until jamie dimon said all the negatives -- >> he did say -- >> i mean, i'm worried about the shutdown he's telling me to be worried. >> you haven't been worried? >> well, i -- >> we're in unchartered territory now. a lot of people are not going to get paid starting friday it adds a lot more >> as for the positives, mary ann lake did say no turn in the credit cycle that they see and talked about the resilience of the u.s. consumer. take a listen. >> i can only remain upbeat and given our franchise, we have a pretty good barometer. from everything we see, the u.s. consumer remains very healthy. >> even the uptick in

chargeoffs, they're putting on a handful of different clients. >> yeah. it can look, i want to be -- when the smoke clears, i don't think anyone will downgrade jpmorgan they upgraded citi because citi had been viewed as the worst, which is -- no -- that didn't compute after the quarter yesterday. by the way, one thing i'm watching with citi, i happen to like goldman sachs, very good piece today in the new york times about malaysia, citi and goldman are neck and neck in a lot of places in asia. and i think that there may be a reputational risk in asia for goldman, which makes it so that citi -- >> by the way, bmo upped citi today to outperform. says stocks are trading as if it was -- as if tragedy was nigh. >> there you go. i like that. nigh once more into the breach. we see delta, this morning delta was down a dollar. i said to myself, all right, every day i come in, there is a

negative delta story same negative dealt why story. i'm supposed to continue to sell delta. that doesn't make any sense to me i say, don't take these -- if you look at delta and say you don't like the number, you sell it down a dollar, could you be recognized that other people have already done that jpmorgan was -- we thought more confident about jpmorgan after citi jpmorgan had reported, sorry to drag you away from that -- >> from what >> wells >> trying to read wells. >> i'll go wells. >> i'm sure you will go wells. >> had jpmorgan reported yesterday, we knew december was bad. mar marianne lake says it is good. wells has pluses and minuses not everything is great. >> not everything has been great at wells for a long time. >> well, yeah. >> does the stock already reflect that >> i think so. but the community banking is very strong. small business lending is very strong. >> yes >> small business lending, that would be interesting to see

about the government shutdown, wouldn't that be something >> you got the sba not making loans now. >> i got a lot of loans not processed. farmer lerelief >> what about the base the base needs loans >> they do. >> the base is happy, but they need loans >> they want a wall, i guess, though they're happy to forgo their loans for a wall. >> we're the most off message moment for the economy what are we, like -- we have to start factoring in, ppi is down. every number that i'm seeing indicates we should be in a recession except for lululemon >> and dave and busters. >> people are playing like mad the symbols play dave and busters, i spent a fortune trying to get 30 cent pink bear my daughter -- >> you did the claw >> the claw. >> the claw. remember you had a toy story --

>> the beer. beer is the secret >> you think the profit margins of beer -- >> the profit margin it is craft beer whatever kind of beer. we have 20 craft beers at -- >> even constellation. >> at this new -- >> at your new italian restaurant 20 beers i feel like i'm having the breakfast meal would you like one that tastes like cheerios s or wheaties. that's craft beer. we're not going in a recession. >> you just said other than lululemon, it looks like we're in a recession. >> q4 snap, weaker revenues, higher provision i'm trying to get something -- i go to jpmorgan, give me something good, tell me something good, tell me something sweet. and they come up with, war what is it good for some people call me maurice. this is a pop at this quarter.

>> stocks are looking to rebound from the first back-to-back losses of the new year futures off the highs as you know on the bank earnings. and then this news out of china, officials did hint overnight at some more stimulus measures in an effort to stem a growth slowdown there lawmakers will vote on brexit sometime after 2:00 new york time theresa may's plan is likely to suffer a defeat, guys, but we don't know how bad it is going to be. >> let's get that story over with talk about another thing people keep selling they have been selling off of that since the day it was -- >> three years in june a long time since the first -- >> i'm tired of that -- >> it will end in march. we'll know one way or the other, i assume, whether it is going to be hard or not >> and, okay, so let's say it is hard what are we supposed to do with our portfolios do we increase our portfolio because it is hard >> no. >> do we talk about it because we talk about it. >> could have a depressing effect on growth in europe

overall. >> the pound is cheap. but what we really -- i like the last few days when the dollar had kind of peaked a little. that would be good i met with novartis when i was away i said i would be pushing that stock if it weren't for the fact i think the dollar may have peaked because of jay powell realizing that, you know, there are -- some things other than just employment. by the way, wells, i think, would tell you the principle reasons is because it is hard to find jobs. hard to find people to fill jobs. >> to fill jobs. >> that's still an issue there is enough mix for me to say why are you selling? why are you selling? maybe it is a retest, maybe it is technical the market -- the bear market ended, okay. the bear market ended. >> with the bear market we were in for three weeks. >> please, did you look at stocks to see how far down they were >> it was brutal >> you open up the statements and things like that -- >> that's what i'm saying. >> the fourth quarter/december -- >> jpmorgan is down huge

it sells at nine times earnings. this is jpmorgan, goldman is selling as if it is a failing steal mill it is selling like bethlehem steel in '88 it is crazy. >> but you're saying na macy's, fedex, delta, jpm are all not ratifying the scare that we got in december? >> i think macy's, look, macy's is fashion, macy's is watches and sports wear, okay. that's apple and lulu. they have the wrong women's sports wear. the lulu quarter was unbelievable lulu versus everything i'm saying, stop trading on this stuff. it is not that bad if december were bad and january bounces back, we'll be saying why did we sell jpmorgan at 97 when it is 110 yeah david, a fortress is a fortress is a fortress. >> you have to have the fortress principles not enough to have the balance sheet. got to have the principles. >> he knows -- >> can't have the balance sheet without the principles >> can't just do it with kronus.

>> no. >> when we come back, we have been discussing the shutdown, we'll talk about what delta ceos is telling cnbc about the impact on his airline chipotle's brian nichol took the job ten months ago since then, the stock jumped 55%. got some calls on oracle today tuse talking ge. i'll filling you in on this, and preliminary results when "squawk on the street" continues

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delta's up in the premarket. the airline posted betterthan expected quarterly numbers earlier on "squawk," delta's business is being impacted by the government shutdown. take a listen. >> we're seeing a reduction in revenues in january. not huge $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 >> so 25 million for the month we should point out, i mean, revenue for the quarter is $10 billion on adjusted basis. >> i think that airlines are --

the economy weakened in the month of december. and you're selling delta, if you sell today on something that we knew i think delta is inexpensive i think if we now do -- the president is tweeting why is nancy pelosi getting paid when people are -- who are working are not. that is not peace talk that's not smoking a peace pipe, like in -- one of the greatest characters this is not constructive this is the kind of thing which is war and it is crazy. and it doesn't let up. and there is no peace pipe here. but hence i think why jamie dimon says, listen, he wants a peace pipe the only company that is doing well that can raise prices, netflix. >> netflix. >> that's why that stock has been going up. >> ap says they'll raise prices by 13 to 18%. >> now we know why the stock is up 13 to 18%. >> trying to get a -- i'm trying

to find out more trying to find out more. we haven't got a press release from netflix. >> we have, what, who is relaying that that -- >> that's john ledger. >> john ledger that's great that's terrific. >> i'm going to john right now >> he's got the price. i'll go to john. >> i already did >> but he responds to me >> we're going to get earnings out of netflix thursday night. if we don't get clarity between now and then -- >> it is funny >> going on twitter which might get to him faster. >> it is odd that you had a company whose stock went up every day and the only thing that could possibly have done it, a price increase i'm telling john what do you have on the price increase we'll get to the source. >> fourth time they raised this in the u.s

last one in '17. first time that the higher price will hit all 58 million u.s. stocks. >> this is a big deal. i've always felt they have underpriced the product. >> wow that's a big move, though. 13 bucks a month from 11 >> it is very big. it is a very big move. >> it comes on the heels of our own announcement out of comcast yesterday, launching streaming service to compete with other over the counter -- direct to consumer. >> that said, ours is going to be largely free. and the idea is, first of all, you get it, if already paying for your cable company you get it if you have on your existing cable company will be available to them. so it is largely going to be a free service with the opportunity that is we're talking nbc's plan here for streaming in 2020 to eventually buy subscription based services as well for the growing

population of those who do not have a cable connection, video connection they have a broadband connection. >> roku, amazon, how do you curate all of these. >> roku. >> listen, any tv now is a smart tv you can obviously connect directly to the app, whatever it might be that you are subscribing to but, yes, conceivably you wind up in a place where it would be nice to have all your subscriptions ordered for you, paid in one way for you. kind of look a bundle, yeah. >> you get the comcast -- xfinity, put on jim cramer, geez, like that. >> right. >> it is all because of these guys netflix is -- they're alone in the -- >> if you bought netflix, stock is up a lot, don't you flip it >> i don't know. don't forget, this is the year that disney introduces its direct to consumer they also take control of hulu

you can make an argument they got to buy out our parent company, take full control of hulu at some point and little bit that at&t owns but, yeah. >> netflix, if they raise price, do we still worry about the balance sheet as much? >> well, everybody says there is a lot of elasticity in the price. 13 bucks a month from $11, you can do the math. that makes it easier to meet the content costs as they ramp >> we have become conditioned that unless netflix had hits, you shouldn't buy the stock. what are the hits? >> "birdbox" is a cultural phenomenon that's one "roma" just won a bunch of awards this past weekend out of the critics circle >> pretty darn sticky. it really is. >> you know what it is for many people, certainly kids our age -- >> kids our age. >> it is tv. they go there and that's it. it is their ecosystem. >> it is painful to have two

kids that cut the cord that's my umbilical cord you're cutting. they don't watch what are you looking at? >> i'm looking at twitter for a second, traying ing ttrying toy is getting in touch with me. >> does it take -- >> this is is the equivalent of tesla saying we're sold out on all of our cars. i think the big worry was this but everybody upgraded this darn thing and now realized, maybe they knew, maybe that premoniti premonition. >> well, it was always a possibility. >> why did you think it was going to happen >> no, not necessarily. >> it is genuine news as opposed to wells fargo, jpmorgan, you entitled, delta, those are old news let's get something new. let's get -- let's get ge. >> they don't have a streaming service just to be clear

>> they don't. >> no. >> just in terms of -- >> jpmorgan -- >> i think streaming service just have -- >> fortress principles, no streaming service. >> camera in the board room, how are we doing how's the power? just okay. >> with this premarket move in netflix, it is up almost 50% from that christmas eve close. 233. >> the only other stock doing it like that is facebook. by the way, facebook, time to play offense barclays, offense. can you imagine? what is offense? what are they going to sell from us now >> i don't know. that's scary. >> what'sleft that they haven' sold okay >> your soul. >> we have cannabis news as well cramer's mad dash and the opening bell in a moment don't go away. hey, darryl! hey, thomas. if you were choosing a network, would you want the one the experts at rootmetrics say is number one in the nation? sure, they probably know what they're talking about. or the one that j.d. power says

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to mad dash as we count you down to the opening bell two minutes, started with trading at the nyse. where are you headed >> sherwin williams, looking for evidence about why jay powell should halt one and wait sherwin williams preannounces in the underperformance basically less paint being sold. and i've got to tell you, i look at existing home sales, which have been weak you paint your house when you buy an old house, not a new house. and this tells me you do not have good housing numbers, you're going to have negative sales in the aisles. home depot will go down, lows, more connected to it, this is disturbing because what it says is that when you get all those numbers about existing home sales not being great, there is an impact. and this is the impact and

sherwin williams one of the favorite hedge fund names. don't ask me how that was. but because they bought val spar this say chink in the theory that the economy is really strong because of unemployment and we keep finding these chinks and they don't add up. they don't add up in terms of you're supposed to be -- if you're doing better painting your house, it is not happening. it is not -- you're doing better but you're maybe going to dave and busters. i don't know these numbers are not good numbers. and they say housing, which is 10% of the economy, is not that great. try to justify it, try to figure things out wells fargo saying small business lending good. sherwin williams saying uptick in housing, don't buy it i don't know. >> you seem a little confused. you really do. >> i am confused jay powell really has -- he's really got to come out and say, you know, jay powell's tone has always been, i don't see it, but others do. he has to start looking at sherwin williams

does he ever paint his house has he ever painted his house? do you know how hard painting is >> get somebody to do it. >> i've done it. >> to the opening bell, at the big board, takeda pharma and at the nasdaq, one stop systems, specializing in high performance computing. so we were talking banks, but maybe we should watch netflix at the open this morning. >> netflix provides -- remember, there are ten etfs that involve fact you have a positive note facebook you have this apple news in germany that i've been talking about, the manheim court where they won against qualcomm. nothing new, alphabet, alphabet is incredibly closed mouth you got the f, one of the as and n doing well >> you do.

netflix will be up 31% so far this year. this year. 15th of january, obviously we haven't had anywhere near that many trading days yet pretty impressive move for the stock. now once again, sort of getting closer in the range to disney's market cap, something we watched closely for some time if you recall last summer, i guess it was, it eclipsed >> so interesting, though, to -- this new landscape, netflix is way out there. in terms of the world of streaming, our parent company nbc announcing its plans for a streaming service yesterday in 2020 disney, that's going to be the main theme this year how much are you going to be spending on your direct to consumer efforts once you close the fox deal, which is going to be introduced in the entertainment direct to consumer offering later this year, late this year. sports is as well.

they'll also control hulu. that ownership is still in other places not clear they're going to want to put content there yet unless they take full control but so many different offerings out there, so much being spent, so many investors trying to figure out the eventual landscape that is forming. >> you raise a good point. the ceo of take two has come on "mad money" saying this new generation, they don't look at time the way we do you can have multiple things going on at once they'll be doing video games at the same time ordering from domino's, same time they have something on tv. so don't look at it so literally. look at it the way the older generation did, you say there is not enough time to watch all the new programming. they're watching something on their phone, while watching something on tv, while calling out -- merging with comcast, xfini xfinity, here's what we want it is okay and by the way, can i just say those who sold jpmorgan at 97,

you are first class morons okay what did i say you're first class morons. you're in there. you're not -- you're not second class morons i flew steerage to california, third class moron. we need to know what went through their heads. what went through their heads? >> 91, the day after christmas >> all through the house, david, there was people running around buying -- >> illusion of the -- >> the grinch stole christmas. now the grinch is away and people who say -- i keep telling people, please stop selling on this same news. we knew december was going to be bad. even with fortress principles. >> we haven't gotten your take on empire at 39. looking for 9. ppi down .1 on core.

clarity yesterday said the delays in the data could impact or cloud the picture of what the fed is trying to do here. >> again, i'm stuck with the fact that you've got jay powell saying others see week waakness don't. what we're talking about is what they're looking at there is weakness. look, there is undeniable weakness if you want to know what the market is thinking, not that the market is anything necessarily brilliant in a given moment, united health down 4, now up 3 it shouldn't have been down at all. they said things are better when they hit the end of the month analyst meeting. but they want to be more defensive here defensive, because of what's -- >> yeah. >> look, i just think we're selling the stuff over and over again on the same thing. it is really a mistake. >> news in autos today in a speech, the head of vw is going to say that ford and vw

signed a memorandum of understanding to jointly develop electric and self-driving vehicles jim, this alliance has been talked about more than ever before it actually comes to fruition >> self-driving is -- i was out in california, spent a lot of time with uber, self-driving is just uber's game plan. i think you have to play -- they're using volvos we're seeing a lot of buying in the stock of nvidia because of deals like this ford deal. nvidia has got preferred self-driving chips as does mobile i for intel i think right now it does seem like nvidia is ahead 40% nvidia's gaming by the way, gaming, very careful, something changed in america they went away from gaming >> what do you mean? >> i've seen ea. both extraordinarily weak. not take two, which, by the way, signed a new deal with the nba, i believe. >> take two has a lot of

momentum the one that quietly has been moving up. but i think that that -- got to be watching gaming >> the maker of fortnite has done pretty well. >> strauss was saying fortnite brings in new players, but obviously the breakup of that team that was doing -- working on activision was a shock. >> yes speaking of teams, and viewing, worth revisiting this continued potential sale of the rsns, the regional sports networks from disney, of course. talked a great deal about it last week. i think friday, when we got that bombshell that fox would not bid. "the new york post" reporting that perhaps the department of justice, which entered a consent decree with disney would allow them to spin it off. that was not something allowed under the consent decree i'm not hearing disney is anything but continued to be focused on a sale here

and believes that there is still a vibrant enough bidding pool from which to choose from, even though it doesn't appear there is an overall bidder other than perhaps sinclair, which is really a small company, would have to rely largely on private equity potentially to fund a deal for the entire thing. so do want to quickly hit that in terms of disney seems solely focused on a sale. could you go to a sponsor spin, 51% and disney spins the remaining 49% to shareholders that's a possibility, it would seem not necessarily precluded by the doj, at least in reporting i've done a full spin is, it is out. from what i've heard this morning, there has been no give on the doj and disney doesn't believe that either. so do want to come back to that on the rsns. back to streaming, and the cable companies, what is is interesting about this is not

just that it is an enormous transaction, very important to disney, because, remember, they paid $71 billion overall for fox. let's call it 20 plus billion of that for the rsns, consider the 1.9 billion in ebitda they contribute then sell it for a lot less than they bought it for what is the overall blended multiple, they're really pay for all the fox businesses higher, right? even with the great proceeds they got from the sky sale to comcast. it is still higher puts a lot of pressure on disney but back to the rsns, what's interesting is if you are not a fox, which has the strong relationships with all the cable companies, who else has the leverage to say to the cable company, you keep this on your te tier one you make everyone pay the 6 bucks a month that most of the customers don't want and so that will be really interesting as to what happens here whoever ends up buying this thing or wherever it ends up what is that negotiation like? when these cable companies would be happy to get rid of it off the top tier and have people pay as they went you want it, you can pay for it,

we don't have to include it in our basic service making it so much more expensive. >> very interesting. >> yeah. we have a very big rally today, a lot of that because oil jumped and the market has been reacting to oil going up and china stronger, buy everything disney shouldn't be impacted by that disney stocks were on fire >> disney, to me, will be an interesting story, we move deeper into the year and we get more, first of all, they close the fox deal unclear. maybe let's call it a month away something along the lines. i'm not sure but -- and then they really start to fill in some of the pieces about the cost of direct to consumer. the cost of buying in the rights that have been out there, that are owned by others or controlled by others that they need for the service the cost of marketing, the cost of rolling it out. it is going to cost a lot. and the question for investors is how much, and will they look through it a report yesterday saying, yeah, it is going to be dilutive, but

investors are prepared to look through to 2021. >> i think they are. i think that's one of the few that the -- the stock has done nothing. a lot of stocks done nothing, stocks are moving. facebook, that barclays noticed moving, which is the time to play offense we're seeing really rather dramatic moves in f.a.n.g. amazon, nothing new, am doazonm, other than about the divorce today. >> nothing on the divorce today. no racy texts that have been released >> no. but the company that hiked prices rates in the past and lived to tell about it. >> that could be it. people are saying, listen, if netflix can raise prices, amazon can raise price. and amazon will raise price, so let's buy amazon >> what? >> what? >> what? >> what? >> i had somebody talking in my ear. you know how that works. >> pull your thing out and listen to me. >> we might get news on cannabis governor cuomo of new york

expected to lay out a case to legalize recreational use in the state of new york. apparently the plan is local governments can opt out of this, but won't be able to share any revenue raised, which he says will be around $300 million. >> this is really a weigh-in grab a lot of -- a lot of reasons why -- there are many, many reasons why a municipality doesn't want this. the recreational, by the way, you see i had canopies, i had canopy on last week. canopy has been the one on fire since tilray said they wouldn't do the -- >> and a statement on this. >> thing ths thing is up 10 they have a huge amount of money. david alluded to beer sales. pretty soon canopy is going to be a huge percentage of the stock of constellation and i think canopy is doing everything right recreational is very hard because we still don't know the proof. what proof is it 6% increases in fatalities

>> malcolm glad well piece on the new yorker just flying blind on some of this stuff. >> alex berenson too i think as far as medical, they're wrong. when you have opiate, when it comes to recreational, we don't know what is two beers? five thc, 12 you use thc, you think of heineken and one is more like -- >> i don't know. it is a long time. my main use is back when -- >> you admit it. oh, my gosh, you admitted it! >> the '70s, come on. >> thc is -- >> now you buy this little bit of it -- >> just say it is tenet health don't say you used it. >> dow is up 53 points to bob pisani on the floor. >> happy tuesday 2 to 1 advancing to declining stocks a roller coaster overnight session. let me show you the three things that matter. china, germany and jpmorgan.

china overnight going into overdrive on the stimulus talk here talking about tax cuts on a larger scale in the pipeline that helped china move then we had germany came out with sort of weak gdp numbers for 2018, below expectations, german market drop it is now flat but it started out pretty strong then we had jpmorgan, prior to 7:00 a.m., that costs 7 or 8 points on the s&p 500 futures when they came out with weaker earnings here. if you look at the sectors now, semis again, good start to the year for semis they're strong today energy has a great start we're up 9% for the year oil is up another dollar and a quarter today. health care flat and the banks, interesting, flattish i think that's very good news given the earnings miss by jpmorgan look at jpmorgan and wells fargo, had earnings, and considering the miss, jpmorgan only down 1% i say that's pretty good given that earnings miss if you look at jpmorgan, i think

we place way too much emphasis on the trading part of this. i look at the overall business, i see long growth up 6%, the same as last quarter card sales volume up 10% net interest income, the income, not the margins, up. driven by higher rates they had long growth too and consumer credit was pretty good not a terrible report overall here sherwin williams did mention sherwin williams, i listened in on the conference call, look at the transcript there they did talk about weaker sales growth in october and november and they're not quite sure why they floated some ideas around, but didn't nail it exactly maybe wet weather, maybe it was slower home sales. they did say business improved in december. and they said business improved even more in january that's the key right now maybe this was a little bit of a one-off. let's say we're not entirely clear what happened there. as for the earnings overall picture, we're worried about 2019 what is the numbers going to look like? not the fourth quarter 2019 we kept it about 6% growth, we were 10% in the beginning of

october. judging by this pace of change, i anticipate this will go down to 5%, maybe 4% in the next couple of weeks. if we're in the high 5s, i say that's a victory where are we right now we're in a bit of a trading range right now. last four. we have the fed, china trade talks and china and stimulus overdrive. but the shutdown, brexit certainly and that weak international data and weak u.s. data, ppi miss, maybe on energy, but that international economic data, i think, is definitely the biggest overhang the dow up 72 points back to you. >> bob, thank you. bob pisani. less than a week since macy's issued that guidance that sent the stock tumbling. ceo jeff gannett just addressed the retail federation big show in new york. and courtney reagan is there with details good morning, court. >> this just wrapped up. and really jeff gannett was the moderator for a presentation with a number of macy's other

tech partners and people that work within macy's on the technology he moderated a discussion between rachel shackman, macy's brand officer, as well as beck beseker, and vivco norbi who runs beta, a company that macy's uses to use this virtual technology in store for different customer measurements. and so at the very end, he said to everyone, i want you to give me one word for the future of what the future of retail means and rachel said collaboration. the ceo of beta said macy's. and location and he went ahead and answered his own question for the future of retail. >> i think the one word is experience we got to figure that out. we got customers that have put us on notice and the better the experience, the more we'll build their

lifetime value >> so that was the only acknowledgement really about the holiday sales and customers have put macy's on notice speaking of experience, wrapping up the show here today, chip and joanna gaines. talk about experience that they created. back over to you >> courtney reagan, thank you very much. we continue to monitor the share price of pg&e. down sharply at the open still down 28%. >> listen, carl, as potentially as it should be. it has been -- it has been a gradual acceptance and perhaps education for investors here as they struggle to understand the idea that, yes, they are going to go chapter 11 bankruptcy on the 29th of this month and then try to fully understand what the recovery value may be, which becomes a lot more difficult, of course. that's not something you're going to figure out in a day but yesterday the stock down over 50%

today down another 28% as it adjusts for the coming bankruptcy that's what happens here what is perhaps surprising is that, you know, a little over a week ago, we first told people there was more than $30 billion liability, and there were other signs of the expected group, stocks hung in there but no longer. >> amazing. >> no longer >> i find that, look, i'm looking at a citi piece from yesterday, files for chapter 11. it is like we're downgrading pcg to neutral that is a buy. the geisha williams resign, navigating a challenging situation. i read this, i think, okay, well, i guess that was like american electric power. >> i don't think we were the only ones either. >> i don't mean to pick on citi at all this is a situation where i

don't understand, they had already suspended the preferred the year before. >> they had. expectations they would figure out a way to step in and that it was really a bluff that was -- and that slowly has been eroded over the last week >> people we revere, people who come on air, people who should be followed, they owned a lot of this i think that we often make kings out of people who are hedge fund managers i point out the hedge fund managers make mistakes and there were big mistakes being made as there was sears hedge fund managers are not masters of the universe. they talk about good ones and then talk about the bad ones. >> dow is up 46. nasdaq 100, up more than a percent. to rick santelli good morning, rick. >> good morning, carl. just to give you some gps, two year note yields down. 30s are up one there is ever so slight of a steepening bias to the wide curve. if we look at what's going on in

one week of 2s, more of a downward slant if you look at one week of 30s, more of an upward slant. i know there is not a huge difference there, but psychologically it is important. maybe the big to date of ten-year knowing the chart isn't very well developed or we're only a few weeks through the year but you can certainly see outside of the first part of the nervousness in the market, it has been sideways. it's high yield closed we're drifting a bit look at what's going on overseas, everybody is talking about brexit here's a december 1st for the gilt it's in a range and has done most of its work between 1.26 and 1.28 the pound versus the dollar, it's at the strongest level since the third week of november on a closing basis and china the other country in the news. dollar versus yuan dollar as a deficit. carl, david, jim, back to you.

>> rick, thank you rick santelli. pretty good open here. dow up almost 60 points. russell up s&p up almost 17 we're back in just a moment. rebekkah: opioids has taken everything and everyone i've ever loved away from me. everything. i blew my ankle out and i got prescribed pain pills by my doctor. if making my detox public is gonna help somebody i'm all for it. i just wish i would've had a warning. the aarp auto insurance program from the hartford? let's take a ride with some actual customers and find out.

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jim, what's on "mad" tonight? >> sanjay poonen vm ware, one of the greatest stocks now separated from dell that's my number one cloud king. >> but dell is vm ware most people say given how much they own of it. >> no disagree >> "mad moy"ne 6:00 p.m. when we come back, more on the netflix price hike in a minute opportunities firsthand. like a biotech firm that engineers a patient's own cells to fight cancer. this is strategic investing.

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♪ good tuesday morning welcome back to "squawk on the street." i'm carl quintanilla with sarah eisen and david. the nasdaq up almost more than 1% on this netflix price hike. obviously the banks to watch and macro data as well. >> our road map for the hour starts with the big banks getting bashed

jpmorgan chase, wells fargo, both out with results this morning. we'll tell you what has those stocks falling >> plus, paying more shares of netflix up as the company announces a price hike, raising prices for 58 million. >> and fending off amazon's health care push microsoft signs a massive deal with walgreens we'll hear from both ceos straight ahead jpmorgan and wells both falling after reporting results. we'll get to wells fargo in a few moments. we're going to begin with wilfried frost >> banks have undone yesterday's gains because jpmorgan numbers disappointed jpmorgan missed on its estimates with fixed income trading. equity trading and the investor banking performance flat year over year. here's the ceo jamie dimon addressing the miss. >> i really don't pay that much

attention to being buffeted a little by the fact the buy-ins are low the last three weeks of december i obviously could care less. i look at more like in equities, we gain share and we're now bumping up to number one those folks have done a great job. cash, derivatives, and fixed income maintained our share and adding services around the world. you don't know what's going to happen next quarter, and i don't care >> he was relaxed there, even if the share price performance today elsewhere. jpmorgan and wells fargo, credit quality was fine. wells fargo fell from $694 million to $520 million. jpmorgan's did rise but dimon said that was because they were writing more loans and taking share. here he addresses credit quality. >> credit is pristine. more credit is pristine. middle market is pristine. other than a few little pockets

that was mentioned and we saw people stretching in auto. some stretching in -- we're not in subprime credit card but a few in that. we're not worried about our loan book we can have a logical conversation the nonbank loan book but that's not our concern, and it is what it is at the time. >> lake and dimon said if there was a recession, performance of their loan book would be much better both in absolute terms and relive to rivals than it was in 2007 on leveraged loans, he said, quote, someone is going to get hurt there, but it's not systemic and nothing like 2007 now yesterday, citi surprised to the up side with better cost control. that does not apply to jpmorgan or wells fargo today which also helps explain the share price differentiation. >> wilfred, i'm wondering if there were any clues about the path forward it was good to hear dimon talk about what's happening now in

terms of credit quality. but looking at some of these numbers like net interest income saw a rise it was a bright spot but four rate hikes unclear what that's going to look like going forward. wondering what the takeaways are as we look to the future for some of these banks. >> the first part is dominated by the miss in trading and we heard his response to that most of the rest of the call did center on people asking about what would happen if there was a recession. what would happen if credit quality got a lot worse. and again, i point to the sound bite we just played. he's very relaxed about that in his loan book. did point to some risks out there, but said they were much smaller. i go back to what he said on the leverage loans market. and on that he said the lending book is much smaller capital liquiditylevels much higher so nothing like 2007. overall, the theme here is very relaxed about the outlook for what they control and the u.s. economy risks out there globally but not affecting the u.s. in

the way they write loans at the moment >> almost like the mark set more concerned about the outlook than the executives are >> yeah, i think the market clearly is trading down today, but we did see a decent miss on the eps estimate now again, go back to what he said at the top. he doesn't concern himself too much about individual quarters of performance when it comes to trading. and that's the big reason for this miss was disappointing fixed income trading relative to expectation. but, clearly, this environment is fairly nervous. yesterday we saw one big bank report and the market was able to shrug off the fact it missed on the top line. today the biggest of the banks miss on the bottom line and again, add that together, the market is a little more worried given all the fears in recent months >> good summary, wilfred we'll hear much more from you throughout the day on the banks. we values to factor wells fargo in down after beating on fourth quarter profit expectations, but slipping on revenue.

take a look at today's earnings from wells let's bring in david long from raymond james. not a whole lot of growth beneath the bottom line. what do you think? >> right so the earnings per share was a beat however, if you remove the tax benefits that they received, we'd be looking at 1.13 versus the $1.21 reported revenue was a miss that's become a common theme for wells fargo and the driver of lower earnings per share estimates for the last couple of years. noninterest income or fee-based revenue was the major concern here revenue was below expectations for service charges on deposits, card fees, trusted investment management fees. some of that is driven by the background, but some of the stuff is specific to wells fargo. >> right i was just going to ask. how much of this has to do with

fallout from the fake account scandal and how they have struggled to clean up reputation and have an impact among consumers? and how much of it is other problems >> yeah, absolutely. their fundamentals since the account opening has been inferior and that's caused them to produce below peer revenue growth, below peer growth and that's driving the pretax numbers for wells fargo. with share repurchases and a lower tax rate they've able to grow earnings per share but outside of those items it's been challenging to grow earnings per share. >> i always look at wells, at the mortgage business, one of the biggest if not the biggest fees down, originations service. how much of that is seasonal and how much reflects a weak housing market >> right so the fourth quarter is seasonally weaker for wells, and that will be the case across the board during earns season for

banks with mortgage exposure in the quarter, with the rates coming down on mortgage rates, the expectation is that msr valuations came down so there was a bit of a hit because of a write down of some of the valuations of their mortgage servicing rights in the quarter. but for wells, they are the mortgage behemoth. the overall patterns on volumes will probably turn out to be in line with what we see from the rest of the banks. >> so, david, what do you do with this stock? has it been punished enough for some of the fake account scandals and the results we're seeing or not? >> sure. so we still maintain an under perform rating on the stock. we think there are other banks out there that have more up side potential. our concern with wells is that the fundamentals will continue to be inferior and investors will look for banks that can grow revenue and grow the bottom line outside of some of the benefits from taxes and share

repurchases, and you look at a valuation perspective, the stock still trades at a premium to bigger bank peers like a bank of america which we don't think is appropriate at this point in time >> david, that was my next question the week is still packed with pnc tomorrow, mellon, bbt, state street later in the week any implications for some of those names still to come? >> the results for wells, some of it specific to their struggles from the account opening fraud, but broadly speaking, i think net interest margins will continue to be under some degree of pressure going forward. we have deposit costs that are rising faster than the asset side of the balance sheet and if the fed does not raise rates like in expectations for 2019, those deposit costs will continue to accelerate and we'll put some pressure on bank net interest margins and as it relates to the trust investment management fees at wells fargo which were down, that will have an impact on

everyone that has brokerage or any type of investment management business that will report this week and we'll hear about that later on this week as well >> yeah, a lot more later today as well with the cfo of wells fargo on "closing bell." thank you, david long, for joining us meantime, shares of netflix on the rise. the company announces it's raising prices for 58 million subs julia boorstin joins us. >> the biggest price hike in years. they're raising the u.s. prices by between 13% and 18% that will apply to 58 million streaming subscribers in the u.s. and latin america and the caribbean. the price for the most popular plan will jump the most to $13 per month from $11 and the price for the lowest cost offering will increase to $9 after the company kept that price steady at $8 when it last hiked prices in fall of 2017 this will immediately impact new subscribers and roll out to

existing subscribers in coming months it will also impact those customers in latin american countries outside mexico and brazil netflix telling us, we change pricing from time to time so we continue investing in great entertainment and improving the overall netflix experience for the benefit of our members this price hike will help netflix continue to invest in original content last year it spent as much as $8 billion on license and exclusive shows as its rivals amazon, hulu and hbo also spend more on content. now netflix is about to face new competition from at&t as well as disney, both launching rival streaming services later this year and nbc universal, cnbc's parent, announcing just yesterday that it will introduce an ad-supported free service in 2020 as to how netflix's price hike will impact subscribers, netflix shares are up about 89% since october 5th, 2017. that was the last time it

announced a price hike in the four quarters after netflix announced that price hike, they added more than 5.5 million subscribers in the u.s but it's worth noting it didn't work out so well in 2011 when netflix unbundled the dvd and streaming service raising prices by 60% for subscribers of both back then the company lost 600,000 subscribers after the switch we'll have to see how much consumers think that netflix's new hit shows as well as now its big push into movies with the likes of "bird box" merit this higher cost. >> big story today, julia. thank you. when we come back, it's a deal that could reshape the world of pharma. the ceo of takeda is with us after completing its acquisition of shire and walgreens with a deal with microsoft hoping to fend off amazon's push. s&p got just above 2600 for the first time since september,

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i am a techie dad.n. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience. my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. welcome back to "squawk on the street." in light of netflix announcing its price hike, dom chu is looking at the impact on the etf spotlight. >> the big banks were the headlines but the netflix increase in prices and the run in netflix shares have put a lot of that stock in focus here. one of the best performers in trading today in the s&p shares have rebounded by 50% since the market lows on

christmas eve. it's driving gains in the s&p 500 the communications sector the best performing. some of them have exposure to netflix stock. some of the larger etfs. the spdr communications services fund, xlc. it's got around 5.6% of that fund as a holding. also the vanguard communications services fund, ticker vox. it's got about a 5%, 5.8% weighting there. and the first trust dow jones internet fund has a 6.5% weighting to those shares. but the biggest impact will be in the $500 million invesco nasdaq internet, pnqi. they represent about 9.5%. making it the single biggest holding there. those are some of the etfs that will have the biggest impact from the netflix trading today, david. back to you. >> thank you, dom chu.

back at our headquarters one week after closing its $57 billion acquisition of shire, takeda pharmaceutical here at the new york stock exchange it rang the opening bell the president and ceo christophe weber joins us here at post 9. >> thank you >> important component after deal activities at takeda is asset sales as much as $10 billion to deleverage and to potentially eliminate noncore assets tell us about your plans for that and how quickly you think you can get them done. >> 75% of our business is very strategic, very core so 25% of our revenue is noncore. we select some assets in this 25% to sell. it's a way to be more strategic, more focused it's also a way to help us deliberate more rapidly. >> when you speak about focus, when shire was potentially for sale, those who looked at the business and chose not to buy it, talked about it was a little of this. a little of that

there didn't seem to be as much focus. what do you want investors focusing on at takeda as your core franchises you should be judged on? >> so we have five key businesses biotherapy, gi, oncology, neuroscience, rare disease and plasma derived therapies that's our core businesses in r&d, we're also focused on these areas. so as a company, it's extremely focused. shire was a good fit because it's a company very much focused on rare disease. >> rare disease was their key. >> and five you feel -- that's a lot of focuses, even for a company as large as yours. when we think about some of the other large pharma companies, it's typically oncology or cardio, not necessarily five >> well, you know, we are extremely demanding on the type of medicine we are developing so we are looking for only highly

innovative medicine. we are organized by therapy or by design or we have a very lean organization supporting our therapy areas. the way to visualize it is that we are like four bioteches four bioteches with a big pharmaceutical company which is financial power to finance these bioteches. >> how should people view the company from the perspective of typically, is it a japanese company or a global company? >> we are japanese global company. headquarter in japan our primary listing is in tokyo, but 48% of our revenue is in the u.s. 30% of our employees are based in the u.s we are present in 80 countries, so we are a truly global company. in the executive teams, in my executive teams, 11 nationalities. >> how do you think about the pricing environment going into this year? is it going to sound any

different than 2018's? >> i think there is pricing pressure everywhere, not only in the united states but in every country. every health care system is struggling with the financing of its health care system so we know that we need to manage this pricing environment. our way, our strategy for doing that is to only develop highly innovative medicine and also to be innovative in the way we price our medicine >> is the pressure, though, from competitors or policy? >> combination of the two. government policies are putting more pressure. there is for more competition on price as well. >> with $1.4 billion in synergies or more expected from the deal and your promise of expanding margins, does that pressure that carl is asking about, in terms of pricing, mitigate your ability to expand margin >> we'll be one of the highest margin among the big pharmas so i think that's also creates resilience in an environment which will be tougher for sure

and that's why also we are developing an organization so that we can sustain and to be ready when there will be more pressure in the future >> we've also seen all the pbms, the pharmacy benefit managers get acquired by health insurers. do you expect them with bigger scale to put more pressure on you guys, the drugmakers >> i think there will be more pressure i think it's part of the dynamic here and again, it's a solution for us to develop highly innovative medicine medicine that you cannot reject, for example. that's very critical >> more six-figure pricing for medications this year? >> not necessarily i think that depends on the medicine depends on the therapy area. i was talking about innovation in pricing as well i think we need to go towards more outcome based pricing value-based pricing. it's created a different type of debate and dialogue. >> one would assume that you're done with large deals for a

while. is that a fair conclusion? >> we want to integrate this acquisition. we are moving very fast. to give you an example, two days after the closing, we had our first conference with a top leader of the company. two days after closing so we are moving very quick with integration. >> carlos ghosn is in jail in japan. he ran a japanese company as its eo but he was not a japanese how do you view that does that raise the concern for you in some way? obviously, he is charged with crimes i understand that. but culturally, there are these gaps between japanese culture and those who run companies who are not. >> you know, it's different companies, different situation at takeda, we have a very strong -- with the board of 15 members. 11 of the 15 are external directors. so we think we have the very

best in class. it's very important not only in japan but also when you are listed in new york so i think that there is no comparison >> you don't find a cultural clash in any way in terms of running the company? >> no, i don't find that i think we need to respect the culture wherever we are, and i think we are japanese company. the company is japanese. i think it's going fine. >> we certainly appreciate your taking time with us and congrats on being here at the new york stock exchange today >> thank you very much christophe weber, the president and ceo of takeda. when we come back -- speaking of health care, another battle going on. walgreens signing a deal with microsoft as amazon's growing interest in the space looms large. we'll hear from the ceos of both walgreens and microsoft on that next

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morning. s&p got over 2600. and then senator chuck grassley had some comments that he spoke with lighthizer who said he saw little progress in the talks last week with china although he said more positive things about chinese soybean purchases, for instance, but that's one reason -- >> that was the easy stuff >> the morning rally was taken apart. amazon pushes deeper into health care technology space, this morning microsoft and walgreens boots alliance it covers everything from cloud to microsoft 365 our jon fortt has that with pretty good sound out of nadella. >> i talked to him and walgreens boots alliance ceo stefano about this deal. it's seven years and it includes first moving walgreens boots alliance from their legacy systems to the cloud and then building on top of that. we should see some more digital

kiosks in walgreens stores they are really trying to bring a lot of things together and put the consumer in charge of data, they say, digitize the health experience i talked to them about exactly how this deal came together. take a listen. >> one year ago, we started to discuss seriously and to analyze what we could do together. and it has been quite a smooth process overall. >> i think that's right. it started three years ago with a conversation around the vision and then as steffano described, they went through a rigorous process of finding the right partner who can bring both world class technology, but also that trust in order to be able to help them build this ecosystem because ultimately this is about broad partnerships that need to be harnessed by walgreens in order to deliver the services that they are envisioning and

they need to find a partner on the technology side that has the capability to do that ecosystem and is trusted and that's, obviously, where we do well in and glad to sort of bring that to this partnership. >> now every time satya nadella says trust, you should be thinking about amazon. he has positioned microsoft as being a partner to a lot of these companies that feel threatened by amazon trying to help bring them to the cloud interesting a week ago you might recall kroger announced its deal with microsoft and that's supposed to be about helping customers navigate the stores also helping kroger's own employees navigate the stores more quickly and fulfilling orders for customers walmart had a deal they announced back in the summer a five-year deal this is seven. step one, though, is moving these customers, huge customers, out of legacy systems into the cloud and then they can build on

top of that. >> so interesting to see who microsoft is partnering with you mentioned the kroger deal. i spent some time with rodney mcmullan of kroger talking about the microsoft collaboration and the collaboration going on with walgreens where they're doing pilot stores between kroger and walgreens. the common thread is they all hate amazon and are trying to compete. so do these partnerships, when they team up like this, does it really work to threaten amazon on the cloud front, on the grocery front, on the pharma front? is it all enough >> they like to say, we're not thinking about amazon. we're thinking about our customer in this case, i think it has to be true because what they need to do is put themselves in position to even start to compete in the cloud which means moving legacy data that's a theme we've seen throughout the cloud story over the past year. think about what salesforce has done with mulesoft, what ibm is trying to do with red hat. a lot of that is getting data out of legacy systems to even

position this cloud transformation story to continue so this is microsoft's take. the likes of ibm would have wished to have this deal a lot of other people that want to have it we'll see if they're successful with phase one >> as a walgreens cust merks when am i going to see the impact of this, or how am i going to see it? >> i asked that to steffano. within the first 12 months we should start to see 12 kind of digital kiosks store in store where you see microsoft technology in the store. they can really only do that at a high level once they've transitioned their systems to the cloud. that should be the tell. once they are able to roll those out, that means they've moved a lot of the legacy systems. maybe if they only have a couple or -- then ides be asking questions about, are you behind? have you been able to do this? >> you'll have more in the 11:00. on what topics >> we talked about amazon specifically and how that comes into play. and we talked about how they are trying to position themselves,

walgreens specifically, not just on this digital play but also working with the likes of lab corp trying to put the consumer in the driver's seat and deliver that kind of app experience. is it going to be the doctor's office that's going to lead or is it going to be the consumer that's going to lead they're trying to figure that out. >> see you in 30 thanks, jon. let's goat set over to sue herera >> here's what's happening the confirmation hearing for trump's attorney general under way. william barr aiming to show he's supportive of the tough on crime and hard-line immigration agenda while ensuring the democrats that the mueller russia investigation will finish without interruption >> i believe it is vitally important that the special counsel be allowed to complete his investigation. when he was named special counsel i said his selection was good news and that knowing him, i had confidence he would handle

the matter properly. and i still have that confidence today. >> kenya's armed forces rushing to an upscale hotel complex in nairobi that came under attack with a blast and heavy gunfire police calling it a terror attack the somalia-based extremist group al shabab is claiming responsibility in and actress carol channing whose career spanned decades on broadway and television has died her publicist says she passed away of natural causes earlier this morning in rancho mirage, california she was best known as the scheming dolly levy in "hello, dolly" on broadway carol channing was 97 years old. that is the news update this hour back downtown to you sara >> sue herera, thank you up next -- shutdown day 25 the president getting ready to meet with members of congress. we'll break down how the shutdown is playing out. we'll hear from the ceo of

delta. plus the former chrysler and home depot ceo bob nardelli is hereituso wh tdiscuss the industry and economic impact when we come 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. welcome back shares of delta giving up earlier gains after they reported financial results it did beat expectations on earnings but its forecast for the current quarter could show slower growth. phil lebeau joins us with a lot more >> listening to the current conference call going on between delta executives and analysts on wall street. a couple of questions coming about the impact of the government shutdown. we'll talk more about that here are the numbers for the fourth quarter delta did beat the street reporting earnings of $1.30 per share. the estimate was for $1.27 but keep in mind really the thing to focus on is the fact they brought down revenue per available seat mile. so there were some lower expectations in terms of what the company is

looking for in the first quarter, the first quarter tends to be one of the softer ones in the airline industry eps of 70 cents to 90 cents per share. the estimate going into today was for 94 cents a share there was a lot of noise within that estimate. revenue per seat mile, they are not being terribly optimistic there. very conservative. flat to up to 2% and then there's the impact of the government shutdown. about $25 million this month that's how much it's going to cost delta in terms of government contracts government workers who would normally be flying who are not flying here's ceo ed bastion talking to us about what the airline sees with the length of this shutdown and how it's impacting the airline. >> we're not taking sides on the debate, but we need to get the business moving. one of the issues to us is we're seeing a reduction in revenues in 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. >> as you take a look at shares of delta, keep in mind it has perhaps the least exposure among the major airlines in the u.s. to government contractors and government employees who are flying just a few months ago he was asked by analysts, are corporate travel entities, are companies saying because of the delays, we're not going to send as many people out are bookings down? they are not seeing that yet guys, back to you. >> phil lebeau, thank you. ed bastion not the only ceo with a warning about the shutdown jamie dimon said if it goes on for the whole quarter it could reduce growth to zero. between questions of global growth, monetary policy, now the shutdown, what is the c suite's next move? the former ceo of crise lerhrysb nardelli is also a cnbc contributor. >> good to be with you

>> we're conditioned to take the shutdowns in stride. that's what history has taught us is this one feeling any different? >> first of all, let me say that ed bastion and the delta team do an outstanding job and i have to acknowledge i'm a loyal delta flyer with over a million miles and go in and out of atlanta at least two to four times a day. so i think ed's comments about potentially getting softer could be correct i know they'll get a big bounce with the super bowl in atlanta it would be catastrophic if the tsa decided to not show up monday following the super bowl. i think you would have a national emergency certainly in that situation so i think what phil was talking about in discussions with ed's conversation, it was probably a modest slowdown right now, but if this thing does go on and you start getting interruptions in

flights, certainly from my personal standpoint, that would be very disruptive i think ed made a very good comment, not to take either side, but i do think it's unfortunate that the partial shutdown is affecting the wages of a number of government employees. we haven't seen the full impact on corporations yet. certainly some of the smaller ones but if it persists, i think we will see, you know, a negative impact unfortunately, another negative impact on what otherwise would be continuing profit growth for corporate america. >> yeah, it goes beyond flights, too. we've talked about small business loans obviously farm aid dimon made some comments about the ipo window could be problematic if they don't open that once again in the weeks and months to come i wonder, what about cap x planning how is that affected this early in the career by something like

this >> i'm not sure the government shutdown is having as big an impact on cap x as some of the other issues that we're facing that, unfortunately, are having a negative impact on the market overall. if you think about china, if you think about, you know, what's happening on the southern border if you think about some of the other issues now with the change in the house and some of the new legislation that's being proposed, i am not sure that the ceo network is changing their mind they may be hitting the pause button for a moment to see what happens over the next 30, 60, 90 days as far as cap x we've got a big boost last year with the tax benefit on cap x. we'll see what happens this year i don't think we are getting a lot of knee-jerk reactions just yet, carl, but i think it might, if it persists, we could see that impact. we had a robust 2018 we're still building off of that not the same percentage, but

it's a percentage on a much larger number. so when you're talking about billions of dollars of percentage in growth, it gets a little more challenging for corporations >> bob, you are still plugged in with other ceos current and former, what's your take on how much the trade war is affecting business decisions in the c suite, hiring and investing and planning the fact that there really is no resolution there's some optimism but still tariffs in place and the threat of them going even higher at this point in march. >> there's no question, sara, that the job market is getting tighter. there's no question that we're seeing wages go up in some situations what i hear from my colleagues is, if you talk about a 10% tariff, there's a great deal of confidence they'll be able to handle that by, number one, going back to the supplier, certainly in china, and getting some concessions 2.5%, 3%

they think they have pricing authority in the marketplace they'll get another 2, 3 we've seen some corporations already announce pricing for 2019 and then they are talking about productivity so there was pretty good resolve that a 10% was not going to derail the projections they had for 2019 if you go to 20% and this is protracted, i think you'll start to see some unfortunate, you know, decisions or negative reaction but right now, as jamie dimon said in his interview the other day, he's still pretty optimistic i know they had a miss this morning, but jamie's certainly one of the real leaders in corporate america today. and he still is pretty optimistic about 2019. so i think that's a very good signal, sara >> bob, it's good to have you. come down to the exchange and see us again soon. bob nardelli >> thank you very much >> through atlanta, apparently, where he flies a lot cooking up a comeback. shares of fast casual restaurant

chain chipotle up nearly 5 p0%er the year the ceo brian nichol joins us next on "squawk on the street. sure, they probably know what they're talking about. or the one that j.d. power says is highest in network quality by people who use it every day? this is a tough one. well, not really, because verizon won both. so you don't even have to choose. why didn't you just lead with that? it's like a fun thing. (vo) chosen by experts. chosen by you. get six months apple music on us. it's the unlimited plan you need on the network you deserve. now buy the latest galaxy phones, get galaxy s9 free.

art hogan says stocks could drop back to the december lows find out what he's watching on tradingnation.cnbc.com

welcome to "squawk on the street." welcome back some of the biggest names in the restaurant space are gathering in orlando at the icr conference kate rogers is there sitting down with a special guest. morning, kate. >> hi, sara. we are joined by brian nichol, the ceo of chipolte. thanks for joining us. so for the new year, the company has introduced these lifestyle bowls with a focus on whole 30, keto, paleo specific diets but you have to order them digitally. i'm curious what the customer response has been and if more are converting to that form of ordering >> so the consumer response has been great these are lifestyle diets that a

lot of people have adopted i personally like the keto bowl, but the response has been terrific our app, i think, is one of the best experiences you can have in the restaurant space so we're giving people a great experience online with bowls that they're really excited about incorporating into their life >> and digital has become a huge part of your business. it had really big growth last quarter. now about 11% of your total sales. i'm curious if we'll see more exclusive offerings strictly on a mobile and online ordering >> absolutely. digital is going to continue to be a key piece of our business i think we've talked about this in the past. we're setting up an entire digital system with our digital second and our app and web business consumers t errs continue to sa is how i want to access chipolte the more access we can give them, the better experience they have and our team members have it's been a real positive spot for us and we're very optimistic about

where this can grow from here. >> i'm curious to get your read on the state of the consumer obviously a really volatile few weeks with the stock market. we're now in the longest government shutdown in u.s. history. from where you sit, are you looking at a slowdown in the future, or do you think the consumer is confident right now? >> the consumer data we've seen is the consumer continues to be very confident there's obviously a lot of noise surrounding their life but, you know, jobs continue to be very healthy. gas prices continue to be low. sentiment is still very positive and that's what we continue to see in our data and it's, you know, it's a terrific thing to see the consumer excited about engaging with chipolte and our value proposition. >> sara eisen has a question for you back in new york >> hey, brian, good to see you it's been almost three years, hard to believe. almost three years since the e. coli scandal and all of the health issues that you guys went

through. clearly the market has looked past it. the stock has done great since you've been ceo. how big of an effort has that been on your part to shift the culture and the process and win back consumers' trust? do you feel that now you really have it? >> yeah, it? >> look, to win your customers' trust is something you have to be relentless with this is why you heard me talk about being more visible, take control of the brand narrative of what makes chipotle special we are focused on driving our culture, clean food, real cooking, customize, at a terrific value that's what consumers are looking from their food experiences today, i believe this is the food experience consumers want in the future that is the point that we are constantly trying to engage consumers with, whether it is in digital or traditional mediums or even conversations i am having with you guys today >> for investors, it is about

justifying 75 times earnings price. where do you tell them the next leg of growth is, can you get back to the good old days of comps with growth. >> i believe there's a lot of growth in front of chipotle. when we brought the top line with smart initiatives around digital, menu, operations, around great teams, the economic model is best in class and it flows to the bottom line the future then is we can definitely get back to where we were and oh, by the way, store count is shy of 2500 we're far from reaching a point where you would say we shouldn't be building more chipotles if anything, the number one concern from consumers is give me more convenience and access as we continue to open restaurants, best in class, it gives us a lot of confidence to continue to open restaurants,

stay on the strategy of growth to get back to the top line results we used to have in the past it will be composed of different growth angles, right, it will be composed of digital and catering it is an exciting future, that's why people are excited about our company because of the growth opportunities in front of us. >> as ceo when you came on, you talked about a cultural reset. you mentioned the jobs market being strong but the labor market is tight. that's an area that restaurants struggle are you struggling in finding the right people to do the job >> i would say the cultural reset has been one of the things i'm really excited about we attracted some of the best talent in key areas of the company, whether it is marketing, digital, operations, supply chain we have talented people leading these functions in the company,

with really a culture focused on creativity and accountability. that flows all the way into the restaurant just last night, i was together with our team that runs the orlando market, and i have to tell you the field guys are just on fire. they're excited. you have to be relentless in hiring because it is a tough market to find the right person. but once you find the right person, our job is to retain them, build them, grow them for the future there aren't many companies you can join as an hourly employee and find yourself in three, four years, running a $2 million business, leading 35 plus people the opportunities are exciting i'm very optimistic about the future of where the culture is going. and people sometimes forget, corporations are only as good as people you have. the better we're able to attract and retain top talent, the better the brand and business will be in the future. >> fantastic brian niccol, thank you for joining us >> thanks for having me. >> carl, back to you

>> thank you very much. > >>meantime, s&p 2600 "squawk on the street" will be right back tech sector. it's about technology transforming every sector. ♪ at pgim, our bottom-up approach uses a technology lens to identify long-term winners. from energy... to real estate... to retail. finding such opportunities for alpha is the true value of active investing. and around the world, you have a partner in that pursuit. pgim: the global investment management businesses of prudential.

coming up later today, wells fargo posting a beat on the bottom line.

the cfo will join us on "closing bell." and a smart shoe for your feet nike getting a lot of buzz, launching the adapt db the self lacing shoe they unveiled you can tighten and lace the shoe from your cell phone. also from the shoe this is no joke. why are you laughing there's a basketball tomorrow that will test it on the court >> tying my shoes. >> a lot of people are obsessed with this. >> don't dis nike in front of sara or in front of my kids. >> we're going to have the shoe later on "closing bell." "squawk alley" up in a minute

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