2019 "squawk box" begins right now. >> are you going to see right now things are flat. dow futures indicated by 3.5%. the s&p futures down by less than a point the nasdaq off by 3.5 as well. this is all comes after an update for the markets dow was up 155 points. the first time stocks rose in three sessions actually, closed near the high of the sessions even after we saw the brexit deal failure and by a huge margin in the parliament in the u.k. we'll talk more about that, and let's look at what happened overnight in asia. you are going to see that the nikkei was down by just over half a percentage point.

the hang seng up by a quarter of a percentage point if you look and see what's happening in europe with all the brexit news, ftse down by just a half a percent really stocks shrugging off that monumental loss by theresa may european -- other european stocks are mixed the cac up just slightly the dax is flat. been in italy and spain. stocks are slightly higher check out treasury yields here in the united states you are going to see that the ten-year at this point is yielding 2.743%. pretty handily above 2.7%. >> china injected $83 billion to stimulate its economy. it'sthe single biggest stimulu injection. chinese policymakers have been pledge e pledging to do more to protect jobs as growth cools to 28-year lows i think this one is worth watching given the amount of money and what it may mean to the trade war and how much

pressure they're under or not. >> yesterdayy lampert has won his bid. i can't say to save the struggling retailer, but that's like talking about the arsonist and firefighter in the same breath the offer by lampert's hedge funds would keep 425 sears and k-mart stores open that would be the good news. is he responsive for getting it to this point. it's still positive to fall part a group of creditors has objected to the transaction. there's a whole bunch of fees and other things that would go to lampert's esl fund. a judge must approve the bid.

>> revenue also topping forecasts as the airline scheduled more flights out of its u.s. hubs. one backed customers after a string of pr disasters united reported a 5% rise in revenue per available seat mile. a key industry metric that was at the top end of guidance the airline also issued stronger than expected first quarter guidance united ceo oscar munoz will join us at 8:00 a.m. eastern in an exclusive interview and a correction i need to make that here it's january 16th. not january 26th at the top of the show wednesday, january 26th. someone -- >> wouldn't be the first time we've gotern the date wrong. >> no, it wouldn't i have no idea i rely on -- i rely on other people to actually know what -- it's -- i got the year right >> my name is ron burgundy

>> thank you for that, though. >> someone called me a d blank blank k weed >> i have never heard that term before >> he said it's the 16th, want the 26th, blank weed i appreciate that. what time is it? 6:04 thank you, sir may i have another >> i was joking that that was my handle >> you have a --steve sedgwick

joins us live from london. most people watching expected that theresa may would lose, but not by nearly the amount that she did. this leaves a lot of questions about what comes next. >> so many questions we said this time that we expected her to lose, but then carry on my goodness me, even just literally an hour before the vote at 2:00 eastern time yesterday as well, they knew she would lose she fought thought 80 of her m's might vote against her one-third of her party voted against her last night 432 to 202 was the vote of mp's voting against her version of brexit absolutely enormous. you have g to back to 1924 when randy mcdonald, a labour prime minister saw anything near comparable this blew all of the records out of the water already straight away she said,

look, i will listen to people on the other side of the house. i will try and build a consensus for a deal that i can take to brus es as well. as i mentioned yesterday, she's got to come back to parliament in three days of this defight, which means monday at the latest as well. seconds later, though, jeremy corbin, the labour leader said i'm going to bring forward a vote of no kfrs. again, i think we talked about that yesterday that vote of no confidence happens in the house of parliament behind me at 7:00 p.m. again tonight 2:00 eastern time as well. now, here's interesting news if all of her mps and the dup, which is the -- if they vote with her, which they are expected to do, she will pass this confidence vote she's had the biggest defeat in political hit but then gets a confidence vote. it seems almost crazy. i just spoke to one leading brexiteer from her own party, and he said to me, no, i think everyone will vote with her tonight. she will pass that vote tonight from her own party, but he said to me -- he said that does not mean that a future vote of no

confidence and if jeremy corbin wants, he can bring as many as he wants he can bring one every day if he wants to it doesn't mean that in future votes of no confidence, we won't vote against that if the government does something stupid basically she's still going to be held hostage to one side, which is the hard brexiteers she tries now then to build up some form of consensus with the opposition parties i spoke to the chairman of the labour party as well the mp, and he said to me what is consensus mean? it means her dropping her opposition to a customs union, and a kufrms union, of course, would mean having a brexit, but it would be a soft version of brexit as well at the moment parliament decided what it really doesn't want and that's a question of can they find something that together they do want just a couple of quick scenarios for you. second referendum people are talking about that's a long shot that depends on tonight's vote, and no brexit deal, that one has gone further into the long grass. again, howie, a former brexit

that works parliament is anyone's guess back to you. >> steve, you are just talking about trying to get all of the different members of parliament there in your country to agree on something then you have to get the e.u. to agree on the other side of that too. really, it lengthsens the odds on any of this >> absolutely. now, what has been said today by michelle barnier, the chief negotiator he said, well, it would require mrs. may to drop some of her red lines and her biggest red line at the moment is the fact that she doesn't want to be in a customs yien if she manages to drop that, if that's the olive branch she gives, it's not only to the opposition labor party, who do want to be in a customs union and to the european commission as well, that could solve the issue of the irish backstop. it would mean that we don't need necessarily an irish backstop, which would solve one host of issues that a lot of people are dead against as well especially, of course a unionists on the northern border as well. she has to move some way whether she's prepared to do that remains to be seen.

very difficult for her to be ousted by her own party now because basically she's got one year's grace there ask she be after tonight it seems unlikely. could she be out in the near future if indeed basically it just seems there's no way forward for her version of brexit that remains to be seen. at the moment another key vote yet again tonight. he could have gone forward with a more traditional form of opposition, or send the olive branchitself and said, yes, i will work with you, mr. says may. >> steve sedgwick, we will check back in early this morning >> florida has issued a look at its full year 2018 earnings in advance of the official release on -- >> are you afraid of numbers now? >> i'm going to go with this ford says it expects to earn $1.30 a share. 3 cents below current consensus. the projection was contained in a presentation set today at a

deutsche bank auto conference in detroit. >> coming up, a lot more on squawk we have a three big horz ahead the events in earnings that could move markets in the trailed trading day ahead. u.s. equity futures. dow looks like it will open up 20 points off. nasdaq off six and a half points we've got black rock's chairman and ceo larry fink the largest investor in the world with over $6 trillion. is he going to join us to talk his earnings, markets, trade, the government shutdown. so much more the exclusive interview coming up in just 20 minutes from now at 6:30 a.m. eastern time. as we head to that break, take a look at the biggest premarket winners and losers in the dow. hey, batter, batter, batter, batter.

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like everyone, i lead a busy life. but i know the importance of having time to do what you love. at comcast we know our customers' time is valuable. that's why we have 2-hour appointment windows, including nights and weekends. so you can do more of what you love. my name is tito, and i'm a tech-house manager at comcast. we're working to make things simple, easy and awesome. alley mccartney, ubs private wealth management. i know i've got money there, but i have nobody privately. >> what's the cutoff >> you don't make it >> i'm not there director of global market research at boston partners. you are directing everything there? >> sometimes

>> it's almost $100 billion? >> yes >> listen to me occasionally >> hence, the gray you are, like, 30 now, right you just -- >> 32. >>. >> i think something you may have in common is that you do need to pay attention to jay powell >> absolutely. >> hard to believe that we can make a mistake down in the twos, isn't it i don't know what changed. >> i think there is right now a focus globally and certainly from individual and institutional investors on a number of things a high list of uncertainty today we're talking about brexit, which actually seems to be the least thing phasing certainly the u.s. markets i think certainly up there are, you know, how sensitive this fed is going to continue to be to the market that sensitivity is sort of an interesting thing to talk about as we sit here in the midst of a government shutdown having less data coming forward every day and every month. i think, you know, the way that

people are paying attention not only to jay powell, but to all of the state level directors and the rhetoric coming out is really something that, you know, we've want seen before. the market we want up based on an easy fed. now it's going down when the fed tried to remove liquidity. i'm not sure that that's -- it's necessarily forecasting anything it just seems like traders are sometimes they just sell based on rates going up because they don't like the punch bowl ever being taken away >> i think that's correct. you have, obviously, the advent

now of algorithmic trading >> is the fed just supposed to every time there's a tantrum they're supposed to say, okay, sorry. we're going to stay low? we've had a historic lack over this bull market cycle, and, you know, now we're having $60 billion a month removed from liquidity, and i think that was really globally propping up some of the markets, and with that coming out of the system, i feel like this volatility and this range around 20 is probably going to stay. >> even with powell saying we're not going to do anything immediately or at least just picking up on that signaling, just continuing to let the balance sheet run off is going to create chaos anyway >> i think it's going to create and take away one of the global

sources of dampens for volatility and flux when that happens. to your point initially, joe, the last three rate hike cycles we've seen, you know, we're talking 5% normal rate we're talking 8% normal rate some of it is a knee jerk reaction to how do institutions, how do governments and sovereigns respond to an increasing and tightening cycle and part of it is that we just have to understand that we're going to give time the fed seems to be using the right wording, have the right posture and going forward. global fed seems to be supportive of that unanimously you know, look, this morning as i said, we have brexit and, you know, that seems to be not a problem for the futures. our markets seem to be focussing more on 22 earnings

announcements we're going to see today and what their progress nos indications for new year look like. >> there's a headline. e.u. commission says brexit withdrawal agreement is not open for renegotiation. march 29 maybe we can bring these negotiators over here and try to get our government open. not open for -- they won't do it either >> we think they'll have to ek tend article 50. that's kind of a given that they have to give themselves more time to figure this out. there was a great op ed piece from john nelson from head of -- who basically said it was more or less ill conceived for the process of brexit. not surprising this is happening at this juncture >> all right we do have a lot to worry about. we always seem to say that, though i have seen people saying more now than ever on the plate, and i don't know there's always something the news cycles in these last few years, sorkin, news cycles

the zombies come in 28 days. >> 28 days later it was just looking back at what had happened over the 28 days. >> off the zombie -- those were fast zombies too >> what are we on? >> 24 on saturday. i thought. >> we should be on day 26. >> wow >> day 26. got your klatt every calculator out there. >> google. >> no, i mean yesterday was 25 quickly deduced. thank you. you might want to hire him michael mull action newsy of -- he grew up there >> alley mccartney, ubs private

wealth management -- >> i want to say -- there's news i want to get to i thinkwe're on day five oh, no black rock just reporting earnings we want to get to them this morning. quarterly earnings of $6 .08 per share. it's below the consensus estimate of $of.27 revenue also coming in below wall street forecasts. we're going to talk all about this struggling on a relative basis to where they were a year ago in terms of the outflows on a relative basis for some of the others they had inflows for the total year we're going to have a whole conversation about that with larry fink in just a bit >> also, when we come back, a major european bank is bailing on its new ceo we'll tell you why the bank

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welcome fwook "squawk box. this is a fascinating story on wall street. it's a global story. bank of santander cancelling its order after new co-'s compensation the bank said it would be unacceptable to pay him the amount of money it would have

cost him to make him the ceo at issue was the following the amount that santander would have needed pay him in compensation for the shares he would have left behind at his former employer ubs. that amount higher than $57 million. he literally left ubs. >> lost the money? >> they said, come on over we're going to pay you plus, we'll pay you whatever deferred compensation you don't get from ubs because you're leaving ubs. you know, the rules are going to be a little unclear. santander is a long-time client of ubs, and they thought that ubs would make up most of this money for them he has a deal. or he thinks he has a deal this has been going on for three months he was a beg deal at ubs he leaves. ubs says talk to the hand. we're not giving you the money if you do this bank of santander says, well, now we didn't really think we were going to have to actually pay the full $57 million >> whoops. >> because it's a material

amount of money, with he actually have to bring it as a shareholder vote 50% of santander's shareholders are retail in spain where, by the way, they require you to do a compensation ratio he would be showing he was going to get paid $60 million. their average employee is getting paid $30,000 talk about sort of what's going in on europe right now they basically said we can't do this anyway, he will get the money probably from ubs now because he is not going a competitor. he is just leaving >> deferred compensation >> but, i mean, talk about you change your whole life to go take this big job, and then the whole thing gets upended by both the social pressures and probably questions about compensation to begin with >> and thinking that the contract wasn't going to hold. >> right >> probably that's a big part of this >> my understanding was -- i don't know if there was ever a true -- i think this was a little bit like announcing a merger without having closed it. i don't know if there was a true deal in place when he left

they had been a long-time client of his anyway, it's a fascinating story. a lot of people on wall street talking about it and what it means and what i do think it means is next time, if you are going to leave for another job, the whole thing better be lined up in writing. >> all right coming up, black rock chairman and ceo larry fink will be here to talk about black rock's earnings, the wild ride in the stock market, and anything else we want to talk to him about a lot more then, later, united continental oscar munoz will be here to talk about his company's big fourth quarter earnings beat that's coming up at 8:00 a.m. eastern. that stock, as you can see, up 6.25%. i hope they're using all these money to make flights really safe that go over the atlantic 'lbeig bk. wel rhtac [knocking]

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>> good morning. u.s. equity futures at this hour are a little lower down 15 on the dow down 3.25 on the nasdaq. s&p down about 1.5 points. we are watching shares of snap

stock is down sharply on news another high-level executive is leaving the company. cfo tim stone is resigning less than a year after taking the job. the company says stone's departure isn't related to any disagreements with his management, and it follows a string of hi-level exits from the company, including the chief strategy officer and vp of content. snap, though, said it expects fourth quarter earnings and revenue will come in near the top end of the guidance. that quarterly report is due february 5th >> coming up, investment giant black rock just out with quarterly results. chairman and ceo larry fink here to talk about the quarter, the market volatility, and the slowdown in china. larry fink and his coffee cup. we're going to talk to the man in just a minute as he makes health insurance way hi way to the set we're expecting results from bank of america as well. we will bring you those numbers and reaction on wall street. stay tuned you are watching cnbc. mr. fink in just a moment.

>> welcome back. black rock just out with quarterly results, and we have the man behind them. chairman and ceo larry fink. he is here to talk about the numbers and much more. good morning we've got a lot to talk about. before we announced the earnings or you announced the earnings and we reported them during the tease, i had said more than $6 trillion now the number has come under $6 trillion >> apparently 5.98 >> 5.9le >> today it's higher >> so just speak to what's happening in the market and what's happened on the marketplace. clearly, there have been outflows not to the extent of some of your competitors, but -- >> we had inflows.

we had $124 billion or $123 billion of inflows the industry had huge outflows we had record inflows and etf, and i assure you it was in the fourth quarter we had $81 billion of inflows in the fourth quarter and atf ds. >> how much of that was in the last few weeks >> i don't remember. it is what i do remember is it was pretty spread out, and i could get into the composition of what happened there over the year we had record inflows in our alternative space at $26 have 16 billion in the industry that's where we had outflows you can see this hollowing out of the center. >> you are seeing the bar bells of alternatives and index products becoming more dominant, and you are seeing that throughout the industry. we estimate the industry's

mutual fund worldwide was minus etf's had outflows of about $450 billion in 2018. so in addition, we had record revenue increases in our technology business. where we saw the negative, we had about $90 billion of outflows in the index mutual funds where people just take exposures. the composition and moralitytives we had increases in fees in our snusal business >> that tells you the difference between the institutional and retail investor, or what does that show you? >> no, i would say across the board. let's step back for a second investors have a real choice to pause unlike the last ten years. quick money and money market fund, and earn close to 3% that is another reason why we saw outflows and fixed income.

you can be a money market fund instead of having any duration >> do you think that's changed the psychology >> absolutely. overall we've had huge equity declines in the fourth quarter we had commodity declines. we had about a 5% decay in our asset base want because of outflow, but just because the market fell that's what you saw in our assets i mean wref benefitted as a firm over the last ten years with rising equity markets. we believe over the next ten years equity markets are going to be higher we are going to see those types of swings. now, we all know the fourth quarter was a pretty severe down draft in the equity markets, and that reflects, but we had

organic growth, unlike a majority of the industry, and we're -- let me just say one thing. what i think is really differentiating us and, also, i think it's changing the whole composition of the markets worry seeing investors moving away from stock picking and moving away from buying a product to working on models and really now portfolio composition. we all know and all the academics will say 80% is 70% depending on the academics of the performances through asset allocation, i'm not trying to suggest everybody knows how to do a proper asset allocation, but we're seeing less focus on an individual stock, less focus on a product, and we're seeing more of the wealth managers and their firms focussing on portfolio composition. this is how we have been always talking about it at black rock

we've talked about we're a solution provider and working on that we have had many modelled for asset allocation we have risk management tools. we are benefitting by that change, and i think 2019 i think we're going to see some very large benefits by providing the risk technology. i think we announced about morgan stanley, all our financial advisors now in the line for wealth management we had more demand for that product than anybody they're going to say to their client rbci shares we have -- >> how dow have a big business doing that already >> this is just the first one. >> beginning that i believe it's going to be quite larnl. >> to do a white-label branded service. >> also, using our technology

and ab intersection for that sim lafr to what we have done with other firms >> i know a number of your employees and other people on the street want to understand it we have grown in our head count by 7% a year for five straight years. not all of our businesses were performing at the levels, but most importantly, we needed to find -- we needed to reorient the organization we needed to be -- we needed to have the capacity to invest in all the new areas we see where we could we could envest

it was or -- there was some concentration in some of the businesses where we believe, you know, there's more to do, but from january 2018 to now even after that we're up 3% head count growth it's -- it was just more of a reorientation that we thought we needed to do we don't have a culture that we dump 5% like other firms do. we believe that creates a negative culture, but, unfortunately, sometimes we have to do this this is probably the third time in the last, i don't know, 15, 20 years we've done something like this. i don't enjoy it i went home depressed. but it is what it is one of the greatest watchers of the bond market and interest rates and mortgages and everything else. i think that could be a lot of

credit for stock picking i want to ask you about both markets, okay? what do you want to do first stocks or bonds? >> whatever you want >> on december 24th did you get the feeling that every -- that -- were you at that point wondering -- i think what we needed to convince most people was you can't just assume this is a garden variety correction you better be ready to run for the hills, and that's the kind of feeling you need to make a bottom do you think we made that bottom on december 24th, or do you think that there's something on the horizon that could maybe go lower? in your gut, what do you think >> i think in the short run we probably hit a bottom. >> that lasts how long >> well, it really depends on what happens geopolitically. if you can give me an answer of where we are going with our trade negotiation with china, what is going to be the ultimate outcome of the u.k.?

we also have a lot of noise around our shutdown. you know, all that just produces some uncertainty, and whether it's a ceo who is going to defer a purchase or that individual who is going to defer a purchase, you know, you are seeing the seeds of a global slowdown we have never believed we're seeing the seeds of a global recession. >> right >> i know there are people who believe that we believe that the u.s. was going to contract anyway the birth of the tax cuts. we're going to normalize now we have all this uncertainty, which is probably accelerating this. >> do you thin complacency out of the average person i mean, did you feel nervous at that point saying, whoa? >> you know, i think that pervasiveness of negativity would give you a -- >> let's go back you know, we've talked about so many times worry about savers

and retirement and everything else you wanted higher rates. are you surprised that two and a half or two and three-quarter percent dip that that actually -- that started actually having an effect on the global economy i would have thought we could go back to four or five before. we got up to 320 and -- >> on the ten-year snoo. >> can you -- this is a new normal, if you will, a new normal >> on this show i think some of the changes which creates, i think, an accelerant, i think they are capped on the deduct n deductions as an accelerant because we know the blue states are already hurt by this cap because of state and local taxes. as you start beginning to see rising mortgage rates, rising interest rates, that cap starts impacting even other parts even in some red states where you have high property tax, and so i

think there's different things that create probably more of an accelerant of slowing down that we've seen other times i think you are right, joe it's hard to explain we got up to 320 in the ten-year, and, yet, we had this global -- >> are you okay with the fed stopping here or one or two hikes after this remember the stop right now is appropriate. most fed governored are talking about it's appropriate to pause, and, you know, i was surprised when they did their last tightening i thought the language would be even more dovish, and i think that's what caused it. >> it costs nothing to be dovish >> and so the -- >> well, it does when you have to raise it. >> it does, when you want to raise it >> and they said that maybe two more tightenings i was surprised at that statement. i think since then they have now changed the narrative.

>> autopilot that didn't help >> so i'm -- i was surprised at that i think the market reaction was probably appropriate because i think you've seen enough, you know, uncertainty in the world whether it is china or what's going on in france and germany and the u.k., all the issues around the u.s this is giving more and more people reasons to pause. >> we're going to continue this conversation with larry in just a moment >> we'll pause for a second. >> pause right here. we have bank of america rolling out its results too. let's go to will fred frost. he has the numbers back at cnbc headquarters >> full beat on the revenue line $22.7 billion. 70 cents a share expectation was 63 cents a share, and it's all-around very solid performance and really coming through on the operating leverage line. if we look at the expenses, 13.1 billion down 1%. they continue to deliver on that

cost-cutting environment, and that really, as i said, helped on the operating leverage in light of revenues rising the pretax income in particular, therefore, stands out even before any of the benefits of tax cuts that's up 22%. the efficiency ratio, therefore, coming in at 58% again, investors and analysts will be pleased with that. we've dug into some of the line items. loan growth continues along their theme. a little behind the likes of their rivals like jp morgan. i'm sure that goes on the responsible growth strategy up 3% it also comes with better credit we saw jp morgan have to increase its provisions a little bit. they said that's because they're growing and taking market share. credit quality here suggests provisions are down. that fimters through to the bottom line. and markets and trading, we see a similar theme throughout the others equities are up 11%. equities better than everybody else, and overall that comes through with a decent beat on the eps line shares up now 2.25% having

already rised after yesterday's close. guys >> thank you very much we are going to take a quick break, but when we come back, we'll have much more from black rock's chairman and ceo larry fink right now as we head to a break, let's take a quick check of what's been happening in the european markets this morning. france is a little higher. up by almost a quarter percentage point stocks are flat in germany, and then in the u.k., down by about half a percent not as much as you might anticipate having seen the big losses that theresa may suffered yesterday, but we'll have manager on this when we come back in just a moment. at&t provides edge-to-edge intelligence, covering virtually every part of your manufacturing business. & so this won't happen. because you've made sure this sensor and this machine are integrated. & she can talk to him, & yes... atta, boy. some people assign genders to machines. and you can be sure you won't have any problems. except for the daily theft of your danish.

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all right. welcome back, everybody. let's get back to our conversation with blackrock chairman and ceo larry fink out with earnings today. we're also talking about markets and what you see there larry, we know the fourth quarter, december particularly, was really chaotic

but what are you seeing in january? are retail investors coming back in we know the indexes have come back sharply but what are you hearing from investors too? >> we see money being put to work we have $13 billion in our ishares platform month to date we have seen pretty good flows i want to annualizing, but we've had pretty good flows coming back into the market so we did see -- we are seeing elevated inflows from what we saw institutionally in the fourth quarter hopefully that carries on. hopefully our ishares flows carry on so we are seeing money put to wo work and we'll see. but i would say more clients than ever before are asking questions, what should they be doing, where should they allocate money, how should they be positioned. you know, we had a huge

downdraft in emerging markets. then as the dollar started weakening, we started seeing new inflows back in. and we're seeing that now too. it's a carry on to joe's question are we seeing more and more money being put to work? do we believe with the federal reserve slowing down their tightening and maybe pausing for a long time? that would be an indication the dollar would be on a path from weakening. if that's the case, you are going to see elevated flows into emerging markets, that fear in emerging markets is going to be reduced. with all the uncertainty about europe, you may see flows back in a more stable area like some of the emerging markets. but until we have better uncertainty on trade and in china, i think we're not going to see super elevated flows. if there was a resolution between the u.s. and china related to trade, we would see a surge in investment sentiment. >> does it have to be a real

resolution can it be something they just say we agree to call off the dogs and we're not going to actual resolve some of these issues >> i think if they -- if trying to reassert its desire to purchase more u.s. product and they set targets on what they're going to be purchasing and they don't come to a resolution related to technology intellectual capital, but that will call off the dogs and it just reduces the tension. we don't believe china is going into a recession but could we see china going from a mid-6 growth rate to negative 5 yes. is that bad? not really it's just -- as joe was framing his question, the negativity in the fourth quarter was so severe, so many hedge funds as we now are seeing were offside >> right >> and i think the biggest issue we saw in the fourth quarter was huge deleveraging from the hedge

funds. it was a mini 2008-'09 wait until you see them selling tons of asset at any one period of time. and so i do believe that deleveraging has occurred. so we have built a base, a foundation for probably better two-way flow >> do you ever see a risk that sovereigns say we don't want to use a blackrock or an american so-called company in this sort of grander trade war >> so i believe more and more companies are going to report consumer preference changes. i mean, we saw that with apple's announcement i think you're going to see more companies suggest that may be a reason for declines. i have not seen that in the financial world. but as you know in my last

year's ceo letter, i talk about every community having a purpose. i strongly believe in and i said this in my letter, this anti-globalist views of the world now, this protectionism that we're seeing is accelerating the need for every company to making sure where they operate, they prove their reason of operating or prove their purpose in the communities where they operate i think that's going to be -- that is a real key element for the success of any company today. so obviously when i talked about purpose last year, i talked about having purpose to your employees but i said communities and countries. and i think what you're seeing -- what we saw in 2018, you need to show that you are

doing -- you're helping the community you're operating whether it's italy or china or wherever you are or america >> larry, want to thank you for being here we appreciate it larry fink of blackrock. >> we'll see you in the alps >> yes, we will. coming up, bank of america shares trading higher teafr the company reported better than expected results details straight ahead more than half of employees across the country bring financial stress to work. if you're stressed out financially at home, you're going to be too worried to be able to do a good job. i want to be able to offer all of the benefits that keep them satisfied. it is the people that is really the only asset that you have. put your employees on a path to financial wellness with prudential. bring your challenges. onmillionth order.r. ♪ there goes our first big order. ♪ 44, 45, 46... how many of these did they order? ooh, that's hot.

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financials remain in focus for investors. bank of america reporting a short time ago in this hour, goldman sachs

results and what they're saying about the state of growth in the united states. all that is straight ahead digging in politicians on both sides of the aisle showing no signs of cracking as the partial government shutdown approaches one month. max baucus will join us with his thoughts on what needs to be done to get a deal done. plus snap, sears, and more what it means for your portfolio straight ahead the second hour of "squawk box" begins right now ♪ life from the beating heart of business, new york, this is "squawk box. >> good morning, everybody welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. after an up day for the market,

a you're looking at the dow futures down about 14 points s&p futures off just fractionally and the nasdaq is up about two points got a lot of headlines to tell you about this morning. bank of america's earnings just 70 cents per share -- i shouldn't say just 70 cents. also above forecasts with revenue. you're looking at that stock up about 4% already in the premarket after that announcement shares of united continental also jumping this morning. adding capacity during the quarter and expanded its customer base. you're looking at that stock up over 6% this morning and ceo oscar munoz is going to join us to discuss the quarter at 8:00 a.m. eastern time in a cnbc exclusive interview then there is the news about sears this morning eddie lampert has won the bidding auction. his rescue plan would keep roughly 400 sears stores open.

the bid beat out an offer from abacus investment group. so the good news is he's saving the stores the bad news is to some degree he had a decade and put it in this position. blackrock reporting quarterly profit of $8.06 per share. ceo larry fink joining us just moments ago. here's his take on the markets as we head into the heart of earnings season. >> i think in the short run, we probably hit a bottom. >> and that lasts how long >> well, it really depends on what happens geopolitically. if you can give me an answer of where we are going with our trade negotiation with china, what is going to be the ultimate outcome of the uk. >> joining us now to talk about the markets is mandy ziu from credit suisse and troy ieske

welcome to both of you we just had a long talk with larry fink on what he thinks is happening. larry didn't sound concerned, but he did sound not as confident as you might have expected or anticipated given the big bounceback we've seen in the markets. have you seen to this point this year and what you think is happening in terms of confidence >> so i think our views are very much in line we think fundamentals in the u.s. economy is still constructive i think the q4 selloff was overdone both in outright gdp recession we're expecting volatility to come in this year versus the highs we saw last quarter. but at the same time, we're highlighting higher volatility which is just a technical term saying there's elevated till risk in the environment. so that i think lines up with what larry was saying. >> troy, that is what larry was

concerned about. any potential things we don't know the answers to yet? >> it's hard to predict the outcome of brexit. obviously europe is in a slow motion train wreck between the yellow vest and the budget shenanigans in italy from our perspective, it's all about the u.s. economy still remaining strong we know it's going to go down this year. but we're looking at 2.5%. it's deja vu all over again. all it takes is a fed not doing anything to cause markets to rebound. so far what they've done this year is chill out and they're messaging that well. we think the big news was not brexit it was esther george who's an ube uber-hawk coming out very dovish that they get it, they're going to chill out and allow markets to stabilize >> so do you like u.s. stocks compared to the rest of the world? >> oh, for sure. there is the potential for emerging markets to have a strong year after the disaster

last year -- >> because of the dollar >> yeah. let's say the fed doesn't hike at all this year then the dollar weakens and you get a similar outcome to what you had in '17 if you're all about greed, that's not a bad place to be but we still think the u.s. is the best place to be >> the other thing larry said is that, you know, investors are much more willing to pause right now because you can park your money and get 3% that that is a different scenario than the last ten years. >> i think part of what drove last quarter's price was derisking. we saw hedge funds take risk off the book going into the end. i think that lines up with lack of conviction going and taking risk off to the end of the year. but now the question isn't start of the year. we had a 10% rally at what point do you feel you have to get back in? we should have a chase to the upside but as markets keep going up and

as earnings come in better than expected, you have chase >> troy, do you have conviction that putting your money in u.s. stocks right now is going to be better by the end of the year than putting your money in a money market at 3 prs%? >> yeah. for us, coming into the year we thought we could retest lows of 20%. but the clear signal the first week was credit stabilizing. first they stabilized. now they've ripped in. if you look at high yield, they've done well. leverage up over 3% this year. that's a tremendous january effect markets derisked, multiples adjusted to the fed tightening winding down the balance sheet and hiking four times last year. now you're finding footing at tighter spreads. that doesn't mean you're going to have a rip roaring year like '17. >> what do you tell people to do specifically >> well, you know, for our portfolios we're very focused on risk reward.

we're trying to make high single digits right now the u.s. consumer is in exceptional shape virtually debt service, debt to gdp is telling you you're going to have a high return and focus credit and if we're wrong, if we do have a recession that starts in early 2020, markets price that in in the later half of the year, we'll have far less downside in that scenario than equities >> what are you watching to see if we are potentially moving towards a recession? what are the most important things >> focus on the fed and fed language jay powell came out in q3 and said we're not here to act as a fed put. they've now walked that back we've talked about some of that. they're clearly going to be less aggressive >> so what makes you feel good about that scenario? >> part of what affects is financial conditions they want financial conditions to tighten and they did but they arguably tighten far

too much that will have an impact on economic growth. we will have slower growth if they go slower, what that means is you can have marginally high eer growth. focus on the fed but also business fixed investment. because business fixed investment was going to be slower this year than last year either way now lower because oil has fallen so much. but you need to see around 6% business fixed investment growth we were well above that in q1 and q2 how much of that is trade, how much is tightening financial conditions hard to see. but that's another data point we're hyperfocused on. >> the other thing we have is we're in the midst of earnings season we're going to start hearing from these ceos. so far, it doesn't seem they've been willing to stick their neck out too far. >> no. but what's interesting is coming into this earnings season, the options market is implying moves on earning telling you this is the key earnings season.

right? after last quarter price action, everyone was talking about earnings recession are we going to get it we don't think so. i think it's for earnings to keep growing at 6% to 7% this year deceleration, but not recession. and so the key is what's going to happen with earnings. and i think that's what you're seeing getting priced into the market i say the bar has been dropped so low that last quarter, you know, if you beat earnings, you beat top line. but you guided lower stocks were down on earnings this quarter, you can miss top line you can miss bottom line >> everything's fine >> exactly >> it's all about risk/reward. >> that's right. that tells you where the bar is. >> look at the banks in particular they were taken to the wood shed in q4. and the earnings we've seen so far with even jpmorgan's, they had good loan growth the problem with fixed income trading.

>> everybody said down 1.5%, 2%. >> the organic growth of the economy is still robust. as the high yield bond market closed and perhaps there's less issuance >> all of the banks were saying there's no recession on the horizon. we think banks can see out 18 months is that still the case are we safe through 2020 >> so from our perspective, the soonest we can have recession is q3, q4 so that's about as far out as we can look that's as far as anyone can. the reality is the u.s. consumer is too strong right now. even if fixed investment rolls over, even if it's liquidated, it's going to be a 12 to 18-month period before it causes to slow down >> thank you for coming in today. >> are you going to davos?

>> i am, actually. yeah first time >> are you going to be at the piano bar? >> i think i was invited so i'm planning on being there. >> is the mooch going? >> yeah, of course >> he's not on "celebrity big brother" yet >> when do they start filming that >> they did already. i think the first showing is after the afc championship game. after the pats game. >> can i send you a request for some wine that i like for the -- >> for our wine party? >> i mean, sky bridge has got a lot of money, right? >> let's not get carried away. we work for thin margins >> i don't want any thunder bird >> the wine party is supposed to be fantastic got some great feedback. >> you're going. can i see you then don't lie. you're going to be there >> i drank water tap water. coming up when we return, united airlines a fourth quarter profit easily beating forecasts. we'll run you through the numbers and give a preview of this morning's interview with ceo oscar munoz. we'll do that next and one of the biggest movers

this morning could be goldman sachs. we will bring you the numbers and street reaction. stay tuned you're watching "squawk box" right here on cnbc when you retire will you or will you just be you, without the constraints of a full time job? you can grow your retirement savings with pacific life and create the future that's most meaningful to you. which means you can retire, without retiring from life. having the flexibility to retire on your terms. that's the power of pacific. ask your financial professional about pacific life today.

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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 box," everybody. a $22 billion takeover deal just announced. p fiserv is going to buy -- and you, you talk about this >> buying $22 billion. they're providers of payment and financial technology they're the infrastructure and backbone to so much of the financial system as we did mention, it's a $22 billion deal $22.74 per share for first data shareholders if you remember, first data had been owned by kkr. >> i thought it was american express at one point wasn't it? what was fdc

>> first data had been spun out. it was originally a publicly traded company then it was a private company. frank was the ceo of the company. was brought in from jpmorgan kkr owned the company. and then they went public. now we have this transaction. >> so that makes no sense though i mean, it's a $9 billion company. are we using debt or something >> first data is taking this opportunity to cut its guidance. >> first data is a $10 billion company. so that does not get to $22 billion. that's my only point. >> yeah. >> fiserv is a $9.9 billion company. it's going up $3 so i don't know. that's $22 billion, that's hiking the number. >> right >> what i see happening here is simply basically they were doing, i assume, just looking through the release now and in

terms of where they were getting that headline price they were combining effectively. >> well, fiserv massachusethas r market cap it's more than that. i don't know anyway, we need to look at it because it just happened, right? >> just happened moments ago >> right but i'd say it's more like a $12 billion stock deal all right. we are watching the shares of snapchat parent snap this morning. that stock is down sharply on news another high level executive is leaving the company. tim stone is resigning less than a year after taking the job. stone's departure isn't with disagreement with management but follows a string of exits from snap nordstrom says same-store sales at department stores rose only 0.3% during the holiday season and that obviously is disappointing. the company blames lower customer traffic and said they had to use extra promotions to

get rid of inventory pg&e, the company who is going to file for bankruptcy, is being kicked out of the s&p 500. it will be replaced by medical device maker teleflex. also being removed from the dow jones utility average. okay we're going to talk more about this first data deal in a minute after the break. coming up now, the focus on airlines this morning after united reported better than expected results after the bell. plus is the government shutdown starting to hit the economy? white house economist doubling projection of how much is being lost each week we are back in just a moment people know aflac... aflac! ...but not what they do. so we're answering their questions.

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welcome back to "squawk box. united continental is boosting guidance phil lebeau joins us with more >> these were much stronger than expected earnings.

let's look at the numbers posted after the close. so easily exceeding expectations a big fourth quarter look at the numbers within the numbers. a couple of things stand out first of all, passenger revenue per available seat, that's the key metric for the airlines. up 5% in the fourth quarter. their guidance was for between 3% and 5% gains. they were at the high end of expectations most analysts were in that 4% to 4.3% expectations. so they exceeded those they grew their profit margins by 90 basis points now up at 7.8% for the quarter and this is one of the key benchmarks that shows that strategy is working. they've been able to reap more profits from those high yield routes where they were underserved in the past. when you put that all together and you look at united continental, keep in mind that for the first quarter, their guidance is to earn $1 a share the consensus going into

yesterday before that guidance was to see united earn 84 cents a share. so they exceeded that expectation. clearly we'll see the analyst numbers coming up. in 35 minutes we will talk exclusively with united ceo oscar munoz. we'll discuss this and the guidance for the first quarter we'll talk about where the airline is relative to their competitors and also how they're dealing with the shortages that we're seeing in terms of tsa staffing around the country, what kind of an impact that might be having on united airlines don't miss it. it's coming up in about a half hour back to you. >> all right, phil we look forward to that. made a lot of news yesterday those comments about the -- you saw that, phil the 25 million that they could just say right off the top coming out of their revenue line that was all over the place. >> yeah. it was all over. >> so different channels --

>> and you've got united with the largest market share in washington, d.c., in that whole market there so the question is what kind of exposure are they seeing >> good question >> okay, phil. thanks coming up, we will recap bank of america results out earlier. plus goldman sachs expected to hit the tape any minute. the numbers and the instant market reaction straight ahead and former senator max baucus will join us to discuss the government shutdown. as we head to break, take a look at u.s. equity futures everything is red. down 18 on the dow we'll be right back. [knocking] ♪

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welcome back, everybody. we are watching three big stories this morning number one, investors were looking forward to today but because of the government shutdown number two, united shares soaring. we'll talk to ceo oscar munoz

about that at the top of the hour and three, apple music will deepen its ties with the iphone maker. coming up when we return, we will run you through bank of america's earnings that stock already up close to 5% plus another big financial set to report. we will hear from golden sachs their report just minutes away stay tuned right here. we are back in just under two minutes. "squawk box" returns etter? 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. a reliable income that lets you retire, without retiring from life. that's the power of pacific. ask your financial professional about pacific life today.

welcome back to "squawk box" this morning we do have a $22 billion takeover deal just announced we want to go through details. fiserv will buy first data corporation in an all stock deal the deal is valued at $22.74 per share for first data shareholders it is a stock for stock deal first data shares are up now 27% on that news up close to 2% now on that news. we were talking about the history of first data. it was spun out many years ago then taken private former ceo of compac was the first when taken private he stepped away from jpmorgan to become the ceo of this company

and fiserv has been -- what a wild ride and remarkable ride that stock has been on maybe we can show over the past 12 or 24 month chart there we probably actually want to go back even further to see the reality of just really what's taken place there. you're looking at stock that's been quite on the move meantime, we are waiting -- awaiting goldman sachs' earnings report and before we get to that, devon ryan, analyst at jpm securities and commentator mike santoli is here as we await that. i don't know do you -- are you someone who follows first data, by the way >> i don't follow. >> let's talk real quick on goldman sachs on what your expectation is what's the one thing you're looking for? >> it's going to be a noisy quarter. you have a few things going on you have the 1 mdb issue which

is probably the biggest thing that needs to get resolved here. but the question is do they reserve this quarter which could make results noisy then what we've seen is december got worse as it went on for trading. so how bad was it? and then the question we've been talking about is does it even matter we know it's bad but what was the outlook for 2019 although commentary had been hearing from companies on backlogs and capital markets and january is back to a more seasonal start for trading those are the types of things we want to hear from them i think for investors really, we need to see some resolution on 1 mdp. then we can start to take the narrative back for goldman what's going on with wealth management, the new treasury services business. things that are going to get the market excited >> in terms of reports thus far, obviously it game in worse than expected you had citi and welles.

what did you have in terms of how to think about goldman >> i think what you're seeing a companies are actually missing and the stocks are performing okay because the bar is so much lower today than it was heading into the fourth quarter kind of selloff. so the market has been recalibrating to a lower growth view i think that's getting reflected in these stocks. that's fine. i think the risk is really that the economy is softening more than people think. and to the extent we get any indication around company that's happening, that's a concern. we have not heard that so far. >> but that is -- is that your house view that it's softening >> that's not our view growth is absolutely slowing you have to factor that in we've probably overshot. and i think december was really -- there was a lot of technical factors at the end of the year as well >> you think we bottomed in december on some of this stuff >> i think it's possible the late december low was the low. what's interesting is these positive reactions to the bank

stocks, it's not even undoing december's weakness. to the point of how beaten up expectations were. and the willingness of investors to write off december trading results. there wasn't enough client activity i think the big thing for goldman though, it's almost a more exaggerated example of this this is a $275 stock ten months ago. it's in the $180s right now. i think it's now valued as the franchise has a risk of being compared the stuff that goldman has been so good at on the trading side, maybe there's less of an edge there available. for everybody. so they're migrating to areas like consumer where perhaps their edge wasn't as high. >> the numbers are going to come out -- >> the numbers are out $6.04 for goldman shares that's well boabove the estimate

we need the revenue release. looking for equity revenue was $1.6 billion bottom line is better than was anticipated. >> normally if you saw a beat like that on a citigroup or a jpmorgan, you'd be looking for -- >> the big swing >> but not with goldman. i don't know either they don't tell the analysts a lot or sometimes -- >> i think the nature of their business, it's quarter and positions. >> and they're pretty good at what they do a lot of times in terms of -- there was a period where every quarter they, like, double the expectations. >> right >> as we're getting the numbers real quick -- >> $8.08 billion versus the $7.26 billion the street had been expecting. >> i wanted to ask because you

mentioned 1 mdb. how big of an overhang do you think that is on the stock >> i think it's a big overhang because it's difficult to quantify so investors try to figure out who they're investing in the space. and when you have this number that you can't put hard analysis around, then people are going to other stocks and so i think once they resolve that, even if it's a reasonably big number in terms of what the ultimate liability is, that's a catalyst for people to make it investable >> about six or seven points per dow point. >> so now we got the dow up. it was down about 15 or 20 now up 34 solely on what you're seeing right there >> it does look like the thick rev few missed but everyone expected it to

miss >> after what we heard from jpmorgan and citigroup >> i think it goes back to this does it matter having one bad quarter isn't going to be the end. the bar's been reset low to mike's point, i think valuations can recover but we're still going to be talking about is the cycle almost over when's the recession coming? so that keeps this lid on how much higher we can go. but we have probably oversold the fundamental level for a lot of these financials. >> to that point, we spoke to larry fink earlier this morning. he said their best case at blackrock is we're not looking at a recession >> and i think that's probably the prevailing view. it probably seems like if you're doing the probabilities, that seems the likeliest at this point. but that doesn't preclude in a

few months or a couple of quarters still feeling as if we have that risk, right? so what kind of liberates you from that feeling that we have to be watchful for the end of the cycle. it's not clear to me obviously the fed backing away, global nominal gdp of whatever it's supposed to be, 5%, 6% nominal, that should be clearance for earnings growth. right? it's not as if it -- you don't have to have alchemy out of that environment if that's what we're looking at >> we don't get anywhere near where we were for december much less the yearly high 275. even up 3.5% today, stock is a long way >> there's a lot of clearance to kind of recover without it being much of a -- getting into a threshold of saying anything's turned >> let's bring in wilfred frost licking his wounds from that vote yesterday but i don't know he's keeping a stiff upper lip and he has more. hey, wilf. >> beat on both lines,

obviously, as you've been discussing i'm not sure the eps beat is quite as big as that consensus number i've seen other analysts have it a little high. either way, a decent size beat it's come on pretty much every underlying department. investment banking, 2.04 revenue. that was within lines. trading also beat 2.4. it was expecting 2.3 investment and lending was the big area of a beat $1.9 billion versus $1.1 billion revenue. so essentially they've shrugged off that sort of poor capital environment market the biggest one coming from investing and lending which continues the trend decent on every single line. and the big impressive thing here is given everybody else's weak trading performance that they weren't dragged down more heavily. i think the theme of today, though, is seeing two banks beat

on both the revenue and the eps line in the prior couple of days, we saw if there were beats from citi or jpmorgan, it came on one line, not on both. we're seeing shares of bank of america and goldman sachs performing well. back to bank of america quickly, they kept costs under control like citi did. they improved growth without provisions which jpmorgan had to do yes, they saw that poor fixed income trading number. but for them, it's only 14% of the total pie. the total trading revenue. so again, that's why they're able to perform so well with their numbers. >> all right, wilf thank you very much. back here around the table, just some thoughts on what to expect from the rest of any of the banks that we might be looking from, any of the trading companies. >> i think right now the market has decided. a lot of times with trading especially, you have one that gets it right. one that doesn't it's almost like a little bit of a zero sum game over the course

of an earnings cycle this time it doesn't feel like that that all you really had to say is no real surprise. also just no sudden down shift in client activity that's been the big takeaway nothing really was a break in november or december >> although to wilf's point, i would say if you're lookingat trading, goldman does stand out. it had had some trouble over recent years in this scenario, it seems they are standing out as one of the better traders >> they've had a couple of better quarters. it's relative to where the bar is last year they had a tough quarter. this year the bar has been reset lower. that's where we are. but i agree. if we were to take the environment we were in this past quarter and take it back ten years, results would have been much worse when you the he he lench, they wouldn't be profitable >> for song clo long the the

banks complained there was no volatility. now they say we can't make any money. >> it's an interesting point >> it's really just a retreat. it wasn't kind of like being able to stand in the middle and trade all. >> you had a massive deleveraging happening saying clients were fore selling. >> it's why the market really doesn't pay for the trading profits that much. doesn't put a big multiple on it >> you buy the banks right now >> we would. our call into this year is bar's been reset incredibly low. relative to last year. so you have a trade hire and we'll recalibrate. after that we're still in the trade higher. >> what's your expectation in what the fed does in terms of that particular calculation? >> so we have one hike this year in our models. a lot of these businesses are relatively hedged. you're seeing this quarter, you

know, a little bit better than margin expansion than people thought because of the way nims move but if the curve flattens further, that becomes a risk for the whole financial system >> devin ryan, thanks. mike antoli. when we come back, we have much more on the big banks moving thornmove ing this morning plus the latest on the government shutdown. in the meantime, check out the futures ahead of the numbers yeah as we saw, better than expected numbers from goldman sachs dow component boosting things. green arrows across the board right now. dow futures up about 38 points s&p up by just over a point, nasdaq by seven points "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? what's now?

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my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. welcome back, everybody. the government shutdown now into its 26th day let's get to ylan mui. what can you tell us today >> recess will be canceled on capitol hill now both the house and the senate will stay in session as the shutdown near. food safety inspections, housing assistance the irs just posted its shutdown filing season which will begin on january 28th. it's calling back 46,000 workers. to help process returns and pay out refunds. the administration has said it does not expect any delays in

getting those out. democrats also insist the shutdown is not delaying their agenda today they plan to produce legislation to raise the minimum wage federally to $15 an hour by 2024 now, compared to some of the other proposals we've seen from democrats, this does look pretty tame leadership is backing this along with progressives like bernie sanders as well as moderates like the blue dogs guys, this legislation sets a baseline for any democrats interested in 2020 and it was what they would rather be talking about instead of the shutdown. >> that's kind of crazy. the idea anybody thinks they should be doing anything right now other than opening the government i was just reading this is the first time in history we are not paying active service members because of a government shutdown we have other agendas we're going to talk about instead? >> the coast guard did miss its first paycheck earlier this week look, democrats have said all along that the shutdown is they're blaming it on president trump. they want to move it ahead clearly they don't want to go

anywhere but it is a symbolic flag that they're planting to say we're looking forward to 2020 rather than focusing on the stalemate that's here right now. frankly, we're not seeing any movement the president today is also going to try to continue his strategy to get democrats to break ranks. he's inviting the problem solvers caucus over to the white house. but so far democrats say they are united and standing firm and opposing the shutdown and wall >> i can't believe nobody feels the pressure on this a pox on all of their houses >> all right, ylan, thanks let's welcome max baucus, former senator of montana, former ambassador to china thanks for joining us. you're going to announce you're running in 2020? is that right? >> i'm not going to do that. >> we're just barely scratching the surface of expected -- >> i think there will be a flood. >> you think 30?

>> i don't know, but it'll be a lot. >> okay. you had to actual do things. how long were you a senator? >> 36. >> you saw a lot of shutdowns, i guess. >> yeah. >> and none of them are good none of them are anything you want there's plenty of blame. i know how you feel. and if you want to air it out you can air it out but how do we get smgs from here and do we need to to have more border security? >> those are several questions the basic one is ending the shutdown i think obviously matters like this, the answer is compromise both sides got to give in to get a solution it seems that president trump wants his wall with concrete and steel and whatnot so much it's something democrats cannot stomach. they're going to keep talking,

try to work that out frankly i think this is going to be resolved if one or two things happens. one, there's just so much pressure and there's so much people inconvenienced and not getting paychecks. the american public is going to get fed up with this thing second, if trump and pelosi can't find a deal, then ang lot is up to senate republicans. at some point, they're going to have to stand up to some degree. they got to say hey we represent our states we're going to do what's right here and we're going to figure out a way to pass these in this shutdown >> that was kind of a reasonable take you're not sitting in the seat of a senator anymore so i understand that to some extent i think you're right you used the word little there because people remember that

there are still 34 senators that voted for ten times the amount of border security funding a couple years ago there are senators that are on record -- and some of the most outspoken ones, there's tape that still exists where -- and when you say a compromise, you think if it was $2.5 billion for all kinds of different -- >> the definition of security leans towards a compromise you know, they're intelligent people >> i think so too. one of the things i hear from the democrats, we changed our mind because the technology has moved so quickly we can now secure the border without a structural barrier that's why we don't like this anymore. since they voted for it, have we really moved in drone technology or electronic technology so no barriers are needed anywhere on the border >> the bigger question is getting a deal and for -- >> we're not getting anywhere.

democrats didn't even show yesterday. >> i was in washington yesterday talking to democrats and republicans. part of the problem is that a lot of democrats just feel that trump's moved the goal post too much they get a deal, will it stick that's a problem >> so my question is do you think that the republican senators will actually do what you said which is effectively turn on the president? >> well, four or five are about to it's not at critical mass yet. we're not quite at that point but if the pain gets even greater than it is, look they're there because their voters in their state elected them they care more about their voters than the president. at some point they're going to turn >> what's critical mass? ten senators >> about that, yeah. >> what would it take effectively for the republican party or the senate republicans to actually -- turn it around. what would it take for the democrats to compromise?

>> something that's 50/50. >> what is 50/50 though? >> some new definition of national security which includes some surveillance, little more structure, building something, more steel slats there's a deal there it's amazing they haven't found it >> what will it take to get the democrats to the table with the president? what would he have to offer them to get them even to the table? >> big macs. >> certainty that he will stick by his deal it's hard for him to give that assurance because people don't trust it more that he could say this is it i'm willing to talk now. not going to slam my -- >> you don't think there's any chance these issues are separated? meaning open the government and let's have a conversation about the border >> i think if the government is opened up, then they talk about the border later, then trump's going to lose a lot of leverage. he doesn't want to do that >> i think obviously i mean, i watched -- you know chuck.

>> i know chuck. >> anyway, once trump said call it the trump showdown -- shutdown once he said that, you knew chuck wasn't going to move off the dime ever. because he can come back to that >> and i think it's a mistake that trump said that >> but he said it in a way of of course you can call it my shutdown if it means securing our country. there was a second part of it. >> i understand. >> but you're right. and, you know, they've got him over a barrel with that comment because they can play that comment again and again and again. >> when the pain is so great that enough are putting pressure on the white house. >> people blame trump in the polls. then the number of americans who think there's something that went up by double digits >> i was surprised frankly during the last senate race that it was immigration

>> it's true it's strong. >> were canada geese coming down on there >> but which issue is the stronger one at what point is the issue of the government being open to the border >> to be honest, they'll open the -- >> not around here andrew wants the government open with no concessions. then we might talk about border security next year i hear you you keep asking the same thing over and over and over >> holding the entire government hostage over a single issue to me -- >> are you just realizing there's another side to this there are two sides entrenched >> i know. >> if you win everything, it might not work that way. it might have to be a compromise >> in montana -- i can't speak to other states as much. but in maryland thereontana, th group, open the government then there's another group of

immigration. >> what? what >> second largest employer in the state of montana is federal employees. >> but still immigration number one issue? >> yes well it was two months ago. >> you got yourself a tester type hair cut, didn't you? when we come back, an exclusive interview with the ceo of united continental. we are back in just a moment what do advisors look for in an etf? don't just track an index, help me meet a client's need. is the fund built to sell or built to last? etfs are only part of a portfolio. so make it easy to explain. give me a quality fund that helps me get clients closer to their goals. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information.

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cashing in bank earnings coming fast and furious. bank of america, goldman sachs, and blackrock so far this morning. we're going to break down all the earnings action so far parliament funk. uk prime minister theresa may loses a key vote on brexit throwing her plan to leave the european union in doubt. plus her future. and flying high. the ceo of united airlines joins us in minutes. the final hour of "squawk box" begins right now ♪ live from the most powerful city in the world, new york, this is "squawk box. >> good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market

site we are in times square i'm joe kernen with becky quick and andrew ross sorkin the futures are up after a move in goldman sachs we were down in the teens, town -- down 15, 20 points in the dow. then the stock went up now green across the board there is the yield curve 10-year now at 2.74% let's talk about three big stories we're watching this morning. bank earnings. beats today from bank of america and goldman sachs including an eps number from goldman that crushed estimates. that's been really boosting the dow overall. we were in negative territory before that. now the dow up by about 45 points we also heard from asset manager blackrock which missed estimates on the bottom line but announced a dividend increase.

brexit and the european union. after lose badly a vote in support of her plan in parliament, theresa may facing a vote of no confidence today. that is coming up at 2:00 p.m. eastern time and three, the future of sears eddie lampert has won his bid to save the struggling retailer lampert's bid of $5.2 billion was enough to win a bankruptcy auction. though a group of creditors has objected to the deal okay now here we go phil, the united airlines topped wall street expectations for the fourth quarter also reporting strong guidance for the first quarter. and phil's got oscar munoz let's get to chicago with that special guest. hey, phil. mr. munoz. >> hey, joe. oscar, heck of a quarter blowout earnings 241 compared to 240 expectations passenger revenue per available seat mile on the high end of the guidance do you believe this is proof your strategy especially with

those mid--size routes, that it's paying off. >> i've always said proof, not promise. probably a year and ago you and i were sitting on the floor of the exchange talking about where we were going strategically. you asked me after another good quarter whether that quarter was vindication of our strategy. i said not yet, we've got more to do. at the end of the year i can officially say we are happy to see the path and the plan going as well. you think of the things we did we told you we would grow and grow profitably. that that would sort of arrange the two things ought to lead with that. we've outpaced a lot of our competitors. and our customer satisfaction aspect and initiative is kicking in thank you for having us. thank you to the united team all over the world and apologize

for -- >> it's been one of those quarters take a bow while you can you know the concern out there in the market. and one of the big concerns is the government shutdown. how much that impacts your bottom line. you didn't say anything in the release yesterday. can you say how much the government shutdown is impact i ing? >> we understand this and we watch and monitor closely. our bookings through december will continue as is. there's clearly some impact there. it's not discernible and significant at this point in time clearly the longer this goes, of course there's going to be impact and we do worry about that to the industry as a whole which affects our company. >> $25 million impact in our industry at this point there's no discernible impact in terms of government contractors or workers not booking their flights or not taking flights? >> i suspect the numbers are

more of a full impact. this is unchartered waters we've never shut it down this long what we've done with regards to arranging it, we've given you a revenue range of a wider -- we went three points versus the usual two. we don't know necessarily and implore our political leaders, there are reasons to not keep our government shut down and so of course that made the impact, we don't know what it is >> last question on the shutdown separate from the government workers who might be flying on united or traditionally do are you or your team seeing any indication, businesses corporations saying you know, i don't want to deal with any extra lines or the uncertainty out there. i'm going to pull back on my reservations >> we continue to see good bookings in the near period. that's our best barometer. it's early in the year

we'll closely monitor it but i hope we don't talk ourselves into anything, right so again, the things we're seeing are good. >> you sea the vote probably today on brexit. lord knows what's going to happen in the uk when that gets settled. but europe has some real trouble spots there. is your transatlantic business suffering or feeling some impact yet because of all that? >> our brexit barometer, if you will is our front cabin to heathrow not a lot of people are interested flying back and forth. and for other parts in europe, it's not been anything that of any significance at this point >> and china >> china, again, we've been asking that question for well over a year. we had a really strong quarter in the fourth quarter to china and our bookings so far this year the chinese new year has moved a little bit which amplifies the demand >> you have talked about adding more business class seats, reconfiguring your plans particularly going to europe adding more business class seats

in there is there any sense there that there is a limit where you guys hit how much percentage of a particular aircraft can have those business class seats >> with regards to percentage, i don't know there's a number in that regard. what we measure and monitor. the demand to those markets is high and we can do that because of our united position. >> oscar, becky has a question for you. >> oscar, hi you sound much more confident and optimistic than about any ceo we've heard from so far. i realize earnings season is still early. but what do you see? is there anything out there that concerns you or you kind of feel like this is full steam ahead >> of course we're always concerned.

it's a state of constant paranoia when you're a business leader but i get to travel all over the world and talk to a lot of folks around in the business environment and i hear the same thing that things are generally looking good i'm reading the same headlines everyone else is and that's concerning again, we know our market. we know our business we know our strategy we know the things we can control in our company i want to make sure everyone elsehears that indeed, if all of us as leaders provide that strength of our commitment to our strategies, i think we can weather through this and of course we're worried about them i'm not sticking my head in the sand necessarily but for the monitor in the near term, it's looking positive. >> that's good to hear >> oscar, one last question. you guys have talked about adding more capacity at some of your key hubs. san francisco is a good example. and there are concerns that people have when they fly into a hub whether it's san francisco or one of the other ones

there's so much capacity that's been added not only by you guys that increasingly when you land in some of these cities, you get a flight in there but you find yourself sitting out on the tarmac and you're waiting for a gate to open because they're just physically constricted. are we getting close to a point where we're looking at the larger cities around the country. it needs to expand because it's getting close to thatbreaking point. >> from our perspective, any impact to your customers is meaningful to us we've had some little situations there. so we work with airport authorities. there are two ways to solve it and you have to figure out who to pay for it. but importantly there's process and procedures and alignments where you can actually move things around enough to be able to accommodate the increased traffic areas. a combination of those are required of course we need more investment it's been known for so long from highways to airports it's something that i think we

really do have to focus on >> andrew has a question >> we have to open the government first >> i want to ask you a broader question it's really about the geopolitical nature of the world today. what's going on with the trade war. but more largely how that's impacting travel in the following way. there are u.s. executives who now talk about traveling to china or to other parts of the world that are much more concerned than they used to be how involved are you in conversations about that and how worried are you that that could impact travel? >> again, we are always monitoring from the best vantage point we have which is our traffic on our airline on our seats. that part has been strong for us we read the same issues. we read the same sort of battles between nations. and of course, again, always

impactful, but for us we watch our barometers and monitor our activity i'd hate to get into a broader geopolitical discussion. >> do you ever get phone calls from friends of yours, executives saying i'm thinking of making a trip to beijing? i'm thinking of going to japan >> you know, we do get questions. we do get calls from all over the area nothing with regards to safety concerns i had not heard that in those particular areas really more about, hey, where to stay and have dinner kind of thing. it's still fairly positive >> oscar, thank you very much. oscar munoz ceo of united airlines celebrating the fact they had blowout earnings. they'll have that conference call coming up later on this morning. i suspect there'll be more questions in terms of concerns about government shutdown. guys, back to you. >> phil, thank you so much and again, that is probably the most positive we've heard from any ceo so far this go around of

earnings it's good to hear somebody talking about what you can control and not worry about the rest when we come back this morning, we will talk about banks on the move following a couple of earnings beats futures getting a boost from the bank gains this morning. especially from goldman. we're going to recap today's big earnings bank of america up 4.4% right now. the government shutdown is nearing one month with no end in sight. when we come back, we'll hear about what a shut zoun means for ceos from a former chief executive. david perdue of georgia. stay tuned you're watching "squawk box" here on cnbc how do you gauge the greatness of an suv?

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at comcast we know our customers' time is valuable. that's why we have 2-hour appointment windows, including nights and weekends. so you can do more of what you love. my name is tito, and i'm a tech-house manager at comcast. we're working to make things simple, easy and awesome. all right. welcome back to "squawk box," everybody. we've been watching the futures. you're going to see now things have picked up we started with a the dow down this morning but we have heard from several of the banks that's helping things out this morning. banks that have beat expectations dow futures right now indicated up about 35 points s&p futures up by just over a point and the nasdaq up by 6.5 of course earnings season accelerating this morning with a number of big-name financial companies. bank of america very solid quarter. earning 70 cents a share for the fourth quarter

7 cents better than had been expected and it just looked like a strong performer across the board bank of america shares right now up by 4.5% that's a gain of $1.20 a share goldman sachs with a blowout quarter as well beating on both the top and bottom lines net revenue rising to its highest level in eight years you'll see shares up now 2%. goldman sachs, a dow component really when we heard from goldman sachs, that helped turn the entire tone of the market. up to that point we had been looking at a negative number golden sachs is what turned the tide but that's not unusual basically what we've heard from all of the banks that really focus on that. siti group, jpmorgan earlier this week. across the board, other areas for them, they really managed to come in with better than expected numbers also, bank ofnew york beating estimate on the bottom line with

revenue in line. let's look at bank of new york coming up, the government shutdown is starting to impact the streams of data economists use to make their predictions and there's a consensus it's also hitting the growth rate of the u.s. we're going to tell you by how much when "squawk box" returns in a moment. and debate underway in parliament for the no confidence vote for theresa may we will bring you updates as they happen. they're going on as we speak back in a moment

welcome back to "squawk box" this morning take a quick look at futures right now. we've had a number of big earnings reports this morning. goldman coming in better than expected along with united continental. dow looked it would open 37 points higher. nasdaq up about seven points s&p 500 up a little over one point. all right. it's day 26 of the government shutdown president trump is calling out speaker pelosi for still collecting a paycheck as the shutdown drags on. she doesn't need it though, i don't think. but several members of the u.s. house and senate are asking for their pay to be withheld until an agreement is reached. we're joined by one of those senators, georgia senator david perdue he's the former ceo of dollar

general and reebok senator, it is hard to imagine how this plays out i wonder if you have a better feel than we do. because it's -- we haven't even seen any glimmers of progress in the last week, i don't think >> good morning, guys. as an outsider in the belly of the beast here, this is unconscionable any other business would already be called in by their banks and so forth but this is our fourth month of this fiscal year to put it in perspective. the other thing is i want to remind your viewers this is all about about $300 billion of appropriated funding for the discretionary side of our budget which is about $1.3 trillion we spend over $4 trillion. so this whole shutdown that we're talking about is over less than 10% of our total federal spending for a year and we stayed here in august last year and got to 75% of our discretion budget. that's the first time in 22 years that even happened

so this is a broken process here people in america ought to be outraged we're sitting here four months into this fiscal year -- and let me remind you of one other thing, joe we only have about 60 to 70 working days left in this fiscal year in get ready for 2020 in terms of the funding i'm not betting we'll get it done for 2020. we'll be back here next year doing exactly this unless we change the way we fund the government >> in this case it's about border security. but you can imagine that it could be about -- i mean, take your pick. the republicans, there was something about obamacare that caused it. and when you hold the government as a -- opening it up as a gambga gambit for your own pet project, there's a lot of people that think while it's important, it doesn't have to be solved right now with people not getting paychecks. >> well, let's put that in perspective. right now we have over 750,000

people entering this country illegally every year to put that in perspective, we bring in 1.1 million legal immigrants a year. so this is a national security crisis and it only heightens your point the hypocrisy of the democratic party. just last year 44 democratic senators voted to fund border security at $25 billion. now we've got a situation where they won't give $1.6 billion which is what we thought the deal was the week before christmas. and senator schumer backed out from that deal so this is the second time senator schumer has shut the government down over this issue. so what i'm looking at right now is for everybody involved to be the adult in the room and let's get this thing done. >> so senator, you began this conversation by saying that it was a disgrace effectively that the government has been shut down for as long as it has why not reopen it, have this conversation i think there is a meaningful and very fair and important conversation to be had about border security in this country. and i think both sides agree to that 36 i think the question is who's

trying to use what leverage over each other at this point. >> you're right. had we had that conversation in august or september of last year, i would agree with you right now democrats are saying give us what we want and maybe we'll come back in two or three months and talk about what you want that's not the way negotiations work in the real world >> but my understanding is that what the democrats want is just to open the government >> i understand that but where's the leverage for the president in terms of getting them to move on the issue of the day? it could be immigration today. next year who knows what it'll be. >> what do you tell -- >> this is totally irresponsible by both parties this is being done in january, not in september of last year. >> what do you tell your constituents who are federal workers in your own state who are not getting paychecks right now? >> they're citizens of the united states first. right now we have a national security crisis. this president is the first president of the last five that basically is standing up and going to the mat to defend america. this is what is at stake here.

no matter what the left is saying here, by all measures this is a national security crisis that's what i tell my people back home. >> do you -- i mean, senator, it's -- we see exactly what's happening. i know you do too. when the president gave that sound bite that you can call it the trump shutdown, i mean, i'm close enough to new york to have followed senator schumer's career i know that he's just going sit on that forever and never -- you know, in his mind he can continue to win in terms of public sentiment on whose fault the shutdown is. that's what kind of gets me and i think is hypocritical. if pelosi and schumer really cared about the paychecks, they'd come back and do $2 billion. >> this is easy to solve if we went back to the solution at $1.6 billion that the president was willing to take the week before christmas, this would be done. the democrats, this is more important to them as an -- >> and people aren't stupid.

they see that. neither side looks good. government's going to have a 5% approval rating when this is through. we even had max baucus on who said people blame trump a little bit more but there is some blame on both sides. do you think -- do you think senator schumer and speaker pelosi eventually will get to a point where they actually care about whether they're being tarnished or not >> well, what i'm hearing from the democratic senators is the same thing i hear from my republican colleagues and that is, enough it's time to get this done so we're putting pressure on leadership right now to get involved and get this done i agree with you on one thing. it's the reason i ran for the senate in '14. it's unbelievable that we're sitting here trying to get this done four months into the fiscal year i keep saying that because this is untenable it is time for everybody to step up, get past the political self-interest and get this done. people expect that >> senator, real quick, i know we got to go but mark warner is

going to be on in a moment he's got an op-ed in "the wall street journal" today. he says this which goes to the opposite of what you were saying before. he said trump indicated before christmas he would sign a continuing resolution the senate unanimously passed only to oppose the bill leaving the majority leader to hold the bag. he sent mike pence to the hill to make an offer then kneecaped him by taking the proposal on national television. >> well, that's one perspective. i'll give you my perspective and i was in more meetings than warner senator schumer walked away. >> all right, senate from the great state of georgia, you got a big football game coming up there too. i don't know who's going to be in it. i have a feeling -- who knows. but it's going to be good. four great teams left. >> have a good day when we come back, we have new data on input prices

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welcome back to "squawk box. rick santelli here with live breaking fundamental news. yes, some of it's still trickling out. our december read on import prices down 1% that's a little lighter than we were expecting revisions the last month popped it up 3% from minus 1.6% to

1.9% that's definitely hotter than expected and sequentially the mirror image of down 0.3% our last look year over year, they were down 0.6%. that's a little lighter than the down 0.8% we were looking for. let's switch gears export prices month over month down 0.6%. year over year, up 1.1%. that is cooler than our last look at up 1.8%. so really nothing intense there. we still see some pricing pressures. but when you remove petroleum, of course the situation looks a bit different and it has been moving around. that is the oil pricing. the dollar index caught a bid last night settled above 96 much of that was at the expense of the euro and contemplating stimulus ongoing jeramy's slowing economy, and of course maybe the biggest news in my neck of the woods, we're seeing ongoing curving

steepening maybe it's more antiflattening z we're getting close to 40 basis points, 30s minus 10s. that latter is about the widest its been in a year joe, back to you >> okay, rick. thanks normally at this time we'd be getting important end of the year retail sales data from the commerce department. but not now because of the partial government shutdown. that's not out today neither is a key report from the national retail federation courtney reagan is here. she's going to make up some numbers and we're going to talk about some conclusions you're not going to do that? >> i don't really like to make things up. facts are important to me. >> okay. we do have some things to draw data from. >> we do while most metrics put holiday online sales growth, when it comes to overall results it does get a little murky first data, that's part of the

payment process at checkout, they say that retail holiday sales grew 2.4%. general merchandise sales 4 z% but furniture and home sales down 3.6%. altogether the svp classifies the holiday as mixed but mastercard says it was the strongest holiday season in six years with spending up 5%. apparel up 8%, department stores down 1.3%. now, most retailers that reported holiday sales did report increases, but some did still miss expectations. lululemon, costco, american eagle, tillys, and urban outfitters among the strongest holiday growth target had sales strong enough to put results on track for the best in 13 years while macy's sales grew slightly, that was disappointing. so the retailer sent shares plunging for the worst stock performance ever in that

company's history. the parent of men's warehouse and others, j.c. penny and express, all three did see their holiday sales fall while there are some metrics, without the government as the equalizer, it's hard to know exactly how the season averaged out. >> especially when you're trying to figure out what amazon means. there's no way to track that >> and they're not required to give holiday sales we have not in my memory gotten holiday sales from walmart, for example, or necessarily from amazon >> the two biggest >> exactly but we don't get theirs. so it does make it a little hard then when you've got first data and mastercard that are further apart, that makes it hard to get through. >> we need our government numbers. >> i think that's what i realized putting this together >> thank you very much joining us is ian from p

pantheon you kicked up quite a bit of a kerfuffle when you started talking about how you think that growth for the quarter could get wiped out completely by this government shutdown. it got more attention yesterday when jamie dimon kind of referred to that fact on the jpmorgan conference call reading what you had written on this how do you do the math on this explain it to us >> well, it's mostly by looking at the impact on employment. because we know how many government workers are furloughed we know how many essential government workers are working without pay. so the government statisticians will not remove those people working without pay from the data because they will eventually be paid but the people who won't be paid, they're out of the numbers all together and the impact on businesses that rely on government employees for their cash flow.

so when you add all these effects together, i'm not a million miles away from the estimate which costs 0.3 percentage points of gdp growth. aquarter is 13 weeks so it adds up if the shutdown lasts the whole quarter. plus all these second round effects as well. bearing in mind q1 wasn't looking great anyway and there's some big seasonal adjustment problems which tend to push it down, everything looks pretty horrible add it all up and you get close to zero if the shutdown lasts through march. >> is this a situation where it costs more on a weakly basis if you could stem the losses, stem the pain. but every week, it's a multiplier effect? >> yeah. there is because, you know, those people are relying on government contracts being paid they can hold on for awhile. they can ask their creditors they can ask suppliers to take longer payment terms but eventually everybody hits a

wall and the suppliers say it's cash and delivery or nothing and the bank says we can't keep extending your credit limits indefinitely there's slack in the system that can be taken up for the first few weeks. of course we're in unprecedented territory. i can't tell you the last time the government was shut down for two months because it's never happened but i assume those effects become worse and the harder it becomes to recover if you're a small business, it goes bust because of the federal employe employe employees who you rely on aren't spending i think it becomes a deeper hole that's hard to get out of and takes longer to get out of as well there's a strong imperative to find a deal quickly. >> you also make the point that the real risk is what happens if consumer confidence or ceo confidence really plunges as a result of this and that in itself creates more problems

>> yeah. because, you know, business and consumer confidence are wobbly now because of the drop ins in the stock market in the fourth quarter. and also the trade war the two things are connected but they're not helping. and on top of that, an extended shutdown which makes people miserable about the federal employees miserable because of their jobs but everybody else looks at the dysfunction in washington. it doesn't make them happy businesses start to scale back investment plans if you're a contractor oryou'r a supplier to a government contractor, you're thinking how am i going to get paid so the whole thing ripples down the chain. it becomes much more than just simply the loss of wages for federal government employees and again, to emphasize the point that the longer it goes on, the more difficult it is to get back to where you would have been so some of this ground that we're losing as the shutdown lengthens we'll never get back if it's just a couple of weeks, everyone gets paid, they go back to work. it's fine. but if it becomes a couple of months, you see losses you never recover. >> ian, i want to thank you for your time today.

great to see you >>. >> thanks for having me. meantime, let's get back to wilfred frost. he has more on goldman sachs. >> yeah. i've just spoken to a senior executive at the bank. want to give a bit more color on what we may be likely to hear on the analyst call which starts at 9:30 a.m in particular on this 1 mdb scandal. the ceo david solomon will frame it along these lines to say that one senior executive who was wearing the badge of goldman sachs at the time did take place in a fraud, a fraud committed on the malaysian people but he did not represent goldman sachs at that time and it was not the firm itself. i think we'll also hear from them that they feel compliance levels internally are higher than they've ever been before. and this is interesting. although this is a long complicated investigation with many parties involved so the resolution won't be immediate,

that they have likely provisioned financially for this fully already. whether that came out of this quarter's earnings, last year's earnings, or before that that financially they feel confiden confident they have provided in their books for however the fine might be coming forward. and just on the earnings themselves, i think they put a spin on this that yeah the trading was disappointing. but the point is, five years ago what we expected returns to be and revenue to be in a capital market environment like this and we would never in our wildest dreams have got to this number i think it's going to be a much more positive number from the management saying this is the new goldman sachs and this is something we do so well. >> okay. thanks, wilf appreciate it. >> pleasure. >> a lot more to focus on now. coming up, the government's been shut down for almost a month and no sign yet that the

closure is ending any time soon. when we come back, we'll look at finding a way out with senator mark warner. he's got some free advice for president trump. stay tuned you're watching "squawk box" on cnbc

♪ welcome back to "squawk box," everybody. we've been watching the futures and we did see a little bit of improvement through the course of the morning right now dow futures indicated up 46 points, nasdaq up by 9, and s&p over by 1. earlier this morning we were joined by blackrock ceo larry fink here's his takes as he head into the heart of earnings season >> i think in the short run we probably hit a bottom. >> that lasts how long >> well, itreally depends on what happens geopolitically. >> okay.

>> whether trade negotiation with china, what is going to be the ultimate outcome of the uk >> dominic chu joins us right now with a look at the bank earnings right now pretty good news today >> pretty good news so far if you look at what's happening with blackrock earnings, we saw a move from the downside it did miss on the profit and revenue target blackrock shares off by a percent so far fell under just slightly $6 trillion but it did raise its dividend payment. now, if you take a look at some of the other ones. goldman sachs as well beat revenue estimates. better results at the investing and lending division those shares up by 3%. that will have a big effect on the dow industrial average and what's happening with bank of america shares. this helped along by better consumer banking activity. also, though, it joined citigroup is reporting weaker

than expected results in bond, skurns si, and commodity trading operations those shares still up. if you look at financials overall versus the market, it was set up favorable for the banks heading into this earnings season as you can see here, the overall financial sector dropped by quite a bit heading into the december 24th low. that bounceback right now heading into some resistance areas. some traders are watching. that's a trade we'll see play out today whether that momentum to the upside can continue >> thank you, dom. appreciate that. in the meantime, i want to tell you about a report just coming out of "the wall street journal" about wework's ceo working as a landlord to his own company. now news of a conflict of interest between the ceo of controlling shareholder who has participated as an owner of many of the buildings that wework

effectively is leasing from him and investment groups he is part of some of this was disclosed to debt investors unclear whether masa son or some of the other big equity owners fully appreciate and understand how all of this took place but it's -- >> now the -- you know, newma n newmanen, that makes more sense. don't you think? >> this reminds me of eddie lampert. where he was buying the sears properties buying those properties then leasing them back to the other entity >> clearly the board at some level seems to have understood or known about some of this. in one of the instances, they stopped it there was a situation in chicago where he actually is part of one of the leases wanting to actually buy -- >> is the company still wework >> we company. but this is going to raise new

questions. >> it's the we company in the meantime, let's get down to jim cramer. you're on a little bit early, jim. that's exciting. goldman sachs, you know a little bit about that place, huh? >> well, look. they're making money i saw what wilf said obviously the malaysian situation is going to overshadow even what they do. but maybe it shouldn't because the tangible book value is up so big. i'm kind of impressed with all of the banks they've really done great things wells itself, probably the weakest because they have to take care of certain things. but this is a good number. and you could argue that it's a growth number. people who hate this group should recognize that it was already hated. these stocks have come down so much look if jpmorgan were trading when this traded, they would be down ten points in these prices, they got too cheap. and i like them.

i like this goldman number we hear more -- the gold man comps calls having pretty bad the last two years meaning they're disjointed and somewhat negative. if these guys could say, listen. we did well and we're in good shape opposed to we didn't do well and we're not in good shape which is the theme of the last few, i think the stock can continue to rally. >> you know, if you were looking for, like, a building block to come after december 24th, the bank's making a stand and actually some data points show the operations aren't so bad that would be something i'd put in as a -- you know, as a little check mark on my ben franklin clothes that maybe we made a bottom wouldn't you >> i couldn't agree more bank of america is a weak stock. bank of america is the best. it's the best so far it is rather extraordinary how much the digitizing solution that they have -- you know what they are they're amazon but they make money. i mean, that's how good they've

become and i really think this is a quarter that brian moynihan shined they are just making so much money off the digital customer and the digital customer is happier. so this company is far more forward than every other they do have a great app it does matter they're converting people. i had them on a year ago, they had none i just feel like they're doing so much right. and that this company's got to get a premium multiple it's just too cheap. the group is right >> all right, jim. did you see the 3-year-old that was watching when the eagles lost did you see that video on twitter? i'm going to send it to you. >> all right >> she's just wailing and the tv's on behind her it's so cute >> that was me >> you looked -- that was my point. it may have been a similar scene at the cramer household. >> it was. my daughter too. >> okay we're going to see you in a few minutes today cnbc begins accepting nominations for the 2019

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welcome back to "squawk box. government employees are starting to feel the impact from the shutdown joining us now, mark warner who represents virginia, a large

number of federal workers are based. he has a new op-ed titled "here's how you make a deal ." i want to talk to you about the op-ed in a minute. help us here, is there any opportunity for a compromise on this issue, given that it seems at least over the past week that democrats don't even want to get in the room with the president >> i actually don't think that's an appropriate characterization. i think the last meeting that took prlace, the president walkd out on the two democratic leaders. let's not look back, let's look forward. there are a group of senators from both parties who said, hey, if the leaders can't come to a decision, let a group of bipartisan folks who can get to yes work together, but start with the premise that you go ahead and reopen the government for a couple of weeks, give us time to see if we can come up with something that might meet both needs that would have

increased border security, but it starts with a reopening of the government we have republican senators who will at least privately acknowledge the last thing you want to do is reward the president's behavior of holding all these folks hostage because if this tactic at all proves to be successful, you'll see it again on debt ceiling, see it again on the end of the year spending bills, and this is not the way we ought to be running the largest enterprise in the world, the federal government, where i can tell you maybe not in new york yet, but in d.c., maryland, virginia, the amount of economic hurt that is taking place at the family level and on the general economy level, meaning it will take us months to recover. >> i won't quarrel with the idea that everybody wants the government to be reopened and as soon as possible, is there any opportunity for compromise and compromise being anything beyond

democrats saying, got to open the government and if you don't open the government, we can't have a conversation even about the border and on the other side, on the republican side, saying if you don't have a conversation about the border, we're not going to talk about reopening the government. >> i think you'll see -- i know there has been an effort the last 24 hours on a number of us saying give us a bit of a cooling off period, this happens in other negotiations, give us a cooling off period, let's not hold people hostage, let them get their paycheck, go back to work if i'm flying, i want to make sure the air traffic controllers, thinking about the safety of the air, not being -- trying to figure out whether you can pay your kid's tuition and let another group try for a couple of weeks to get to yes. i'm all for additional smart border security. this is not a question about more border security there will be a debate about how that -- what that border security ought to look like. and frankly, there is even some moves suggested which would --

this would take longer, if there was an effort to say let's agree on a number and turn it over to some panel of experts. so you take the politics out there are reasonable ways to get to yes but it doesn't -- but the notion -- >> any version of yes including any form of a border wall, even if a short-term way, democrats put a billion dollars down, a billion and a half dollars down, $2 billion down on some form of border security and then we'll open up the government and keep moving >> some form of border security. as i think people have talked about, there is already fencing, i think around 700 miles, but that was decided by border security experts who said, where are the biggest population areas and a lot of that was built back before i got here in 2006. but as we all both know, technology has changed dramatically since 2006. i want to spend the money, the smartest, the best way possible.

and i think that's -- i don't think it is a question of increasing border security i'm all for it >> there is no shortage of 20/20 challenges but you haven't said anything, but a lot of people just bring you up all the time. you're a business man. reminds me of that reagan comment, i don't think that your age is a problem your relative inexperience, you're so youthful, you are. >> hey, i work in the only place in america where 64, i'm one of the young guys >> maybe tv. maybe tv but seriously, is there any part of you that is even considering that -- i mean, to be honest with you, some people announcing, it is like, i guess trump was hard to imagine too, but there is is just -- they don't have a shot in hell, senator, some of them. i feel like you would be a viable candidate. >> you're kind i think there is some folks trying to work here in the senate to get to yes --

>> you won't do it, no matter what >> i have ideas i want to make sure are part of the debate. we talked about i fear that if we got to make -- find a way to make capitalism work for more people again in america, that's one of the biggest problems we've got. i fear the far left and the far right are driving us off the cliff. i think i can be -- >> on that very issue of capitalism and the debate that this country seems to be having, i want to show our viewers a poll, i'll read it to you, a new poll out, i believe the hill did it, a majority of registered voters, 59%, said they would support a proposal made by yes, we call it aoc these days to increase the top marginal tax rate to 70%. this is according to the survey, conducted by the hill and harris x just yesterday and goes to this very issue of what is going on in our economy and capitalism and what is going on the democratic party in terms of how left it may or may not have veered >> are there ways to make our tax code fair?

absolutely let me give you -- i know we're short on time, but let me give you three quick ideas that would be as important if not more important. nobody works for the same job for 30 years going forward we ought to have a portable benefit system so that you can take your benefits from one job to another we ought to recognize we have to treat investment and human capital, the same way we treat investment in tangible assets. why do you invest in a computer, you get get an r&d tax credit. we out to aut ght to have a debe the notion of long-termism and short-termism in the capital markets. manufacture the gre many of the great american companies couldn't be created today because of the enormous pressure on -- >> would you support a 70% marginal tax rate. >> i would support a fairer tax return and support a tax, frankly, i think the tax cut done in the past we could have

been made america competitive without 21% rates and paid for, but i think the way to get -- the way to actually move the incentives is to frankly get business reinvesting. >> are you throwing in your support behind the 70% rate? >> i'm not >> okay. >> not necessarily >> thank you for being with us >> saved by the bell >> we didn't get "the washington post" op-ed. >> read the op-ed in "the wall journal. >> "squawk on the street" begins right now. >>. ♪ one more time >> good wednesday morning, welcome to "squawk on the street." futures pretty solid as are the core results and the flurry of bank earnings we have gotten today. record stimulus in china and the brexit drama, may is expected to survive a no confidence vote late