good morning it's 8:00 a.m. at s.n.a.p. headquarters in los angeles. 11:00 a.m. on wall street and "squawk alley" is live. ♪ good wednesday morning welcome to "squawk alley." i'm carl quintanilla with morgan brennan and jon fortt at post nine of the new york stock exchange big day today, markets rallying

this morning with the dow inching closer to getting out of correction territory all the major indexes sitting at their highest levels in a month. tech sector surging once again the nasdaq is up a around 14% since christmas, as you know joining us this morning, ben swi swindburn is head of media research our mike santoli joins us on set, as well ben, let me start with you because you've got f.a.n.g. basically up 20% from those christmas lows, and we've got netflix tomorrow how much of this is going into the earnings season with too much optimism, or maybe, not enough >> well, i mean, i think things got a little bit out of hand in the fourth quarter, as we saw growth sell off tremendously, particularly in december we put out a piece on netfli last week. we remain establish on the stock. obviously, their decision to raise prices, i think really reinforce ouce our view this is year free cash flow burn will peak and that becomes the next piece of story for the stock as we

move through the next year ever since we've been covering netflix, we've wanted to buy every big dip and that continues to be our approach we still like the stock, despite the run it's had since mid-december >> does their strategy necessarily change, if, in fact, free cash flow burn does peak? >> no. i mean, the strategy, i think, is to make a lot of money, long-term. we've always felt like this was a business that could be highly cash flow generative they actually will generate, we think, close to 13% operating margins in 2019. so it's a profitable company from a p&l perspective and the focus on cash flow, which is what the bears tend to focus on, i think, has really been a little bit misguided in that it misses the timing of tv and film production spend. but as that goes away and fades into the background, we're really left with a business that has pricing power, which is unique in this market, and a big global opportunity still ahead of it. >> mike, how important are netflix earnings tomorrow, in terms of setting the stage for a broader f.a.n.g. and tech stocks >> i think netflix earnings

themselves maybe got slightly less important, because we got that move on the price increase, which maybe, i think people tried to infer that subscriber trends must be okay if they're going to make this move right now. but in general, i think netflix has separated itself as a story line from the rest of f.a.n.g. but in general, the appetite for the big growth stocks, the old ones that worked, you know, last year so well for most of the year, i think tells you it's much more just of a refreshing of risk appetites in general that's mostly what we've seen, i think, in the last three to four weeks. okay, people were able to decide that was the downside overshoot in the markets the credit market did not tell you there was something broken in the system. and so, we're just going to take it back up now, i think the question is, you've kind of unwound that overshoot, you're back at this level that you were at in early december for the overall markets, for the nasdaq and everything else, do you have the horses to take it past it, without much of a rest or a pullback. that's the question for today and tomorrow as we get more of these earnings >> ben, give us your take on the streaming landscape, overall

we heard about our parent, nbc universal entering the fray with this service that's going to be free with authentication that you're already paying for cable, paid for others. is this all about original content, what's going to make all of these succeed or are the models going to be necessarily different, whether you're ad driven like nbc and others or subscription driven like netflix >> yeah, the world is change at a rapid pace and it makes it a lot of fun to be a media analyst and a great time to be a consumer, but tremendous uncertainty for investors. i think what nbc announced is interesting in two ways. one, it's different. it's ad supportive, largely. and it's -- it also is going to be given away with the overall paid tv subscriber base for comcast and skye so it really plays to the company's strengths. the real question to me with nbc was how do they think about licensing their content going

forward. are they going to be pulling stuff off of third parties and moving it on to their own service? we have a piece out this morning actually on the cable satellite industry and in that sector, comcast is our top idea for 2019, the stock from a pe basis, about as cheap as it's been since 2012. so on the streaming side, which you asked about, netflix and spotify are two overweights that we like a lot, in the more traditional cable media world, comcast is a top name for us >> ben, to that point, in terms of pricing, we've got this netflix price increase i think there's probably a lot of folks out there that subscribe to netflix, myself included, 13 bucks, okay, whatever i'm getting a lot och cf conteni still seems like a good deal to me but when you have amazon, comcast, hulu, at&t working on something, disney, apple, plus espn plus, hbo, i could go down the list at some point, there's going to be a ceiling in terms of the prices that netflix and all of

these other companies can charge any sort of insight on what that might be >> look, i think the -- it's a great question i think if you look at what's happened, we already have, we think, about 150 million, ott subscriptions in the united states already so the consumer likes this delivery mechanism, this way of consuming content. but one thing we made in our netflix report last week entitled "for your consideration" is that tv is much -- the addressable market here is much larger than just streaming. there's a tendency to pit disney plus and netflix and hulu together it's a $500 billion global market most people around the world watch pay tv in a traditional cable/satellite package. that's really where you're seeing share erosion so there's a lot of room for these services having said that, i think we should not underestimate what netflix has and is accomplishing. it's going to be very hard for other companies to pull that off. and i think you've seen that in nbc's approach to the market they're really not trying to go

down that path so we think netflix is going to stand ahead of everybody else and then there are a couple of other companies with opportunities to scale something. they're not going to be transformative, but i would put nbc and disney in that camp as having a good opportunity to build an asset that makes money over time. but it's really netflix and a long list of smaller players, i think, for a while on the pure streaming front. >> i think one question is, having spent the last year obsessed with m&a game theory, and to a lesser degree, regulatory game theory, if we get back to classic ad trends, right, or subtrends, things like -- in terms of trying to find valuation >> yeah, i think we're kind of getting in that area, if you view the whole thing as really one market, you know, pay tv or internet tv is all kind of part of the same thing. yeah, i think that's roughly where we're going. not to saying you preclude the idea that the pieces are going to move around cbs, viacom, all the rest of it. but what's interesting is, another way to look at the netflix move is to say, look,

clearly there's some finite, absolute number in terms of amount people can spend for streaming. or for paid tv in general. why not use your advantage now, get a bigger piece of whatever that number is that we don't know, that's also your raw material for the content, because netflix feels it's already made itself indispensable in this world. so i do think that, it used to be -- it's funny, when you look at what kind of companies have pricing power? it used to be cable. it's not unusual to have this idea that you can have subgrowth, plus some pricing, and add trends, gdp plus we might be back to that mode of analysis for a while >> it was a good model, for a while. ben, mike, thanks, guys. we'll see you soon >> thank you first data agree to become acquired by pfizer this morning in an all-stock deal valued at $22 billion. deirdre bosa is in san francisco with more on this deal's details. deirdre? >> morgan, this is a deal that's going to create a giant in the payments and fin tech space, a

space that has been consolidating and overlapping for years and further encroaching on traditional banks. fiserv is offering first data shareholders a 29% premium based on prices over the past five days when it closes, fiserv shareholders will own 57.5% of the combined company with first data shareholders owning the rest fiserv ceo jeffrey yabuki will become first bank's ceo as franks byignano will become president and ceo. yabuki said, quote, a lot of banks, especially in the community spaces are worried about companies like square. what do you do where square has a rapidly growing pos lending business that's going to take money out of the revenue line of banks. i also spoke to dachlt davidson analyst dan dolman and conan leen, they told me that the move was a defensive move in response to square really being a one-stop shop. fiserv is a financial services tech company that else services

and systems to banks and other financial institutions together, they will be better able to compete with the squares and paypals and stripes of the world. these are payments companies or fin tech companies that have ballooned in the ecommerce and digital age and are offering more and more bank-like services for instance, both paypal and square offer small business loans and have their own debit cards. square recently made another bid for a banking license. first data has massively underperformed its payments peers over the last year from a valuation point of view, fiserv may have been able to justify that nearly 30% premium to its shareholders. guys >> deirdre, thanks amazing, square's market cap less than a billion under fiserv, and it's doing a deal that big deirdre dbosa, thanks still to come, shares of s.n.a.p. down dramatically following the resignation of its chief financial officer and an ensuing downgrade over at rbc.

we'll discuss where the stock goes from here but first, former jcpenney ceo and former head of apple retail, ron johnson, the first head of apple retail he sdoits wn with us right here at post nine big show "squawk alley" continues after a quick break. with a cockpit fit for aspaceship. hang on. radar that senses things the human eye can't. busted. and the ability to make a thousand decisions before you even make one. was all this, really necessary? what do you think? ♪

i am a techie dad.n. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience. my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. welcome back to "squawk alley. the government shutdown rolling on, now in day 26. meaning retailers and investors won't receive holiday sales data from december from the commerce

department fortunately, our courtney reagan is back at hq. she's digging through other sources, including mastercard spending numbers to give us her holiday report card. hey, court >> hi, morgan. so without those government retail sales numbers, the national retail federation can't put out its final holiday tally, because it uses that as the main input, but we do have some replacement data most online holiday sales growth measurements put that between 16 and 19% for the season the in-store, though, and overall results gets a little murkier. but here's what we know. first data, part of the payment process at checkout, we've been talking about it a lot today, says retail holiday sales grew 2.4% general merchandise sales, the strongest at 4%. that includes the big box and department stores together in that category. but first data says furniture and home sales were down 3.6%. so altogether, the senior vice president of analytics classifies the holiday as mixed. but then mastercard says it was the strongest holiday season in six years, with spending up 5% apparel up 8%.

department stores down 1.3%. citi, jpmorgan, and wells fargo says credit card purchase volume grew during the holiday quarter, but all three banks also said that purchase volume decelerated from the prior quarter now, of the more than 20 retailers so far reporting holiday sales, most did see growth still, some missed expectations. lululemon, costco, tilly's and urban outfitters among the strongest sales. target's sales on track for the best increase in 13 years. while macy's sales grew slightly, we knew that was disappointing. it led them to cutting their annual forecast, sending the stock to log the worst-ever single-day performance now, tailored brands, the parent of jcpenney, express, all of those did see their holiday sales fall so while we've got lots of pieces, without the government report as the broad equalizer, it's a little hard to know exactly how the season averaged

out. morgan >> and it may be a little hard to know exactly how it averaged out, but courtney reagan, that was a great job taking a whack at it. thank you for joining us sticking with retail, shares of nordstrom at a more than one-year low after weak holiday sales. macy's, kohl's, target, all in focus as analysts caution about outlook this year. and of course, that shutdown is not helping. joining us now, here at post nine in an exclusive, former jcpenney ceo and former head of apple ceo, ron johnson, who currently runs enjoy.com great to see you here on set >> great to be here. >> after strong 2018 for retail sales, caution flags pop up. you think that's the case for 2019 >> i totally agree and it happened about mid-november and you think, here, guided up november 14th. two months later, the stock's off nearly 40% he's a smart guy

things changed and that those would be external, not internal the company's merchandise didn't change stock market dropped 10% a huge impact, especially eastern seaboard tariffs, cost structure, how do i manage that? shutdown huge impact, nearly 20% of people work for the government, but even if you're working for the government and getting paid, you're sympathetic you're not sure. you become uncertain so a company like macy's highly exposed on the eastern seaboard, 25% of the stores, d.c. to boston, 35% of the volume, it's going to be hard to figure it out. what we saw with nordstrom, though it's broader right, nordstrom had a surprise and they're in seattle heavy west coast so i think the consumer is being more cautious, as they start the new year and that's pretty common when your portfolio, which was up all year, got to flat. you're going to rethink things before you respend >> do you think the market volatility is having anything to do with that as well in terms of a more cautious consumer

>> anytime you have uncertainty, you don't do that. >> given that, shouldn't we see the same pressure in online ecommerce as we see in store all of those factors you mentioned should affect the consumer no matter where he or she is buying. so do you expect to see that right across to amazon, too. or is there some reason why the pure player stronger positioned ecommerce retailers are going to do better? >> as i said, last time i was on, amazon has felt it for the last year. they're now a single-digit-growth online retailer in the u.s. target grew 29%. walmart's 40 amazon's got it own issues, but ecommerce is slowing down year over year. it went from 20 to 16 to 19. next year it might be 13 to 16 eventually 10 to 12. it will have head room, but it's already slowing down >> irs says that they're bringing in staff. they're going to process returns. but how much is writing on those returns being late and maybe not

happening for some, when they thought? >> that's a good question. i don't really know. but it has >> is there big seasonality, though, in terms of april, may >> it's not going to change. when you get your return in april, you might spend some money, but you're going to save most of it we're thinking all the time about spending well, my paycheck's coming in, i'm spending every week. when my paycheck stops or my return doesn't come in, that's a big chunk of money for most people so you won't have as much spending when there's a delayed refund >> nordstrom, goldman today takes it back to neutral, saying they got this wrong. fading confidence in the core department store business. was that whole period where we thought they could work this out, was that a fool's errand? >> i think for the department store, it's a fool's errand. nordstrom has a great position they're a very good online retailer they've got incredible service in the store they do high and low you know, chanel is probably one of their best accounts, but

they've got their great private label. nordstrom's fine and they're going to transition well but i think when you look at people like macy's and penny's and sears and even kohl's, people don't want to shop in these big stores today, we look at instagram, see an image, and try to buy it, right? if shopping's that easy for a millennial, do you want to go navigate nine floors of a department store the whole model is out of touch. >> what do you think happens to sears? we hear today, eddie lampert wins his bid as the winning bid. they're going to keep something like 400 stores open at least for now. does it continue does it survive? >> he must know something nobody else knows what i mean by that is penny's is trading for under $1 billion with twice as many stores as sears would be left with why would you create a $5 billion transaction unless you knew something about real estate or brand value so i don't think -- i don't know >> i want to ask you about retail's move into the cloud and digital era.

we had satya nadella yesterday talking about this deal with walgreens's boots alliance he's also done deals with walmart, with kroger what's the hard part in pulling that off, not just between these two companies, but he's talking about bringing this whole ecosystem together to digitize the foundation for the future. >> the world is going digital, and it's all being integrated. we've talked for a long time about retail stores connecting digital and physical, like target's doing a great job then it goes to specific categories so like, pharmacy. pharmacy should be an online deliver-to-door business, very economic high value-added product we help the premium companies with the last mile we're taking thousand-dollar products through the door to create an experience for free. so we've got to pick your niche. like, electronics is going to go, digital, through the door. that's what we're creating the on-demand mobile store walgreens, boots, pharmacy, going through the door, right?

but that doesn't mean all products will. it's going to be niches that get re-invented for this digital world. >> before we let grow, i can't have you sitting here on set with us and not ask you about apple. what do you think, after that earnings pre-announcement? >> i think i'm obviously an apple fan boy. i can't imagine a better buy for your portfolio, for the next decade strongest consumer franchise smart, committed, experienced leadership team, a lot of cash, great products they did the battery replacement. 10 million people took them up on that. those 10 million didn't upgrade their phone. next year, they'll be ready, right? apple's a great buy. >> you still holding the stock >> yes >> just for full disclosure? >> yes >> i love apple, so -- >> ron johnson, thanks for joining us today >> thanks. when we come back, we'll get a live report from london as another confidence vote for theresa may looms this afternoon. dow up 149, holding into some decent gains

banks doing really well. squa"squawk alley" is back in a minute

european markets soon to close, but brexit headlines again driving today's action another confidence vote for theresa may only hours away. wilhelm marks is london with the latest >> last night's defeat for theresa may was no surprise, but the scale of it was a shock even for her. she immediately responded by saying that she would try to seek compromise with other political parties. but her main labor of leader, he turned around and said, you know what, we want to table a motion of no confidence in your government, and that's what we're expecting to see voted on in a few hour's time the debate over that particular motion is ongoing. and what we've seen over the course of the day is theresa may's conservatives rallying around her you may remember last month, it was just three or four weeks ago that she faced a leadership challenge within her own party more than a hundred of her more than 300 mps voted against her as leader of their party, but that doesn't mean any of them

are going to turn against her tonight. she is expected, therefore, to remain in power and win this confidence vote tonight, but what happens next, still very unclear. she promised to reach across the political aisle and try to find solutions to this political impasse, but so far, she's not budged on any of the red lines that she's set for her version of brexit. and that's making a lot of the opposition lawmakers pushing tonight's motion very unhappy with the status quo. >> all right willem marx, thanks much let's get over to sue herrera with a news update this morning again. >> here's what's happening at this hour. house speaker nancy pelosi asking president trump to reschedule his annual state of the union speech before congress, which is slated for january 29th she's citing the partial government shutdown and security concerns in her letter to the president. democrats introducing a bill to gradually raise the federal minimum wage to $15 an hour. but even if it gets through the

democratic-controlled house, it will likely fail in the gop-held senate the legislation would hike the minimum wage to $15 per hour by 2024 a vatican spokesman says pope francis will attend all sessions of his sex abuse summit next month its goal is to guarantee bishops clearly understand what they need to do to prevent and combat that problem the summit will take place february 21st through the 24th and jackie robinson's signed contract with the brooklyn dodgers in 1947 along with his contract with the minor league team in montreal two years early are going up for auction they were appraised at $36 million. the opening bid is $5 million. and the bidding runs from january 21st through the 31st. something nice to hang on your wall that's the cnbc news update this hour back downtown to "squawk alley." more kb morgan, back to you. >> nice and expensive. >> and expensive

don't let the kids get to it >> yeah, exactly sue herrera, thank you let's get to kroocontessa be now for a news alert on the shutdown >> hey, morgan day 26 now of the government shutdown and agriculture secretary sonny perdue has just tweeted out that the farm service agency will open tomorrow for three days to process some farmers' existing loans and some other limited services this could make a huge difference to farmers, beginning farmers or those who are disadvantaged and on the bubble in making a difference, whether their pharmacy go belly up remember, this is a lender of last resort for the nation's farmers. and in many cases, they also provide crop insurance without it, farmers can't go and get loans from the banks, in other ways, too. so for three days, they're going to send some 2,500 employees back to 50% of the fsa offices around the country to open up. that's some good news for farmers in the midst of this shutdown morgan >> contessa brewer, thank you. after the break, goldman sachs and bank of america

leading the banks higher this morning after posting strong earnings results we've got a deep dive into their quarters, next meantime, the dow's up 152 points stay with us r sell? with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity. open an account today.

busy day of banks earnings to get to. goldman sachs and bank of america both reported some pretty strong results. wilfred frost at hq wrapping up the results and still to come. >> bank of america both managed to beat on the top and bottom lines.

their share prices responding accordingly. bank of america numbers were very strong. in particular, the operating leverage continues to drop through as expenses again declined and since only 13% of their revenues in trading, they weren't too hurt by a tough quarter there. goldman sachs also had decent numbers and followed them up with a very well-received earnings call, in particular, ceo david solomon pledging to provide nor transparency going forward, including on the investment and lending business, which had in the past been seen as somewhat of a black box he also gave various updates on the 1 mdb scandal. >> it's very clear that the people of malaysia were defrauded by many individuals, including the highest members of the prior government tim lizner, who was a partner at our firm, by his own admission, was one of those people. for lizner's role in that fraud, we apologize to the malaysian people, as detailed in the government's charging documents,

lizner purposefully concealed from the firm his scheme with malaysian government officials i think people here are extremely angry and upset about the fact that we had a partner of the firm involved in such a significant fraud. and i would say the impact on our client franchise, at this point, across the globe has been de minimis >> goldman sachs and bank of america up over 7% now, dragging the sector significantly higher with them. guys >> wow, it's a fiery response. thanks, wilf for more on the banks and on goldman specifically, let's bring in rbc's head of u.s. bank equity strategy, gerard cassidy. gerard, good to see you, as always >> thank you, carl >> what do you make of that 1mdb defense? >> i think he did a very good job on the conference call he was sincere, passionate, and was obviously upset at what happened so i think david solomon, in his first earnings call with the street community did a very good job.

>> does it -- does this ongoing coverage of the issue put a cap on the shares, over the next, i don't know, year or two? >> i think, carl, i think you're on to something, because there's certainly going to be a cloud overhanging goldman until this issue is resolved. we know there are investigations going on by the department of justice, the bank regulators are doing their investigations, so, obviously, we've got to get this resolved once that's resolved, that cloud will go away but, yes, i'm with you i think there is a cap that will be put on the stock, vis-a-vis, bank of america or jpmorgan or morgan stanley, who are going to benefit from stronger capital markets, like goldman, but obviously do not have that clout. >> gerard, speaking of bank of america, their results strong, a lot of it having to do with the consumer, consumer loans up 4% year over year they touted how checking balances have risen for 40 quarters in a row. how much of that's at risk

between some federal workers not getting money flowing into their accounts and some of the concerns about the consumer in general? >> i think there will be probably some issues with the government workers, but you've got to remember, bank of america is an enormous organization, and the percentage of government workers that bank with bank of america will probably not have a meaningful impact on delinquency statistics, should some of them go delinquent. and we don't know if they will, of course. but bank of america's numbers were very strong, across the border the consumer business was very strong we saw that also at jpmorgan, in their results, that were released yesterday on the consumer side. so the consumer banking business for our biggest players is doing very well, and it's obviously evidenced by the strength in consumer confidence and the employment picture, which gives consumers more confidence to go out and spend money and borrow money. >> gerard, weak to date financials, the top-performing

sector in the s&p 500. obviously, we know what happened to the bank stocks last year they got hammered, particularly in the second half of the year is this the beginning of a bigger, more sustained rally for the banks and for financials, more broadly >> i think it is and the reason being is, as you pointed out, the banks had a terrible first quarter ourth qu year, particularly the month of december and obviously, they're recovering very nicely from those low levels but what's interesting, if the federal reserve is done raising rates this year fwb you go back to the last three tightening cycles, the moment that the markets or the banks sniffed out that the fed was finished, they rallied. i would also point out, since 1990, there have been five times where the bank stocks have gone down for a full calendar year, not due to credit problems and every single time, the bank stocks have recovered in the following year and four out of five times, the bank stocks have outperformed the s&p we're off to a very good start

this year. i think it's going to continue due to the strength of the economy and that the fed will pause in raising rates this year >> gerard cassidy, obviously on the road, but taking some time out for us, gerard our thanks, as always. we'll see you soon gerard cassidy of rbc. >> okay, thank you >> watching the markets here dow's up almost 180, to get out of correction territory, you need 24256, and that's about 11 points away. we're back in a minute lobster fisherman is the lifeblood of this town. by 2030, half of america may take after stonington, self-employed and without employer benefits. we haven't had any sort of benefit plans and we're trying to figure that out now. if i had had a little advice back then, i'd be in a different boat today, for sure. plan your financial life with prudential. bring your challenges.

welcome back i'm brian sullivan in for scott wapner today on the "halftime report," we are going to hear live from jpmorgan chase ceo jamie dimon he will speak from the economic club of new york and you will hear it, as well plus, the rest of the financials goldman sachs and bank of america, they are surging, both up 7% on earnings. but what does that mean for the rest of the earnings season? and one high-end retailer getting downgraded not by one, not even by two, but guys, by three different analysts plus, former chairman of goldman sachs, jim o'neil, is here on how to play the mess known as brexit. all of that coming up in the "halftime report" at the top of noon eastern time. morgan brennan, now to you >> brian sullivan, we are looking forward to it. thank you. >> thank you >> the dow is back near session highs right now. 24,233, moving closer to escaping correction territory. the level there would be 24,265. let's get over to the cme now and rick santelli for the

santelli exchange. rick >> thank you, morgan i would like to welcome my guest, dr. joseph gagione. joseph, thank you for joining me >> it's a pleasure to be here. >> all right you wrote something that i really agree, but i want to put some context in the jobs report we had earlier this month, we had strong wages, really strong over 300,000 non-foreign payroll increases, and we saw the participation rate move up where we're drawing more people into the labor force having said that, you wrote something that said the market's blind to the possibility of rising inflation can you explain what you meant by that comment? >> sure. i think that we haven't seen inflation above the fed's target for a long time now. and i think people are sort of forgetting the fact that ultimately, we can have an overheating economy. i don't expect a real rapid

change, but i think a slow upward creep of inflation led by these wage increases is a possibility that the market is discounting too much >> now, having said that, and i don't say i disagree, it's kind of unique this time for a variety of reasons, because we prime global economies for so many years that having them survive on their own organic growth is something sort of new. aren't you impressed that even though it certainly looks like a fertile landscape for inflation, not only is it not showing up, the high wages still haven't created a scenario where we see a dropping labor force participation. is there some hope in that for a fed that can be on hold, but still not see them kind of blow through their inflation target >> oh, i think the fed can be patient, because certainly, they don't want to make a mistake of overtightening we've been below target too often. and i think they don't want to do that, either. i think they would welcome a

little being over target that would balance out, it would be symmetric we're talking about 2.5% inflation, not you know, high numbers. but, yeah, i think the -- we shouldn't worry too much about it the fed doesn't need to rush >> and my final thought is, you know, the fed needs some way to be guided, and the markets in general, as you pointed out, sometimes the economy isn't what they pay close attention to. so would you think the notion of the long end leading fed policy that is steepening curves should be more of a green light for more normalization your final thought is that a good way for the fed to approach its job yet undone >> i think that's one signal that would definitely help them move to tighten further, but even if the long end doesn't go up first, i think they ought to pay close attention to what actual inflation is doing. and if a year from now it's starting to rise, i think they may need to act, regardless of the bond market.

but i expect the bond market will also notice so i think you're right. i think the long end probably would go up, first >> excellent joseph, thank you for joining me today. jon fortt, back to you >> rick santelli, thank you. and a lot of the disruption in tech over the last decade has been on the platforms of smartphone and the cloud but with overall smartphone sales slowing, is there a new catalyst on the horizon? our julia boorstin is out in los angeles with more on the contenders and the impact they might have on this year's disrupter 50 list. julia? >> well, john, we're opening the call for nominations for our 2019 disrupter 50 list we're looking for the fast-growing private companies challenging the status quo the companies that could become the public giants of tomorrow. technologies that could provide platforms for innovation this year include 5g, expected to roll out nationwide within the next year, artificial intelligence, block chain, and the internet of things one way to get a sense of what's next is vc funding, which

increased about 30% to nearly $100 billion last year, just here in the u.s. with bigger investment rounds on average, but a smaller number of deals, according to the pwc money tree report. the biggest jump in funding last year was to artificial intelligence those start-ups saw a 72% jump in funding to $9.3 billion though the number of companies drawing funding decreased as the average funding amount grew higher in second place, fintech saw a 38% jump in funding to $11 billion, backing more companies than last year and digital health funding jumped 21% to $8.6 billion with the number of deals pretty much flat another trend, according to pitchbook, is that corporate america is betting even more on start-ups. as corporate vc funds invested nearly $67 billion in start-ups last year, that's an 83% increase from 2017 and a look for more innovation outside of silicon valley, with

funding to the new york metro area setting a record last year. for more on our disrupter 50 list and to nominate companies, go to cnbc.com/disrupters. back over to you >> julia boorstin, thank you when we return, the company behind the pokemon go phenomenon announcing a fund round of nearly $250 million this morning. the founder ancejos nextinus stay with us i am a family man.

i am a techie dad. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience. my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome.

niantic, the developer of pokemongo announced that it raised $245 million in a venture funding round led byround. the company valued at $4 billion. joining us to discuss the future of augmented reality and niantic, the ceo john hanky. >> good morning. >> you have harry potter wizards y unite coming out pokemon go kicked off this augmented reality thing. how will you take it to the next level? >> we saw growth in 2018 over 2017 it's a healthy foundation for the company. we are looking to basically add onto that with the launch of

wizards y wizards unite this year. we're building towards that. >> you say you saw growth in 2018 over '17, the presipercepts there was a lot of hype in 2016 and then it fell off, that's wrong? >> it was one of the fastest growing launches of any product ever in terms of number of downloads and revenue and the global phenomenon of people flooding the streets it continues to be a strong product after that very active global community it's one of the larger mobile games out there. >> the money you raised, what will it go toward.

independent event of raising any money, we raised a serioes b about a year ago we're using that to align strategic partners with this round, it's led by ivp. we have been able to bring in a couple of key strategics backed by peter goober and others who are very entrenched in live events, sports we're looking to grow our company and that's expertise we're looking at and samsung is part of this round there's work that we're excited to do with them. also in 5g in optimizing our platform the goal is to build our war chest and invest in our games. also in the niantic real world

flat form. >> what needs to happen before we get this truly in the hands of most consumers at a price point they can stand >> i think in our case, hundreds of millions of people have used our products and continue to use our products we feel like this is a mainstream activity that's growing. on the handset, we can take it to a certain level with phones ar becomes a much more phenomenon when we transition to future devices i'm talking about things like ar glasses. when we think about the market and the opportunity at niantic, we're thinking about building products for mobile phones but building the infrastructure to power those ar glasses in the future it's a very big opportunity. we see that as a device we will transition to the handset to

these wearable devices really an immense opportunity. >> what's your advantage what did you learn from pokemon go and from since from a business perspective in terms of how you make money on an ar platform that will give your next efforts faster start. is it pull those existing pokemon go user into a new game. is it something about in a purchase >> we have been working on our formula for a number of years going back to our creation of the group back in google we spun out from google a few years ago. we focused on three core aspects of our mission that's to get people outside and moving and exercising. to increase people to explore their town or city and to encourage people to socialize in real life. we design our products so families can play together and people can go out in groups planand play together or meet new people through the game

the coming together and playing in groups and being out and being active, those have been keys to our success. those are things that make people feel good they are positive activity they lead to the spread virally of the product we're looking to double down on that core commission with our future products. >> all right we'll be looking for it. markets hanging onto gains dow is up 118. we're back in a moment i consulted with your grandmother's doctor. we can do the screening at her house. hi. this is the man that's going to check your eyes grandma. cognizant ai solutions are helping healthcare companies advance diagnostics and prevent blindness in patients with diabetes. everything looks good. you have beautiful eyes. ♪

conflict of interests have been raised by wall street about rewark he leased his own purchased properties to the start up he runs multiple investors have expressed concern over the arrangement saying he may be benefitting on rents and other leasing terms with wework. take a listen. >> we have never had more long term commitments than before our enterprise business is growing faster than ever before.

our one person companies, the ones that do get month to month, there's no vacancy >> to clarify, he owns the building in part, usually in a group. a majority owner and wework leases it and leases it to other people this is kind of like if tim cook owned the iphone factory and made the iphones for apple >> this does seem to be legal. the question is whether it's ethical. that is going to be a question for not only investors as he company looks to go public but also the board which will have to make some decisions and put some rules in place here they have the dual class share structure. he has the voting power. what does that mean as well. >> hasn't been the best couple of weeks of press for the we company. >> the question here, i think, before he had that voting control, the board shot down

arrangements like this now, how much does he have markets taking into gains. financials up 1% we'll see if they can follow suit with what unite told us this morning >> csx >> that's right. watch the rails. let's get over to brian sullivan and the half carl, morgan and jon thank you very much. i'm brian sullivan in for scott wapner you have earnings front and center >> financials soar both stocks flying today jamie dimon speaks live this hour we'll listen in. the high end retailer four wall street firms just downgraded the halftime report starts right now.