please come back and see us again soon. >> i would be happy to. >> that wasn't much different than riding in a golf court, really >> i didn't have to endure your golf swing along the way, though >> learn from, learn from. >> thank you, guys >> you can -- >> thank you we're out of here. >> all right >> good-bye. >> "squawk on the street" begins right now. ♪ >> jim cramer, hope you had a good long weekend. futures are pointing to a lower open the imf cuts the global growth forecast, worries about china trade and day 32 of the shutdown europe is south of the flat line we begin with doom and gloom from davos ray dalio warning cnbc of significant risks for recession

next year. futures do point to the declines of the open. >> ebay is surging in the premarket. announces it owns $1.4 billion of the e-commerce company and wants a spin-off of stub hub and the classified business. >> keeping an eye on earnings, j and j travelers, u.p.s., halliburton reporting before the beth stocks are poised to open lower on worries about global growth chinese gdp for 2018 coming in at 6.6 the slowest pace since 1990. then the imf cutting global growth forecast. stocks are in the midst of a four-week winning streak since christmas eve. nasdaq is leading with a 13% gain 6.5 for the s&p this year. >> i think a lot of people suddenly -- come in, the future is down, maybe this is the big retest i don't see it that way. i think we're earnings derived i actually feel that the news

about china and europe this -- we had an imf -- the imf shaved from october makes it again a pause for the fed. the fed, i think, is trying to figure out if they are now data dependent, what it means to have international slow and do you raise rates into a slowdown? and that has been the wrong thing to do. >> davos, the guys talked to a bunch of players today heard from scott minor, david rubenstein and ray dalio on the risk of recession, maybe not this year, but possibly 2020 >> there is a significant risk of a recession, you know, is it minus one, is it plus one, okay, let's not get technical about that too much. there is a high likelihood of a significant slowing in 2020. >> all right, that sort of dove tails with other survey work pwc of corporate executives. i think 30% see global growth slowing in the next 12 months. >> i don't buy it.

this was exactly the rap we had about 2019, not that long ago. we heard we were late cycle, that this was -- really very little hope in the earnings. i would point to the fact that third quarter was shaded a lot we came down, we made estimates go lower, because we felt that things were going to be bad this year yes, we had mixed retail but what we see so far from internationals is not that bad i'm not buying it. hedge funds come on, they're very rare that a hedge fund comes on, this is a good opportunity. and yet i would argue that x the bear market of december will be the stocks down. stocks went down 19.8% and there is opportunity now we're up 13% but i just think that i reject the notion that we can call 2020 with a meer krcurial president trade deal you can't make these predictions. people want to make predictions. i don't know a hedge fund that would say it looks good for

years. that seems like a polly anna position i feel like a trade deal makes it seem like everything you say that is negative makes you feel -- well, will blow up in your face. >> you seem more constructive to me in a way. >> i watch the bank earnings i went through bank of america's earnings this weekend, just closer jpmorgan and goldman sachs these were very good numbers and i just think that some of the regional banks stocks are down a lot and the numbers weren't that bad i looked at -- >> financials had been one of the best performing groups if not the best performing group this year. >> that makes me feel better >> they had been responding. >> that's funny. >> not initially on the very first -- >> no, not -- >> not long after that, all these stocks rebounded and they all have been up sharply in the last few weeks. >> yeah. they're making so much money the revenues are huge. the expenses are all down. i find the expense control for these companies is magnificent so i go back and i say, well,

listen -- >> morgan stanley's numbers were surprisingly poor. >> yeah. that was a letdown they did not do a good job i thought that goldman was good. i think goldman took off some of the franchise risk but i just don't get the -- yes, dalio is really smart. one thing that is difficult is the people who say that things are bad are all smart people so you say, cramer is going into dalio, dalio runs billions no i'm just saying you can't make the predictions. the predictions themselves should be held off it is a little like saying, you know what, we know that the pats could win the super bowl in 2020 i don't no if sno know if brady to be playing. if he's playing, yes it is just a bad call to make the 2020. >> one last point on broader things revenue, beating on the top line percent -- it is early in earnings season, we're in the

50% range in terms of companies that have done it. that's well below the one year, the five year average. is it just not willing to make a call this early into the season? >> i can't i also see things today, we don't have the call from j and j. j and j did not guide down speaking to the cfo. it was not a guide down. there are certain issues involving devices, certain issues involving a sale of things, but the idea -- we're just, like, again, we come in, like jpmorgan, down 3 bucks, going back and forth, jpmorgan you are awful, how bad is it give me something good the quarter was good i think that j and j's quarter was good, the stock is down a lot. down 15. this was a very good quarter and people are just presuming from day one that there is nothing good to say about the future that is wrong. i don't feel the same way about arconic. i am confused about bla black & decker

maybe lowe's isn't doing as well we have to talk about that, because i thought that -- i'm wondering is it the liability from the building. >> morgan grunfeld fire. all i can say is i'm so glad i was not one of those who did that story saying it was coming, it was coming, it was coming apparently it was almost there, arconic and then the board rejected it. all of them rejected it, not enough money others reporting it was net $22 range and apollo, just not high enough you can see it is going to be one of the features today, down substantially on the fact that they are going to stay an independent company and not sell, not having seen enough value being accorded them in the endless seemingly talks that went on with apollo. not the price they could sell to. >> it is interesting both that liability. you have some -- you have some problems with some of their engineering in aerospace, i

thought it was resolved. arconic is not an expensive stock. but -- >> at 16 bucks >> at 16 bucks. >> yeah. >> but ebay was a cheap stock at $33. >> that gets us to ebay this morning as well. because along with arconic, ebay will be a feature. this on the news that elliott management has taken a $1.4 billion stake in the e-commerce company. that is a little more than 4%. talking about a market value at least before today that was around $30 billion it is going to be up they're not focused on sell the company. although we will get to that in a moment they are focused on underperformance, of course, of the key marketplace. and this is not your old ebay. the one i did a documentary on all those years ago where it was about selling things that you didn't want anymore or what was in your attic or basement. this is -- that's only 10% is used merchandise this is a competitor to all the

other e-commerce sites out there such as, of course, the giant among them all, amazon what elliott is focused on is not the core marketplace, other than what they say is the misexecution there, they're focused on stub hub and the classifieds business think craigslist, not craigslist, but others, particularly in europe, where ebay had a strong business, germany for example. what they're saying is unlocked value there by separating stub hub and the classifieds. what do they think they can get? a lot. they point out the classifieds business is $1.1 billion in revenue, and you could get anywhere from 8 to 12 billion bucks they think based on those operating margins and that multiple to those revenues stub hub maybe closer to $4 billion, competitors trade around 16 times ebitda you get the point. if you spin them both, their belief is you create value you then leave the core marketplace business they feel

has not been attended to properly and that they think could deliver a lot more value than the current stock >> i can't agree with them more. i've been watching stub hub, which is an excellent company. what is interesting here, stub hub is excellent, their classifieds is excellent what did they miss how about the fact in the letter they missed etsy they could have owned this they had such momentum spun off pay pal look at pay pal. this is an undermanaged asset. and i really agree with elliott. i think that they should break it up. i think live nation would pay 12 to $14 billion to get that stub hub business it would give them a lock on things david, ebay, i read this, why not sell it to alphabet? >> that's -- listen, you know, they don't say with any specificity whatsoever and with elliott, you know that they do push companies potentially to sell themselves and/or do other things sometimes elliott is the potential buyer or with a group. arconic is a perfect example

they were willing to roll in, and elliott is going to be licking its wounds today, it would seem, given that decline in the stock price here they say the core marketplace is a strategically attractive asset they say ebay, they point out, the second largest e-commerce retailer outside of china with amazon one of only two truly global players. the biggest in south korea, australia, italy, second largest in the u.s., uk, germany and canada and benefits from this community. originally many were sellers of used goods they drive a virtuous cycle. and that makes it a highly defensive platform and this is the key, impossible to replicate if they're right, and they do actually spin stub hub or do something to create value with stub hub and the classifieds and left with the core marketplace and you say you can't replicate it -- >> but the gross margins, they have just declined and declined. in an area that they own and look at the -- look at the value

etsy created during this period. look at what has happened with amazon during this period. this was just a pristine asset it really is incredible. they separate pay pal. and suddenly you have a level of value that nobody thought was possible i agree with elliott i would vote for them. >> all right >> there you go. >> we'll watch one of the big movers today when we come back, we'll check in with sara eisen in davos. look at the premarket. tons of news some research on under armour, pvh, nike, oscar nominations are out, goodell and arthur blank rings the opening bell we're backn mite ia nu the future of technology investing lies beyond the tech sector. it's about technology transforming every sector. ♪ at pgim, our bottom-up approach uses a technology lens to identify long-term winners. from energy... to real estate... to retail. finding such opportunities for alpha is the true value of active investing.

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what a morning it already has been in davos. to sara eisen standing by at the world economic forum in davos, switzerland, for a look at what's coming up later today >> good morning, carl. well, joining the conversation here with heads of state and ceos are hedge fund managers big name includesing jeff oven who we got to speak with of value acts he's here to say that companies, boards, their ceos and often a lot of his fellow hedge funds are getting it wrong and mismanaging their companies, thinking too short-term and not

long-term. we did talk about some value acts big investment including in financials, citi and morgan stanley. last year at this time he said financials are undervalued after they got shellic ishellach market last year, i asked him what he saw. >> the yield curve would invert one basis points, the computers were talking to computers and the active investors ran out of money and they just -- there was some sort of self-financials at any price. so now you have a situation where you got companies that are almost utilitarian in nature because there is so much regulation and so derisked that actually they're low risk entities and they're pretty fortified against a lot of macro risk >> so there is the bullish case. he said that they -- the financials, share prices, totally disconnected from reality. i called up and asked are they

signaling some sort of global recession or financial crisis. absolutely not he blamed a lot actually on the computers, hedge fund liquidation and active fund managers, liquidating at the end of year. talking about the unique arrangement, i'll play the interview later on the closing bell and have many more interviews including that downgrade of the global economy from the imf at the onset of the meeting, managing director christine lagarde. outlook for the u.s. and some pointed commentary about what the shutdown is doing to corporate and consumer confidence and how it affects our economy. ceo of adidas, also get his take on the global economy. and much more. just getting started here in davos, guys. >> all right, yeah always interesting to hear from oven he's fashioned himself sort of as the anti-activist of late not quite following in any way the same playbook as the people we tend to lump him in with. >> in fact, he directly criticized them, david

he said, we went after with no uncertain terms the media driven campaigns that the activist funds are managing for the short-term thinking to boost short-term shareholder returns and pointed to his deal with citigroup, which as you know, gives them access to information through december, backing management, as examples of value acts sort of longer term perspective and trying to get companies to do better he's actually very focused in the new spring fund on that very point. one of his big positions, aes, he likes to say, done incredibly well, 50% over the last year has changed its focus from coal power plants to almost 100% renewables or that's their goal. that's the general thinking and how he frames himself, which you're right is completely different i think than a lot of the hedge fund managers we hear from. >> we'll be watching the whole interview later and staying updated with all of what you got going on there thank you. sara eisen in davos. >> we're going to get to cramer's mad dash, count down to

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you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity. open an account today. all right, we got a mad dash for this tuesday got to remember it is a uesday we're backwards. this is all weird to me. >> i know. >> they switched us up. >> i know, frontward back. it is hard, but we have a new telestrator. stanley black & decker, really

confounding people why? the company is far more negative about the future than the past very big guide down for 2019 they think 745, 765, people thought 845, 865 what is interesting is this company is taking more share they have crafts men, people thought that crafts men would blow it away lowe's corp. saying this is doing very well. david, people are still very worried about housing. and i have to tell you, i'm worried about housing. one of the reasons why i think the fed should wait is because this is a company that is unique to contractors contractors love their product but also hobbyists, do it yourself it is quizzical. >> more negative perhaps than people had expected about the future >> i think what they're saying is that we have to be cognizant that housing starts, but also housing remodel is very -- is very bad and this is something that ppg

mentioned last week. talking about that possible splitup in ppg, sherwin williams, sherwin williams preannouncement. now we know it is not just paint, it is the tool aisle too. i wonder when it gets to costco. it will affect home depot and really affect lowe's and the big season for these companies is coming up, which is the spring season, but this is shocking that they're -- shocking honestly i thought this company was doing well they're worried about the economy. it seems odd that unemployment is so low. this is the disconnect between what the companies are saying and what unemployment is saying and what wall street is saying wall street being negative, but not negative enough when it comes to these companies. >> you would think with the employment levels we have and strength of the economy in that area that housing -- mortgage rates have come down a bit. >> 1.3 million housing, the mortgage rates are down. there is not a lot to be able to buy, not a lot of inventory.

but it is a conundrum. this should be housing's hassian moment this may end up being an opportunity. this stock should not be down this much. but the company is downbeat, hard to go against a company when they are saying you should be more cautionary. >> all right we'll be keeping an eye on stanley black and decker shares, arconic, ebay, johnson and johnson, so many different names. >> nfl. >> and the nfl yes, don't worry i won't come over there and interfere with you >> a lot of space. >> there is a lot of space. >> don't forget, don't touch me. >> it did not touch you. "squawk on the street" after this

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♪ ♪ each day, brings new possibilities. that's why you need a partner dedicated to helping your company reach its goals. u.s. bank -- the power of possible. you're watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell in two and a half minutes busy tuesday morning here on a holiday shortened week we covered some of the gains so

far. china gdp is one thing and then there is this supposed briefing that lighthizer gave some congressional personnel about, i don't know, some stickiness in long-term ip protections. >> i'm told don't be so aggressive thinking there will be a trade deal instantly. a lot of people are saying, they're caving, they want the trillion dollars no it is intellectual property. the chinese unemployment is above ours a lot of people are starting to talk about maybe it is not the all powerful president xi. i saw -- we had someone on -- i won't point him out, saying, listen, chinese, so much more power, so much more powerful than ours. i don't know when you look at fox con, maybe to india, i deal with re tailers trying to move their business out of china, i don't feel very -- if i were the chinese, chinese government i would not feel nearly as confident as a lot of americans make them sound. >> xi himself sounds a little bit -- gave the speech saying

serious dangers could arise out of slowing growth. >> huawei, go after the cfo. i think that the world has turned against huawei. i was getting some feedback from ericsson saying, listen, don't give up on us. we can come back a tweet i had about how our actions are not doing well enough because of the chinese. it worried me they came back within a minute. it is great they followed me bad, i'm worried about the image, but ericsson should be killing huawei crushing it. >> nobody is killing huawei. >> nobody. >> huawei succeeded in part because they do come in at a lower price point and apparently also with equipment that a lot of people really like and are willing to work with people. there is a reason that they have succeeded and it does go beyond this idea that they're just spying on everybody. to your point, they are getting -- >> let's get to the opening bell at the nyse. and the s&p 500 at the cnbc real time exchange, at the big board,

it is retro atlanta chamber celebrating 53rd super bowl in atlanta. we'll see arthur blank of the blank family businesses, co-founder home depot and roger goodell, the nfl commissioner. at the nasdaq, gregory meeks representing new york's 5th congressional district by the way, congratulations to the patriots and the rams. >> doesn't matter how you win, you're in. i guess a lot of people were intimidated by brady, including all of kansas city so -- >> two championship games in overtime, never happened before. >> it was tight. a lot of people felt there were blowouts going on. there weren't blowouts the ratings continue to be good. i think also we should mention, disney's espn plus doing quite well what's the matter? ultimate fight club. >> funny you mention that, i

heard about that did they -- >> do i have a scoop >> did they have 568,000 new subs i think they might have because of ufc it has been going around. >> 567,000. >> i think 68. we'll see if disney reacts at all. a strong number. >> that is -- look, ufc, we don't talk about what is working. i have logictech on tonight. incredible still 80 million people playing fortnite it has that big impact what people do in their spare time -- >> what is it? >> atl, they're not in the super bowl, but they're going to host, as we know. >> not in the super bowl >> they were in it a couple of years ago. didn't go that well in the end >> you guys mentioned stanton lee, black and decker, a bunch

of calls out of retail, goldman takes gap to sell. cowan cuts pvh the journal saying jcpenney has a year to figure it out. >> negative. calvin klein is doing well gap stores, uniquely mall. uniquely mall is just bad. you look at high end, whether it be tiffany with the disappointment, whether it be ralph lauren -- i knew ralph lauren is doing well, gap stores chronically underperforming and nothing is different there i continue to think that retail is a very split world. the winners are tjx, dollar tree, which i don't think has the dollar tree is under pressure to change things, but i think that they're doing quite well now in the last quarter dollar general doing very, very well. >> cowan says it takes pvh to market perform for the first time in eight years. >> yeah, i thought -- i love the cowan analyst, very smart. pvh, i think doing a remarkable

job. he's addressed all the mistakes. he is linked to macy's, but he wasn't hurt by macy's. >> on the flip side. no nike upgrade at cowan as well, target to 90 another one on under armour, goldman conviction by -- on both cases they're talking about gross margins inflecting up. >> good inventory, under armour saying that the inventory is very good. nike is a juggernaut, not that worried about china. neither by the way is canada goose. i think that china retail is rather remarkable how they may not like american -- canada goose, canada, but they're buying them. >> that's a very important market for them, canada goose, china is an important market >> emphasize over and over again. retail is so mixed we can't draw any conclusions whatsoever >> speaking of retail, ebay, of

course, was a feature forus at the top of the show with elliott taking $1.4 billion position the stock is up about 10.5%. what will be interesting now is what comes next. hasn't been a lot of discussion between elliott and ebay management, prior to this letter that this morning they outlined, what they believe would be a plan that would take the stock price up appreciably from here in evolving selling or spending both stub hub and the classif d classifieds business, largely overseas business for ebay is the classifieds business stub hub issing, jim could you imagine a live nation owning a stub hub? would they like to antitrustwise, got to wonder whether or not that would be something that would be allowed to go through. but their claim, there is no shortage of potential value -- buyers and/or a way to create value here stub hub competitors trading in as much as 15 times, 16 times

ebitda by that measure you can get, what, $4 billion and classifieds business higher multiples given the 50% operating margins. that would be interesting. >> if there were no antitrust issues, michael wants to dominate in tickets. anyone who ever used stub hub is rather amazed how well run it is, great customer service again, you got a company that is really firing on all cylinders in terms of its product, but not in terms of its margins, not in terms of bringing out value. i think pay pal makes us feel like wait a second, pay pal is lost within the company. and maybe -- yes, i think that that stub hub is lost within that company classifieds is more important than i realize. >> i wasn't aware that the classifieds business, $1.1 billion in revenue and pay pal, $106 billion market value, obviously benefited very much so from the split of a number of years ago. by the way, ebay, speaking of -- that was a fight with carl icahn

at the time, speaking of a potential fight here, nominating window does open next month. don't have the exact dates on ebay but we're getting in that season where if you think you may want to have a fight, the nominating window is coming up because the meeting season is a few months later, of course, typically in may, june, and so if you are an activist, you're getting towards that period where you want to come public potentially, see if you can avoid a big fight. >> in expensive stock if they get it right one getting it right and they report later this week, kevin johnson, and starbucks using ubereats after a great test in miami. they're moving to san francisco, they'll be going to nyc, going to chicago, l.a., strong demand. what is interesting, we're analyzing for a new restaurant longshoremen who to use. uber eats is spotty in new york city versus, i think, caviar,

owned by square. each city, uber has such a great reputation uber eats a little more -- it is a chore to find to find people when want to do this still in a full employment market but obviously people like the fact that starbucks is going -- >> 3500 branches, that's some scale. >> big >> big week for earnings, another 11% or so of the s&p will report this week. >> this is such a big week. >> jeffries on facebook, jim, reiterates a buy their status as the leader in social is unchanged. they argue. >> the same praise piece one is that they talk about instagram has to make it up for facebook and the second is the idea they think that it will be choppy at the same time, if you can get plus 20% growth combined with instagram, you're going to have a stock that is expensive. >> they claim core goes to sub

20 for first time in terms of growth. >> that's why i say it is a little more lukewarm the one i think that we got to come back to, we don't talk about enough, is the fact that snap didn't go down nearly as much as i thought it would >> why do you suppose that is? the cfo departing? a lot of restricted stock on the line the value of the stock declined meaningfully in the ten months that the cfo was there, a gentlemen came over from amazon. >> down $4 i just think that someone must be thinking that evan spiegel wants to give up i don't think that's possible. but there is -- talk about -- talk about -- >> what did you just say give up? >> that he would surrender >> what does that look like? >> a buyout. i think that's -- >> we have parlor games on who would be interested. >> is he still going to retain 100% voting control if he surrenders >> i don't know. i would say he's hobnobbing like he's a big executive, over 234

in france. >> do you surrender voting control too? >> will you stop >> what am i doing >> come on you have a second cfo leave, i mean, the stock should be at 4 i'm trying to figure out why it is not at 4. what are you doing >> i'm looking at arconic. >> that's great. i can look at that >> which is off its lows maybe in part because you kind of liked it at 15 something now it is -- >> i like the nfl what does that mean >> i don't know what it means. >> i'll tell you -- remember i said costco is the battleground? costco and walmart are doing very well. costco not impacted by stanley not impacted by paint. not. >> okay. not yet. not yet. or not >> not costco -- take them down, david. costco, walmart, tjx, the burlington you refuse to go with me. >> i will not go to burlington. >> you would -- >> you avoid depot, sherwin williams, lowe's -- >> i'm worried about those

they got to have a really great spring selling season. spring selling season involves lawn mowers, it involves the outside, it involves planting. a lot of people -- >> i know about the planting because you tell me about it >> but also outdoor furniture. >> yes outdoor furniture. >> high margin stuff scotts miracle grow. >> right now hard to imagine that when it is minus 5. >> i know. this is exactly what they're preparing for. that's why -- i don't want to give up on those but holy cow the negativity when it comes to housing. chairman powell, please make a note of it, mr. rate increase at any cost, now data deposiendent because he started doing homework started calling companies. >> only started recently >> he had odels. models are never wrong they're models >> models like on howie mandel's show, you mean >> very funny. >> thank you >> good one. >> "saturday night live". >> yes >> future of comedy. downgrade of altria over at

morgan stanley. >> that is like 6% decline they overpaid for juul i was in san francisco occasionally met a person that didn't get a million dollars for juul. >> that was one of the most amazing deals of the year. $4.8 billion for 35% if i remember correctly. >> incredible deal. >> now you have the fda commissioner apparently suggesting that if they continue to market the ecigarettes to young people, he can envision an outright ban. >> they're very angry that i made a few jokes about how they appeal to high schoolers well, they do. hello. >> what amazed me about the deal was, they have an $86 billion market cap themselves now, there is was no path to control for them that i still can't -- >> it was odd. >> how desperate, how desperate. >> desperate desperate. when you have a business decline and you have 6% pace, i don't know short of sears, do we have --

maybe any position use extra cash jcpenney, back to them, i don't want to avoid that it is a dollar stock there are a lot of people who feel this is the year they can't make it. there is a debt problem. you go to jcpenney you see values, but you're going to say i don't know those brands. >> i did go to stores this weekend. we had to return some stuff. i went to saks i didn't i just drove and dropped off i went to bloomingdale's. >> you did macy's that's owned by macy's. >> i'm aware the old federated. >> yes you covered the burning bed. >> yes. >> journal does put it on page one. jcpenney faces a do or die year. they quote mark coen on our air quite a bit, former sears executive, saying it is a broken business. >> if you think that, you should buy ulta the only part of penny's business that is working is

sephora and i think ulta is firing on all cylinders. >> netflix shares showing a bit more weakness after the print last week. >> what is that? >> some people still looking at the international business of netflix and talking about the average revenue per user and deceleration. >> not benefitting from first ever best picture nominee this morning in "roma." they lead withten, ten nominations. >> that's worthy of some sort of valuation change i have to tell you, if you haven't seen "punisher", you're a wus. "punish "punisher" is amazing. season two there is something to, like, you go to netflix and it says, you say who you are, and they push this stuff to you, because of all ai, it is 100% ai. 100% ai. and that stock is doing well david, despite your attempts to

try to get disney up, espn plus, you failed >> disney is negative. the dow is being led lower by cat and dupont and 3m and utx. to bob pisani on the floor. >> industrials and energy are the weak link here 4 to 1 declining to advancing stocks we're still off the low. it is not bad given the rally we had on thursday and friday take a look at sectors, kind of defensive tone, not surprisingly utilities were up at the open. consumer staples doing a little bit better banks are holding up okay. energies down, oil is down a dollar halliburton's guidance on the conference call a little shaky there. that might be a little bit of an issue. industrials are weak as you saw some of the big trade names are weak but also we got some weakness in some of the names. it is affected related industries to stanley bla black & decker, snap-on, united rentals, related sectors down 3%

or 4%. the things out there that we're all dealing with, in terms of the shutdown, i think it has been remarkable. the markets have been patient. i saw a lot of ancillary stories about employees of government contractors being laid off they are not government employees, they are employees of government contractors private people that's now starting to ripple through. china is slowing we had the gdp 6%. lowest gdp since 1990 for 2018 that is priced into the market still doing a lot of stimulus there. the trade talk deal, thursday and friday, let me show you the s&p 500, we moved 50 points on the s&p, 500 points on the dow jones industrial average put the chart up on thursday, on friday, all on trade talk optimism. there it is. that's a two-day chart of the s&p. that was quite a rally here. we're vulnerable to either no deal or even potentially sell on the news we priced a lot of trade talk

optimism into the markets now. let's turn to earnings mike wilson from morgan stanley, got a lot of kudos for talking about the earnings recession potential for 2019 i think he was a little surprised we had such a downdraft in december ahead of his call but this morning, or yesterday, excuse me, had a call out, saying, look, 2600, 2650, considering lightening up, that's where we are now, 2400 where we were in december in the bottom, he would be an aggressive buyer there hedging his bets interesting call from him yesterday. as for the earnings now, here is where we stand so far the q4 reports, hasn't been a lot of bad news, though stanley black & decker was a bit of a surprise this morning we'll have to keep an eye out for anything more like that, that is not good news. overall for the first quarter, what we care about, downward revisions occurring. the market -- the quarter is still positive overall for 2019, what everyone is trying to handicap, we have gone from 10% earnings growth from october 1st through now, roughly

5% to 6% and most of the estimates are aggregating around the 5% level right now it is 6%, but the number of people who are at zero or negative is pretty small right now. bottom line is we're holding up here brent improving. no 52-week lows out there. haven't hit a lot of new 52-week highs. in the middle area now for the markets trying to recover from december right now dow is down 143 points carl, back to you. >> bob, thank you. to the bond pits as well rick santelli at the cme in chicago. good morning, rick >> good morning, carl. parallel shift this morning. you look at all the maturities, basically all of them are down 4 basis points down 4 basis points from 2019. intraday of ten-year, all maturities look pretty much the same way with respect to the pattern. if you open the chart up to early december, what really stands out is that for the most part of, outside of the very few first trading days of this year,

yields have been up. now they did run into a break or intradays, trading ever so close to 280 remember, 281 was midpoint of 2018's closing yield range for 10-year. shift to europe, let's look at boons from the same date looks volatile, but scrutinize the yield levels mario draghi's big day coming up this week. my guess is he's going to underscore global slowing and disappointing growth in europe we know the 6.4 year over year gdp number in china today was the lowest rate year over year since march of 2009. if you look at the dollar index, it is up a little bit. not much right now but as you look at this intraday chart that starts around the second week of january, it is pretty clear that the dollar index is really liking 2019. and if you look at the dollar index on a bigger picture, from december, it just jumps out at

you that as long as it is above 96, seems to catch traders off sides, looking to continue to short it the dollar versus the yuan, since early december, seems like the more china deteriorates, the more optimistic in the big picture we get, the better the dollar does against the yuan maybe getting ready for those exports to start moving in a bigger way again carl, david, jim, back to you. >> rick, we'll check in with you in a little while. as we go to break, look at this morning's worst performing stocks on the s&p. got the ndx down a full percent. arconic, stanley black & decker and snap-on are leading the s&p. lower, the dow is down 151

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all the components largely red, although facebook is trying to make a run at 150. we'll get stop trading with jim in a minute. was ahead of its time.

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let's get to jim and stop trading. >> kind of disappointing news from halliburton they are talking about, obviously, oil has come down they have a lot of position -- a lot of business in north america. worth watching because the group is coming back don't forget, baker hughes and -- >> a ge company. >> and that is very much in play here because they needed better valuation for larry colt to be able to make it really come true let's stay focused halliburton is decent to baker hughes which is, a ge company. >> for ge, to monetize some of the 63 or whatever percentage -- >> health care still doing well. aerospace doing well i think larry colt is doing the wrong thing by getting rid of health care but he knows health care >> what are you going to tackle

tonight, jim >> i have bracken darrell. i think one of the major stories of this year is gaming seems to have become less relevant. fortnite, no fortnite is something where you need their equipment gaming equipment is doing well they've reported a good number lost in the fact that today is such a down day, but, remember, it's early it's early, and we're really going down as if oil, because of europe and when you see salesforce down really big with keith bock and marc benioff making big sweeping talking in davos. i'm all over davos there was big -- there was a very bad call at davos about -- >> jim, we'll see you tonight. sara eisen is in davos for us. biggest drop for the dow and the s&p since about jaary d.nu3r we're back in a minute ave a hunt renewable energy goal.

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welcome back to "squawk on the street." i'm diana olick from the national association of realtors existing home sales in december down 6.4% month to month to a seasonally adjusted annualized

rate of 4.99 million units that's a huge miss, and a very unusually large drop or even move for a monthly figure. sales also down 10.3% year over year realtors say they're not sure why the big drop in december mortgage rates were higher in october when these sales would have been contract signings but also high in september and august as well sales down across the board. in the northeast down 6.8% midwest down 11% sales down 1.9% in the west where affordability is hardest but down 15% year over year in the west prices, the median price $253,600 that's up 2.9% year over year. but it is the smallest annual gain since february of 2012. inventory did increase 6.2% year over year to 1.55 million units. we have the total sales figures for the year at 5.34 million units. 2018 was down 3.1% compared with

2017 prices were up 4.8%, but again, that was the slowest gain since 2012 still, though, at $259,100, that was the highest sale price for the year ever. so a very large monthly drop down 6.4%. but the realtors say they don't have any reason why, and they expect to see some kind of recovery at the beginning of this year since mortgage rates dropped back in december back to you, carl. >> a lot of information there, diana. thank you, diana olick good tuesday morning welcome back to "squawk on the street." i'm carl quintanilla with morgan brennan and david faber. sara eisen is in davos, switzerland. take a look at the markets worst gain in a couple of weeks, january 3rd or so. a full percentage decline in the russell and the ndx. >> our road map today starts with stocks falling. investors fearing weak data out of china and the imf renewing

its warning of a global economic slowdown imf managing director christine lagarde joins sara from davos. johnson & johnson with strong results we'll talk to the company's cfo. >> plus, shares of ebay up substantially this morning elliott management announcing a large stake in the company, pushing them to do significant things to create value we'll give you the details markets opening lower as the imf cuts its global growth forecast for the year sparking new concerns for investors recession fears taking center stage at davos take a listen. >> there's a significant risk of a re -- a recession, is it minus 1? is it plus 1 let's not get technical about that too much. there's a high likelihood of a significant slowing in 2020. >> we'll probably grow this year somewhere around 2.5%, maybe 2.75%?

i don't see any recession. i don't know where that came from the last two months of the year >> joining us this morning, charles schwab and jeff klinetop and jim paulson. thanks for joining us. jim, i want to ask about your piece this morning titled policy paralysis. of all the topics you could have tackled, is this something about the shutdown or something we're hearing out of davos or something else >> well, i -- it's sort of just thinking ahead to the next recession. i don't think we're going to have one really soon, carl, but i think one of the things i worry about is in the next recession is there could be some anxieties or spike in fears about the inability of the policy officials to help revive the economy. i mean, the fed still looks spent out. the rate is still lower than at any other point in post war history prior to a recession it only gets there in a

recession to this level we're at and the balance sheet still $3.5 trillion and the efficacy of monetary policy has been decayed for some time now. and now we have a treasury orificical policy which is also looking spent out with one of the largest deficits without a recession we've ever had so i think it's a chance if we get into recession and the deficit blows out further and rates go back to one handles in the funds rate we could have a lot of fear about an inability of our policy officials to help us and that could create special risk for the next recession. i don't think they'll occur until then but i'm a little worried about how the response may be in the next recession >> one handles in the funds rate how likely is that >> who knows where the fed might have to take rates again you can imagine if we did encounter another recession, and i can see one unfolding, it

could come just ahead of the 2020 election. if that's the case you can imagine a lot of pressure on the fed to lower rates the focus should be on fisical, rather than monetary policy. there's a lot of room to cut taxes. germany is making some proposals right now to do so the netherlands as well. china is cutting taxes lots of places fiscal policy can be more impactful than monetary policy this time getting a sign of what could be a downturn in the coming year. >> six to 18 months in terms of risk for recession what do you think would cause it >> there's a number of factors i think a tighter monetary policy around the world. we're seeing this. that's having an effect. look at the indicators one of the ones i like to watch is the gap between the unemployment rate and inflation rate that continues to narrow it signals an overheating economy. we're not there yet. when those two numbers become the same number, that's been the sign ahead of the last three recessions in the u.s. but many around the world we're not there yet but i can

see us getting there in the next 6 to 18 months >> jim, we've spoken to you last year you were very cautious you wanted to see things like a dramatic spike in the vix and the fear index to feel like you'd get back into the market in a meaningful way. we got it in december. where do you stand on stocks now? >> i like them yet i think what we needed last year, i think the recovery was coming to an end, morgan, in the sense that overheat was going to bring a recession. but we needed two things we gotthem both, i think one is we had a revaluation miracle last year. we took the trailing from 24 times almost in january a year ago to 16 times on december 24th we're still at 18 times. so we radically revalued equities but at the same time, more importantly maybe, is in order to elongate this recovery, we needed to slow the recovery dramatically and i think we're doing that i think we're going to slow 2%

or less in 2019 in real gdp. be scared about recession for much of this year. but i think we're going to avoid it if you can grow it 2% or less you'll put a pause button on the fed and vigilantes and inflation pressure and allowing another rally here in stocks that could carry on for most of the year as the p/e multiple rises, even if earnings are flattish for the year i think it's a good time on days like today to add a little risk to the portfolio, to tilt back towards economic sensitivity as people are dumping them today on fear of recession. >> yeah, jeff, it's interesting. the journal today looks at flows in money market funds as cash allocations continue to get pushed up. do you think of cash as a percentage of overall holdings right now? any differently than you did before december, let's say >> you know, cash does provide more of a yield now than it has in the past. it will be there for you during

the down times but i think fixed income may be more attractive. treasuries intermediate duration. they'll move against the ups and downs in the stock market, provide you a little buffer there in terms of volatility and also pay a nicer yield than you'll get on cash you can still find a little bit more there out further on the yield curve. >> and finally, jim, is it -- do you think it's consensus right now that we have to go back to those christmas eve, christmas -- day after christmas lows >> i think it's easing, carl i think that was a strong consensus. i still think a consensus is that we're going to have a period of significant sell-off again. some period where there's fear generating it. whether we have to go back down to the lows, i think people may be giving up on that, but i think the consensus is we may get a 5% pullback and fear yet before we rally even higher.

i don't know if we have to, in part because of the strong consensus expecting to wait on buying the dip >> interesting times to start off this year. jim, jeff, talk to you guys soon >> thanks. when we come back, johnson & johnson recording results. the company beating the street despite months of blowback from the baby powder scandal. we'll talk to the company's cfo. stock is down about 1% right now. we've got more "squawk on the street" after this break the future of technology investing lies beyond the tech sector. it's about technology transforming every sector. ♪ at pgim, our bottom-up approach uses a technology lens to identify long-term winners. from energy... to real estate... to retail. finding such opportunities for alpha is the true value of active investing. and around the world,

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welcome back to "squawk on the street." i'm sara eisen here in davos, switzerland where the imf has just lowered its outlook for the world economy to 3.5% growth instead of 3.7% it expected in october. i asked the managing director christine lagarde about what she sees for the u.s. economy, which remains unchanged. >> first of all, there is no recession in the u.s., as we discussed. and our forecast is unchanged for this year and next but the shutdown is clearly having an impact beyond the fact that people who operate from one check to the other are hurt and it's a sad situation, i have to say but from an economic perspective, typically, a shutdown of a limited duration has a minimal impact on growth you are talking about 0.01 or

0.02 that's the magnitude we've been used to. but the longer it lasts, the more impact it has and, you know, when we do those assessment of sharp growth whether it's on trade or shutdown, you have the sort of direct impact. but then you have to add to that the confidence impact. and the more uncertainty and the longer it lasts, the more impact it will have from a confidence perspective. and people beginning to think, well, can this be fixed? and how can policymakers arrive at solutions and will that uncertainty actually impact the way in which we conduct business going forward? so that's where there is a potential risk >> there's also a risk it's happening at a time where the positive effects of the tax cuts are starting to wane the federal reserve has been tighter in terms of its policy there's a lot of things coming to the floor in 2019 adding up

to a sort of uncertain outlook >> well, we certainly forecast a decline in 2020 compared with 2019 to reflect exactly what you said the fact there's a limited direct impact of the tax reform and the fact that, you know, clearly this prolonged shutdown is not a good thing. in terms of the tightening by the fed, what we understand, all of us, from the -- jay powell's comments is that the tightening is not going to be as accelerated as we had initially anticipated. so it's good news/bad news good news because the cost of financing will not be increased as significantly as we had feared, but bad news because he forecasts, he and his team are focussing on an economy that is not accelerating as much as had

been anticipated but the unemployment numbers are phenomenal >> there's also a lot of concern now that the balance sheet policies of the central bank, the unwind of the massive stimulus program is starting to have a bigger effect on growth and on the markets is that something you guys agree with >> you know, i would reserve judgment on that i think it's early on in the process, and i would not pass judgment >> but the new patient attitude is welcome for growth? >> absolutely. well, it has to be abundant anyway and i'm sure that's what the fed abides by. and if they're indicating they'll be moving at a slightly slower pace it's probably that they're seeing numbers that are not very different from ours which indicates a slight slowdown going forward >> president trump is not here as you know. he was supposed to be here theresa may, not here. she was supposed to be macron, who was here last year, not here everyone is dealing with these domestic crises. how do you see this impacting

the outlook? and do you see it as part of a rise in populism >> it's certainly -- from my perspective, looking at the economy, looking at numbers, looking at performance and forecast, we are seeing more and more of an impact by politics, by, in a way, nonfinancial, noneconomic based considerations that have an impact on the economy. and if it wasn't for what i just mentioned, which was essentially politics by nature, whether you look at brexit or whether you look at some of the other threats on the horizon, it is politics if it wasn't for those political components, the economy would be thriving even more >> so it's holding us back >> it's -- it's society adjusting to phenomenal changes that are happening at the moment, both at the geopolitical level, transformation of the geopolitical map but also the

technological breakthroughs we're seeing everywhere which require that we adopt a different approach where we focus on the people and they are equipped and they can be able to adjust to this new economy >> and my final question has to do with rising debt levels, something you have been warning about. sovereign, corporate some are wondering if 2019 is the year they start to matter for the markets and investors are going to scrutinize those levels more? >> i think of debt as big bag of stones that you carry on your back if you are asked to rise because the finance cost is going to be higher, well, that burden of debt that you carry on your shoulders is going to be more of a drug and will be a deterrent going forward. so is 2019 going to be the year? i don't know but certainly our policy recommendations is try to

limit that growth of debt and move it down in the other direction. make it down, not up in order to facilitate your response to the future >> christine lagarde, thank you. managing editor of the imf shares of ebay are way up. a massive stake in the company we've got details on that. plus philip morris the future of cannabis and more. the dow is down 178. ♪

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shares of ebay up over 8% this morning this after elliott management, the $34 billion activist hedge fund reveals a $1.4 billion stake in the e-commerce company. and quickly goes to work trying to outline its case for why it

believes separating out two of its key businesses will help create value elliott, for its part, is focused on stubhub and the classifieds business think craigslist, though in this case not craigslist but businesses like that most of them overseas where it believes that ebay would benefit a great deal from a separation saying in its letter that it could value the classifieds group at anywhere between $8 billion and $12 billion. that's business that does about $1.1 billion in revenues with 50% operating margins. and stubhub at as much as 3.5% to $4.5 billion based on the peer group it has. we'll see where all of this goes by the way, if you were to offer a stubhub out there, jim and i were speculating would a livenation be interested in trying to do something there if it were allowed to from an antitrust perspective. elliott saying it believes unlocking value by separating

stubhub and the classified will help revitalize the key marketplace business which they say has weathered prolonged self-inflicted misexecution but also increase operational efficiency and margin expansion. at least they go on to say to have a stake in here from ebay, which simply says that it does appreciate elliott's recognition of the strength and power of ebay's businesses, the board and leadership team regularly engage with their shareholders they value their input focused on delivering value for their shareholders and employees as well. they also look forward to the opportunity to engage with elliott as they do with all of their shareholders the nominating window for directors is coming up next month. we're moving into that season right now, of course, with all the spring -- doesn't feel like spring anywhere nearby but soon enough it will be here and so will annual meetings let's turn to the etf

spotlight. mike santoli is at the spotlight. the e-commerce companies in that part of the marketplace in the wake of this announcement from elliott. >> e-commerce etf, a decent size ebay is about 3.5% of this etf not enough that 8% gain in ebay. it is outperforming the market today up about 0.8%. it is in wight righite right he. the nasdaq etf and s&p 500 obviously big decline for everything down in here. but it has outperformed back on the way up ebay about 3.5% of this. paypal also about 3% of this so companies that used to be part of ebay are close to one-sixth of the etf it seems e-commerce because wayfair is in here, a lot of the hotter kind of consumer facing internet companies of the last couple of years are in here and

basically the one area, aside from enterprise software that's really stood out as outperforming within tech, it seems to be continuing right here so, obviously, ebay has moved. not enough to sway the entire group but pointing out that maybe there's some value in here because ebay would have underperformed this whole sector for all this period attracting value investors and activists because it really did seem cheap compared to almost all the other smaller guys out there >> they say it's trading at 12 times earnings and roughly same multiple to cash flow which makes it cheaper verus some of its -- >> kind of priced as that first generation internet legacy business that maybe needs to be shaken up in their estimation. >> thanks. when we come back, j&j beat the street the company's cfo is with us talking about earnings, global trade and the state of health care later, why amazon investors should be worried about bezos'

divorce. back below 2650, although off session lows dow down 156 we'll be right back.

good morning i'm sue herera here's your cnbc news update at this hour. the death toll from a brazen taliban assault on a military base in eastern afghanistan has now climbed to 45. and another 70 people were injured. most of the victims were military personnel three attackers were killed. the assault began when a suicide bomber drove a humvee into the base an american being held in russia on suspicious of spying making his first public appearance in court. former u.s. marine paul whelan who was kept in a glass cage was detained in moscow at the end december the judge ordered him to be kept behind bars until at least the end of february.

the tokyo district court rejecting nissan motors' former chairman carlos ghosn's request for bail it is the second time his lawyers requested the court to release him on bail. singer chris brown detained by police in paris authorities say they're investigating allegations of aggravated rape and drug offenses the allegations come from a 24-year-old woman who says she met brown at a paris nightclub last week. brown has had repeated run-ins with the law you are up to date that's the news update this hour morgan, back downtown to you >> sue herera, thank you shares of johnson & johnson lower this morning despite reporting earnings have beat wall street expectations stock down 1.5%, 2%. amid months of controversy surrounding its baby powder. with us is johnson & johnson cfo and a member of the cnbc global cfo counsel, joseph wolk thanks for joining us today. >> good morning. pleasure to be here with you

>> a lot of focus from investors standpoint is on this 2019 forecast and namely the fact the sales outlook is falling short of what wall street was expecting. put that guidance into perspective for us >> absolutely, morgan. we're very pleased with the results we had in 2018 and we think that really provides a great foundation for 2019. if you look at the guidance on a reported basis, we have guided down to about 0.5% to minus 1.5% fx is having an impact of about $1.2 billion or roughly 1.5 points n then we also have divestitures from our businesses, primarily diabetes and advanced sterilization products which is worth about another 2 points if you look organically it's 2% to 3% growth we think that's just tremendous outlook for the future, if you think about another dynamic in our portfolio with that stellar pharmaceutical business that you referenced we have about 3% to $3.5 billion

of generic and similar competition that we'll encounter this year. yet, we're still able to talk about growth most companies would be talking about contraction. the dialogue would be when we're going to return to growth. we're still going to grow. that's a testament to the broad-based nature of not just the strength of our pharmaceutical portfolio but the uptick in medical device perform apse and consumer products performing above the market. >> i want to get into the consumer products piece of this a bit more you mentioned the increased competition from generics. i'm assuming you're referring to zitega and remicade. in terms of how much that competition is affecting those businesses and how much you expect the growth to be offset by other drugs, where do you see that offset coming from? >> great question. so we have -- if you look at the base portfolio, if you take out the zytega impact and triclear and procrit and the biosimilar

competition for remicade, we'd expect the portfolio to be well above market but that's part of the business, specifically in pharmaceuticals and navigating that headwind we'll see continued strength from trumfiya. and crohn's disease. we hope to treat more patients who are most in need and our oncology franchise continues to do well we're moving up lines of therapy so darzalak for multiple myeloma. it's having a tremendous impact not just for our business but for patients >> we're a full month into this partial government shutdown. it's impacting the fda looks like no end in sight is it affecting you? >> with the in line market portfolio, it certainly is not health and human services are still administering drugs and therapeutic options out there. where i would say we're becoming

concerned is in new product approvals. we have a great new drug for treatment resistant depression we have a date for march 4th we just received word in recent days that an advisory committee was postponed due to the partial government shutdown. we're hoping the two sides can come together, resolve the disconnect there and we can move forward bringing new therapies to patients. >> let's talk a little bit about the impact from the baby powder controversy. last summer, $4.7 billion was the verdict awarded to 22 women bringing that case back in december looks like you lost a motion in the missouri circuit court to overturn that earlier ruling in the middle of all this, these investigations from reuters and "the new york times. i know johnson & johnson is very strongly refuted the alleged connection between baby powder and asbestos and, thus, cancer but given the fact that these

litigation situations continue to move forward in courts, there seems to be some sort of evidence that the courts are seizing onto here, right >> no, i would disagree with that assertion, morgan i can see how you reached that conclusion however if you look at the scientific evidence and the facts that have been presented for years now, facts that can honestly be found on our own website, where we've disclosed transparentally all the available information. while there's initial jury verdicts that go against talc in this case, i would say on appeal, 35 times, we've either won, had a dismissal, there's been a mistrial. so there's no basis to think these are probable conclusions and we will continue to fight and defend a product that consumers use around the globe that we know to be safe, not just based on our own scientific evidence but that from highly

respected authoritative bodies across the globe >> sales of baby care products fell last quarter year on year has there been a change in public perception due to all of this litigation? has it impacted that piece of your business? >> so that's a great question and that is an astute observation on your part the baby business reported for the current quarter had some anomalies that related to a baby center.com, a neat unit that we have in our baby franchise but real deals with media sales as well as smaller brand desitin. if you look at the relaunch of johnson's baby, that grew about 7% in the quarter. so the relaunch that we put forth in july is really connecting with millennial moms and dads just in the product formulation, the packaging and just the way we even connect with them in getting into their purchasing protocol. >> lastly, given the fact that johnson & johnson is the largest maker of both consumer and

pharmaceutical health care products in the world, have you been impacted by trade, and what would you expect in terms of an outcome between the u.s. and china? >> that's hard to predict what the outcome might be between u.s. and china we certainly hope there's some resolution we're big advocates of fair trade. what i would say is we've not seen an impact if you think about health care in general as more people move into the middle class for the first time ever, 51% of the population globally is now considered middle class or better, health care is a prioritization for those folks if you look at our business, let's take china in 2018 we grew 15% in china for our products and it wasn't variations so each segment was between 14% and 16%, whether it be consumer products, medical device or pharmaceuticals. so we continue to have good strength outside the u.s. and in china specifically >> joseph wolk, thank you for joining us today on this earnings day for

johnson & johnson. >> thank you, morgan when we come back -- the ceo of marlboro maker philip morris joins sara from davos. what he has to say about the state of the tobacco industry. cannabis and juul. shares of arconic you can see right now, they're getting crushed. the company no longer pursuing a sale ending a potential deal with apollo global may have been as much as 22 or 22 and 20 cents but not enough to meet the expectations of the board. "squawk on the street" back right after this ♪

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has many wondering what it might mean for amazon. and our next guest says the split could have consequences for investors in other companies that also have billionaire founders such as google, facebook and we can think of a few others joining us at post 9 to explain, "new york times" columnist jim stewart. a lot of people still want to talk about this. >> oh, yeah. everywhere i go. >> it's so interesting on sea many levels. >> one key element of this is that bezos is the first of this generation of founding high-tech billionaires with either very large stakes of stock or voting control of the company to get a divorce. and when you look at the average age there, this is not going to be the last. this is kind of prime -- i don't want to use a cliche, mid-life crisis, but this is prime divorce territory. and given the divorce rate in california alone about 60%, we'll probably have half or more of these people getting divorces

at some point. and almost every ipo out there of a successful unicorn has involved either a big chunk of stock or voting control with these super shares and people often don't think that their personal life is a risk factor, but the minute you're injecting this potentially contentious fight over the assets. who knows what will happen the spouse could ask for half the shares, could ask for super voting rights, a seat on the board. this could radically change expectations >> does the risk from the divorcee, asking for some control or is it more of a function of how much she might -- or he might sell over time where does the risk -- >> it's both of those. if you get somebody taking half the stock and flooding it on the open market, that's a potential issue. or worse, potentially, selling it to a hostile investor,

someone who wants to effect change and is going to be demanding seats on the board none of this is potentially unheard of a lot of them have prenuption agreements one thing i explored, should a prenuptial agreement that affects the disposal of a large chunk of stock be made public? i think it should because this is a factor people should take into consideration when investing. even if there's a prenuptial agreement, it's very easy to litigate these things and try to overturn them. whether that succeeds or not, just putting the cloud of litigation over it is a big risk factor and by the way, almost all these people have enough money to litigate this. you'd think we're talking with bezos, $140 billion. like you split it 70/70, wouldn't everybody be happy? the divorce lawyers all said, no the dollar signs have nothing to do with it what it really means is people that wealthy have enough money to litigate the principles

>> divorce lawyers are going to make sure they do also >> and they make sure they do. they'll get a chunk of that. another thing to consider, you know, the bezos divorce has at least given the statement they've put out, is super friendly in fact, that statement was so friendly that i kind of wondered, is this like protesting a little too much here i think investors were very reassured by that, but again, the divorce lawyers told me that, first of all, most divorces are contentious from the get-go those that start out friendly -- the reality is, they rarely end friendly and who knows what's going on there, but the announcement preceded the release of the national enquirer text and all that information it's kind of going to take a superhuman person to read all of that and be all that friendly, in my view i hope they are friendly for everybody's sake, including

theirs but reality is, most of these are not friendly putting amazon aside, there are a lot of these companies, as i point out with -- when they faced this, you can't expect these things to all be friendly. >> in this case, bezos owns 16%. there's no voting control or super voting shares, unlike zuckerberg with chan or -- >> the founders of google. >> or evan spiegel one of the google guys did get divorced along the way, didn't he maybe i'm wrong. i thought one of them already had. or split >> eric schmidt got divorced >> yeah, that i know >> but there was a very interesting case involving mark hingus and his wife, the founder of zenga he had supervoting shares. in the course of the divorce, he changed all the supervoting shares to non -- to ordinary shares he's maintained that had nothing to do with the divorce it was

more that he was pulling back. whether it did or did not have to do with the divorce, that was probably good for shareholders by and large, public shareholders don't like supervoting control. they're willing to put up with it that's why i think, if they had to disclose this and could reassure people there's going to be an orderly transfer of these things, it would give the shares a boost. give some confidence to people who might be worrying about the supervoting control issue. >> yeah. elaine wynn, and wynn being the shareholder. steve is out >> the wynn is the counterexample to these friendly arrangements and that started out sort of friendly, on the face of it. and elaine wynn got a seat on the board. well, it was down hill from there. i would have liked to have been a fly on the wall at some of those board meetings apparently it was terrible they forced her off the board. they litigated for six to eight years when there was a cloud over this. and then because of the me too

thing and other stuff, he's out. she has the largest stake. but the stock has gone straight down >> it's not been good. he made a good sale. jim, thank you >> not the last we'll be talking about this >> i'm afraid not. >> jim stewart when we come back, a look at the changing landscape of tobacco. the ceo of marlboro-maker philip morris joins us on "squawk on the street." the dow down 170 points. spacesh. hang on. radar that senses things the human eye can't. busted. and the ability to make a thousand decisions before you even make one. was all this, really necessary? what do you think? ♪

welcome back to "squawk on the street." joining me, the ceo of philip morris international welcome. >> thank you for having me >> you're here with a big message for global leaders and government leaders took out a full page ad in "the wall street journal" to make this point that your cigarette company doesn't want to be selling cigarettes any more. how does that work >> well, we set for the companies to replace cigarettes as soon as possible, they don't combust tobacco, they're smoke

free the problem in smoking is the delivery system to deliver nicotine and taste if you don't, then you reduce toxicity by a very large degree, and that's the mission we said to ourselves now, to achieve this, as powerful as a company and financial resources we have, we also need help, help from people in public health, opinion leaders internationally, and governments eventually will adopt a regulation. >> how much does smokeless products reduce health risk? >> well, the reduction in toxicity is ranging from 90% for certain products to almost 99% for a vapor product. all of the products have nicotine and there are no zero risk products, to be clear

>> so what happens >> we should not be confusing absolute quantification of reduction or risk, that the fact is all of the scientific and clinical analysis with time points to the direction that all of the products are better than cigarettes, and i think people that would not otherwise quit completely use of nicotine should switch to these products and these should be made available to 1 billion people that smoke today, will continue smoking tomorrow around the planet. >> what does that mean for the future of marlboro, parliament, other storied brands >> well, we have a new brand that we are building it is not only one product, it is multiple products they have the highest ability to

switch people smoke out of cigarettes, actual fact from markets, between 75 to 80% of people that buy the product switch completely out of cigarettes, stop smoking, and use only these products which is pretty significant in my view. but we have vapor products as well, pure nicotine products because i think other times and during different times in life people have different leads. there's room for all these products clearly as cigarettes decline, you know, we want to be very competitive. the idea is to push them in the alternative. now, today is clear that for a variety of regulatory and perceptual reasons, having marlboro which is the arc type of cigarettes as the brand behind the better products would

not be something that is acceptable by regulators or sometimes even people in public health so we make the conscious decision to disrupt even that part of an iconic product with a new brand and over time, emotions run away from the current debate, we'll see what happens to marlboro. >> everyone wants to know why you're not investing in cannabis that's where the growth is >> we have no plans as explained many times for the cannabis business there are four reasons for that. the first is science, despite all of the hype, is not very established yet. there's a lot of talk about positives and there certainly are but there are also negatives that we all need to understand the second part, the economics, it is an industry that's

fragmented with no emerging technology or brand. thirdly, on worldwide markets, not every country is on the same page accepting the principle, not even decriminalization we have to take all of this into consideration. above all, we have a mission to accomplish switching people out of cigarettes, from an organizational perspective, we have enough on our plate just now to do this, and they always -- and that's the priority. >> sounds like you want to be clear marijuana is not the next cigarettes >> i think they're very different products and there's room for all kinds of products but my priority is 1 billion people are there, 40 million in america, they continue smoking and will continue to smoke, so we must give them better alternatives >> thank you >> thank you for having me >> ceo of philip morris international. >> thank you

facebook's data privacy lapse. why the company may be facing the largest fine in ftc history. kara swisher joins us to discuss that more on ebay's surge elliott management revealing a massive stake in the company "squawk alley" is next we have a big hour don't go anywhere.

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