tomorrow >> come out here. >> this is mack. >> oh my god it's a big foot sighting, or something. >> i want to thank our entire crew for all the hard work that's gone into davos great seeing everybody we'll see you tomorrow right now it's time for "squawk on the street. bye-bye. ♪ good thursday morning. welcome to squawk on the street. had a decent premarket going thanks to chips and the transports then the commerce secretary a few moments ago said there are miles and miles to go in resolving china trade. futures went red europe's a bit sluggish. oil prices red as well

our road map begins with recession fears. goldman's david sol man somon s there's a 50-50 chance of recession. the shutdown hit southwest airlines says it's cost the airline as much as $15 million this month on the heel's of yesterday's roller coaster session in which the dow out performed futures are off the highs of the morning on these renewed china trade concerns after the commerce secretary said thatthere's a ways to go before china is resolved take a listen. >> there's been a lot of anticipatory work done, but we're miles and miles from getting a resolution and frankly that shouldn't be too surprising trade is very complicated.

there are lots and lots of issues not just how many soybeans and how much l and g but structural row forms th reforms that we really think are needed >> i can see for miles and miles. i think they definitely want a deal on our side i think wilbur ross is close to it, larry's close to it, peter navarro is close to it, president trump is close to it they don't know what they want they have to get intellectual property they have to it's about i.p it's not about a trillion dollars of trade it's about i.p there are too many companies every single day that tell me on background i can't go there. i can't work with that they just take everything i

have it is no longer just a couple of companies. it is companies that just say it isn't worth it. >> that's been going on for a really long time. >> but it's come to a head. >> certainly they would like to see a more level playing field. >> right. >> to your point that it's not about the numbers, i think that's true. some of the goal posts have been changed in the actual negotiations in terms of the focus on the numbers or those who are critical say we don't want to see a deal that's just about them buying more soybeans. >> right that's the big change. >> that's not going to move anything in a significant way or make a real difference. >> it's not like buying planes i think what it's about is a recognition. the chinese do not want unemployment to go over five we had the best unemployment numbers in 40 years. the chinese can have the worst unemployment numbers since mao mao didn't keep a lot of

numbers. what's happened is that i am more -- i had a little company logitech the other day they're big in china and they're trying to get small in china they said, listen, we can source where else we don't have to be there. dollar tree, we can source elsewhere. these are real jobs and they're just saying -- can you imagine if we had ten companies in the united states saying we're going to mexico? this is a real crisis in china they can say it's miles and miles. i can tell you we're a little closer than people think because of how poorly the chinese economy is doing. >> the data wasn't terrible. for the year, fixed asset investment, things like that, we're not off-the-charts bad. >> the german number, which the

first time in four years, manufacturing down that's china it's not united states china, huge trading partner with germany. a lot of people are being hurt by chinese spending. the only company -- they're starting to see some proctor and gamble had great chinese spending >> organic sales in china were up 15. >> it was amazing. i don't know on single day, what do you give? toothpas toothpaste i'm not kidding. singles day was huge for them. what's that about? >> i don't know. and i don't know others are as sanguine as you are that we get to an agreement with china >> i'm more optimistic. >> i know. i don't know where that's coming from. >> people i talk to or involved with it's called reporting. you do it. >> i know but it's not necessarily something that's going to get done by march 2nd. >> oh god no it's complicated

brakes on. stop talking like it's going to happen tomorrow, but that it's going to happen. will it happen in time to save the tariffs? >> i don't know. maybe they get extended or the 10% gets extended. >> the markets keeps getting tossed back and forth like a hockey puck. >> what was the stock best performing yesterday in the dow? proctor. ibm. how about this one how about the fact that nike downgrade adidas why starbucks reports. it's going to have a good china. there you know, we just need apple. >> you're saying good china, bad china. what are you doing here? >> don't chinatown me on this.

this is an ta antipathy >> it's only 2% of the market. it's not really key for microsoft. it's interesting. >> i think it's going to happen. every time i get too negative, the reporting i do says will you stop it. then when you get too positive, they say will you stop it. whatever i say i've got to stop. >> jim mentioned the chips they are a source of strength today along with the airlines. southwest comes out, 117 beats by a dime. revenue is ahead southwest issued some upbeat

guidance for the year. we will talk to gary kelly later on this hour about the shutdown, about load factor, about the memorial. >> they had a terrible accident early last year. you didn't know how long it would take to recover. these numbers indicate they're recovered. they're playing offense again. they're doing this hawaii run, which i think sis important you want to see them grow. i like what they're projecting for the revenue per seat model is great this is good i mean, it makes sense that it's going up i think there are a lot of people who thought that it was going to miss.

>> unp is going for precision railroad the rails are like the nfl the hunter harrison tree and a train comes in what's really incredible, i thought union pacific was doing really well. what people really care about is the precision railroading. we saw what it did at csx. i think it's great stuff >> yeah. >> the stock ran ten on the decision to be more precise. i mean, will you explain this to me >> what? they were non-precision railroading for a long time. >> they had a lot of congestion. a lot of customers complained to me about union pacific can you imagine if you came one day and said, jim, i've been imprecise, i'm going for

precision now. i would say, what were you doing beforehand >> he could actually get on and talk to an engineer at a particular crossing. that's precision. >> i remember an elementary schoolteacher. her father was in charge of demurrage at a railroad. you know what that is? the amount of trains they lose shrinkage. i think that's part of the precision. union pacific has had a hard time getting people. we commiserate that you have to start lowering your standards a little bit that you might otherwise hire a very good thing that i've seen throughout the system and i'm really excited about this. >> ford's really the only

disappointment today, inline with the weaker preliminary results from last week 30 cents misses by 2 cents >> carl as the ceo said i'm really optimistic as we enter 2019 china terrible, europe terrible. they had structural costs increase by 1.7 billion every year from 2013 to 2017 i thought they were lean. >> apparently not. >> you told me we'd be safe in philadelphia what movie >> i don't know. >> "witness. this is a terrible quarter everyone was asking about the dividend they talked about what they thought they wanted. they wanted a strong balance sheet. that's first maintaining our debt capacity, global pension plan. and then dividend.

>> meanwhile the conversations continue in davos. ceos there have been weighing in on whether or not a recession is on the horizon. >> the big question is where are we in the cycle. it's very easy to say we're somewhere closer to the end than the beginning. could there be a recession in 2020 there could. i think the chance of a recession in 2019 is relatively low. >> a lot of discussion about -- i think it was gorman this morning who actually called davos an echo cchamber these executives tell each other how worried they are and the headlines get accentuated from there. >> when you look at what people are saying, when we talk about the semiconductors we're talking about february/march starting to get better not texas instruments, which is up a lot

that's wrong not a great quarter. by look at these guys. if you read the texas instruments quarter, housing bad, auto bad. those are big parts of the economy. ford is selling a lot of super duties david, i got a deal on a used super duty, five years old, very low mileage, 27,000. they last forever. when i hear a recession, i want to say to solomon, i love you, i love you what the heck are you talking about? how do you get to recession when you have 199,000 jobless claims, the best in 40 years i've been saying wait for pal because we've got to get housing stronger, we've got to get auto stronger but the idea that there's a recession, we just had the best

jobless claims what is he talking about >> you know employment lags. you know this. >> they've been firing people. i like goldman very much they're much leaner. i know it is rear view, but i also know that you cannot say that -- and we could go to 250,000 claims and still not have recession a slowdown, yeah going from double digit to single digit, i'm not buying the thing where we have gary kelly on southwest air is the leading indicator and their numbers are good remember, oil dropped huge during that quarter. i'm not giving up. you hear me? >> i hear you. i hear you. >> are you giving up >> no, i'm not giving up. >> do you really think that tie goes with that shirt >> i don't know. >> you dressed in the dark >> there's purple, i'm telling you. >> there's other stuff the ecb of course with some comment this s this morning.

>> a pretty interesting development here where the president of ecb start of endorsed the idea of no ecb rate hikes until 2020. they said in a statement this morning there would be no rate hikes until at least tin the summer of 2019 he says significant stimulus remains essential. near term growth is weaker finally he said the risks are to the downside the possibility of a rate hike in europe faded to 40% from 45%. you're all going to want to stick around because my guess is that jimmy, david and carl are going to crew on this latest development on the ecb mmt.euro strengthened on that

coen

i'm a veteran and the army taught me a lot about commitment. which i apply to my life and my work. at comcast we're commited to delivering the best experience possible, by being on time everytime. and if we are ever late, we'll give you a automatic twenty dollar credit. my name is antonio and i'm a technician at comcast. we're working to make things simple, easy and awesome. let's get to the bond pitch this morning good morning, rick >> good morning, carl. i normally start out right in my wheel house, you know, interest rates. today we're going to start out talking about the euro

i think draghi will go down as the most stimulative banker of all time we' e that help doesn't look very helpful especially as global forces continue to pressure various economies in europe like they are many economies around the world. the problem is that mario draghi and the ecb still have boat loads of negative interest rates, they still have a big bloated balance sheet and they certainly haven't acknowledged that the training wheels are welded on. look at a year to date of the euro currency versus the dollar. hovering at what will be a challenge to the low prices of 2019 switching gears to ten-year, we are coming back down on yields a bit. a year to date chart pretty

interesting. it's rounding out right around the midpoint of last year. lots of technical forces here as it continues to follow and trade along with the equity markets. if we look at a chart for what's going on in bunds i would suggest we go back to 2014 look at those yields, under 20 basis points that can't instill confidence, especially if you're a banker. >> busy week in fixed income when we come back we'll get cramer's mad dash and count down to the opening bell, talk more about day 34 of the shutdown, some airlines, chips

when did sleep start requiring effort? what if it didn't have to? each tempur-pedic bed is made with advanced pressure-relieving material, so you get the deepest sleep you've had... ever. there's nothing like tempur-pedic sleep.

so so, servicenow put your sworkflows immhm. cloud, huh? your employees must love you. [ chuckles ] thank you. you could say that. i love you. servicenow works for you. ♪ hawaii is the first state in the u.s. to have a hundred percent renewable energy goal. if we don't make this move we're going to have changes in our environment, and have a negative impact to hawaii's economy. ♪ verizon provided us a solution that lets us collect near real time data on our power grid. ♪ if we can create our own energy, we can take care of this beautiful place that i grew up in. ♪

welcome back about seven minutes before we get started with trading here at the new york stock exchange. time for a mad dash. >> do you remember how jerry pitched one of my favorite actors the idea -- >> i saw bob ballaband last night. >> what did he say the show

seinfeld was about >> nothing >> this guy not son-in-law he a great reporter, but hoe's also incredibly funny he's saying that this narrative not so good. that's the sale of the leasing, aircraft leasing. >> a very valuable asset that ge has. it does have a good amount of debt that is associated with it or liabilities that are. but what's the conclusion here. >> derivatives exposure thing. every time we read the filing and discover a number that stands out as large, what he's saying is this move shouptd have occurred this thing is not going anywhere. >> the reason for this move, he's the reason for the move >> he still kept the sell on it. >> when he became less negative. >> but he was saying that this is reasonable. i know he wants an equity

filing yes, he moved it by being less negative he's not positive. he's just less negative. i would tell him the show that was about nothing was one of the greatest shows ever. i'm not as negative as he is negative >> seinfeld went out on top, just for the record. >> totally on top. i saw him recently what he said was three dots. we all watch >> we got an opening bell coming up also gary kelly here, the ceo of southwest. my experience with usaa

has been excellent. they really appreciate the military family and it really shows. with all that usaa offers why go with anybody else? we know their rates are good, we know that they're always going to take care of us. it was an instant savings and i should have changed a long time ago. it was funny because when we would call another insurance company, hey would say "oh we can't beat usaa" we're the webber family. we're the tenney's we're the hayles, and we're usaa members for life. ♪ get your usaa auto insurance quote today.

♪ ♪ ♪ 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 "squawk on the street." the opening bell in about 90 seconds. busy thursday.

watching semiconductors closely here the senate is going to vote on a couple of proposals which may not go anywhere, but could carve out eventually a path to some compromise we'll have to wait and see. >> we have to talk about the semis. what really is igniting the sem semis is 5g. tim marcher came out of novelles he called the bottom he announced a $5 billion buyback. he said that we are here it's been bad, the downturn was terrible, but the downturn is done this stock was at 234. this is not a one-day move a lot of people really trust him, including me. if he says it's bottom, it's

bottom it's a big, big call >> even tech maybe not as bad as some feared. >> this is an amazing time the they are so good it's a great company >> we're going to watch semis very closely here at the open. let's get the s&p 500. the new york knicks celebrating the entrepreneurs and small business winners of the 2019 make it awards alm marking its legal week conference in new york city. do you buy the chips indiscriminately here? >> i know this is terrible you have to buy some lamb research this was a conference call where

you literally were dazzled by tim archer he's a very tough guy. he's saying my book is ready it's here a couple quarters ahead. i think this is a buy. if it comes in, you've got to buy more incredibly good company. asm reported a bad number. that stock is up texas instruments not that good, stock sup. we a we are seeing the turn. >> jp morgan said the texan was the most important print of the night. >> texan is always considered they were more down beat than i wanted them to be, but it's not the end of the world a lot of people are going to call a trough there. they have some apple business. anybody who has apple business, it's awful i'm not denying that if you start to see sky works go

up that is the tell that we're starting to invest in 5g china is ahead of us. >> i guess i don't know. >> are the nets playing better than the knicks? it's like that. >> yes no doubt about that. >> so they're ahead of us. you get that >> if you tell me and i believe it >> it's not debatable. the saints are not in the super bowl, okay >> i just don't have the numbers. >> i do. >> next week we're going to get apple, microsoft, amazon, facebook and baba >> fang is just -- i mean yesterday facebook was up. then it was down four. i did everything i could to find out why. i couldn't do it

amazon is stuck here netflix already had its run. f.a.a.n.g. is not dead but it's sleeping >> what's going to wake up f.a.a.n.g. >> an apple watch maybe? i don't know f.a.a.n.g. is moribund >> it had a nice beginning to the year netflix is up. if your data services was working, i would tell you exactly how much but netflix has been down after those earnings numbers people kind of looking through them, questioning their ability to grow average revenue per user overseas in the way that the bulls seem to think they can it was a strong conference call. it's an incredible company in many ways, but it obviously is

valued quite highly. >> it's not a f.a.a.n.g. moment. if you lead by f.a.a.n.g. that's all that goes up when facebook's not in china, amazon. netflix isn't allowed in china china exposure to f.a.a.n.g., people come on and say anything. >> chinese exposure to f.a.a.n.g. was apple >> we do have some research on snap today our morgan stanley reiterates it's underway, goes to a $5 target, bear case is $3. they trim ad revenue numbers by 3% this year, 5% next year. >> we were an investor there

early on. >> we had a good quarter yesterday. >> nbcu did have a very good quarter, including the cable networks, i would add. >> again, data services not working. don't know if comcast is moving higher this morning, but we can watch our charts >> it was a top five s&p gainer. >> it was along with p & g, ibm. >> you had a line in your show last night about the christmas eve selloff and how you think regulators could look into it. >> i got a lot of heat from that people say you only talk when it goes down. we need to look at what happened

that day the reason why i say it, and people just twist my words, what matters is that we have another step down in people who are in the market there is a big movement out. this time when you have something that makes the asset class tarnished, they've got cds that yield 3.5 when i look at what happened on that day and i look at the breakdown, during halftime show the market really broke down you had people saying negative things that market that day destroyed more confidence because then you get with the family and what do the families say i'm done with stocks i want to be in cds. that was a horrendous day. i wish someone -- they want listings the companies are clueless buy some shares today. that's their reaction.

the sec is on cbs. >> let's get to southwest this morning. rallying about 5%. the airline reports a strong earnings and revenue beat as well as a strong outlook for the year despite a hit from the government shutdown. joining me is southwest chairman and ceo gary kelly welcome back good to talk to you today. >> great to be with you all. >> i hope you don't mind me starting with this bit about the shutdown because you did put that $15 million number on it. but it sounds like when it comes to things like hawaii, maybe the effect is a little bit bigger in scope. >> well, yeah. i hate to start out talking about that i do want to at least get in talks about southwest airlines we had a really strong finish to 2019 i'm very proud of our people despite this shutdown, we're going to find a way to have a really great 2019. our outlook for 2019 is superb we've got really strong revenue momentum despite the penalties

we're seeing from the shutdown our people are doing a fantastic job. we've got a pretty decent cost outlook for 2019 if things continue and barring anything unforeseen it will be a stellar year the shutdown is painful, it's certainly painful for the people that are furloughed. it is very frustrating in our business at least, we deal with the federal government in a very intimate way the tsa screens every passenger. the faa manages every flight my hat is off to all the federal workers that are showing up. they are heroic. they shouldn't have to put up with this. it has impacted our certification process for hawaii that creates a lot of slop for us to manage but as you can tell by our outlook, we're going to manage it we're going to find a way and

hopefully our government will get its act together and get this shutdown over with and get these people back to work and get our country back to work >> when the pilots union and the flight attendants and the air traffic controllers get together and warn about the system potentially breaking over time if this goes on, are they overstating it >> no, they're not overstating it as an example and i'll just editorial comment, the thought that you would refer to people and their jobs as nonessential is absurd. everybody is essential or they shouldn't have a job as an example, the faa is not hiring replacement air traffic controllers or training them all those are considered non-essential functions and that is shut down that means that where the faa is already stressedin terms of staffing all of the centers around the country, now they'll be even more stressed.

there is a risk that air traffic will have to be slowed down, because they will be safe. they do a phenomenal job managing our air space and they will be safe, but it may not be very fichefficient and it certay puts a lot of stress on the people there it is a crazy way to run our country, absolutely absurd. >> i want to change it to something the opposite that's herb kel lleher. i just want to give you a chance to talk think about great man. he's one of the few icons who really did something in an city that is amazing. >> i know we would continue to pay tribute to him he changed the world when he started southwest

airlines back in the late '60s and finally took off in 1971, only rich people could afford to fly. it truly democratized the sky. there's been so much written about herb and his life. it's been so gratifying to see that kind of coverage and all the attention on him and all the accolades for all of his accomplishments. but one of the articles i was reading recently is how purpose driven he and southwest have been he's instilled that in our company and it will live on. our people believe in this they believe in keeping our costs low, keeping our fares low, making flying affordable. we're anxious to go to hawaii and they want us to come because they know we're going to bring low fares that more people are going to be able to fly. we're going to bring much-needed

competition, especially interisland in hawaii. it's just an example of what he's been doing for 4 ye8 years. he's just a larger than life figure if there ever was one. >> what's it like to be you? i happen to think tim cook is doing a great job innovating people say he's no steve jobs. i think kevin johnson doing a remarkable job at starbucks. what is it like to follow the greatest titan in your industry? >> what a blessing in my life to be a part of southwest airlines, to know herb for 33 years, to work for him for all of those years. and he's been retired as ceo for almost 20 years and chairman for ten years. but he remained my friend and my counselor and my mentor.

he's like a father to me it's been one of the greatest blessings in my life to work for herb you know, he gave this company a big old push and now it's up to us to make sure we continue it on it's very inspirational to just relive a lot of the moments that we had with herb over the decades. i know all the people at southwest will want to make him proud. i hear you laughing. oh man, have we laughed telling stories about herb there are too many to tell here. >> everybody who ever knew him knows exactly what you mean. before we let you go, one question tactically on load factor are you seeing that trend? >> no. our load factor for 2018 was right up there with what we've seen over the last four years.

it wasn't a record load factor, but it was very close. we're seeing really nice revenue growth on a unit basis with yields we've got much better revenue management tools in place which are a part of that we gave credit to that in our earnings release my expectation right now as an example for 2019 is that we'll see higher load factors in 2019 compared to 2018 >> gary, thanks for coming on. >> you bet. >> gary kelly, the ceo of southwest airlines. >> thanks for having us. i wanted to focus on a few other movers. >> you can book hawaii for 700 bucks right now. >> i didn't know that. here's something else we haven't talked about yet this morning, jim. let's start with bristol mye-mys it's not just the earnings

themselves that are going to get some attention this morning. 94 cents was ahead, revenue estimates up about 10% from 2017 the guidance 4.10 to 4.20 now pap they've stopped testing of a particular drug to treat certain type of lung cancer. that may be viewed as a negative let me take a look at how the stock is performing at this point. as well we also get a long deck talking about the deal and giving investors a good deal of guidance in terms of the financial ramifications of that deal for bristol-myers for many years to come. it is worth noting that. this thing's really long i know you always take a look at all of this. i focused on in particular, as i think a lot of investors may,

the pro forma revenue and pro forma net income because they go out to 2025 and they put up some fairly significant projections here. >> very gutsy. they're really saying they can substitute all the of the revenue. >> they are telling me these are probability weighted in terms of when they make these kinds of projections, probability weighted on the likelihood of certain drugs reaching approval and others not they have to get all three approved in a certain timeline for that cvr to be worth as much as 9 bucks the pro forma revenue going above 50 billion from where we are now at roughly 40 billion. pro forma net income increasing dramatically i mention all of this in light of the fact that the spread in this deal, the differential

between what celgene is worth based on the 50 bucks share in cash and the share of bristol-myers -- >> oh my god. >> the reason for that is because of this continued belief or concern -- not belief, concern that perhaps bristol-myers would get some sort of a bid. frankly i've heard nothing that indicates that's true. >> nothing >> again there i've heard nothing that indicates the presence of a significant activist in the stock. so that is why you're looking at a very substantial spread. interesting the company chose to come out with this very long deck this morning in which they share their financial targets with the deal. remember they talked about it being 40% right off the bat but going to some level of detail as well about the various therapies that they have at bristol-myers and at celgene. >> i think the deal is a good

one. i believe in the celgene pipeline i like the cvr although i don't trust those drugs. that's okay. that spread is daunting. i'd buy bristol. i'll tell you why. that was a major decision to pull on this small non-cell lung cancer the stock is barely down what does that tell you? >> i think people are reacting to the presentation. >> the deck is good. >> i'm not done. going to talk about arconic too. we got the news arconic said we're done, we're not talking to you anymore, surprising everybody. 22.20 was the number according to reporting from some others out there, there were some iingly minor issues

whether it be pension cost but the board walked away. since then you've had a lot of stock change hands and you've had any number of investors trying to pressure, as you might expect would be the case, the board of arconic to reconsider and hope they would reengage with apollo saying, come on, 22.20 was right there. yes, it get emotional. yes, apollo can be very difficult to deal with in certain ways and there does appear to be a lack of trust on the part of the board which was simply too much for them and the reason they said no. they do have three board members. i will tell you one thing which i'm hearing a lot about which does not appear to be the case at this moment which is while there's pressure being applied on the hopes of reengagement, there is not a plan from what i hear from people who are

familiar with the situation that elliot would consider a proxy fight. the nomination window is open. i think it's until the middle of february but at this point that is not where the focus at there simply -- they are focused much more simply on can we get these guys to re-engage given how close they were, inches away from getting the deal done, but not necessarily on a proxy fight which would be problematic for any number of reasons from the elliott perspective at this point, so did want to share that on arconic which was really stuffing in terms of the turn-about there this week. >> that's a good board that's a decent board. look, i mean, you know, klaus, blankenship, the heavyweight the fellow that's from -- this david miller from elliott is a heavyweight, so i think it's a not done story. >> so we'll see. we'll see. don't expect anything in terms elliott at this point initiating

a proxy fight. carl. >> you might have seen the commerce secretary on the wires talking with the "squawk box" guys about the impact of the shutdown on some of these furloughed government workers. take a listen. >> there are reports that there are some federal workers who are going to homeless shelters to get food. >> well, i know they, and i don't really quite understand why because as i mentioned before the obligations that they would undertake, say a borrowing from a bank or a credit unions, are in effect federally guaranteed, so the 30 days of pay that some people will be out, there's no real reason why they shouldn't be able to get a loan against it, and we've seen a number of ads from government institutions doing that. >> obviously raised a few eyebrows given some of the stories we've heard about the workers. we've talked about this yesterday, jim, and, i mean, if you're a family that lives

paycheck to paycheck taking on paying interest on these obligations doesn't help. >> i thought that was painful, painful. i like him very much how can you be that out of touch with what people who live, you know, paycheck to paycheck >> he seems to think they can get the credit that they need to be able to -- >> maybe go to one of the check cashing outlets, maybe a 72% rate. >> dow down 54 points though the s&p trying to get green. back in a minute this is loma linda, a place with one of the highest life expectancies in the country. you see so many people walking around here in their hundreds. so how do you stay financially well for all those extra years? well, you have to start planning as early as possible. we all need to plan, for 18 years or more, of retirement. i don't have a whole lot saved up,

but i'm working on it now. i will do whatever i need to do. plan your financial life with prudential. bring your challenges.

i've done all sorts of research, read earnings reports, looked at chart patterns. i've even built my own historic trading model. and you're still not sure if you want to make the trade? exactly. sounds like a case of analysis paralysis. is there a cure? td ameritrade's trade desk. they can help gut check your strategies and answer all your toughest questions. sounds perfect.

see, your stress level was here and i got you down to here, i've done my job. call for a strategy gut check with td ameritrade. ♪ let's goat jim and "stock trading. >> this is the quarter where it didn't work, acquisitions did not produce a lot of growth. it's mea cull per. it's been a big winner for me, mccormick. i've got to find out that didn't give you the growth, and i think that it was shocking to me, shocking to a lot of other people. >> yeah. >> i have a show tonight so exciting, because i have unit

reynolds mike neiland is retiring remember when he got the job and this is todd mckinnon, another disciple of benioff. hole cow it's identity and check-in like i had dinner with zora last night. these companies are about getting on the web and being secure matt plannery. >> zorro >> no, i had dinner with zora. >> got to bring us to these dinners with the lone ranger. >> zorro at your dinner? >> last time i introduced myself as an influencer >> do you have any disciples or not? >> are you an influencers? >> i'm not. >> i'm an influencers. jim cramer, i'm an influencer. >> you definitely are that, jim. we'll see you tonight. "mad money" 6:00 p.m. eastern time when we come back, we'll continue to watch the marks, dow down 80 points and s&p down 4 and daviuckles ]d taylor of p &e

from davos that. i love you. servicenow works for you.

>> good thursday morning welcome back to "squawk on the street." sara eisen is with us once again from the world economic forum in davos, switzerland dow down 80, s&p down 3. let's get to rick santelli with breaking economic news. >> we're supposed to be getting our december read on leading economic indicators. it's down 110, a little delayed maybe but down 110 that is an interesting number, and i'll tell you why. because there aren't many negative numbers in this data series as a matter of fact, this now becomes the third in close to three years? we had one in october and we had one going back to may 2016 this marks another one, and, of course, sequentially it follows a positive number. many don't consider this

market-moving, but do i take into consideration how rare a negative number, is so i think we need to kind of put it in its own category in the back of our mind as we monitor some of the global slowing affecting the u.s. global economy. carl, back for you. >> rick santelli, our road maps begins with miles and miles away from a trade deal. the commerce secretary wilbur ross on "sfauk box" talks about talks over china's trade. >> and the man who sold sears to eddie lambert. former ceoallen lacey will be joining us >> and a few moments now i'll be sitting down with procter & gamble ceo david taylor. his company resulting the results and raising the outlook on strong sales and what that says about the global consumer >> get straight to the markets though the major averages reversing course today on the renewed china trade fears after the commerce secretary goes on "squawk box" today and talks about what it will take to get a

deal done. >> there's been a lot of anticipatory work done, but we're miles and miles from getting a resolution, and frankly that shouldn't be too surprising trade is very complicated. lots and lots of issues. not just how many soybeans and how much l & g, but even more importantly structural reforms that we really think that are needed >> in a sense he's right nobody is expecting this to get wrapped up when the meetings happen next week in washington, but markets never like to hear anything marginally or even directly negative. >> you want to heart subtext to a certain extent well, okay, does it a not mean if there's progress made they are just going to continue i don't think many people will expect you can wrap up these incredibly negotiations involving things like intellectual property and not the sharing of it any longer

with the chinese in that short a time period, but if you can make some progress, then you extend the 10%, don't go to 25 and that would still certainly be viewed as positive, i would guess, by the market. >> right you know the latest lingo. jimmy pethokoukis repeated the phrase purchase and promise. agree to buy a certain amount of goods andpromise to work on th harder stuff down the road, but question remains whether purchase and promise is something our government would be interested in and if the markets would apply. >> and then how you hold the chinese to whatever it is that they do promise, of course the mechanisms that actually undergird that are equally if not more important than the negotiations as well. >> right. >> one thing is for sure next week is going to be crazy busy between the talks with the chinese, with the fed meeting and tons of mega cap earnings, apple, microsoft, facebook and baba so the coming days are going to be packed. >> we'll be busy going through all of those and trying to answer some questions i'm sure,

yeah. >> and, of course, we'll be reflect on the week so far in davos. for that we'll get back to sara. >> hi, carl and david. well, we start with procter & gamble reporting earnings yesterday, topping wall street estimates. a decision to raise prize on a number of products due to higher commodity and transport costs and helping deliver strong sales numbers. joining me now exclusively here from davos procter & gamble ceo david taylor hello. welcome. >> good to be here. >> so another quarter of 4% organic revenue growth here we are in davos talking about the big picture trends for the world economy. what are your results saying about the global economy right now? >> certainly it says when you have products this appeal to consumers and deliver to them when and where they want to get it, that they get excited and they buy it. i'm excited. this is the second quarter in a row we've been able to grow organic sales ahead of the market, and it tells that you superior products consumers will still buy. >> so is it an execution story with some of the changes you

made within the organization that we've talked about getting rid of the matrix structure, or an overall better view on consumer >> i think the consumer is still very engaged i've heard a lot of stories about the consumer not engaging, and that's not been our experience whether it's the u.s., china or around the world, the consumer is willing to buy products that meet their needs at the end of the day they want products that buy benefit and deliver it for a great value and the superiority strategy we have is working and it's underpinned by the investment that we have delivering better products and you're right about the organization everything that happens apt p & g happens because we have outstanding, engaged, agile and an accountable organization. >> what's the level of innovation in terms of the product is this. >> it's very high and across all ten our categories to me that's what's required right now. in order to win, you've got to be able to innovate on all parts of your business model, the product and package and how you communicate to consumers, how you deliver to consumers, online

or offline and when that comes together the consumer is delighted and you're able to win the value proposition. >> what gave you the confidence to raise the top ends of the cnbc what do you see out into the future >> what we've seen under product growth is share growth which says your products are winning we have share growth in the past one to three months globally and in the u.s. growing share the last month, last three months, last six months and 12 months and seeing other important markets like china actually accelerate which is very important so our top 15 markets all grew sales over the last quarter. with that we thought it was appropriate to go ahead and raise the upper end of our guidance range because we believe that consumers are coming into our brands because they see them providing great value. >> want to get to the china story. >> yes. >> a lot town pack there first, just on the business. you know, it wasn't broad-based fully. i mean, grooming was still declining. what did you see in that business >> grooming still remains a

challenging category for us, but we're bring innovation in fact, one of our biggest innovations is hitting the market right now and we believe with both innovation and improved communication, and there's been communication recently that we think is very much connecting with the consumers, that we will be able to grow -- >> be the best man. >> be the best. >> that's so controversial. >> that started a conversation what we want to do is connect with consumers, and there are some things that we do need to talk about there is an issue with toxic masculinity, and what we wanted to do is show that there are some things whether it's bullying or sexist behavior that we can be better and that men are stepping up, and we showed in the commercial very clear examples of that happening, and while there was a very well-organized but small number that did not like that initially, what we've seen is each day more and more people coming in and saying they connect with that and they understand that it is a relevant message of the conversation will lead to understanding and improved behavior by all of us. >> do you actually see a sales

impact either positive or negative as a result of this commercial >> it's too early to see and it only broke a week and a half ago and we've had 90 million views of that spot which says it certainly has connected with people, and it started an important conversation, and to me i think men want to be better on this, and i think men are stepping up. >> were you inspired at all by nike's colin kaepernick campaign >> certainly we've seen a number of examples. the one that really inspired us was our like a girl campaign that we had a few years ago, and that communicated an important message where teen girls at puberty were seeing their confidence drop, and when we ran that ad what we saw is people's view of the phrase like a girl to 19% positive to 79% positive and it lifted the brand, so it was good for business, it communicated an important societal message, and we've seen the same thing with the talk which also talked about an important topic, and now this ad so i think brands need to stand for something, and they need to deliver superior performance when you do them both, you connect with the consumers, and

to me that's what's important to me going forward. >> i mentioned price that was a contributor to growth. so you passed along some of the higher prices to the consumer. are we going to expect more, expect to pay more for our everyday products from procter & gamble this year >> in general we want to provide outstanding value. there are outstanding cases and paper categories that were impacted by input costs. would input costs go up so much that we need to pass along price? we tried to do that in a very responsible way. we want to provide great value to consumers it's been in a few categories and countries that we needed to do that and to me consumers so far have shown they have accepted that as long as the product still delivers great value. it's typically associated with innovation when we can, so that we give the consumer an even better experience. >> and a reason to pay a higher price. >> absolutely. >> any impact on the consumer psyche and behavior from the government shutdown which is now in record territory? >> certainly if it were to sustain itself it would be a very high concern. it's a concern for all of us

we want our government operating. i haven't seen yet a big impact on the business. the category sizes, but do i think it will over time? certainly if text tends itself. >> the last few months of 2018 were rocky in the markets. >> yes. >> this period of incredible volatility, and there were concerns about the u.s. slowing down, whether the consumer had peak how did you read the volatility in the markets >> well, the volatility in the markets to me, we're not seeing in the categories, so in the consumer categories, we weren't seeing big gyrations in category size, and it's evidenced in our top end results, the plus 4% certainly we all see the challenging trade situation. to me that concerns people, concerns us. we want to see free and open frayed we think that's right to do and better for all stakeholders and certainly we hope for good resolution, but i have not seen as much as we've heard about this, i haven't seen evidence in category size and most of the business categories that we operate in and most of the countries we operate in where

we've seen that depressed. there is a risk. if the there's too much bad news will affect consumer confidence and when consumer confidence goes down you'll see it show up in category size or category growth the growth rate has not been slowing down it's slightly higher this year than it was last year, even with all the volatility. >> globally or in the u.s. >> both u.s. and globally. it's a little bit higher than it was before you know, whether it was 2.5% or so or moving for 3%, but i have notseen -- >> when you hear talk of recession, what are you thinking >> certainly not in the consumer categories right now am i concerned if some of these things don't get resolved? yes, but if you look at, again, the growth rate of categories in the major countries, we're not seeing significant drops in aggregate. it's up about half a point. >> do you see any pain globally? which countries? >> certainly we've seen some volatility in turkey we've seen some volatility in argentina, some that have very high foreignexchange exchanges

and other disruptions, but even turkey you've seen now the% turki turkish lire extended a bit and there are some countries with more volatility, some in latin america and as i said turkey, but generally what i see right now there's a little more stability. the dollar seems to have stabilized. >> you must be very happy about that. >> that's a positive thing. >> yes, that's a positive thing and even a little bit weaker would be a little bit better >> one thing that's contributed is europe has slowed down its growth. >> yes, it has. >> what are you seeing there especially with brexit looming >> brexit is the a high concern. we have to prepare for all eventual tis, and we're trying to reassure our consumers whether it's in the uk or the balance of the eu that we'll thereby for our product, but if brexit is a hard exit, it will disrupt the supply chains. we make some things in the uk that we ship to europe and other countries. we make a number of things on continental europe that we ship into the uk, so we have to be ready. >> what does that mean, consumers are going to pay higher prices in europe?

>> depends what happens. we don't know. what we're doing is making sure we have the ability to supply them what the costs will be i don't think we know right now, and that's a real concern. up certainty is not good for business it's not good for the consumers so i think we all hope for it to be an appropriate ending to this where there is an ability to ship back and forth without any kind of tariff if there is a tariff certainly that puts cost in the system and that will have to be addressed >> higher prices, both europeans and british consumers? >> depends again how it works. if you can tell me -- which way the -- >> i have no idea it's going to end up. >> neither does anybody else and that's the real challenge right now. one thing we do want to know, we want products on the shelves for consumers in the uk and in continental europe, so we have to look at our supply chains hand have contingency plans for almost any eventuality which is challenging right now. >> how are you planning contingency plans if the trade war does not get resolved by the march 1st deadline between the u.s. and china >> for most of our products that

we sell in the u.s., we make in the u.s. for the vast majority products we make in china or we sell in china we make in china, so certainly the first thing we want to do is where we can we want to localize our supply chains and serve the consumer and make the product in the country where they can consume it where it's economically possible that's true today for the u.s. and china. that does minimize the impact that we have to me there's a broader impact on the economy if this thing goes in a way that disadvantages both countries, and so i think it's in the best interest of the u.s. and dhon fichina to find an amicable solution. >> you're not seeing an impact on the chinese consumer? >> we reported the last quarter was our best quarter in china in the last year. last six months, it's ahead of the previous year. if i look the previous year, it's ahead of the year before that i'm seeing the consumer respond to innovation and great value. there's involved in our category size or growth rate, the results

we just report, that the consumer is pulling back in the consumer categories we compete in. >> david taylor, thank you very much good to get a world view, especially after those earnings. >> david taylor, the ceo of procter & gamble both of us from cincinnati to here in davos, switzerland carl, back for you. >> fascinating stuff, sara, thank you. when we come back, the man who sold sears to eddie lambert. former sears chairman adam lacey is here and shares of union pacific and as we go to break take a look. the dow up four points

♪ ♪ our new, hot, fresh breakfast will get you the readiest. (buzzer sound) holiday inn express. be the readiest.

and the army taught me a lot about commitment. which i apply to my life and my work. at comcast we're commited to delivering the best experience possible,

by being on time everytime. and if we are ever late, we'll give you a automatic twenty dollar credit. my name is antonio and i'm a technician at comcast. we're working to make things simple, easy and awesome. the fate of sears kind of still hangs in the balance, this after more than 125 years in business the company currently working on a $5 billion deal with its chairman eddie lampert that would save roughly 400 stores from being liquidated. the case does head to court early next month joining us now in a cnbc exclusive is former sears holding chairman and ceo alan lacey, led the company through its merger with kmart and sold it to chairman eddie lampert nice to have you this morning, mr. lacey. >> nice to be here, thank you. >> you know, funny that i can remember being with you and mr. lampert on that day in question when i announced that

deal there were some that would say it was inevitable that sears would find itself in this place regardless of what happened given the vast changes of the places that have taken place in the retail industry over the last 13 years. do you agree >> well, i -- i don't know that conigliaro is necessarily inevitable, and one of the principal reasons that i did in fact sell the company was that i had doubts about sears' ability to survive, stand along for the longer term. i mean we had a storied history and great assets during the time that i was ceo my management team did nom fantastic things in terms of improving customer service and merchandise offering we had the leading internet presence within bricks and mortar retail at that point. retail is a tough business and our mix of goods was unique on the mall with 70% of our business competing with off-mall retailers like walmart and home depot and lowe's and basically our trade areas were shrinking

as we grew off wall and a principal driver of the kmart opportunity from my standpoint was the potential ability to allow sears to get off mall and off mall faster than it otherwise could by converting kmart locations. >> right >> the deal if people don't recall i think was 55% stock, 45% cash so you did give that opportunity to sears holders to also participate in the combination, and by the way, people may forget, but sears stocks soared afterwards in part on the value that people perceived of the real estate. that ended up being ephemeral. give me your take on sort of how that story went and why it was not realized in terms of somehow mr. lampert making a fortune out of the real estate itself. >> yes i think there was a lot ofsort of mischaracterization at that point. eddie lampert when he point lampert very much was looking at kmart as a real estate play. the sears combination was never

that i think that eddie very much viewed the combination as the potential for him to have an operating success longer term. he, as you may recall, would talk quite directly about the way that he thought a retail business that should be -- should be run and how that was different than conventional wisdom, and -- and shortly after the -- a combination of the two companies he proceeded to buy back $5 billion worth of stock at well north of $100 a share so i think that eddie, you know, very much was looking to have an operating success and to have an operating success principally under the sears brand name and obviously that didn't take place. >> yeah. so chose not to invest in the stores, of course, is one of the key criticisms, and to your point spent an awful lot of money buying back stock at very high less. let's assume he didn't though and decided to put that $5 billion back into investing. do you think it would be a different story that we'd be viewing right now. >> well, i think that, you know, $5 billion still in the company coffers probably would have

given seas more options than it has for several years. i do think it's a hard job i mean, think that me and my team, my predecessor, the sears retail business has been -- had been a challenge for a long time and then you combine it with kmart who is competing versus walmart and target i think eddie lambert signed up for a very significant operating challenge, and so, you know, there were some ways that i think from a sears roebuck standpoint that the kmart transaction gave the brand and the business a chance to survive and thrive that it didn't have on its own, but it's a tough world. i mean, in 2005 when we put the two businesses together, we were a little over $50 billion in revenue, and amazon at that point was $1 billion 8 billion n is 250 billion and sears holdings is $6 billion or $8

billion after it emerges from the bankruptcy process so there's been a tectonic shift on that factor alone, even excluding the more direct competition by walmart, home depot and lowe's and target over this period of time. >> alan, i know it doesn't do any good to do a forensic reconstruction of the business path, but when it came to asset sales, craftsman, kenmore, land's end, was that really burning the furniture to keep warm >> well, i think that -- i mean, i -- you know, i've had a couple of pat lines i think since the transaction was done in the early days i basically said if i had complete confidence in the company's business i wouldn't have sold it, and then i would say after the great recession, you know, that shifted to i know how this movie ends and i'm not sure how many minutes are left. i think eddie's -- i think the

great recession was a huge impact in terms of housing turnover and the economy the fact that the eddie began with a couple of spinoffs, with hometown stores, the land's end business and the heritage real estate play, that's not surprise, and then i think after that, you know, basically everything that he sold, the proceeds of that have stayed within the organization to i think to keep the lights on longer, and hopefully i think, you know, for him to find a path to have an operating success despite the challenges. >> interesting that you tie it to the financial crisis because i've heard others argue, mostly economists, argue it was the period of an normally low interest rates that kept sears basically alive for the past nine years is that fair >> no. i don't think i would go there i think that -- i mean, to eddie's credit he never put a lot of debt on this business, so he -- for a financial guy he ran a relatively unlevered business

for a long time absent the $5 billion that went to buy back stock. i really think there was an interest rate correlation and in my sears time there's no question that housing turnover was the big driver and housing turnover and new construction and sales got killed in that great recession period when somebody moves to a new house, whether it's a brand-new construction or existing home, they want the latest flood screen tv on the wall and they don't want to most dirty filthy old lawn mower and the refrigerator is old and they want a new refrigerator so the sears franchise kicks in with mattresses and everything else in conjunction with a real estate transaction and that never came back to the level that it had been before. >> we had one guest in particular that you share some of the blame here that, you know, sears decline began under you and obviously the sale itself was just a recognition of some of the missteps that took place. >> well, i -- obviously i disagree with that, and i guess

i would cite a few things. i mean, we -- we clearly left a few things yet to be done at the time we sold the business, but we improved customer satisfaction, we reduced costs we improved our merchandise offering notably with the lands end acquisition and being part of that. we had a very successful sale of our credit business. we had the leading online bricks and clicks, e-commerce presence of established retail at that point in time and i guess that we also had in that period record retail profit ability i, the retail business never made more money than did under my leadership and i guess sort of another fact i would cite as you well know as fortune does its most admired company list and in the survey that took place before i became ceo we ranked tenth in our sector, and in the last survey that was done when i was ceo we ranked third and so despite all the noise in the last, you know, "x" number of years since the sears holdings was creating, you know, our team accomplished a lot, and i'm proud of what our team did we worked very hard to provide better customer service and make

the business better and our shareholders did well. >> and they did and had an opportunity to sell out of the combined company at a combined premium. what do you think happens now if lambert is successful and comes out of bankruptcy with 400 stores senator can sears survive. the numbers you gave from am none, you know, we know them, but they are astonishing when you hear them and you just wonder what is the point of even trying to make a go of did. >> no, i think that -- i'm hopeful that there is in fact some operating success that comes out of this, and i'm sure that eddie is also you know, i -- i think obviously many people have said it's doubtful and unlikely that a retailer that goes into a chapter 11 process comes out of it and stays out of it i mean, i think it's rare that that's happened in retail bankruptcy history it's possible in my view that if he winds up with a going concern that's basically based online and that in fact the store base

may shrink further after they hopefully do come out of chapter 11, but there is an on going, you know, sears presence online. that area seems to be one area that eddie has paid a lot of attention to and invested bed hind and seems to have a lot of interest and it's been a common theme of his for a number of years and stores that are left probably have retail value though there's more retail stores available these days than there are tennants to occupy them. >> on that point let me end getting your opinion on another storied name that a lot of people believe will have to pass into history as well jc penney faces many of the same pressures, doesn't it? >> it does i guess just as a frame of reference in 2008, just about the time of the recession, peppy's was $20 billion in revenue and it's now 12. it had a huge drop in revenue. it's hard to say actually an interesting debate as to whether penney's has done better because sears declined or sears has done better because of penney's decline and here's two

retailers a couple hundred yards from each other in a typical shopping center. i think we're at a bit of an infliction point and if the economy ticks down those retailers have low returns, penney's will have a very, very difficult challenge to survive. >> mr. lacy, thanks for taking the time to join us this morning. >> thank you >> alan lacy. >> when we come back airlines are a big standout as far as earnings go we'll look at results from southwest, american, jetblue, and talk to gary kelly from southwest earlier this morning markets digesting new comments on china trade, specifically from the commerce verdict and then the vice chair of pimco the former chairman of blackstone will join sara from davos and what it means from the markets. dow is up 40 more than half of employees across the country bring financial stress to work. if you're stressed out financially at home,

you're going to be too worried to be able to do a good job. i want to be able to offer all of the benefits that keep them satisfied. it is the people that is really the only asset that you have. put your employees on a path to financial wellness with prudential. bring your challenges. at&t provides edge-to-edge intelligence, covering virtually every part of your healthcare business. so that if she has a heart problem & the staff needs to know, they will & they'll drop everything can you take a look at her vitals? & share the data with other specialists yeah, i'm looking at them now. & they'll drop everything hey. & take care of this baby yeah, that procedure seems right. & that one too. at&t provides edge to edge intelligence. it can do so much for your business, the list goes on and on. that's the power of &. & when your patient's tests come back...

so, servicenow put your workflows immhm. cloud, huh? your employees must love you. [ chuckles ] thank you. you could say that. i love you. servicenow works for you. good morning, everyone i'm sue herera here's your cnbc news update at this hour. airbus warning it could move its uk operations out of that country if there is a departure from the european union without a deal ceo tom enders says the country now stands at a precipice.

>> you can see it's threatening to destroy a century of development based on research and human capital. if there's a no deal brexit we at airbus will have to make harmful decisions to the uk. >> the florida man accused of gunning five people inside had a florida bank making his first appearance 21-year-old zefhen xaver a jury has ordered knox to pay -- that's the news update this hour i'll send it back downtown to you. >> time for our etf spotlight

keeping an eye on the transports airlines obviously rallying after reporting some strong earnings the transport etf ticker iyt off to a pretty nice ticker for the year up 7% so far. american airlines, jetblue, southwest all beat on the bottom line and southwest issued some pretty good guidance later on do not miss a cnbc exclusive at phil lebeau will sit down with the ceo of american arlds do >>. >> reporter: when we come back, longtime deal-maker and vice chairman of pimco john studinski will join me

♪ hawaii is the first state in the u.s. to have a hundred percent renewable energy goal. if we don't make this move we're going to have changes in our environment, and have a negative impact to hawaii's economy. ♪ verizon provided us a solution that lets us collect near real time data on our power grid. ♪ if we can create our own energy, we can take care of this beautiful place that i grew up in. ♪

and the army taught me a lot about commitment. which i apply to my life and my work. at comcast we're commited to delivering the best experience possible, by being on time everytime. and if we are ever late, we'll give you a automatic twenty dollar credit. my name is antonio and i'm a technician at comcast. we're working to make things simple, easy and awesome.

when we come back, shares of union pacific posting higher after posting earnings that did beat the street. we'll talk to lance fritts and break down the corner and talk about the state of the transports and the economy in a few moments. meantime, get a check of the major averages on this thursday. some gains faded here but we've been in and out of positive period dow is up 9 and s&p up 4

♪ acan echo throughout ane entire community.nge that's why we proudly support, invest and volunteer in communities like yours. because the changes we make today... can you hear me? ...shape the possibilities of tomorrow. u.s. bank the power of possible.

it's been a volatile week for the markets, but one top sdwrast says you should be buying any dips. find out more on tradingnations.cnbc.com. more "squawk on the street" is coming up.

i'm ken jacobus and i switched to the spark cash card from capital one. i earn unlimited 2% cash back on everything i buy. and last year, i earned $36,000 in cash back. which i used to offer health insurance to my employees. what's in your wallet? this are tloorts there are some federal workers going to homeless shelters to get food. >> well, i know they, and i don't really quite understand why because as i mentioned before the obligations that they would undertake, say borrowing

from a bank or credit unions, are in effect federally guaranteed, so the 30 days of pay that some people will be out, there's no real reason why they shouldn't be able to get a loan against it, and we've seen a number of ads from financial institutions doing that. >> commerce secretary wilbur ross earlier this morning on "squawk box" talking about the shutdown and the impact of some of the furloughed workers. trending pretty high on twitter as some argue it reflects an administration that's out of touch with how some workers and families get by. >> yeah. getting a lot of attention as you might expect it would for exactly that reason, carl, being someone out of touch the idea that you would secure credit in part backed by the 30 days of back pay that are you due. it's asking a lot of people who are living paycheck to paycheck and, of course, people pointing out that the commerce secretary

unaware of just how many people rely simply on that paycheck and do not have the wherewithal to necessarily access credit in some effective way quickly and/or meet their needs without that paycheck actually clear. >> others argue that it reflects a attern, at least from the commerce secretary, of perhaps underestimating how much families are impacted by economics. famously he was on with you and me a little more than a year ago for talking about the impact of tariffs on consumers held up those campbell soup cans, the beer can and said who is going to be terribly if these tariffs do filter down to consumer prices? >> yeah. he is a very wealthy man, but perhaps not as wealthy as some have thought but extraordinarily so and certainly that -- that criticism may -- is making the rounds that he's simply not aware of what it's like to live day to day. >> more concretely we did talk to southwest's gary kelly earlier this morning about the impact of the shutdown

you might not have heard yet, but the unions of the pilots, the flight attendants and the air traffic controllers came out with a statement sayingthat even they cannot quantify the level of risk that is present as a result of the shutdown ant impact on the faa. this is what kelly said about that >> the thought that you would refer to people and their jobs as non-essential is absurd everybody is essential or they shouldn't have a job, but as an example the faa is not hiring replacement air traffic controllers or training them all those are considered non-essential functions and that's shut down, so that means that where the faa is already stressed in terms of staffing all of the centers around the country, now they will be even more stressed, so there is a risk that air traffic will have to be slowed down because they will be safe they do a phenomenal job managing our airspace, and they will be safe, but it may not be

very efficient. >> you know, carl, it's interesting. there are those who say a one-day sitout by traffic controllers or tsa would be all it takes to get the president and pelosi and schumer to figure a way out. >> hope it doesn't come to that. >> obviously. >> interesting comments from kelly. let's get back to sara in davos. >> reporter: carl and david, global executives and world leaders are gathering here in davos talking about the big issues facing the global economy right now with stocks, gloomy themes emerging here we'll go the some thoughts joining me is deal-maker and note the pimco deal-maker john studzinski welcome. >> good to be here. >> you're framing the risks not as financial but as geopolitical what do you mean >> we've looked at risk in a financial mode for the last ten years since 2008 the world has been very disciplined about evaluating

risk central banks, interest rates, inflation, unemployment. it's been very rigorous. we now, of course -- risk, of course, is taking on a much different phase driven heavily by technology, but real sort of elephant in the room is all the personalities that have emerged globally probably about a dozen personalities in the world, objection lit most noted being donald trump, but then it quickly follows with putin, erdogan, xi, modi and then we can list many more duterte and then the brazilian president was here yesterday so we've got a lot of strong personalities so we are in what i keep referring at this davos in probably the worst geopolitical recession that we've had in like a long time. people are having a hard time trying to evaluate geopolitical risk because we haven't had to deal with it before. >> geopolitical recession. does that filter through to the

real economy and to the markets? >> i think what -- well, yes, it does it does in terms of short-term, number one you see a lot more volatility in markets. number two,the media, social media, people like you and your colleagues play a big role in that because you talk about things earlier this week in davos, for example, remember the chinese government came out with the gdp. there was initially a bit of a shock. it was whatever it was, 6.6 and people were saying it was declining. >> it was the worst year i think since the '90s. >> right. >> but the chinese overnment, to give it its duehas been expanding economically for 40 years, and they have taken a billion people out of poverty, so they -- and they are a class act in terms of knowing how to run a government and an economy so it's very important that during this period of geopolitical risk people don't overreact. they take a little bit more time and pace themselves, but i would also say that some of these

personalities, people like president xi, for example, and his negotiations with donald trump, you know, he's a very wise man he's a very patient man, and i'm -- i'm sure he's -- he'll take a long-term view about china's relationship with the united states. >> do you predict that the trade war will be solved, that they will make a deal, and this will all be resolved by march. >> yeah. i think they will come up with some type of understanding and to satisfy both parties, but i think the real issue is the fact that america is going to have to live with the fact that china is going to be the biggest economy in the world between 2025 and 2030, and china then needs to rethink its own role in the world, and most importantly technology is going to be the -- is the big piece on the chessboard here because is it going two technology worlds or up, or will the microsofts of

the world or huaweis of the world and other big players, will they play a dominant roles, or will we have two separate sets of technologies and two separate sets of economies >> certainly a place like davos the theme is all about coordinating those types of policies do you think this so-called geopolitical recession has impacted corporate confidence and investing? you speak to so many different global ceos. >> i think what's happened is a couple of things one, people have been delighted with the performance over the last ten years a lot of people are looking at volatility and there's been more movement into cash and cash equivalents. there's more movement into people not -- people looking at the volatility of the stock market and being a little more cautious about overreacting to short-term swings. i think the market also is telling people that as they look around the world they have made a lot of money in the last ten years and yet the next recession

when it comes, and, of course, most of the pundits, there's a lot of pundits here at davos, say it couldn't -- it's probably not going to be 2019 it will probably be 2020, but i think we all know that if something is likely to be 2020 it's really going to be 2021. >> johstzikin udns of pimco, thanks for joining us. >> thank you. >> more "squawk on the street" right after this see that's funny, i thought you traded options. i'm not really a wall street guy.

what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade is it to carry cargo... greatness of an suv? or to carry on a legacy? its show of strength... or its sign of intelligence? in crossing harsh terrain... or breaking new ground? this is the mercedes-benz suv family. greatness comes in many forms. lease the glc 300 for $479 a month at your local mercedes-benz dealer. mercedes-benz. the best or nothing.

shares of union pacific are moving higher after reporting q4 earnings beat. cited strong volume growth, core pricing gains. joining us for a first on cnbc interview, union pacific ceo lance fritz. welcome back good to see you again. >> thank you very much for having me this morning >> quite a quarter operating revenue up 6, car loads up 3 help us understand how much of this is improved operating efficiency and how much of this is macro economics goods moving around the country. >> certainly we benefitted from a pretty strong economy in the united states. it stayed pretty strong and it is a good time to be in the freight railroad business and freight business for that matter

but a lot of our results in the fourth quarter were specific to the union pacific team doing a tremendous job of improving productivity and service levels. we're exiting the year on a very good foot, entering 2019 with a bit of optimism in terms of how we're running the network. >> we always like to breakdown categories, product categories one of your services that transports finished cars and auto parts up 15, which flies in the face of a lot of fears of peak auto and depressed demand going forward regarding automobiles. >> remembering that premium something meant includes international and domestic i think what we said in finished vehicle shipments that we were essentially flat on volume which bucked the trend, the fact that u.s. car sales were down about a percent, light vehicle sales because we had opportunity to penetrate auto parts shipments

and also had some favorable mix that played our way in terms of relatively more suvs and pickups and sedans and coups we saw a lot of strength in the premium segment when it came to international volume off the west coast and domestic. >> how does that compare to other things we watch like agriculture and energy >> ag was off, mostly on the grain side that's a direct reflection of tariffs and essentially china not being in the market for beans, so we had other off sets to that but i think that's the clearest indicator of what's happening trade wise between ourselves and asia if you look at other markets for us, the industrial markets look pretty good. steel, domestic steel is in pretty good shape. construction products were in pretty good shape.

industrial chemicals, plastics we saw a little strengthening in crude in the energy market but we also saw some substantial weakness in frack sand those shipments were off something like 47% before. >> i'm not sure how your business would necessarily interact with the government shutdown but tell me is there something that we could expect to see as a result of 34 days so far and counting >> yeah, i'll tell you, i'm troubled the government remains shutdown, mostly because of the potential impact on consumers. our heart reaches out to the employees who are both working without pay and not working and not being paid clearly there's enough there to have an impact on some of the markets that we serve, but more broadly that's just not a good look for the united states, right?

i'm just a little worried that there might be impact on the confidence of consumers, and you know that's the thing i pay most attention to how confident is business and customer base and how confident are consumers, because that will largely dictate what will happen on the demand side >> finally, lance, you mention the shutdown if there's some resolution short term to the dispute with china and if there is a promise to, say, buy more ag as an example, is that the dynamic that would result in capacity constraints later in the year? >> it depends. speaking for union pacific, we have ample capacity to handle any reasonable assumption on volume as we look to 2019. we said on the earnings call for shareholders this morning that we're anticipating low single digits growth on the top line. and we talked a little bit already about some of the items

that might put that in jeopardy. you mention something that if we see a sound good deal between the united states and china, that lifts a bit of an chick overhang we could see china in the market for things like grain product, and we might see consumer confidence and business confidence buoy again. >> something to watch. always good to talk to you on the quarter. lance fritz. day 34 of the shutdown, we'll talk about how it is impacting ipos in a minute 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, you have a partner in that pursuit. pgim: the global investment management businesses of prudential. when did sleep start requiring effort? what if it didn't have to? each tempur-pedic bed is made with advanced pressure-relieving material, so you get the deepest sleep you've had... ever.

there's nothing like tempur-pedic sleep. you should be mad they gave this guy a promotion. so you get the deepest sleep you've had... ever. you should be mad at forced camaraderie. and you should be mad at tech that makes things worse. but you're not mad, because you have e*trade, who's tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. don't get mad. get e*trade's simplified technical analysis. ♪ hawaii is the first state in the u.s. to have a hundred percent renewable energy goal. if we don't make this move we're going to have changes in our environment, and have a negative impact to hawaii's economy. ♪

verizon provided us a solution that lets us collect near real time data on our power grid. ♪ if we can create our own energy, we can take care of this beautiful place that i grew up in. ♪ good morning it is 5:00 p.m. at the world economic forum in davos, 11:00 a.m. on wall street. "squawk alley" is live ♪