why is andrew still there then >> more interviews, i think. we're going to see maybe through the morning? >> i think so too. >> somebody has to pack up all the equipment. you know is it really all those times they do the health care conference and say, oh, everyone really -- the real stuff gets done three days beforehand no one sticks around we'll ask andrew about that. we will see him later this hour. steve was here he is directionor of institutional services and cnbc contributor, and i never get to see either of you guys >> u.s. equity futures at this hour is a positive tone to markets even though there's no real reason why. there is the dow pointed to open

higher 104 points a lot of focus on chinese economy and how that is doing. shang high composite adding up one-third of 1%. in terms of european equities, you can focus there after comments from mario draghi about weakness in that economy german iphone index, germany is the outperformer up more than 1%. france relatively strong italy up nearly 1 approximators. the ftse lagging with a third percent gain treasury yields, which kind of fluttering a little bit lately, but not a ton of movement. we're back below 275 2.726 on the ten-year. the two-year at 2.581. >> treasury yeeltds going up have coincided with stocks going up

>> here are some of the big stories we are watching today. the state department ordering all non-essential u.s. workers out of venezuela as political tensions rise. this comes as venezuela's generals through their support behind isolated leader nicolas modoro we have more on the situation coming up. right now let's check on another price of crude oil it is up slightly. .4%. wti a little over $53 a barrel meantime, facebook ceo mark zuckerberg has an op ed in today's wall street journal. zuckerberg defending his company's business social net world war iing giant has come under fire, for privacy and data protection issues >> right now, though, shares of pg&e, while they're down premarket, but they were up huge yesterday. it was actually a wild scene down on the floor in the last

hour of trading when they reopened that stock, steve >> it was really crazy you hit it on the head what was really amazing is the way you led in was perfect people were talking about them being clear for the 2017 and when people saw it cleared of, this he didn't think about, oh, there's another overhang on the stock as well. that's why it ripped so aggressively >> it's true, although there has been a camp that says a bankruptcy filing is not necessary if they don't have this open-ended liability for all of these fires who knows? it just seemed right there to be the spring-loaded situation where if you take zero out of the probabilities a little bit, right, for the stock -- >> if you look at where it came in from. we had an aggressive pushdown originally that it traded down at $17 originally. >> they haven't tried to pretend like they didn't cause those camp fires they have said our equipment has sparked all of these wildfires, and it would cost you billions and billions we would have to hire thousands of employees to clear out all the brush from these areas what i don't understand is they basically acknowledge, yeah, we

started it why should they be given a reprieve from investors' point of view. >> i feel if it's not going to be -- >> it's either binary, right bankruptcy or not. the bets are being placed in some quarters. there's big money moving into that stock that it's not going to be a bankruptcy, and that's why you had -- whafgs it, 50% jump yesterday >> yeah. >> it was actually -- it was actually -- >> it was a double it was almost a double >> it halted for volatility because they can't let it go up in one big jump. request we talked about the reading headlines as well, and when you see it has been cleared of, they don't even think about the 2017 versus the 2018

>> if you look at the probability set, we're not stacking up multiple years of fires on this. plus, there's the activist investor in there saying bankruptcy is a choice >> is that blue mountain? >> the stock, though, getting a lift on its guidance

the company now expects revenues to improve in the second half. shares of western digital are up nearly 10% chips, guys, you know yesterday -- it's down 50%. today people are not taking intel well, and they overall -- >> it's all positioning. when you are looking at apple, it was the original wet blanket on this a couple of months ago, and then they racheted it up in january with apple, but the chips already reacted it this is just a positioning rally off of what that was a negative overlow in the whole space

>> if you have that good news yesterday, youco easily say, well, this is an intel-specific story. you still can't name your ceo. >> exactly >> you are obviously having some sort of issues with your outlook. your guidance doesn't meet the standard that was set 24 hours ago by some of the other names when you have the kind of numbers that you got yesterday and the stock follows through -- >> intel already on a positive, so people -- >> intel was the defensive stock for the last year. >> disappointing for sure. i don't think there's any other way that you could describe intel, especially coming off of the numbers you got yesterday. it's a huge disappointment we'll see what the impact is going to be throughout the day on tech. >> we're watching starbucks. that coffee joint reported strong results last quarter. same store sales grew 4% here in

the u.s. just 1% in china starbucks opened 541 new stores in the first quarter more than one-third of them were outside of the country the shares this morning are about 3.5%. >> the u.s. and china is both of their home markets they've got so much riding on china, and one of the issues that they've been dealing with is a possible backlash because of the trade fight that we're having with china, and whether there are competitors on the ground in china that are taking

some of the business away from starbucks. >> that's why i think a 1% positive comp in china was okay at least for this quarter. >> that's how bad expectations had gotten >> i think it was supposed to be up a percent and a half or two >> time for the squawk planner the earnings calendar very light. colgate, palmolive are on the list house democrats will discuss the shutdown that leads us right into eamon who has more on the shutdown i saw that cnn piece where maybe we are going back to the declaration of a national emergency to get out of this >> yeah, that's one possibility the president kept alive yesterday, kelly the president suggested he had other solutions up his sleeve to solve this, but what happened yesterday was that the senate took two votes one on the version of the spending bill, which had the president's border wall in it. that one failed. another one on the democratic proposal, which didn't have the border wall funding in it. that vote failed

now that the senate has failed to figure out exactly how it's going to reopen this government, we get back to sort of the negotiations behind the scenes one of the proposals that was floated yesterday was for a three-week continuing resolution to sort of keep the government open for a limited period of time while they continue those negotiations a couple of senators came out in support of that. the president signalled yesterday in an appearance at the white house that he might be in favor of that if it meets his criteria here's what he said. >> i don't understand. perhaps you should have said it differently. local people know who they are, where they go for groceries and everything else. i think what he is trying to say is that they will work along >> that was the wrong soundbyte. that soundbyte was the president reacting to those comments that we saw yesterday on cnbc from wilbur ross. the commerce secretary he suggested that the people who have been laid off who were going without paychecks ought to

just get a bank loan to cover the difference, and they should -- he saw no reason for them to be going to food banks as a number of federal workers have been doing here in washington d.c the president seeming to feel the need to go out and clean that up after that comment was criticized for being out of touch and perhaps insensitive by a number of democrats. let's see if we have that other soundbyte. this is the president signaling that he might be open to some kind of continuing resolution if it comes up on his term. here's what he said. >> if they come to a reasonable agreement, i would support it, yeah >> i have other alternative ifs i have to, and i'll use those alternatives if i have to. we want to go through the system we have to have a wall in this country. >> that's what he is talking about when he said other alternatives that's the idea of maybe a national emergency declaration the president is getting pressure for folks on the right who very much want him to take that step. it would be a provocative step and would definitely change the debate here in washington. not clear here what the solution is going to be, but it's friday,

and we've got all day today for lawmakers to try to figure it out up on capitol hill >> yep day 35 thanks we'll check back in with you aemon, nbc a rare action on twitter ackman saying why should members of congress be paid while workers for the federal government go unpaid if we fix this inene equity, we would no longer have government shutdowns. >> that's interesting. i mean, not a bad thought. why don't you -- >> especially a couple of weeks ago when a couple of the congressmen said -- even aoc said i'm going to give up my salary during this period of time, but we have not heard much about that lately the longer this has gone on >> they should furlow members of congress and bring back the 800,000 federal workers where. >> to do congress's job. >> to do their job >> do you realize how much the market would rip higher. >> they can't do they are jobs, so maybe we need to bring the federal workers back people who can actually get something done what did we say? day 35 day 38 >> when wilbur ross is talking

about getting a loan and then you have to pay interest on that loan, what they should do is just go above and beyond and say we're going to make it 200% federally tax deductible on whatever interest. this way it covers whatever they're doing as far as interest costs. >> okay. >> you're worried about interest costs. what do you think, someone is going to walk into the bank, hey, i'm a federal worker. i would like to get a loan >> we've had stories about this that federal credit unions, if you are an employee, they are offering these 0% 60-day loans >> it's not as easy for people to walk in the door and got a loan >> my point is it's out there. >> you could also have a government backed loan >> i understand all of this is just circular talk, but you could also have a government loan given to them so instead of just saying walk into a bank, walk into someplace that they're directing you to 200% of it would be tax deductible on the interest, and then it's a moot point obviously, this is a huge inconvenience if you are living paycheck to paycheck >> or pass a budget. >> that would be a -- >> that's comical.

>> there's a thing in the journal a couple of weeks ago where they said the president used to be in control of the budget process, but after watergate and the budget control act, they kind of wanted to give that more to congress. that's why we have the cbo, congressional budget office, and the omb, and so if you give it to congress and then have the president still setting the budget, of course, you'll be at cross currents i guess the issue now is do you resolve it by restoring it fully back to the executive branch and the whole budget-making process, auto are do you try to do something where you say that it's then fully out in congress. if it wasn't part of how the separation of powers was originally enviged, i can understand how that now has gotten us into the mess of rolling shutdowns. >> want to talk about the markets? >> ho hum earnings >> it's all about guidance, and it's all about positioning if you look at where we were, we were so oversold going into year-end you had that rip back and what ripped back the most, the

netflixs of the world. is the positioning done yet? i don't think so it's absorbed this overbought short-term condition overnight we've seen the rest of the world rally, because you have another people's bank of china move to stimulate. it seems like that's the asian markets going up.

if you look at the chart, even though we've rallied aggressively, we haven't gotten back to anywhere where we should be to feel bullish >> all right we'll see. markets trying to get the benefit of the doubt back. when we come back, a crisis. there are big implications for the oil market as the country of venezuela teeters on the brink of disaster. brian sullivan will tell us what's at stake. as we head to a break, here's a look at the biggest premarket winners and losers in the dow. you see apple set to open up about three-quarters of a percent. be right back. ♪

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these are the yens who are largely moduro's strong men being put into positions of power and favoritism by him that have said that of course, the u.s. and other countries have recognized the government of juan guado most of latin america has shown its support behind him as well on the other side you have russia, china, cuba, and turkey who are backing nicolas moduro russia and china, by the way, are owed bill yobz by the venezuelan government. there's a vested interest in keeping him in power two other big financial angles this fight could determine the fate of citgo, the u.s.-based arm of venezuela's national oil company, already under siege by creditors. there are 10,000 u.s.-based employees. also watched oil companies like chevron, volero and bps. now, many oil companies, like

marathon and phillips 66 have slowed or stopped buying venezuelan oil since the financial sanctions were imposed. you know oil may be the ultimate political weapon here. it provides nearly all the venezuelan government revenues, and if you are not aware of the collapse of venezuelan oil production, how about these numbers? in 1997 venezuela produced about 3.25 million barrels of oil a day. hugo chavez took power a few years later. now they produce just 1.4 million barrels a day, and the number of active oil rigs has fallen from 70 three years ago to 25. producing less and less and less and kelly, it's not, i guess, impossible to envision a scenario where they produce less than one billion barrels a day, which will drive a nail into an economic coffin in a state where you have people literally digging through the trash to find food and money. it's worthless >> people are saying look at

russia and cuba and all these. is this even going to be about the venezuelan people, or is it going to be, again, about authori authoritarian ridge he'lls and allies trying to figure out how to get them out of there >> the two things, with cuba it's idealism, right the venezuelan motto, chavez changed it to have something to do with the cuban model. he basically copied the cuban model about socialism and the regime there's also a financial angle here that's rozneft it's not the state-owned oil company of russia, but it's closely aligned. they bailed out the venezuelan oil company. they are a huge creditor and really then de facto citgo the sit go situation they're already attack by a hedge fund and creditors, by the way, that's got rozneft as a major creditor as well >> yesterday we spoke with a few people on possible ways out here, and they said, okay, maybe russia, maybe uba, maybe some regime like that could help a

negotiated settlement to get moduro out of there. i'm not sure that's their motive why should they help to resolve this wouldn't it be better to prop up another authority tarn regime, unfortunately, in a country like venezuela? >> i would disagree with that, kelly wrrks i'll tell you this, if money is the ultimate goal here, and let's be clear, it likely is, then the best interest of everybody would be to bring up venezuelan oil production they need venezuela to produce oil, and to produce oil you need to put money money turns into oil because especially in venezuela, most of the oil is really sulfuric it's really thick. it's on kind of a river -- >> brian >> yo. >> i want to interrupts you. my apologies i do want to alert people to what they're watching at the bottom of the screen, and that is a major development out of the mueller investigation.

the former trump advisor roger stone has been arrested in fort lauderdale, florida. i'm quoting from the indictment. this is from our eamon javers it contains seven counts one count of obstruction of a official proceeding, five counts of false statements, and one count of witness tampering perhaps not a great surprise that this is happening to mr. stone. were, he had been telling folks for quite some time that he expected to perhaps be indict for his whatever involvement, if any, he is alleged to have as a result of that russian meddling in our election and some of the relationships that he may have had as it relates to that. >> obviously, you need to get more details, but that description of the charges suggests it's for behavior with regard to the investigation at this point, right? in other words, obstructing the proceedings of the

investigation. >> eamon javers, do you not to expand on what we're learning this morning >> yes, scott. we just got this announcement just seconds ago from the special counsel's office let me read you what we have here officially from them. roger, jason stone, 66, of fort lauderdale, florida, was arrested in fort lauderdale today following an indictment by a federal grand jury on january 24th in the district of columbia the indictment, which was unsealed upon arrest, contains seven counts one count of obstruction of an official preelgd, five counts of false statements, and one count of witness tampering they say here, stone will make an initial appearance later today at the federal courthouse in fort lauderdale additional information, they say, they will provide once it's available. this is an enormous development in this special counsel investigation because roger stone was one of the key outside advisors to president trump during the course of the campaign, and thereafter the question has always been what role, if any, did roger stone play as an intermediary

between the trump campaign and wiki-leaks, and was roger stone aware of anything that wiki-leaks had done or was planning to do before it happened we might get answers to that now that stone has been arrested in fort lauderdale. it's a dramatic development in this case. what i'm looking at says that law enforcement actually approached the house where mr. stomr. mr. stone was just after 6:00 a.m. in fort lauderdale with witness accounts saying the fbi was pounding on his door fbi opened the door is what they said when they approached mr. stone's house just before taking him into custody. again, because he was indicted by that grand jury

eamon, you have more to adhere or do you want us to come back to you in just a few >> i think we can talk sort of about who stone is and what he has said he has said publicly that he expected to be indicted and what we're seeing here is that they've unsealed this grand jury indictment and made the arrest today. the question is why today? roger stone has been saying for a long time that he expected this to happen the question is why is this special counsel office of the fbi moving today, and we expect we might get a little bit more information on all of that when we see his court appearance and when we get a chance to go through this unsealed indictment here. often they want to make sure -- they don't want to tip the person off that thief been indicted the question is why is the timing happening right now

what does this mean for the president? those are two very important questions here as we just begin to cover this story this morning, scott >> okay. thank you. brian sullivan >> yeah. >> you have a question >> i just want to jump in here, guys i apologize. i was talking about venezuela. i want to add to the story as well if you remember back on december 3rd, president trump tweeted out a quote from roger stone where roger stone said i will never testify against president trump, and trump tweeted that outside and said thaernnks to my good friend roger stone for saying this remember, i have a law degree, so i got a bunch of friends that are in the law, and we were asking discussions about this where is that tweet by the president on december 3rd -- does that constitute witness tampering by roger stone if he indeed said that the irony here may be if stone said it and the president tweeted it, that stone's witness tampering could be undone by the president's tweet on december 3rd. that's something to think about. >> okay. thanks, brian.

>> yep we'll come back to you, eamon, i'm sure, in a few. in the meantime, kel >> we'll have more on that story, of course watching the markets as we "squawk box" back in just a moment stay with us ♪ 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. ♪

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>> s&p up by nearly 13 points out of the gate. dow jones industrial average triple digits. about 120 points nasdaq by about 35 we've had more earnings this morning. intel after the bell yesterday, and even though intel was pretty large disappointment

doesn't seem to be having much of an impact at least at this hour. coming up, we will have much more on the markets. plus, coffee talk. should investors jump on starbucks right now? are the prospects for 2019 hot enough to push that stock higher we'll break it down with an analyst coming up. as we head to break, take a look at yesterday's s&p 500 winners and losers 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?

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>> good morning. among the stories front and center, roger stone has been arrested in florida and charged with seven counts, including false statements, witness tampering, and obstructing an official proceeding. he will appear in court later today. being of, the former trump advisor roger stone. >> i mean, we were looking to

see if there would be a market impact they basically shrugged it off people are going through the indictment, as eamon was talking about. is there more information there? dow at 117 premarket s&p up 12. nasdaq up 32. what due think it would take to get the markets to care more deeply about this this morning >> i think it would have to show some urgency to the release of whatever the mueller investigation is ultimately going to do, and if that, in fact, lands it in congressional right now giving given the tail mate and shutdown, that has a lot of volatility producing potential. serm i think you're going to see maybe some pressure on

treasuries especially as we've kind of got to these low yields. rel tily low yields after the last couple of sessions. >> you know, we've seen the market is looking for a smoking gun. until we find that smoking gun, until we find that direct relationship with prurp every president trump, then the market is going to discount all of the stuff that's already been discounted already. think there will be zeebt earnings in what will be a separation between company a and company b. that's what we're really looking for. a stock picker's markets a bond picker's market.

>> there's been a handoff between the more growthy names and value-oriented names, both on the debt and in the equity space. you have now a reset of yields with the fed having moved four times. you have an outperformance of companies that are reinvesting in themselves that the cap x acceleration, and the companies that are rewarding shareholders in the form of ever higher dividends. i think it's the high flyers and non-paying type securities credit markets are stretch the high yields had a big rebound here with equity markets. i would be very cautious of going purely intothe debt side

for income let's be kind of ag nosic about what part of the capital structures we use. ates lot better space than two years ago. >> let me go back to the president in one second. we had a monster rally, and then frankly, through august, september of last year, now we've given a lot of that back that was one of the big reveals. there was huge ceo confidence. huge consumer confidence all of the wrangling that's going on, i hope just temporarily is certainly putting a dent in that we're seeing comments out of the davos conference ceos are starting to get more leary, and that could be a real wrench into what would otherwise be a very good economic back

drop >> when you look at the investors and investors as a whole, we got a crash course on quantitative tightening. when you look at the fed, even if they pause, if you have upwards of 50 billion coming off the balance sheet per month, that is still tightening no >> credit conditions are tighter. you mentioned the credit market spreads did get quite a bit wider in december. volatility is higher equities had a down draft. all of those are tightening environment for the economy, and the fed right now is up against it i mean, the market has told it that if you continue the yield curve is going to invert, and we're going to have a slowdown i think what we've seen is the fed put for lack of a better way to say it, is no longer 10%. 20% sure got their attention

>> coming up, facebook ceo mark zuckerberg going on the defensive. he is lashing out in a new op ed this morning we'll talk about that next stay tuned you are watching "squawk box" on cnbc what if numbers tell only half the story? at t. rowe price, hundreds of our experts go beyond the numbers to examine investment opportunities firsthand. like a biotech firm that engineers a patient's own cells to fight cancer. this is strategic investing. because your investments deserve the full story. t. rowe price. invest with confidence.

>> it's time for the executive edge mark zuckerberg pending an op ed in the "wall street journal" defending the ad business and reiterating that the company doesn't sell user data zuckerberg also emphasizing that users have "complete control over how their information is used for advertising." you can check out the performance of facebook over the last year. there is the stock it is down about 22% over that period facebook has been under fire over a large portion of that period for some of its practices. the op ed is interesting there are a number of polls from here zuckerberg saying we have a strong incentive to protect people's information from being accessed by anyone else. some would question whether they've lived up to that obligation that zuckerberg so says he has in this particular op ed. another question he writes is whether we leave harmful or divisive content up because it drives engagement. we don't people consistently tell us they

don't want to see this content >> they will click on it >> are they doing enough to control whether your data is being used in nepharious ways? i think you could make the argument that they haven't done enough in the past you could i think fairly take issue with some of these issues. >> he does he does. publicly >> yeah. >> quite publicly. >> is it just perception is reality? does the investor think that they've done enough? do -- does the market think they've done enough? do facebook users think they've done enough? >> they want to be able to click bait >> no, no, no. >> the biggest question for facebook as a stock is do advertisers walk away from the 800 pound gorilla in the room? do they still get bang for their buck >> no, because there are only 200 pound gorillas in the room it's facebook and -- >> the fundamental tension of the business is there in the op ed, which is advertisers are the customer they want more relevant ads to be delivered, and they need to

know more about you to do that where do you strike that balance is the whole story starbucks reports hot sales, and the stock is moving higher this morning is now the time to add coffee to your portfolio to get more reaction, that's coming up next on ""squawk box." at&t provides edge-to-edge intelligence, covering virtually every part of your retail business. so that if your customer needs shoes, & he's got wide feet. & with edge-to-edge intelligence you've got near real time inventory updates. & he'll find the same shoes in your store that he found online he'll be one happy, very forgetful wide footed customer. 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 &. & if your customer also forgets socks! & you could send him a coupon for that item.

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♪ welcome back starbucks reporting first quarter results above wall street expectations. last night global comp sales also grew 4% versus an estimate of 2.8%. will slaybaugh joins us.

bit of a surprise on comps the stock has been a good performer going into these results. what's the main takeaway from this quarter where does it leave you on the stock? >> i think that the u.s. result of 4% was about in line with expectations it was more after the analyst day, you know, china was talked about a lot. there were a lot of fears there. they guided that positive for the long-term. that was at 1% there were a lot of fears out there that could be negative so i think that was the slight upsides where they manage in the face of rising labor so i think those are the two upsides to process we haven't had traffic growth there in a couple of years and also if you look at the traffic growth it's all ticket. 4% ticket growth the worry for me is it's increasingly discretionary if you look at the drinks they're selling. more cold brew, nitro, things that might not be as traditional as the coffee drinks >> in other words, can't rely as much on the average ticket going

up from this point on. why is the market like it so much it's kind of interesting i know you're neutral on it, less than half the analysts are expecting it right now skepticism over china or the whole business >> china is a big piece. it's a fully company-owned model. but in general, this is a company-owned model with a lot of leverage up and down if things go well or don't. it caught a defensive bid along with yum and with mcdonald's and others at the end of last year it's trading about 25 times at earnings 10% to 12%. that goes negative fairly quickly where a mcdonald's wouldn't it's catching an offensive bid at times >> what do you make of the pickup in their loyalty members? those are critical towards the company's success, right especially on the digital side of things. >> the big question about 2019

is they did well with the current base can you convert into loyalty members because those spend multiples of your oneoff guest will spend >> how do they grow traffic, right? if traffic was flat and that's deemed to be an improvement, where do we go from there? you addressed it already, but how do you grow it >> it's tough. they've been throwing a lot of innovation at the wall nitro, $5.50 cold coffee beverages. that's something you haven't heard a year ago it's a lot of innovation that might not draw that ritualism in the past innovation, it's in the afternoon. the afternoon is soft for them it got a little bit better this quarter. but it's a place that they have some room to grow. >> over happy hour as they call it >> when you look real quick at dunkin' doe nuts, the franchise model versus the corporate owned model, would you still stay there base d on a lack of --

>> i like dunkin'. given where we are in the cycle that's an easier place to be given the ups and kouns aren't going drive growth in much way or the other i think the ceo is doing good things in terms of driving their beverage growth platforms. espresso relaunched this past quarter. i think there's legs there >> i like that between what discretionary and nondiscretionary is. >> my brother drinks that cold stuff. maybe that's different from the nitro thing you're talking about. >> yeah. the highly engineered bigger ticket stuff we'll see. will, good to see you again. starbucks ceo kevin johnson will be appearing on "squawk on the street" later this morning so watch for that. steve? >> you're apparently taking over. >> it says steve >> i guess so. we have another big week of earnings coming up including apple's report

what will you be watching? or will you be watching? >> i mean, next week you do get a different profile of earnings coming through >> so i think what you're going to see is the last gasp in this rally, could have a little more breath in it i think the last gasp is going to be the u.s./china trade dispute ending you're going to see a pop in the markets. that's going to be a huge sell to the news. >> how critical are apple's earnings next week >> extremely >> we could be gasping for awhile >> we could be but that's why the market can move higher. sort of this -- scott, to your point, apple was a huge head wind to the overall market along with powell. so if they come out and they say, okay, it's not that bad which i don't think they're going to say >> they already said it was bad, right? since they sort of -- they already guided lower they telegraphed it. how much more of a surprise can it actually be >> china growth went from 10 to cut in half basically and we

don't really know what that level is, but it's -- i'll tell you one thing. it's not higher than six so head winds are extreme and apple's head winds are probably more than most >> you know what that music means? >> to hum? sing >> it means you're out of here thank you, steve grasso. coming up, we have more details on the roger stone indictment that just mapd. later, a report from venezuela ay tensions remain high. st tuned you're watching "squawk box" on cnbc comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers. "activecore, how's my network?" "all sites are green." all of which helps you do more

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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. good morning and welcome back to "squawk box" here on cnbc i'm kelly evans along with scott wapner and mike santoli. why? because joe and becky are making their way back from the world economic forum in davos. we will see andrew he's still out there he's got some stuff coming up for us, right? had. >> couple interviews coming up >> talk to him -- people still talking about wilbur ross yesterday. >> before he gets out of dodge >> here's u.s. equity futures at this hour. dow up 111 points. s&p up about 11. nasdaq up 30 so no real movement from the

roger stone stuff yet. breaking news this morning, speaking of, political strategist roger stone arrested in ft. lauderdale, florida, this morning following an indictment by a federal grand jury. the indictment which was sealed upon the arrest contained seven counts eamon javers joins us with the details. eamon, one count of witness tampering. mr. stone will make an initial appearance later today in ft. lauderdale >> that's right, scott we're learning a lot more detail here because they've unsealed an indictment which is 24 pages long revealing what the special counsel's office knows about roger stone's alleged conduct during the campaign. the key question about roger stone who was an outside adviser during 2016 was was he season intermediary between the trump campaign and wikileaks the group which released the stolen dnc documents we have not known the answer to that question heretofore

roger stone has denied all wrong doing. what we're getting today, though, is new information from the special counsel's office as you say indicting roger stone on seven counts five counts of false statements and one count of witness tampering. here's what the special counsel's office is saying in this indictment today. they're saying by in or around june and july of 2016, stone informed senior trump campaign officials that he had information indicating organization one, that sp wikileaks, had documents whose relouis would be damaging to the trump campaign they remind us those stolen dnc documents were releasedon july 22nd if roger stone was telling senior trump campaign officials in june or july of 2016 that he was aware of this, then the question becomes how did roger stone become aware of this what they're also saying here is that stone made deliberate false

statements in some of his testimony to the house intelligence committee about his involvement in all of this they're saying that stone made false and misleading statements including about his possession of documents related to this investigation. also the source for some of his statements, requests he made for the head of wikileaks and communications with the trump campaign about organization one. to the special counsel's office here in this indictment is saying that roger stone made false or misleading statements, that is lied under oath about all of those subjects. so we'll see what roger stone has to say he has denied wrong doing in the past he has said that he expected to be indicted, however, during the course of this investigation so this was not surprising that it happened. surprising in terms of the timing and early morning arrest here of roger stone in ft. lauderdale, florida. as you say, we'll be expecting to hear from roger stone himself or at least see him at 11:00

a.m. east coast time all that going on. meanwhile, here in washington, they're trying to figure out how to resolve this government shutdown so you can expect it will be a busy news day here in washington on this friday >> yeah. one more thing on the stone thing. >> sure. >> it's also clear at least alleged in the indictment that these weren't one-way communications this wasn't stone, mueller's people allege just reaching out to the trump campaign about organization one being w.i.ik wikileaks. they say in the indictment this morning that mr. stone was contacted by senior trump campaign officials to inquire about future releases from the organization one otherwise known as wikileaks >> and that's a key point, scott. what they're saying here is this was a two-way street in the indictment, they lay out a stream of communications by roger stone about wikileaks both before and after the public release of those documents and they do say that senior trump officials, campaign

officials reached out to roger stone to get more information, in effect, about what was coming next from wikileaks. and they have a stream of e-mails, text messages, and other communications here in which roger stone is communicating with various people in and around the trump campaign suggesting that he knew what was coming and giving people in the trump orbit a heads up about wikileaks in effect so that could be a damaging piece of evidence if it bears out. remember, everything in an indictment is just an allegation by the government they're going to have to bear all this out in a court of law and roger stone will have an opportunity to defend himself politically, this indicates that some trump campaign officials were asking roger stone about wikileaks and what was coming next, that would indicate some degree of cooperation with roger stone whether it amounts to collusion or a cooperation with wikileaks which u.s. intelligence has suggested was in bed with russian intelligence that's an open question at this point.

also an open question is who are those trump campaign senior officials that roger stone was communicating with and what, if anything, did now president trump know about all of this back in 2016 or today >> eamon, thank you. eamon javers in washington covering that early morning breaking news for us today there are a couple of big corporate headlines to tell you about as well this morning home builder d.r. horton reported profit of 76 cents a share. 2 cents short of estimates revenue did beat although higher prices and interest rates have impacted demand pl also out with earnings moments ago, colgate palm olive, 1 cent above estimates. perhaps more importantly, that was up better than anticipated by analysts. microsoft's binge service was restored in china after access was cut off earlier this week microsoft is still trying to determine exactly what happened. we have a couple of big

stocks to watch this morning starbucks reported an adjusted quarterly profit of 68 cents per share. that beat estimate biss by 3 ces and stock indicated up to be about 3% intel did beat estimates by 6 cents with $1.28 per share but revenue missed forecast and a weaker than expected guidance for the current quarter. pointed to china about the a key reason let's get to the broader markets now. joining us now, sarat satis. our guest host for the hour. david bailin from citi bank. sarat, turn you first. you wouldn't expect it to, but we are looking at a higher open. what do we make of the way we've traded this week >> i think now the market is kind of moving to this tariff issue. and i think it's kind of

discounting some positive news i don't know why we still don't know what is happening. we're getting indications to say they're not really that close. but earnings are coming through. we've got some solid companies coming except for intel. and people are saying things aren't that bad. maybe we got oversold in december which we think we did but things aren't really that bad. and valuations have really come down you're at 15 times earnings compared to 18 the beginning of last year. and certain sectors like financials have really been punished so you've got some basis to where we can go from >> thing mace not be that bad, but they don't appear to be all that great either. it's not like earnings are gang busters. >> no 37 but the fact they're not deteriorating is what's important. and what we're looking at is a situation where you have a slowdown that's taking place, but not something where there's an imminent recession. and i think there's a lot of fear that's been digested really since last october in that markets now seem pretty normal think about what happened this week everything out of davos sounded

pretty negative. >> as usual. >> a year ago, everyone was, like, everyone was happy about the world. i don't know if it's always that way. >> right but what i'm saying is if you take a look at the week, you have news on china, political news today, what's going on in davos. and then the markets ended up closing well even in china all across the globe >> i wonder, though, if we can kind of set as a premise that december was this very intense overshoot to the downside because of not just the fears of a big slowdown, but liquidations of hedge funds a lot of extraneous things as well if we say for now, that's the low. what's the ceiling because i wonder about how much the market is going to try to put a bigger valuation on earnings that are still eroding for 2019 that's a big question there. >> i'm not sure that it's eroding. the growth rate is slowing >> we're talking about below 4% for the next three quarters.

>> aren't we at 2.7% >> the revenue growth is actually better. >> it's under 3% the first quarter of this year. >> we were expecting higher earnings in general in the u.s. than are currently projected some between 7% and 8% also with valuations being where they are, you can imagine that the market could be 7% or 8% higher from here or if you want to look at it differently, we could close at a slightly higher high than last year >> i think what's happening with a lot of companies, you take stanley black & decker, you're not giving forecast to what's going to happen. you don't know if the tariff is going to be 10% or 25% you just need clarity. what is it going to be i think at that point -- >> are they ever going to get it >> that's why these stocks are trading at single digit multiples. because you really can't put your arms around it in the short-term our quality is high franchise companies, you're getting an opportunity to have it in five years. but it's a rocky ride. it's volatile. you know, month to month when you're looking at kind of what

you own, you really have to have a strong stomach >> i wonder if the other story line that's developing nowis guess what central banks are not your enemy anymore. they're your friend. the ecb stalled where it was china overnight making greater efforts. meanwhile, this "wall street journal" story saying it might settle at a higher level than before we can see the end of quantitative tightening. we're back in the low and slow >> a lot of countries globally are going to look at how we get our economies jump started and fiscal policy is something that hasn't happened yet but then the fear that will come is does that lead to inflation then our fed will be back in the picture again. you're going to be in this range bound and stick with what you really want to own >> do either of you think we retest the lows? >> i don't think so. i think we're seeing a lot of this fed policy that was the trigger event. december 19th. the market was down almost 10% from there with a somewhat accommodative

policy, i don't think we test those levels >> i think to your point, so much negative news has come out already in the last week >> you agree >> i do agree. i think you can have days where you go down 2%, 3% volatility is back but i don't think we go back to december 24th lows maybe 5% down and then kind of steady from there. >> a new and interesting question is not to say there's a particular s&p level where the fed is going to say fine we can get a couple of hikes in there, but there's financial conditions when the fed would be back in the game, right? >> you could match if the china issue is completely resolved which i can't imagine it would, but if it did, then that would be a boost to the market, a pretty big hop and that plus some good news could make the market go up and in which case people would feel inclined to do that. but look at the forward curve. they're not thinking there's going to be any. there could be one you know, those kinds of numbers, you can tolerate the 10-year at less than 2.80% now >> but there's still a gap between where the market is and

where the fed is on paper. >> correct we'll see what they do so we're in that situation when you could be where there's simply not that much tightening. then you could imagine a long slowdown that could last for a long time without a recession. >> to mike's point, i wonder if the market is ahead of itself on this notion that the fed is going to sit back now and do nothing. >> yes and i think you're right on that if you do the things you just talked about do happen, rates are still low. historically, we still need to raise rates. when things do get bad, we need to have some ammunition. right now they don't have any ammunition when that happens, then we're going to get -- we're too early for is that. we've got too many things to get resolved government shutdown, tariffs, earnings you know, right now we don't see that but yes, we will see that coming down hopefully >> whether that means the market's ahead of itself or it's capped at some level right? where you have to think the market would be up on a 12-month basis and the vix would have to be below 18 or something before the fed says okay, all is well

>> the market so badly wants to believe right now that the fed has changed its tune and that if not changed its policy and is going to be now on the sidelines until further notice and the minute there's any upset to that -- >> powell could call the market's bluff at some point >> thank you dave, good to see you. sar sarat, good to see you coming up, violence erupting in venezuela as tensions grow. plus we head back to davos for a rare interview with robert smith of vista equity partners just moments away. stay tuned you're watching "squawk box" on cnbc when you retire will you or will you just be you, without the constraints of a full time job? you can grow your retirement savings with pacific life

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. with just five weeks to come up with a deal, the u.s./china trade talks seem to be at a stand still. kayla tausche joins us with the latest >> the white house economic officials have offer sod many mixed talks on this trade talk yesterday wilbur ross of the commerce department said they're miles and miles apart. secretary mnuchin said they're making a lot of progress but one point has become clear without enforceable promise on intellectual property violations, there will not be a deal president trump reinforced that position yesterday and said he's actually happy with the money the u.s. is currently making off of tariffs >> we're charging tremendous tariffs now and they go up as of march 1st.

very substantially i think china would like to make a deal, we'd like to make a deal i like where we are right now to be honest. we have billions of dollars coming into our treasury billions from china we never had 10 cents coming into our treasury. now we have billions coming in but if we could make a deal, that'll be great, on intellectual property and theft and all the things we're talking about in addition to taxes themselves >> so everyone's trying to glean what this means for next week's meetings with the chinese when their delegation comes to washington larry kudlow said yesterday that next week's meetings aren't the end of the game for those talks. of course that march 1st deadline is potentially a very big deal bigger than next week because those tariffs go up. some officials in the white house have begun raising concerns about how close the march 1st deadline is to the february deadline for auto tariffs. they could delay the auto tariffs report citing the

shutdown so those two potentially market moving events are staggered. we're still waiting for any official decision on whether that would be the case but they are aware of these deadlines on the horizon and the potential impact on stocks >> okay. kayla, thank you meteoric move on the political front in venezuela in just three weeks, whjuan guio we're now joined from caracas. a lot of talk now about whether cuba and russia and some of those other plays are coming to a settlement to get maduro out >> well, right now this is an intense political fight going on there's the international movement that's behind the national assembly president who has declared himself the interim

president with basis in the constitution the streets are controlled by maduro right now so it is going to be, perhaps, a very intense, entrenched fight we don't know how it's going to happen but basically the involvement is something we haven't seen in past bouts of unrest in venezuela. >> do you agree with those who say there's no way maduro will be pushed out unless the military turns on him? and how likely is it that they would do so? >> i'm sorry, i couldn't hear you. >> how likely is it the military would push maduro out? >> all right we knew we had a delay there we lost the sound. let's talk about the impact on the oil markets. joining us now is john kilduff and our own brian sullivan is

standing by to talk about this one of the issues we spoke about yesterday is that our refiners and venezuela is the fourth biggest supplier to the u.s. last year. they make heavier grade crude. it's cheaper we could lose access to that oil. so this morning, you know, what are your thoughts on all this? >> it's been a modest premium priced in right now as a result. part of that problem is wti oil is a lighter blend the type that venezuela provides is in more demand. venezuela makes it viscus.

as a result of that, if we were to impose sanctions on them, it could throw a monkey wrench in the oil market not only would we not be buying their oil and our key refiners would be losing out, the world wouldn't have the by-product to make theirs flow >> russia has an interest in venezuela being able to produce that crude which it's almost not even doing anymore >> -- started talking about maduro funny how that happens either way, yeah john's right focus on the diesel market venezuelan oil is important for diesel fuel because it's thicker and more ooey. diesel is used in trucks and trains to transport goods around the united states. there is an impact to the american consumer. on that side, kelly, the big russia oil company bailed out the venezuela oil company a few years ago. they also have kind of an

interest in citgo which is owned by the venezuelan group. china is owned $20 billion from venezuela. that may be -- there's a money angle to this oil story as well. >> and john, you still are bearish on overall oil prices, is that right? if there's talk of sanctions, a rumor of it, we're going to see a spike. but you're not saying you think that's really going to happen. >> i mean, unfortunately maduro has run this once crowned jewel of a company into the ground except that when you get into the weeds of this stuff and as brian just talked about, the transportation sector is vulnerable on this front you know, we've kind of wrote it off to zero almost they're at about a million barrels a day. given how much rush there's been from the shale and improvements in liberia we kind of -- what happens if

there was a crisis and nobody cared in venezuela that's what we're seeing >> that's exactly what we're seeing it's unfortunate, brian. the u.s. is finally at least coming out saying we recognize guaido unless the military turns on maduro or someone else, someone else can come up with this deal or push him out, we're looking at the status quo. >> it is there's a difference between the military and the military leaders. the generals who are all maduro appointees and in his pocket, they can say they stand by him they're hissed buddies they get rich and paid well. whether the rank and file will go with their military leaders, that's a different issue that's called a coup you have a country with two

competing governments. a we'll see if this opposition can hold out they're not going to be on the streets. they have to be careful because the maduro regime will have no problem locking people up. >> before we go, is there going to be more of a transition in the u.s. towards processing the light sweet stuff we're fracking more of imposed to the imported heavy crude and if that transition is going to take awail, will that make up for the loss of the venezuelan >> there's an incentive for them to move toward our lighter sweeter oil. they're being forced in 2020 to go to a cleaner burning fuel that will require less sulfur to be in that fuel. i don't want to cause people's eyes to glaze over this morning. >> john, you're not. let me tell you, the imo 2020 rules you're talking about, you know, i do this rbi on "worldwide exchange. i'm going to call this bbi

boring but important i'm pitching something bigger on that that's a huge deal for oil >> huge deal it could play right into our shale powerhouse. >> if that happens, we'll have less reason to care about what's going on in venezuela. >> yeah. they're in trouble >> john kilduff, thank you for joining us brian, thank you as well good to see you again, our brian sullivan when we come back, a rare interview with a titan of private equity robert smith will join andrew in davos. it's an interview you can only see on "squawk box." that is straight ahead as we head to a break, take a look at u.s. equity futures to see slight setback in the gains. but still the s&p 500 set to be up about 0.4%. we'll be right back.

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tampering. mr. stone, an alley of president trump, will appear in court later this morning two, sears creditors challenging the sale edward lampert saying he used a variety of efforts to take billions out of the company while driving it into bankruptcy three, starbucks shares are surging after better than expected earnings and a 4% jump in u.s. same store sales the ceo right there kevin johnson will appear on "squawk on the street" and that is at 9:30 eastern time. coming up, we head to davos and the world economic forum where andrew has a special guest. if you have been living under a rock for the past 24 hours, wilbur ross lighting up social media and news wires after this comment. >> i know they are and i don't really quite understand why. because as i mentioned before, the obligations that they would undertake say of borrowing from a bank or credit union are in

effect federally guaranteed. so the 30 days of pay that some people will be out is 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 >> we will have much, much more on that after the break. ♪hold on, i'm comin' ♪hold on, i'm comin' ♪hold on don't you worry,♪ ♪i'm comin' ♪here we come, hold on♪ ♪we're about to save you i'm comin', yeah♪ ♪hold on don't you worry,♪ ♪i'm comin'

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welcome back to "squawk box. here's a look at futures we have triple digit gains for the dow. the nasdaq up 26 and again germany's index not very strong. even the dax is one of the better performers in europe right now. >> yeah. some dovish central bank talk. that's what we have to hang our hat on plus the market hasn't come in a lot. >> all right so they're couping let's head out to davos. do you turn the lights off when you leave? >> you know, we -- you can't turn the lights off here because

it's so beautiful out. i don't even know what we're going to do. we will take our lights down, how about that but thank you for that we are here in davos and we do have a very special guest to end the world economic forum things are just wrapping up. robert smith is founder of one of the world's most -- and i also want to say you are the first and only african-american to be part of the giving pledge. >> one of many to come, hopefully. >> hopefully we can talk about that and i should also say a cornellian too so go big red. >> right >> let's talk about what's been doing on here in davos this week it feels like a tale of two cities i know it's sort of a bit of a cliche most people seem to say their business is going well they're expecting earnings to be okay then there are these dire warnings about a recession that is looming on top of it. >> there's a couple of dynamics

at play. the first and we've been talking about this, first let's not talk ourselves into a recession there's a dynamic where there's still massive productivity being introduced to every industry and a lot of it is driven by technology i'd like to say that software is probably one of the best indicators and drivers of that productivity so you're seeing a massive upswing in productivity and to expand the businesses leveraging technology i'm not sure all the economists can factor all of that into a lot of their figures and numbers. and i think that dynamic is still missed when we first came here a few days ago, it was, you know, a feeling of pessimism of course we have a government that's shutdown. we have a brexit that may or may not happen and a trade war that's been causing a bunch of tensions as speak to heads of state and business managers, we're figu figuring out business is moving forward and business leaders are thinking how they drive that productivity into their teams. and into the communities in

which they operate and that created the swell of optimism we didn't have the first few days >> maybe we were dealing with the hangover of december and what happened in the markets you did mention the government shutdown before we came into this segment they showed a clip of the conversation we had with wilbur ross yesterday that really did go viral in many ways in terms of the commentary from the administration and what it meant both in terms of thinking about it economically but really thinking about it on a personal level. how are you looking at the shutdown, yourself and more business >> there's a couple of dynamics. one i've been focused on here, what are we doing about it some are saying we're going to offer opportunity and offering loans, for instance, if you look at what they're doing in paypal and what dan's doing it's phenomenal. saying let's help the constituents that we deal with we atavist ta have been helping air traffic controllers in

austin making sure they have the opportunity to move their families forward the dynamic is business leaders are stepping in making sure the communities which they operate in are actually somewhat cared for. the government needs to get back to work. we need the government for inspection of our food and drugs and all sorts of things. helping move the society forward. >> i'll ask you the same question i actually asked secretary ross yesterday which is alex karp cape on our program from palantir. huge government contractor he said he believed the government shutdown was terrible for the brand of america as he walked around here, that it wasparticularly damaging. >> yeah. >> true or not true? the answer that wilbur ross gave was hyperbole. >> i think it's true people here still look to america as really the bellwether, the leader of how society should be structured, should be governed and frankly, if you shut down

that infrastructure, it disables us to do business. people look at that saying why is that ineffective? what are you fighting over and what's the dynamic there everyone is ready for america to get back to work and move forward and lead and not only the business leadership but the moral leadership of this >> you sell a lot of your enterprise software product all over the world >> we do, yes. >> what are you seeing what do you think is coming out of asia, china, europe sort of take us on a little trip >> yeah. it's a long conversation we now sell in 175 countries we operate in essence over 60 portfolio companies that in essence are in over 62 different industries the dynamic is as follows. our customers are realizing the value that enterprise software brings to management business, expanding their opportunities, engagement with their own customers. we're seeing a continued consumption of software. the good news about that is as we're seeing that, we're seeing

companies be more productive. >> do you see it slowing out of china? i was with the ceo of a major chinese company yesterday who must use the word ugly and the word economy in the same sentence five times in a row >> i have to say, you know -- >> he wasn't even talking about u.s. trade tensions. >> when you think about drawing a 40% in terms of software growth, does it go down to 32%, it isn't sluggish. they're saying the overall economic growth is mid to high sixes. that's still pretty decent and you look at india. still growing over 70% two new presidents saying they're pro business, anticorruption >> when you look at the economic cycle and we've asked this question of every private equity titan as we've called you this week, are we in the planting or

harvesting period? are we at the end of the cycle >> i don't think so. i think we're still in the middle of it >> middle? >> yeah. in the middle. >> by the way, jim coulter said this was like a fraternity party. and they just brought in a new keg to get things started with fiscal help. now it's like 4:00 a.m it gets crazy after 4:00 a.m >> i don't know the fraternity he was in, but the one i'm in we're focused on trying to drive growth and productivity. there's still so much efficiency that could be taken out of underlying industries that technology brings. then you'll start to introduce the next generation of catalysts. you know, artificial intelligence, machine learning, ledger technologies. those create, again, another accelerant to the efficiencies those efficiencies aren't really what i'll say are being captured or realized in a lot of the economic figures we have a chance, we have over 800,000 customers. when i look at how we're performing in those businesses and serving those customers, those customers are not slowing

down their consumption of the software they are realizing the dynamic that our software brings >> let me ask you a different question the opening panel of davos this year i hosted was around the idea that tick companies, there's not enough competition in the tech space because of amazon, because of google, because of facebook, because of the biggest players. ginni rometty just bought red hat. a business you probably focus on a little bit do you think there's competition in the tech business >> here's the dynamic that's been interesting there there's been a massive distribution of computing power. okay and as a result of that, amazon and others have distributed that computing power. computing power went from a thousand dollars an hour to now 30 bucks a month as a result of that, you have massive innovation occurring most of those companies are private. >> you think all the hand wringing is too much >> no, there's a few big companies that actually they were first movers, took advantage of the opportunity they have massive distribution of their products and services

but the innovation cycles are accelerating there's 100,000 companies. 90% of them are private. we see them. that's the world we live in. in many of those spaces, there's adequate competition and that competition will ultimately, you know, end up in a place that would have consolidation in those industries where you have fewer winners. >> before i let you go, when you walked in here you said you were crying because of what you just saw. >> right >> tell the audience what you just did and what you just saw before we send it back to new york >> i have the great pleasure of supporting an organization called the sphinx organization founders and stewards of this organization, they get over 10,000 inner city kids this year in helping them bring classical music from their hearts and souls to people. they get over 2 million people a year we brought them for the first time here for the closing ceremony wasn't a dry eye in the house.

they were spectacular. and as the way to end the conference like this with hope and optimism through our young people >> all right we'll leave it there hope to see you back in new york. >> we will see you at cornell >> all right >> andrew, thanks very much. coming up, intel slammed in after-hours after a week of guidance and trouble in the cloud. we'll get an outlook for the chip sector after the break. intel's interim ceo robert swan will join "squawk" later today

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let's get back to headquarters dom chu joining us with more >> let's look at some of the earnings movers today. colgate palmolive. another one to watch from last niegd is resmed down about 14% after its sales came in below some analyst estimates this company makes a lot of gear related to copd also sleep apnea, that sort of thing. then one more to watch here as we kind of take a look at the end of this cycle. western digital shares also higher on some expectations that the company will have some better results in the coming year now, all of those companies in focus but certainly the one we're going to watch especially in the dow is going to come from intel. the semiconductor's very much a

big part of the trade talk today because of those results coming out from intel whether or not it does gain some momentum will be a big part of the trade today. it is up decently at least in the premarket. down not that much, i guess, mike despite the fact that intel's results were as we can as they were. >> we will pick it up right there. intel shares sliding after weak profit guidance for the first quarter. robert swan spokeabout the hea winds facing the company >> we expected a stronger finish fourth quarter revenue of $18.7 billion was up 9% but short of our expectations as a result of a dramatically weakened demand, lower overall growth in china, cloud service providers absorbing capacity, and a weakening price environment.

>> for more on intel's earnings and its outlook for weaker guidance, we turn to chris caso at raymond james he's here. great to see you >> thank you. >> the stock had performed relatively well going into this. it's been a defensive choice so where does it leave us? >> we've seen weakness in the semiconductors in general right now. you know, before this texas instruments yesterday for the second quarter in a row lowered their numbers, talked about broad weakness we had downgraded the group early on in september. there was deceleration in cloud. cloud's been the best part of intel cease story. it was up the first three quarters of the year that's probably the most surprising thing there was a which indicated that business, the total data center business would be down about

double normalcies and suggests maybe 15%. that drives down year on year. it's a significant deceleration. >> again, is that an intel issue? because there has been talk about a lull in investment >> certainly what happens, you know, this is just cyclicality in the group and what happened is the first half of the year, a lot of these cloud service providers, you know, bought a whole lot of product and now they have to digest it. doesn't mean cloud is cover. but what it does mean is the growth rates we were seeing in the beginning of last year were not real growth rates that they were overstating what the real level of demand was. >> see a comment about china and the slowdown there what is the degree to which that's a story that's made up or actual >> based on my companies and the work we've done and conversations we've had, it's real and we've seen it in every area of semiconductors. you know, it's not just in

sales. we can hear it from the rest of earnings season. but we've seen it pretty broadly. again, you know, touching on what texas instruments said. it's not just china, however ti said they saw a slowdown in every end market, every geography. china just happens to be the worst. >> what's the story with the cor o? why can't they name a ceo? is it dragging on a little bit too long >> and the tough part, you know, aside from some of these knee term issues with cloud and gdp issues, there's also some structural issues as well. the fact that moore's law slowing down they've caught up now. and that's challenging for a company like intel which had a lead for awhile. without having a ceo, there's decisions that need to be made and obviously you're not going to make those decisions until you put somebody in the seat >> what does it say about the company that they can't find a ceo? in terms of the cloud thing, too, salesforce knocked it out

of the park. that stock is indicated higher off the open today >> but still it's not like the cloud space is falling apart >> yeah. >> what does it say that they can't find a ceo >> what he's told some of us is they wanted the board to be unanimous with the decision. that there's different ways they can go intel is investing a lot in mo dem right now. that something you stay and do do you stay in the memory business which, you know, obviously digital last night, memory's not very strong now it was marginally profitable at best those are the decisions you can't make without having somebody at the helm >> just, you know, the stock's at 11 times forward earnings it's not priced for any real growth here. is it getting towards some base

level? >> it's hard and let's see what the stock does today one of the things, you saw the action in semiconductors yesterday where you had some very poor reports that that stock actually went up one of the things we look at in terms of finding a bottom is stocks not going down on bad news let's see what intel does today. >> all right we will be watching. thank you very much. >> david, thank you for spending the hour with us you're saying it's not vietnam, cambodia >> plenty of places where the substitution effect is going on. when you hear what robert smith has to say at the end of the day, that's pretty encouraging you'll see this worldwide growth in productivity and sort of what's going on in the markets right now. >> great to have you with us for the hour >> appreciate it we'll be back with more on trouble in the sky and how the government shutdown could affect flights. pilots issuing a warning and as we head to break, take a look at the premarket winners and losers back in a couple minutes

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good morning welcome back to "squawk box" here oncnbc live from the nasdaq market site in times square i'm scott wapner with kelly evans and mike santoli andrew cease still in davos. we'll hear from him with a special guest. look forward to doing that let's look at the futures right now set for a positive open across the board dow would open triple digits to the upside s&p would be up by 11 and the nasdaq would be higher by just shy of 33 points the implied open there. >> did andrew just do a head nod? >> he did. >> yeah. >> wow think he can still hear us right now? >> probably. did you want to talk to him? >> no. i just -- >> can you hear -- >> hey there

i did a head nod on my own show. and yeah how you guys doing are you enjoying the set there back there in new york >> it's warm >> we can keep this going. what do you want to talk about >> what do you want to talk about? you're right there, andrew it feels weird like i don't want to keep going if you're right there. >> i'm right here. we can talk about treasury yields you're about to read those we can talk about wilbur ross. we're open to all topics you've got eamon javers in d.c >> we'll go to eamon in a second but since you brought it up, it is your interview yesterday and specifically your question to wilbur ross the commerce secretary as you said went viral. and really beyond that z you do wonder if that is going to be one of the defining moments, those comments from wilbur ross. and i wonder if you could have a sense of that sitting there when

you were doing that interview? >> a little bit. i mean, i think like everybody who's seen the clip, every viewer watching yesterday, it was one of those moments where as he spoke, you know, your eyes widened and a little bit of disbelief. i understood what he was trying to say he was effectively making a narrow economic argument, but i think it became and it will be used to sort of demonstrate how telling it may be about, perhaps, the prism with which the administration is looking at this and the humanity or not that the discussion is being had. i will tell you over here as i walk down the street yesterday and today, we're getting stopped. i know becky and joe last night, people were talking about it everywhere it's interesting also because the conversation that happens out here in davos, by the way, almost every ceo now is talking about their employees. what do you do to help your employees and how you think

about that by the way, if you're a government, how do you think about your employees so it clearly was a moment i think the questions we were asking really were the same questions i think most of our viewers would have asked in that moment i don't think there was anything special particularly about the question and i do think, you know, as the day progressed and you saw secretary ross dare i say clean up some of those comments, i think he recognized the way he said it and his approach didn't go over well the question is whether that was a mistake in terms of just the wording or if it was a mistake in terms o the intent. that will be the debate. >> perception is everything. regardless of the intent, this, that the, or the other thing sometimes the most simple questions are the best ones. anyhow, we'll come back to you for another great interview.

appreciate your coverage from davos. we'll see you in a moment. that government shutdown we're talking about is now surpassing five weeks. many workers are missing their second consecutive paycheck today. eamon javers joins us now with the latest on the investigation. eamon? >> good morning. we're going to findout today whether they can come up with some kind of deal to reopen the government the united states senate yesterday failing twice in two separate votes to get a deal to open the government. one vote was a spending bill which had the wall funding that the president wants. the other vote was a democratic bill that didn't have the wall funding. neither one was able to get the required 60 votes. we'll wait and see whether the deal makers can come up with a deal that can pass the senate today or next week meanwhile, this bombshell news of the arrest of roger stone, the trump campaign outside adviser, arrested early this morning. indictment unsealed. here's what we know about this indictment it's one count of obstruction, five counts of false statements,

one count of witness tampering we know stone will appear in court in ft. lauderdale at 11:00 today. important to note here that none of these charges in the indictment appear to relate to the underlying conduct of possible communications between roger stone and wikileaks, the outside group which released those hacked dnc e-mails but the indictment includes a lot of detail about stone's communication with the trump campaign and others around president trump's campaign about wikileaks. including this they're saying in the indictment, the special counsel's office is by in or around june and july 2016, stone informed senior trump campaign officials that he had information indicating organization 1 that is wikileaks had documents whose release would be damaging to the clinton campaign they're also saying in this indictment after the july 22nd, 2016, release of documents by w.i.ik

wikileaks, a senior trump campaign official was instructed to contact stone about any other releases and what other damaging information organization 1 had regarding the clinton campaign stone thereafter told the trump campaign about future releases of damaging material by organization 1 so a couple of questions here. who is the senior trump campaign official who contacted stone about these wikileaks document dumps? and who directed that senior trump official to contact roger stone? so a lot of questions here, but some answers being unspooled by the special counsel's office an indictment is just an allegation roger stone will have the opportunity to defend himself in court. we expect to hear his appearance in court today the shutdown has had a severe impact on the travel industry the unions representing air traffic controllers, pilots, and flight attendants issued this joint warning. we have a growing concern for

the safety and security of our members, airlines, and the traveling public due to the government shutdown. this is already the longest in the u history of the united states and no end in sight we can't even calculate the level of risk currently at play or at what point the system will break. it is unprecedented. joining us now is the spokesman for the allied pilot association. i asked the ceo of american airlines about this yesterday. he said he doesn't think there's any risk, that there's anything people should be worried about this is a pretty dire statement. should it be >>. >> well, it's a question of right now first i want to thank every tsa worker, faa official who is contributing to that margin of safety and our air traffic controllers. they have stepped up in their performing so our aircraft right now, we don't take the aircraft off the gate unless it's safe and secure and that hasn't changed today. but there is an immense amount of pressure and stress on that

system and we're beginning to see it and it's got our attention and we're calling on our elected officials. we're not picking sides in this. but we are imploring them to come to a resolution, a collaboration that focuses on the funds aviation then the rest of the business that needs to get done in their tasks to do can get done aviation should be a separate issue. it's too important to our country. >> dennis, walk us through so if we're sitting on a plane, walk us through what the pilots are doing. sort of as they're in touch with parts of the government through every step of the way. and what specifically you are worried about throughout that process. >> well, it's a crew those officials we mentioned, we're all part of a crew i've got my flight attendants on board, my first officer. one of my crew members is distracted or under stress, we know from our training it can affect performance i served in the military on

through the airlines it's the same. that aircraft is flying at near the speed of sound with many souls on board if it degrades your performance, it's going to get our attention and we're obligated to call that out so it doesn't affect the margin of safety right now the professionals outz there are maintaining that but we're here to tell you it's under pressure and under stress. and we want that corrected before it becomes a bigger issue.% >> so we're day 35 might be 36 now of the shutdown. first couple weeks people said, all right. here we go again but now we're getting to the point where lots of different partss of the government that touch people's lives from the fbi to, you know, we talk about the banks and some of the impact there. this is sort of the web, the tentacles. it's spreading are you noticing any impact on business yet i mean, what's happening from the fact that we understand a

lot of the tsa agents aren't showing up and the airlines themselves are now putting a lot of personnel out there to keep things running smoothly. >> sure. the business perspective and our pilots in american airlines watches the business side very much this is where if our companies thrive, we're going to thrive. i know delta just reported a $25 million forecast on this southwest proportional numbers as well. and my company, american will report going forward so there's uncertainty out there. it's certainly affecting earnings and that's important as you mentioned, those other industries but when it comes to actual aviation what's unique about us, it's an unforgiving task and profession. there's not a whole lot of room for hyperbole and debate >> that's actually why -- for there to be a statement this strongly worded either means the level of risk must be extremely high or they're using this, you

know, as a political moment. so do we travelers have anything to be worried about or not here? >> the risk right now taking the -- being on an aircraft right now is safe. that is what we are tasked to ensu ensure and all the professionals out there working are making sure that happens but we're calling out that that's not going to last forever. because we're seeing it's a symphony of safety out there when certain players are pulled off the field or are distracted, you're getting down where the tune is not so fair to the ear and that's what we're starting to notice now. we're calling out a warning shot saying, look, this has got to be resolved aviation should be carved out from this. >> all right captain tajer. let's get some reaction to what we just heard joining us now dan kildee. members of the house ways and means committee. good to see you this morning >> thank you. >> you want to comment on what we just heard from the gentleman who was joining us here? we have had more dire warnings

from the air traffic controllers union, et cetera >> i think what this shows is there are real consequences to this shutdown. i think the president and obviously the ignorant statement made by secretary ross suggest they don't understand there are consequences when it comes to air safety, there are a couple one, sooner or later there will be an impact do you want your air traffic controller, for example, who's already engaged in a pretty highly stressful activity having the additional worry of not being able to pay his or her mortgage or rent or having enough food on the table add that stress to that stressful job, of course at some point in time it's going to have an impact. but i think more immediately what we'll see is a slowdown we'll have to see employments cut at airports in order to accommodate the fact some of these folks will have to make decisions they're going to move on with their lives and find

other work and there won't be the workforce to do this for the important safety work. >> right >> so for sure that's going to be an impact if this doesn't get settled soon >> what's going to settle it very soon then >> we just have to open the government i've been very clear on this this is not the way to settle a dispute over a specific policy difference top have one party in this case the president decide, not accidentally fall into, a shutdown but decide he's going to shut the government down because he can't win the argument over this one very specific policy discussion this is just no way to run any organizati organization, let alone a government how did -- do we solve it? somebody has to get a backbone if the senate, mitch mcconnell, anyone in the senate gets some backbone and simply takes up legislation that we've now

passed in the house 11 times to open the government, then we could continue the debate about border security or any other issue we disagree about. >> how much more money are you willing to give on border security >> we've already offered a lot of money on border security. the question isn't really about the amount of money, it's about whether or not we're going to employ the president's seventh century solution to a 21st century problem in order to satisfy a chant at a political rally. or if we're going to do something serious about border security we're happy to do that we've offered time and again >> you've offered $1.4 billion, right? are you willing to go up on that number >> absolutely, of course we will >> to what number though >> you're missing the point. >> no. >> the number is not the problem. it's what we spend it on it's what the use is for back in 2013, the democratic controlled senate passed comprehensive immigration reform that over ten years committed $30 billion to increased enforcement, border security, enhancements at the ports of

entry. we're willing to go big on this, we just don't want to go stupid. that's what the president is asking us to do. >> before we let you go, there was a well known financier here in new york, bill ackman, he wonders aloud this morning on twitter why our elected officials are being paid while 800,000 federal workers do not do you have a problem -- i mean, should you guys and ladies on the hill be getting paid while 800,000 people can't pay their bills? >> i don't think anybody should at this point in time. and this is -- but let's face it everybody should be working and everybody should be getting paid for the work they do the idea that we have to accept is a fact that 800,000 people have to go without pay so that must mean that everybody should concedes to the president that he has an even bigger weapon to try to get us to do something that the legislative process won't deliver otherwise. so i think it's a pretty

poignant commentary on the situation, but it's kind of a pathetic one as well. >> congressman kildee, we appreciate your time this morning. >> thank you coming up, we'll get into the fallout from commerce secretary wilbur ross' comments on federal furloughedworkers and a global environmental icon joins andrew in davos. you're not going to ntwa to miss this stay tuned you're watching "squawk box" on cnbc

yesterday's "squawk box"

interview with wilbur ross generating buzz all over the place from washington to wall street even to switzer land. here's what happened >> there's reports there are some federal workers who are going to homeless shelters to get food >> well, i know they are, and i don't really quite understand why. because as i mentioned before, the obligations that they would undertake, say of borrowing from a bank or credit union, are in effect federally guaranteed. so the 30 days of pay that some people will be out is no reason they shouldn't be able to get a loan against it. and we've seen a number of ads for financial institutions doing that >> andrew ross sorkin is still in davos i just saw some notes. i think rick vallier saying that may have been a turning point for the trump administration we saw larry kudlow come out later when he was asked about

it, no i mean, he really rallied behind government workers and the president even tried to put some distance here >> right >> but the damage was done >> i'll tell you, i do think it may be a turning point both in the conversation around this government shutdown itself and i think you're startsing to see that and you're seeing the backlash because i think in some ways, it laid bare the prism with which this conversation's been happening at least on one side of the aisle and the lack of humanity about it we talk -- we're a business network. we often talk about this in the context of economics and business but this is a personal story i think frankly we should talk about it more in that context. i think when we heard it said in the way it was said and i know that wilbur ross later in the day cleaned up some of the language and clearly felt that he had put his foot in his mouth, but i think it exposed and created this new conversation about what this is really about and may have changed the

dialogue on the government shutdown itself. but i'd also just raise another issue which is i think it changed a little bit of the dialogue about politics and the economics of it all. yesterday you saw elizabeth warren come out with a plan to tax the wealthy over $50 million to effectively -- i mean, some people even call it confiscatory i think the conversation you're hearing on all sides of the aisle, the way we're talking about this is creating a sort of different dialogue and i think it's going to have an impact by the way on economics, on business, on investing i think that's why we need to be focused on all of this it's not just the government shutdown i think there's a larger conversation and that conversation is happening here in davos. you hear it every day. >> that said, still goes back to, okay how does the shutdown get resolved from here again, going back to the note here, it's becoming more clear that it's going to be some amount of funds for some kind of

border security and/or wall in exchange for daca and the dreamers that sounds pretty good. so even with everything that you've just said and sort of elizabeth warren's, you know, wealth tax thing, maybe this just becomes a very pragmatic i would say win/win. president and his supporters get some of what they wanted and the democrats and their supporters get what they wanted and daca who are all sympathetic. they get the extension >> there's clearly two sides to this it takes two to tango. there is no question that it requires both sides to come together and there's no question, by the way, as much as we've just been discussing the approach the administration's taking and the republicans are taking, there's no question the democrats have also not been willing to engage. i think now potentially there might be more of an opportunity to engage. i don't think that was the intent by the way of my question nor wilbur ross' answer yesterday. but they may be the outcome and

maybe that's a good thing. >> listen. your time there is winding up and you're going out in a very special way. >> we are going out in a very special way because we have a very special guest i have to say selfishly, i am thrilled to have this guest with us jane goodeall is here. the foundation is to safeguard her life on conservation, environment. and is the joins us right now. and you brought a little something special too. >> well, mr. h has been my traveling companion for 28 years. he's been with me to 64 countries and that includes north korea. and he's mr. h because gary horn gaifr him to me. gary horn went blind, decided to be a musician. he was told it was impossible.

he said don't give up. he's just taught himself to paint. he thought he was giving me a stuffed chimpanzee and i made him hold the tail. he said never mind take him with you and you know my spirit's with you so he symbolizes the indominant human spirit >> tell us what the foundation is about >> ever since 1986 when i realized that the forests chimp numbers were dropping and all the problems facing the chimp and soon after that learning the plight of the african people who live around the forests. they're crippling poor they don't have good education facilities and so raising money and developing a program first of all around the gambia area and tanzania and now in six other african countries where there are chimps and giving people

better lives in the way they choose and they've become our partners in conservation. if you don't have the local people with you, there's no point doing it because it's their country then and having -- you know, being still working on getting the funding for this, what's the point? if younger generations aren't going to be better stewards than we've been >> you've raised an enormous amount of money including from some corporate sponsors. that's one of the reasons you're here >> yes that's it. and this basically is an endowment so that there are 24 -- sorry, 34 jane goodall institutes around the world. there's 80 countries with our youth program which is kindergarten, university, and everything in between. and all of these groups are choosing the products to make the world a better place for people, animals, environment >> how much money are you trying to raise >> 250. >> $250 million? >> yes.

>> yes okay wi i wanted to make sure. we could try to raise more for you. we have a lot of wealthy viewers hopefully watching this right now. >> well, the point is that these young people all over the world and we were right across china, right across u.s., and other parts of the world moving into the middle east. it's not that they can make a difference they are and why should we care because we have been stealing their future here's our intellect taking us to mars. here's clever businesses here's the new technology era. and something's gone wrong and what's wrong wrong i think this is a disconnect between this clever intellect and that's what separates us more than anything else from chimpanzees and other animals. and love and compassion. the human heart. >> i have a couple of quick questions. one is a debate in davos about giving back. i'm curious where you stand on that given the work you've done

all these years? whether it's working for people, right? >> i think there are some individuals, philanthropists, some businesses. and they definitely are giving back the thing is sometimes you can hardly differentiate whether they're doing it sort of green washing to look good or whether it's actually the passion of the ceo but quite honestly, as long as they give the money and it's not a corrupt business because we have to be careful. we don't want to take money from some company that's completely destroying the environment >> two other quick questions kids these days. you like kids to spend times outdoors i don't know if it's unfortunate a lot, but kids spend a lot of time on screens. including my kids. do you think that's going to change >> we do know for good psychological development, it's been proved children need to be out in the green world >> and then final question, you travel 300 days a year

>> roughly. >> how old are you now, can i ask? >> well, in two months i'll be 85 >> 85 years old. we have a lot of people who watch this show who also are road warriors. what's the trick >> passion, mission. just doing what you have to do because you care >> fair enough jane goodall, thank you. appreciate it. guys, back to you. want to thank the entire crew and producing team here in davos. this has been a remarkable week. thanks >> remarkable, it is andrew, we'll see you next week. thank you so much. andrew ross sorkin and jane goodall. coming up, we'll check in with the look at the next recession. recession. we're back in two.ear me. mike mike mike...mike what day is it mike? ha ha! leslie, guess what today is? it's hump day. whoot whoot! ronny, how happy are folks who save hundreds of dollars

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even intel, you know, obviously significant company on the back of what was a great move in chips yesterday, doesn't seem to be hurting things right now. coming up, how close are we to the next recession? when we come back, we'll dig into the market's ability to predict downturns with the president of the national bureau of economic research stay tuned you're watching "squawk box" on cnbc what do advisors look for in an etf? i tell clients, etfs can follow an index, but which ones target your goals? it's not about quantity. it's about quality. no trendy stuff. i want etfs backed by research.

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welcome back to "squawk box. the question of when the next recession will hit is being asked more and more. steve liesman joins us now with a special guest who is a bit of an authoritative voice on such things >> he's me man, actually joining us now is the president of economic research jim, good morning. >> great to be back with you >> listen. so you guys haven't declared a recession for about ten years. you're just not working right now? >> the current run has been for 116 months it is the fact the case the

business cycle committee has had a pretty quiet time for some time this is now one of the longest recoveries in post-war u.s. economic history and we're getting very close to the 120 months which was the recovery which came to an end in march of 2001. >> now, i know that you don't forecast, but tell me. when do you guys decide that, hey, it's time to meet it's time to take a look at this business cycle to see that things are getting weird out there. >> it's a very data driven decision right? this is, you know, the decisions of when to date these business cycles are made by a committee it's not a simple rule it's not two quarters of decline and real gdp so the committee chair, robert hall at stanford university, as we observe the data will begin to say i think it's time for us to have a conversation you know, at a moment like this when we're seeing a period of continuing growth, there's not a lot to talk about.

the committee doesn't have any reason to meet >> just a word to investors who might want to key off of this decision, don't do it. because you guys will meet and decide like you did -- what's the date here? september 2010, you guys decided that a recession had begun in june 2009. so you're more in getting it right than being first >> the clear example, steve, is that in 2008 in late november of 2008, the nber ace announced a recession would be done in december of 2007 >> so tell us how you would process as the head of nber, we have this market that seems to say you know what? a recession is definitely coming and the data has been pretty robust you have 4% unemployment gdp at 3%.

what does the literature say about does the market have it right or the economic data have it right >> right as you've said, the difficulty right now in reading the tea leafs is that the economy looks strong the market saw some gyrations especially in the fourth quarter. the difficulty with the market which does have some information, right the market is trying to tell us about future earnings and it's trying to combine that with some future discount factors. we only get one piece of information which is market value. so it's very difficult to take apart whether the market's reacting to lower perspective cash flows which might, of course, be related to some slowdown in the real side. you know, you can think of many factors for why that might be happening at the moment versus a -- we think the discount rates are going to be higher and the market valuations are coming down my late colleague paul samuelson said the stock market's a leading indicator. it's called nine of the last five recessions. i think that false positive element is worth keeping in mind and in this particular case,

when discount rates are relatively low, relatively small changes in discount rates can lead as we know to substantial changes in asset values. i think in an environment like that, it's difficult to take apart the market valuation movements and then try to back out from them. what is this telling us about the recession likelihood >> it's a great point. it's kelly here. i have a related question on that we talked to steve a lot about how the first quarter because of the shutdown might go negative if something happens like that for kind of technical reasons, you know, how would you guys think of -- i mean, look it's unlikely it would go two. but two quarters of negative growth equals recession. is that true when it's not really the end of a business cycle? >> that's a great example of where the two quarter neg div rule could, in fact, get you into some difficulty this shutdown, of course, begins at the beginning of a quarter. so the way in which a shutdown today would impact two quarters

of growth, you'd have to have a very long shutdown for that to happen >> right. >> but imagine wha shutdown started in the middle of a quarter and it was a larger shutdown than we've seen at the moment and it really did have substantial effects on growth numbers. you could see a situation in which a shutdown ran from the middle of one quarter to the middle of the next the growth numbers in both quarters ended up slightly negative i think it's conceivable in a situation like that that the nber committee would say as long as there was reasonable growth before and after, this was an aberration it was not a true recession. and the committee might decide not to call that 4 if you were using the rule of two quarters of decline, you would say there was a recession in place >> we have an ongoing debate here, the extent of recessions are person made or rather than sort of outside -- just happen as a shock to the system you have the shutdown.

you have the trade tensions. and i'll never forget the line that you guys put in the 2001 recession announcement that if not for 9/11, there wouldn't have been a recession so two questions here. do expansions die of old age and two, what does kill them >> i don't think there's much evidence that is a high mortality factor in this case on its own. right? and the fact that today we are into a recovery doesn't in my mind necessarily raise the likelihood that anything's going to go down the other way in the near term. i think the statistical evidence by and large bears that out. the combination of, you know, manmade and natural factors, i think, can come together and probably use the more likely source now, some of them you could have a very harsh winter or something

like that that might impact some aspects of things. a lot of factors are, in fact, human related. the federal reserve is often a source of some downward pressure that tends to bring business cycles to a downturn >> i'm sorry we haven't had time to talk about your research on retirement and finance but we'll have you back. i don't know how much we actually want to see you it's usually a bad sign. but thank you for coming in. >> have a great day. >> steve, thank you. coming up, charlie mcelliot joins us after the break to talk markets. we'll ask him why he sees the s&p 500 heading lower soon stay tuned u' wchg quk"n yoreatin"saw o cnbc

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welcome back to "squawk box. take a look at the futures right now. they are still positive, have been around this range for awhile the s&p looking to be up about half a percent dow up 125 at this point and the nasdaq up 35 despite some expected weakness in intel. >> yeah. that weakness not having a broader impact it's amazing let's get a check on some of this morning's biggest movers. dom chu joins us with more intel probably one of them >> it is one of those stocks, but there are some other ones out there earnings related as well the consumer products company colgate palmolive for the latest quarter. revenue and growth beat

forecast colgate helped by stronger demand for north america but the company is also forecasting lower sales for 2019 those shares off by 2% we've also got a medical device company, resmed down big sales did miss consensus estimates. it also is announcing that it's suspending its share repurchase program. those shares off by 16%. then western digital shares as well missed estimates by 6 cents. quarterly profits there, a buck 45 per share the disk drive maker saw revenue down almost 21% on waning demand for smartphone storage but the company also said sales will improve in the second half of this year and they plan to cut costs as well. those shares up by 10% as a result, guys back over to you >> okay. dom, thank you very much dom chu back at headquarters let's get more into the markets now. joining us for that is noted market contrarian charlie mcelligott

charlie is for the americas at nomura good morning >> good morning. >> so you foresaw this move higher to start the year now you say it's about to end. cold water >> yes it's -- i was having a conversation with a senior hedge fund executive yesterday and he said you're really at the point where you're making nine-day market calls is that how tactical we've become i do think that that is the present and future state kind of on the one-year looking out. not so much a directional call in the market by any means the way that i've looked at this, the same way i came in here december 17th after anticipating a systematic selloff to go max short in equities we had that big impulse down part of that and certainly the performance environment and i know you spoke about that earlier in the morning the global growth slowdown, the fed looking tone deaf in december all set the table for that wide scale deleveraging across december.

which ultimately set the table for the rally, right people were underpositioned. hedge funds hugely gross down. they sold their longs. covered their shorts mutual fund redemptions. retail outflows. that all was the fodder for upon getting three easy and predictable catalysts in the form of dovish fed pivot which is now an inevitability because equities are part of the fed's reaction function. which, you know, you also then knew you were going to get that seasonal pboc stimulus easing and liquidity injection which we got in the form of major open market operations and easing cuts and finally you're going to get some trade leakage with regards to china/u.s both president trump and xi needed the stock markets to work for them you got those. here we are. releveraging systemic funds have covered half of their shorts. part of the case now for this pullback thesis and it's really again as we stated kind of a

two-week window. that we've been using an analog which is just a prior trigger. and we looked at s&p scenarios where the s&p traded down 17.5%. so a very severe selloff in a short period of time 67 days. there have been six prior instances. and what's been so fascinating about this current period meaning the period since september, since september high to now is that it tracked this analog almost to the day which then allowed us to predict that last friday would be the local high now the next nine days on median you see about a 5% pullback. we've seen a 1% pullback since then >> so 5%, that doesn't necessarily take us to the low >> it's a 25/25 type of level. which, you know, i don't see a retest or a reproach of that december 24th type of a period simply because i don't think the exposure is there to come back down i don't think the leverage is there to come back down. i do still see catalyst for

upside and the interesting thing about that trade analog is that by january 31st, february 1 depending on your count, we then begin resumption of a multi-week rally which corresponds with the return of the corporate buybac by february 6, 75% of the s&p is out of the buyback blackout. that could be the story of the last five years from a flow perspective. >> so your take is that not as if people have really chased this move up aggressively. we got up 13% in the s&p and 17 trading days into last friday. we really only settled back 1% on the net basis at the moment so you don't think people are just really long right now, just that we need a stutter step here. >> this is the inevitability we have squeezed the blood from the stones of those catalysts. we're at the point where we stated earlier, systematic trend funds have covered half of their shorts where further triggers are multiple percentage points

away as it currently stands. and we still see this kind of pervasive skepticism from the fundamental community with regard to chasing this i still think and it is fair to say there is this end of cycle skepticism out there and i think that's hard to override, especially against this backdrop. data stabilizes, data actually improves, we're back in that financial conditions tightening tantrum environment of last year, or the data worsens, and it in fact confirms the slowdown, confirms the recession fears. that's why i don't see us kind of on the year ahead, getting out of this chop powerful periods of rally under exposure, powerful draft down. >> trade fight coming to an end in some sort of positive way would be a huge catalyst >> for sure. >> yes, yes. there is two things that would cause me to re-evaluate my kind of overall outlook with regards to this end of cycle, you need to begin rebalancing ahead of --

ahead of this ultimate slowdown into recession that being a truly constructive across the board trade deal and that means that not -- the market is not just going to be satiated by soybean purchases and lng purchases. >> nor is the administration >> absolutely. i think the key here, you need those structural issues. that's a word that keeps coming up ip theft addressed, you need the state subsidies, that's my low delta scenario the one thing that i do think is higher probability and we got, you know, we saw some of this both with the fed recently and then the journal this morning, the thing that would really cause me to change my footing, because my overall footing is that this quantitative easing to quantitative tightening regime change is what triggered all of last year and what triggered the financial conditions tightening

is if the fed begins to speak again with regards to mod fight the balance sheet runoff i think that is -- instead of the fed hiking next week, a nonstarter, i don't think the fed is doing anything through summer or through the start of summer, the bigger point is what they say about willingness to adjust the balance sheet that's the bigger risk if they do that, we're pivoting back towards a directional easing in some ways, and then you can get much more constructive. >> so we have a two-week window. >> two-week window and day counts aside, february 1, i think there is a pretty strong case that you see some of this readjustment one other thing i would say really quickly, because, you know, flows are kind of my bread and butter, we talked the fundamental guys still aren't there, and still fighting this, macro guys are fighting this, if you start getting that escape philosophy, start breaking down from the analog over the next week and a half and start heading higher, and the buyback comes back on, you also lose some really interesting sell-off

data points from the one year ago window february 5th, 5.4% down day. we had another couple 2.5% those drop out of the windows, and some of those covering points for that systematic short that is still out there get pulled lower too and you'll see some more force covering that creates that buyers are higher scenario that could see this thing squeak. >> thank you let's get down to the new york stock exchange. jim cramer joins us there. jim, i like what charlie was saying what do you think? >> i think it makes a lot of sense, the idea that there are shorts out there, talked about the days that broke down, whether we're like that or not i think that there is a consensus building now that maybe this big 2019 will be a disaster, cataclysm. it is kind of unraveling and those who came in short are kind of saying, well, i thought it was supposed to be a really bad year where is that happening? and so, yeah, i kind of -- i

kind of go along with it i'm more sanguine than a lot of other people. >> you got to be sanguine this morning. intel was, i don't know how you describe it, and futures are up triple digits. >> yeah. look, i think people want to believe the best intel made it so it is hard to that was quite a disappointing conversation call on many different levels company needs a new ceo, they're-liking for one but, yeah. western digital, a lot of people say they call the bottom they didn't. that's a false read. it doesn't matter. what they didn't do is cut numbers big. and anybody says anything good, it is being magnified by shorts who are viciously trying to cover and realize they're on the wrong side of the trade. you need a company like intel to say, listen, you're wrong to be long that's what those companies are saying otherwise, it is up. it is an up day. >> western digital was interesting. dom was talking about it, smartphone demand. is that a read through for apple. earlier people were saying we got to get past this apple

weakness, you know, for the whole market and the smartphone slum, we talked about it the last couple of months. i know western -- the stock is doing better this morning. but, you know, what do you think it tells us about apple? >> tough read through. katie uberte mentioned every negative there is a low bar issue and low bar issue with western digital it is about the balance sheet, they didn't pay the dividend they're not about calling the bottom they did not call the bottom i don't know where people get that maybe they're just looking at the stock op but the world isn't coming to an end. we'll be able to pay the dividend you have to take your lumps until we get to a new cycle. everyone should be -- has every single negative imagined, the deceleration of the service stream, people aren't talking about enough. >> we got to go. we'll let you talk about starbucks when you guys take the

reins. >> thank you continue to love exchange. continue to love exchange. >> you got to come on. will you come on, please >> i'll try to drop by and surprise you >> we'll see you later see you in a couple, really. be sure not to miss the team from "squawk on the street" and their interhave with kevin johnson at 9:30, first on cnbc "squawk box" back in a minute. was ahead of its time. still, we never stopped making it stronger.

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dow opens higher by 175.

s&p, nasdaq, in the green as well looks like we'll get a pretty decent day. >> keep getting a late morning sell-off >> make sure you join us next week the gang will be back. "squawk on the street" is next great weekend. ♪ ♪ tell me what you got show me when you got ♪ ♪ show me when you got >> good friday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. stocks trying to end the week on an upnote, but it is going to be close, we're watching intel, starbucks, western digital, dr horton and shutdown negotiations and roger stone's arrest and indictment we will not get durablesr