good morning welcome to "squawk box" here on cnbc ah live from the nasdaq market site in times square. i'm becky quick along with joe kernan and andrew ross sorkin. our guest is steve grosso, director of institutional sales at stewart frankel and fast money trader and our good friend it's actually school i think it's a delayed open. >> a recorded delayed open >> it's 6:00 it hits right on the -- >> nobody is there yet, right? >> no. >> i mean, your kids -- it's not like -- >> they're waiting to get in the door no >> someone is throwing up, come and get them >> it's cold fro6:00 in the mor. it's a delayed open.

>> i really want to get your insights on the fed. >> absolutely. >> let's start with yesterday's earnings and a fed-fuelled rally and stocks the dow trading back above 25,000 after the fed left rates unchanged, and signalled that future hikes are pretty much nowhere in sight here's fed chair jay powell making the case for caution. >> financial conditions tighterned considerably late in 2018, and remain less supportive of growth than they were earlier in 2018. while most of the incoming domestic economic data had been solid, some surveys of business and consumer sentiment have moved lower, giving reason for caution. >> it was that and much more in the statement just about everything that jay powell said yesterday that the markets really took hard and said, okay,

if they're on hold potentially for the rest of this year. what do you think, steve >> everything he just said we had brexit originally, it caused the collapse of the market. >> i think it was the whole president trump thing, and he thought he was going one-on-one against president trump. >> it takes a big person to step back from this i don't know that i would have changed my mind so quickly >> i think a lot of people had him in their crosshairs, so what i find amazing is that there was no inflation, and then he said there's maybe a little bit of inflation now. now there's no inflation again this to me is extremely dovish where, what the bulls wanted and what they got. >> you got a statement >> what? >> he got his statement it >> what do you mean? >> powell opened up the mail

and, oh, my god! >> oh, he got his statement. >> i got to pause fast i got to pause yesterday >> nobody knew what quantity takive tightening was, and now it's just as much a a topic as the rate hikes or what not the market is priced in the zero rate hikes i think you might have gotten a little bit over anxious. >> let's take a look at the u.s. equity futures at this hour. again, we showed you that it looks like the dow has indicated down by 22 points. again, this comes after a gain of more than 400 points yesterday pushing the dow back above 25,000 for the first time in quite a while s&p 500 at this point looks like it's indicated up by 3.5 points, and then the nasdaq up by 45 points take a look at treasury yields big moves there in the yields yesterday too. the ten-year note is yielding just 2.663%. that's kind of unbelievable too. you look back to ten years, and

you are only going to get 2.66%. >> there's not that much competition, right you still have to -- you are forced kind of back into where we were. this is back to the future you are forced back into risk assets the truth is the market is -- feels to me that it's sucking everyone right back in, and we really haven't made up that much ground even though we bounced aggressively from that december 24th low. >> china, japan. you have europe. the whole thing is -- as a whole on a macrolevel is slowing >> dow dupont is rolling out results here

adjusted net 88 cents a share that's a penny ahead of expectations revenue was slightly short of wall street forecast 20.1 billion i don't see that as slightly short. i see that as -- >> what's dow dupont's symbol? >> dwdp. okay that is -- yeah, 20.1. it's below -- okay i thought it was .09 that is about 800 million less than that. the company remains on track for separation of the newdow on april 1st. flat the sales are -- were flat lower demand lower demand vented growth. continued demand, 21 cents it's actually up 71 cents on that news. >> okay. it is the busiest day of earnings season today.

that is 37 companies in the s&p 500 reporting results today. some of the big names to watch include we're going to get ge and master card, ups, conco phillips, hershey, and also amazon, and speaking of earnings, two of the biggies last night tesla and now let's talk facebook facebook shares are on fire this morning. this after the company reported a record profit last quarter the daily active users continue to grow. that's a key metric. average revenue per user came in at $7.37 that was a 21% increase from last quarter up and up 19% from a year ago. that's shattered analyst estimates. facebook coo sheryl sandberg spoke to julia borestein last night about the safety and security challengesthat the company faces. >> we need a different approach to running our company that we need to put so much effort into preventing the harm so that that harm, which is done by small people, but risks round u drowning out the good. what we see every day on facebook, and i think this quarter shows people see, are

people connecting and sharing and using a product that matters in their lives and we need to protect that experience. >> the question is -- there's a couple of questions here first, have they turned a corner it seems like maybe they did is the public not nearly as fickle as the conversation that we have around the table may suggest, meaning that, you know, a lot of hand-ringing over privacy, all these questions zuck going to congress all of that. there was an expectation that it was going to slow growth down, a, because people were going to be less inclined to go on the service. b, because advertisers are less inclined to advertise on the service. does this suggest that actually maybe all of that was over -- >> it doesn't take away the issue of possible regulation okay whatever happens, there's still, i think, a potential for congress to move on some of these issues because particularly because it involves elections. things along those lines

>> if you are an advertiser, though, you have to be there they're the biggest force. you literally don't have a choice you have done there as an advertiser we haven't seen users fall off a cliff. to your point, andrew, maybe you were on that bubble, and now you are sort of over it to a certain extent it's a ready combat of the privacy issues users probably aren't going anywhere and advertisers aren't going anywhere that means the stock is probably safe at this point >> that -- the regulatory cloud is real. >> right >> the idea of a consumer backlash >> you know, i would have been more willing to say absolutely before we had that news yesterday about them paying 13 and 14 and 15-year-olds where. >> by the way, she was asking -- >> for information >> she was asked about that. this is the idea there's a facebook research app that was -- went completely against the apple program, meaning apple disallowed it. they were doing ittian way she made the argument that everybody who opted into it understood what they were doing even if apple didn't understand

what they were doing >> they were going against apple's own guidelines is what they were doing. >> i 100% agree with you >> i don't care what you are doing with 18-year-olds and older, if they are signing on for that, but the idea you are insoing up 13 to 18-year-olds, 13 to 17-year-olds and i as a parent don't get to sign off on that, i would be furious if i found out my kids had signed up for that and were getting $20 a month so you could track them. >> the question is whether apple because they broke apple's rules in a material way, instead of just taking away what are called there are certain types of certificates that would allow them to use -- these are developers certificates for their employees, which is what they were using for are this service, whether they would ever just say, you know, we're yanking you? we're yanking you. for two weeks we're yanking you off the service. the question is do they say -- does tim cook say if i did that, then everyone is going to go to android. i can't be the arbiter here? it's interesting, if people break the terms of service that you have, if you are so powerful --

>> are you so powerful or are they so powerful that's the question. >> who has the power >> who wants to get into that battle >> i agree wholeheartedly, but doesn't it get to the point where you feel like this is a lot of noise, and i think that's what the public feels. whether -- if you are going to be on it, you're on it you're not going anywhere. >> i have gotten over all of my concerns about the privacy issues until we got that news yesterday. again, it wasn't the adults. any adult who signs off on this, whatever that's your choice to go along with these things. it's the idea that you have teenagers on the site, and you are asking them, and they're not equipped to be making thes decisions. i know they're not reading the terms of service closely, and i know they don't have an understanding of what they're signing away, and you are asking them without going through me. that is -- that to me puts me back in these questions. i had gotten through and past all of it until yesterday. >> right >> that's creepy >> i agree i agree. >> it's bad. >> it's kind of stunning >> yeah. that it's happening now after everything you've been through the idea that that slipped past. what else is slipping past >> it's a question about leadership and culture and the

question about whether there's something rotten at the core let's talk about another company that's in the midst of a lot of controversy, joseph kernan >> yes it is -- if they need to ever live without -- >> elan musk ear we're talking about. >> if they ever need to live without government help, it's going to be a different situation because that's why they're able to eek out the profit they've made. they're reporting back to back profitable quarter the profit was below sequentially the last quarter and didn't miss forecasts. then on the earnings call, tesla ceo elan musk while the company is seeing strong demand for its model three, if they cut prices to stoke demand, they may not make as much money here's what he said. >> the demand for model three is insanely high. the inhibitor is affordability it's just that people literally don't have the money to buy the car. it's got nothing to do with desire they just don't have enough money in the bank account.

if the car can be made more affordab affordable, the demand is extraordinary. >> tesla's stock dropped sharply towards the end of the conference call. that's when musk announce reasonable doubt that the cfo stepping down. skbro de epa k will be retiring. >> again >> yeah, from tesla. it's not been -- it's about 1 1 years ago, right >> when it goes to that -- >> almost 1 1 years. >> thank you for your tremendous contribution to tesla. >> what do you -- >> the question is -- >> i don't like this i don't like it. >> the cfo has stepped down twice. >> like a hyundai. >> he stepped down once in 2015. came back in 2017. he is now stepping down again.

the bears on this stock think that this is some kind of -- the true cynics, conspiracy theorists think this is a sign that something is -- another sign of something amiss. >> there could be a multitude of reasons why the cfo is doing this, but it's always -- it's just like when someone sells -- an insider sells stock there's a host of reasons why they could be selling stock. there could be a multitude of reasons why the cfo is doing it, but it's still always interpreted as a negative for the stock. >> you look at the stock you heard the numbers. joe mentioned it without the government credit, what's going to happen they're also -- also going to finally have real competition in terms of electric vehicles from the like of porsche and others >> is that march >> we talked a lot about that payment. that comes this month in

february they say they're in a good enough cash position to be fine on that payment. were, if the stock hit -- it won't be it's at least, what, $60 or $70 off. if it was around $360, they could have converted a $920 million rather than pay it out in cash. they say they can do it. you look at the stock. you like it? >> i don't like it i think at this point -- you remember when he tweeted, you know, saudi was going -- the funding was secured. now we have heard that saudi has pej hedged their position. i think there's something that really is underneath the hood at tesla, so to speak, and i think that, you know, this is tough from either side it's very volatile i think the bears are winning as of late, and i would agree with the bears. >> okay. to talk to you, i want to talk about multiples of contracted even though earnings may be up 4%, 5% your statement that the market shouldn't be anywhere near where

it is because of the slowing economy. that's what you said last time you were on. you're down 100 points so far in the s&p. were you bearish all the way back did you think on december 24th that we were going even lower? did you get it all -- did you feel any better at all on december 24th as far as making a low? now that -- >> yes >> you did feel better >> i did >> then when we went -- you were on about 25.60, 25.70, and you were very negative at 25.60. we're 100 points higher than that when do you say i'm wrong and i should have been bullish >> the beauty of television is i was on the show. >> yeah. >> at 28.15 in the s&p i said we're going to test the february lows. 2,350. tested them. on air on the 26th -- >> of what >> of december >> okay. >> we're in a rally. >> i'm on january 11th >> okay. >> then on january 11th. >> then i said that we would sell off again

we've overshot >> oh, yeah. zroo my upper level is 2,715 >> and to stay bearish your rationale is even though multiples are less than we were at highs at what -- what do you say the high on the s&p is >> what was that -- >> 2940. >> earnings have gone up since then, and multiples -- >> multiples from 16 to 18 buy them at 16, sell them at 18. >> where are we now? >> somewhere in the middle depends how you look at it >> you think we're in a trading range? zplie think. >> i think the low will be bought, but we have to test the low again. >> really? >> down in the 23 rz >> yeah. >> okay. so no quick move back to 2,950, 3,000, nothing like that >> i don't think -- i think you have this -- >> what if we had a trade deal you aren't looking at fundamentals >> that's an interesting topic >> is there an overhead where if we got through, you would say,

okay, we're not going back down? >> i think the 2,815 where we originally started that move down where we originally had that positive, that would be a triple top, basically. if we went through that, then it's bullish >> did apple making a pretty good bottom, does that make -- >> no. >> that doesn't help >> no, because apple was all about sentiment, right >> it's always about you don't think -- we're very negative all i hear is negative stuff >> look at the trade deal. you think it would be an overwhelming -- you think it would be an overwhelming positive >> i don't know if we get near 23 again on the s&p. maybe we do. maybe we don't i'm willing to be -- >> if you got a trade deal, i think you'll get a pop in the market, and i think that would be the last gasp >> here's my bigger question what happens if we don't get a trade deal, and the tariffed double on march 2nd? i feel like the market is not prepared for that. >> the market is not prepared for that, but the market also thinks that if we get a trade deal, it's overwhelmingly positive what is -- what is the fear in

the marketplace right now? china growth global growth. do you think a trade deal is going to be helpful for china growth, or hurtful >> well, helpful from where we are. >> for china or us china or us? >> i think versus where they could be with double the tariffs. i mean, if you are looking at a situation where you double the tariffs and that continues to put pain on them, or they say, okay, at least we make this go away for now, we can get rid of the tariffs, maybe that is >> if you think about it, why -- >> the way i look at it why do we want a trade deal we want a trade deal because china has been stealing our lunch. now they can no longer steal your lurchl. if they're not stealing your lunch, they're paying for the lunch. >> maybe -- >> it hurts them >> maybe they've stolen so much they don't need to steal much more >> i think -- >> that's where we keep. >> china's growth is the slowest in 28 years. >> still, 6.6% if you believe the numbers. if you do. >> point of reference. it's slowing >> they have a lot of tools. and you always have to pay for lunch. you know why >> because there's no such thing as a free lunch. >> is that it? >> well, there's nosuch thing

as a free lunch, so you always -- work with me, grasso i'm here all week. >> oopg daiappearing daily at 6. when we come back, stocks rose in asia overnight despite disappointing data in china. we will go live to beijing next. check it out shanghai composite up about one-third of a percent right now, though, as we head to a break, let's take a look at the biggest premarket winners and losers in the dow. leading the way, dow dupont out with its earnings this morning i consulted with your grandmother's doctor.

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china's manufacturing sector, and it's not good. >> no, it's not. today's data indicated that the manufacturing sector here shrank for a second month in a row. the manufacturing purchasing managers index ticked up to 49.5 in january from 49.4 in december that's better than the forecast of 49.3, but, still, any number below 50 indicates a contraction. now, the production in raw materials inventories both edged higher, but new orders, which is an important gauge of future activity, declined also, a lot of manufacturers have been reporting that they've had to cut more jobs the manufacturers here have been under a lot of pressure because of falling profits, decelerating, factory inflation, as well as all the uncertainty over the tariffs it is latest data is likely to be a stark reminder for the chinese negotiators who are going into the second day of talks in washington as to why they need to end the tariffs the vice premier who is leading

the delegation is going to be meeting with president trump later today, and even though the government here has not indicated what he plans to pitch, a lot of china watchers believe that he is going to pitch for a deal that is very heavy on the trade deficit reduction component, and to try to play up how that would benefit president trump's base guys >> thank you very much coming up, a deep freeze just in the midwest. a deep freeze. could deeper there than it is here >> you tweeted it was one degree -- 1 degree here. a little colder. minus 17 with the wind chill you ought to see this thing i just retweeted from the u.s. a woman goes outside with her hair all wet flips it up, and her hair stands straight up. >> it's frozen a deep freeze in the midwest taking a toll on travel and business i mean, i don't even want to go outside really including the country's biggest automakers

details next later, we're going to bring you the latest quarterly reports from general electric. expected around 6:30 a.m. eastern. we'll have long-suffering jack degann on to lick his wounds on tv "squawk box" will be right back. uh-oh! guess what day it is?? guess what day it is! huh...anybody? julie! hey... guess what day it is?? ah come on, i know you can hear 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 switching to geico? i'd say happier than a camel on wednesday.

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>> a blast of icy polar aur is bringing -- it's already responsible for at least a dozen deaths the extreme cold caused a school cancellation and closure of state offices in some states and suspended mail delivery in the hardest hit areas. the deep freeze taking a toll on businesses general motors announcing that yesterday it would temporarily suspend operations at 11 of its michigan plants after utility made an emergency appeal to users to conserve natural gas during extreme winter cold fee at chrysler also cancelling shifts at two plants today the extreme cold is responsible for travel disruptions, including the sis pension of amtrak service asks cancellation of more than 1,000 flights a lot more on squawk we've got a ton of earnings movers on the busiest day of earnings season today. we've got a full rundown next. plus, we're waiting on numbers from general electric. a lot of folks waiting to see what they have to say where, we head to a break and look at the s&p 500 winers and losers.

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zbliefrmt general electric is rolling out some results here. the estimate was for 22 cents

and if we use the -- that's a lot of numbers here. i guess -- >> i guess go with the adjusted number >> there's a continuing ops number the adjusted is, what, 16? >> 17. 17 cents >> 17 cents. trying to see if it's anything that looks -- that's down 60%. the weakness is still in power >> the stock is up because, remember, you had the downgrade from the power analyst on this that puts pressure on the shares before the earnings came out >> industrial free cash flow was down 29% because of power. basically. strong cash generation in other businesses the company agreed in principal with an doj to settle the firrea investigation of the wmc that's a long-term care, isn't it, for $1.5 billion is that what we're talking about here i'm not 100% sure if that's what

it is, but yeah. here's what larry culp says. deleverage our balance sheet and strengthen our business, starting with power. to do this we're improving exkiegs, customer focus and how with set priorities. goes on to say we have more work to do, but i'm encouraged by the changes that we're making to strengthen ge and create value for customers and employees. they lay out the delercveraging they've gone through signed and completed $20 billion of industrial dispositions last year they reduced the dividend and that's to the tune of $4 billion a year baker hoou baker hughes ge selldown the revenue a little above the pressure on the stock leading into this from that huge analyst who makes the call >> he is negative. he is negative again he is negative again >> he was always negative. >> at the very bottom he -- >> he said, yeah

>> even when he was less negative his price target was still six. >> then it moved back up to where he said it was zbroosh it was the pricing. >> he went negative again, though he said the move has been made recently went negative again. >> i think that's why you are seeing a pop today even though the numbers are weaker than expected there had been lowered expectations heading into this >> up 2.2% that's good news bad news is it's 20 cents. >> exactly >> it's up -- >> look at this $9.30. where that stock has been recently >> i know. >> this is one you are playing for. either it's lights out, or this thing is going to double it's that binary of an event there's plenty of people that have been carried out in this, which is unfortunate for them. plenty of people have owned this, and pension funds and -- >> retirees. >> we're going to talk to jack degann in a few minutes. he has owned it for a long time. an $830 billion market cap now like a mediocre biotech stock. >> unbelievable to see the action >> again, up about 2 percent this morning, and we will continue to follow that too.

>> immelt wasn't at the -- >> all right never mind >> let's talk about the fed and earnings induced rally on wall street that we've been watching. joining us for that is matt toms, chief investment officer of fixed income and voya investment manager. they pretty much told us this is it >> i guess you had it firmly in your things to worry about list. >> at this point if you do say, well, they're going to cut at some point, they're only going to cut it des moines we see a deteriorating economy. there's not much to root for >> stay on hold and then see the economy gradually improve.

>> they're going to be on hold, and now there's not much they're going to say that will have a big impact on the market >> i take it you agree with that >> we do yeah look for the second half potentially. if you do see that moderating growth, you reference that they could reengage in the second half towards the modest sites, but patience at least for the first half >> okay. what do you think of what we're seeing with the fed off the table. what do you think of the earnings season right now? what does that tell you about what you should be doing with your money >> you are looking at a 5% earnings rate. we're looking for signs that consumer confidence or business confidence is degraded into the political uncertainty and global trade. as of yet we have not seen any signs of a steeper decline we we think it's better than -- >> what do you think you have been cautious to this point, but with the fed out of the way, what you are seeing from earnings right now, does that make you much more optimistic about what might

happen with the stock market >> if you look at earnings for the quarter, they've been pretty good if you look at the guidance for next year, the endless forecast for next year's growth now on a bottom-up bias are 6%, right that was 10% a few months ago. you get a pretty good chance you get at zero or worse i think there's a pretty good chance you get an earnings recession at some point this year, and it's drin largely because of weakening demand around the world skpoo even if we do wind up in an earnings recession, which we've had a few people at the table say this week, is the market already reflecting that, or at least was it before yesterday's rally? >> well, if you look at valuations, they are still not cheap. they're not so cheap you say to yourself, i just got to own stocks here. >> what's the alternative? you are looking at a ten-year at 2.66%. on the other hand, if you are going to see a slowing economy,

you have done pretty well in owning bonds over the last few months then better earnings stocks. >> i would so much rather own stocks than bonds. >> i think, first of all, we always run balance portfolios. we are pretty close to benchmarks a 60-40 benchmark we're close to 40 we're not bears. we think that we work way higher we'll end the year higher than we are now not by a lot >> a month or two months ago when we were in a rising rate environment, you were expecting multiples to stay where they are or contract. why doesn't it give you an alt clear sign when that's something you can put on the back burner that any rate increases will contract multiples multiples look better. >> it helps. the kind of purpose of 2018 in some ways was to wreck the multiple excesses. in other words, you had graefrt earnings growth. stocks went down that part of the worries is behind us, i think.

>> we have zero rates in the united states and europe and japan now. for years and years and years. if you went back and thought 15 years ago you asked any economist, you get zero rates for a long period of time, what's going to happen you expect booming credit and have an increase in inflation. none of that has happened. you are not seeing the same kind of response to stimulative policy >> no booming credit >> the booming credit i say. just not the inflation >> in some parts of the credit market you haven't seen it on the personal side. europe still growing at 1%

despite aggressive monitor i think the fed did the right thing. i think at 2.4 on the fed funds, that's already about 50, 60 basis points real. that's already enough, i think, to slow the economy down >> matt, what happens next in terms of leadership that you might see in this market, in terms of places that you would say, this is where i would put my money down. >> i think the markets looking for fair valuation we don't expect a recession, and then in that environment, you want to be paid more for the down side skew of risk that adds referencing. high yield corporate bonds yielded something like 6.25 before the sell-off went to above eight, and now we're back at seven that's the market trying to find a fair pricing level i think we're nearly there further ramally, if not supported by better economic news, should be sold in our opinion. you also don't need to forecast in a recession too many economists are calling for recession. when they speak together, they're usually wrong. we're happy to look at the other side >> steve >> i think that when you are forecasting for a recession, you have that change in monetary

policy and i think we've seen powell pause, and that's continued to change. if he continues to burn through 500 billion for the year, that's tightening that will be a headwind for the overall market as well >> that's what we have to watch every fed statement this time around every six week >> i think he has done a great job at making us watch that because no one is going to watch that no one has the ability to watch that i think that people will just start to look at the overall market, but risk-reward, i think you'll see maybe a flattening out at this point. >> thank you for coming in today. >> thank you >> braving the cold and it's great to have you here thank you for joining us too >> thank you when we come back, e-great companies have been under fire from the f a, but a nigh study says that the e-cigarettes actually help people stop smoking regular cigarettes we have the details from that study next and, later, much more on the morning's big market movers. you are watching "squawk box" here on cnbc

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>> a new study that was published yesterday in the new england journal of medicine. the results show that e-cigarettes helped 18% of smokers quit a year later while nicotine gums and patches helped only 120% of people. experts warn that the long-term -- participants may be trading one addiction for another. a year after the study 80% of the people in the e-cigarette group were still vaping. >> i can't tell if the take-away should be if this is a great sign it's a better sign >> i think what it ignores is the whied that so many of these things are being targeted at

teenagers. that, again, is the difference that's where the fda has been cracking down, and i think rightfully so. maybe it's a product that's helpful for smokers, but the way they were marketing it, the flavors and everything else, and, by the way, if you are a real spoker, do you really want peach flavored cigarettes? is that going to convince you to stop smoking >> look at who is vaping, and break it down. who are new vapers and replacement vapers if the new ones are 80% versus 20% are replacement, it's giving people a new delivery mechanism for a substance no one even needs. they're getting it without the tar and horrible smoke >> when you have teenagers ad t adopting it at such rapid rates, that's a concern >> what about the drugs? i see it advertised all the time ray leota. boom he plays with his dog and stuff. >> sets the table with his wife. >> puts parmesan cheese. boom, he kwegets it's kwha he needed to do. i hearother people, like crazy

dreams >> wow that, doesn't happen in real life. >> you don't like crazy dreams in. >> you ever take melatonin that will get you to crazy dreams where. >> acid, but not melatonin mushroom pizza i have the mushrooms that i find coming up shares of ge rising sharply. we'll take you through the company's reports with jack. what is next as we head to break, there is a quick check on what's happening in the european markets right now. coming right back.

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welcome back, everybody. we've got stocks to watch this morning. microsoft's first quarter earnings beating forecast, but revenue missing despite strength in the company's cloud business. microsoft says the chip shortage has cut into sales of windows and that the problem will probably persist in the months ahead, that stock down by 2.1% this morning paypal's first-quarter revenue missing forecast because of weakness from its former parent company ebay pais peypal says the transactio volume from venmo has exceeded volume from ebay paypal shares down 3.7%. i thought ebay had better than expected numbers and there was strength in that fourth quarter.

how does thaw translate into weakness at paypal >> i think ebay, the move has been because of the activists so that's why the -- their core business is what's been underperforming and it's been -- >> so the actual transactions on paypal >> yes. >> all right again, that stock down by 3.7% visa's fourth-quarter profit beating estimates. the network promised more transactions on the back of strong consumer spending during the holiday season that stock is down 1.8%. let's get reaction to ge's latest results joining us now, the chief investment officer at harbored a visesory every time you're on we talk about whether there's rebuilding and positive signs in what is usually a depressing performance. are their there positive signs here we got a new guy, a new, new guy. culp doing the right things do you think? >> it's very positive he settled

the department of justice suit and i think it's imperative he settle the s.e.c. suit or have it dismissed as quickly as possible because one of the things that led us to sell shares 15 months ago was we lost confidence in the reporting and we were concerned about the s.e.c. investigation because part of it relates to revenue recognition in the services business and that's a huge part of the business, joe >> so what if that went -- what if the worse case scenario came to pass. what does that look like is it -- it's prior management -- or is it prior management that would be held responsible or the company would be fined what does that look like if it's not settled. >> investors will continue to lack the confidence they need to invest in the shares so they'll languish down here and steve grasso's comments probably pretty correct that it's binary. you think it's going to go

bankrupt or you think it's a long-term buy here >> that's -- >> well, the whole thing is you're not looking at the numbers as you would a traditional stock on a day-to-day basis there's been so much that's been done that you're waiting for to be literally a power play the this point so it's reached peak pessimism and now you're seeing people say, okay, if we can get a little bit of momentum behind us, maybe we can have a little tail wind. >> but, jack, so if you get the regulatory stuff, this legacy stuff out of the way, i mean, that doesn't make powers' results any better, does it? what if power doesn't recover? or you figure it's cyclical and comes back >> well, it's a cyclical business but i think you could argue it's heading into secular decline and i think what larry culp needs to do is to give investors some confidence that

we're at or near a bottom in the power business and that he's got a strategy to carry that business through what could be a modest secular decline but getting the margins he needs to bring back some earnings and some cash flow margins in that business are less than half of what the corporate average is and we're carrying almost 100 billion in debt and a pension that's underfunded by 20 million billion. he needs cash flow and power will be 50% of sales after all of the announced spinoffs and sales are completed and you can't have half of your sales coming from a business that's potentially in decline and has very low margins. >> so we're up substantially now, almost 5% do you attribute that to the settlement what does that get out of the

way? >> joe, i don't know the details of that settlement so i'm probably not the best guy to ask that question. >> but you think that's what the stock is trading on. >> i think that and the better revenues because ge's missed something like ten of the last 12 quarters and revenues are -- if you can't get revenues moving, you can't get free cash flow and earnings moving so it's a positive sign they beat on revenues. >> there was the long-term care overhang for how much that was going to cost. you didn't even know about that. then there was the way they booked the service revenues. >> i think it's a major head wind if you start to look at accounting regularities or how they booked certain things in the present. you start off the interview with

the new new guy. this is 80% play on culp and he's been given the benefit of the doubt and we haven't seen that kitchen sink approach that we've seen so many times before of hopefully many more positive steps for ge you can't imagine it getting much worse than it was a handful of moments ago. >> all right you've earned your way on here, obviously, but how's the wife? >> she's great, joe, she says hello and she'd love to see you again some time. >> she was one of the people i worked with at merrill lynch in 1981. >> 1980. >> she still have a twitch from working? >> 1980 and 1981 good irish girl, jackie kelly.

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so, servicenow put your workflows immhm. cloud, huh? your employees must love you. [ chuckles ]

thank you. you could say that. i love you. servicenow works for you. an earning super bowl. we tackle quarterly results from tesla, facebook, microsoft and more plus, blackstone group and u.p.s. set to report. speaking of the super bowl,

patriots owner and businessman robert kraft joins us ahead of this weekend's big game. and the fed turns dovish on interest rates what matters more to the market earnings and jay powell. we'll discuss as the second hour of "squawk box" begins right now. ♪ this is what it sounds like when doves cry ♪ >> announcer: live from the beating heart of business, new york, this is "squawk box. good morning, everybody. welcome back to "squawk box" on cnbc i'm becky quick along with joe kerr anyone a kernen and andrew ross sorkin. dow futures are indicated down by 22 points, thenasdaq u by 55 and this comes after a big day of gains where the dow was up by over 400 points, pushing back above 25,000 to 25,014. we'll see if we stay above 25,000 at the open

also getting earnings from a couple companies right now, too. u.p.s. just out with its earnings it looks like it came in at $1.94 versus the 190 the street had been expecting also just talking about some of the numbers they say that the supply chain and the freight revenue were both higher, driven by forwarding and logistics. look at those shares right now you can see it's up by 1%. blackstone out with earnings came in with a loss of two cents a share versus the flat number, the break even the street had been anticipating. revenue, though, was higher than anticipated, up by $505 million versus the $381 million the street had been expected. shares of general electric, look at what's hang. rising in pre-market trading ge missed estimates by five cents with quarterly profits of 17 cents per share however it beat forecast and ceo larry culp saying ge is making progress strengthening its business, improving its balance sheet. that's up nearly 4.5% right now.

dow component -- dowdupont also high they are morning the chemical maker reported a profit of 88 cents per share, that was one above estimates though revenue fell short of forecast you're seeing that stock getting hit a bit. we'll begetting the labor department's weekly initial job let claims number in 90 minutes at 8:30. expect it to rise from the 49-year low. later we'll get the shutdown delayed november report on new home sales joe? in his first news conference of the year, federal reserve chairman jay powell apparently changed his tune to some extent and stressed patience and raising rates and giving his reasons for that. >> the case for raising rates has weakened somewhat. but traditional case for rate increases is to protect the economy from risks that arise when rates are too low for too long particularly the risk of too-high inflation

over the past few months that risk appears to have diminished. joining us to discuss the fed and the big market rally we've seen, the portfolio manager at fl putnam investment management covering the economy is the u.s. senior economist natlast markets. he didn't really say we have to think about the risks in front of the economy he didn't say, for example, the fed going up too far too fast. he didn't say that was one of the risks. he sort of was saying that the economy slowed on its own and they weren't really responsible for any of it. there are people that think they had already move too old far and they have something to do with what they were responding to by pausing. do you think that? >> well, i think the fed is looking at the global economy and seeing it slowing and that's probably the biggest factor. >> did they cause the slowing?

were they part of the reason that it was slowing? in october, did sentiment change based on what powell said so it orchestrated -- it was self-fulfilling that the economy slowed >> well, the economy was running at an extremely strong pace mid-year of last year. so some slowing was inevitable but i think the domestic economy is very healthy. if you remember back to the beginning of the month when we got the december employment report it showed job growth of 312,000. if you look at industrial production, you're very strong so the u.s. economy is still in good shape. >> but what's he pointing to global >> probably numerous factors slower groebl growth, uncertainty with regard to the government shutdown.lobal growt uncertainty with regard to the government shutdown. you've seen sentiment measures as you've mention have had come off. earlier this week we saw

consumer sentiment measures have come off so right now a pause and patience is the right approach. >> so it's only january bare ly what does it because mean? does it mean they go in june >> perhaps i think they'll want to see the resolution of these down side risks before they go again so right now they're removing all this forward guidance that has been put into place over the past several years and as we get closer to that neutral rate which right now you're at the bottom of the fed's range of neutral of 2.5% to 3.5% in rates, then as you get closer to that you want to get away from giving the guidance and you want to see how things evolve so right now i think the fed is on a path that yesterday's statement was even more dovish saying that they're not even characterizing it as some further increases, they're saying adjustments so it's a

two-way risk that they could either cut rates or raise rates and they've removed the balance of risk statement entirely. >> so does that mean for the stock market, for the s&p that the fed is now out of the way until june or -- i mean, the market discounts in the future, when does the market start worrying about a june hike or does it is it just going to focus on results? and these are last year's results, right they're -- we need to know what this year will look like. >> so it looks as though the s&p earnings this year are going to come in at mid-single digits and that's a big deceleration. >> it's not zero, though. >> it's still positive and that's the key a lot of people are talking about whether or not there's going to be a recession and the fact that the yield curve has flattened, et cetera, but it looks as though the s&p is going to have positive earnings even though it's decelerating and the key will be whether or not the market and the fed are able to correctly discern the difference between a slowdown to a more

normal corporate profit growth rate and the beginnings of a recession because the first signs might look the same in both cases i think if the fed does raise in june, the market might have a little bit of a tantrum but at the end of the day we are still at the low end of the normal rate and we still have pretty accommodative policy compared to the history pre-financial crisis so there is scope to raise rates. >> if models only worked, wouldn't it be great we could say, okay, the fed is on pause so the multiple we have right here shouldn't really change so if we get 5% earnings growth we should be able to count on 5% up in the s&p. but it doesn't work that way. >> animal spirits are powerful and difficult to predict so i didn't think anyone predicted the market would be down 4.5% last year. this year we'll have to see but it does look as though corporate profits are pretty good. the s&p companies that have reported thus far have had sales

growth 40of 4%, 5% earnings growth i think those numb blers coers in higher. you look at 3m earnings, stanley work earnings, stanley black & decker, you look at caterpillar's earnings and they all talk about slowing in china, in germany, in europe. and to some extent in the u.s. you have the housing slowing, you have to autos slowing so there are some negatives it's not a goldilocks world. >> is that that it will put us in recession in 2020 >> at the earliest. >> you think everyone is coming out with this 2020 business because that's just sort of -- they look at the calendar and say well, it's not 2019. >> it's not this year. i think it's very difficult to predict out that far. >> very difficult to predict the future much harder than other predictors, isn't it >> thank you, yogi berra. >> well, you're welcome.

i don't know what to -- would it surprise you if multiples expanded >> it wouldn't surprise me if multiples expanded where we are right now is at or below historical averages for multiples and as kevin was saying the economy looks pretty strong here with respect to unemployment, gdp, purchasing managers index, many other indicators so you could have multiple expansion from here but predicting that on a day to day week to week basis is very difficult. >> before we go, kevin, just the easy question for you, we should be more worried about inflation or deflation globally? >> well, right now i think inflation is where the fed wants it stop i think you have to see really upside surprise for them to actually hike rates this year afterperha after perhaps some resolution of these external factors of global growth reaccelerating, perhaps

but i think, you know, the fed has been very cautious and rightfully so because inflation really hasn't picked up. >> so what's our true concern, inflation or deflation >> not necessarily deflation but low inflation i would say. >> that might be -- that could be good. >> i think it's pretty solid growth and tame inadministration a good -- >> that's the question, why. i don't know why with 300,000 jobs, i don't know why it's so hard to get subtraction. i think it's the internet, amazon, social media, everything else, right? >> innovation. all the companies that andrew talks about that do all that crazy -- applications you download, all that stuff. >> what are you doing over there? >> crazy companies like facebook. >> like facebook get off my lawn. when we come back, patriots

owner and businessman robert kraft will join us live from atlanta ahead of this weekend's big game plus, tesla shares slammed after the cfo becomes the latest top executive to leave the company. we'll talk about the company's future and musk's future that happens when we come back stay tuned, you are watching quk x"ig he cc. ♪ hawaii is the first state in the u.s.

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welcome back to "squawk box. only dowdupont is really helping the dow. dow is down 49 points. strong, though, green on the nasdaq, up 52. s&p up about four. we heard from blackstone that reported a two-cent loss short of expectations and u.p.s. earned an adjusted $1.94, four cents ahead of expectations but revenue was just shy of expectations. >> they did give guidance for the full year. they're saying $7.45 to $7.75. street was at $7.69. they're talking about giving you guidance of what the street anticipated before. when we return, we'll talk

tesla and the latest executive to leave that company. and while it's a big day for stocks, it will be a big weekend for robert kraft his patriots will meet the rams in super bowl liii he'll join us live from atlanta in a couple minutes. squa "squawk" retnsur with bob kraft in just a few moments. and to manage this risk, the world turns to cme group. we help farmers lock in future prices, banks manage interest rate changes and airlines hedge fuel costs. all so they can manage their risks and move forward. it's simply a matter of following the signs. they all lead here. cme group - how the world advances.

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shares of tesla, the company missed on earnings elon musk announcing seicfo deek ahuja is retiring this year. phil lebeau is coming to us from the chilly city of chicago phil, good morning. >> i love it, that's awesome that will be me from now on. i never want to see any other picture up there for me. whenever i do a phoner, i want that you mentioned tesla and the shares being under pressure. the reason is because the fourth quarter was a mixe s, depending on what you're looking at but the resignation of deepak ahuja has people thinking.

we don't know a lot about the person stepping in and deepak ahuja to a certain extent was a stabilizing force there, certainly given the fact that elon musk at times over the last several years has been a volatile presence within his own company so that is the reason the stock has been under pressure there was good news and also news that disappointed investors and wall street. it was a small profit. smaller than the third quarter it did miss estimates. better-than-expected rey knew not surprising given the fact that they were pushing to get as many sales in as they could and the cash level and cash flow both improve so that's good news, right? the street is looking at guy dance from tesla and it's disappointing. overall delivery between 380,000

and 400,000, most were expecting deliveries between north of 400,000 and there's the wild card about how quickly they can get the china factory up and running. here's elon musk talking about how he believes the company is positioned despite what might happen tothe economy. >> even if there's a global recession, we're expecting deliveries to be about 50% higher than last year. it could be more than that. >> it could be let's wait and seep what happens in terms of production as they rush to get the china plant up and running before the end of the year and they say they would like to get model 3 production started before the end of the year also one other note, elon musk says they may unveil their pickup truck that is coming a couple years down the road but they may unveil it, give people

a vision of what they want to do when it comes to the pickup truck, that could happen this summer. >> phil, stick around. i want you to be part of this conversation joining us is the auto analyst at ubs, good morning to you. there's a couple big questions here first of all, the bears look at this and -- look at the seicfo leaving and think there's something more amiss than the other theories where do you land there? >> one of our concerns is having a sell rating is the constant senior management departure. so it's very concerning. we're not familiar with the new cfo so it's another concern. >> where does that rank in your concerns >> i mean, i think there's more fundamentals in terms of we're very concerned about mix as the price comes down on the model 3. when you look at the profit and they're targeting 25% margins

and selling in the high 50s, that's very challenging and there's even comments that raise concerns about the actual demand they indicated in january and february orders had slowed which i'm surprised so i think those are bigger concerns. >> do you have any question about the cash position they have given the fact you'll owe about $920 million later this month? >> i mean, we look at it -- >> it doesn't look like the stock -- it would need to be at $360 than to convert the stock instead of paying it out. >> i don't think there will be an imminent cash flow concern. they have $3.7 billion i think they'll burn close to a billion in the first quarter because they guide to hopefully a small profit so that probably implies negative cash flow and i think working cash flow will unwind but i think by middle of the year i would expect them to

raisecapital. >> you think they will >> i think they will and they've indicated -- >> because they need to do that with china >> they said on the call probably about $500 million they're expecting to do debt in china. >> and how quick do you think they'll get this factory rolling in china >> that was one of my other questions on the small i mean they're planning to a 3,000 per week rate by the end of the year and they just broke ground i don't know if i ever heard of a factory ramping that quickly and they don't seem to have decided on the supplier which when i talk to experts the cell is so critical in the integration of these vehicles. i'm sure the chemistry will be great but -- >> phil, jump in. >> that would be my main question colin, i was on the call listening as you were and i know you guys were asking a number of questions to elon. you've got a lot of things up in the their have to come together

very quickly in order to hit even beginning production in china by the end of the year if you had to put a percentage on likelihood they open the plant by the end of the year what would you put it senate 20%? 30%? 50% confidence that will happen? >> i would put it at the low end close to 20. i think that's a very aggressive target. >> remember elon said on "60 minutes" he's an optimist. do you remember that interview >> of course, i know that interview. >> he says i put out these things and what do i know? >> go ahead, colin. >> i think if you're talking to financial investors you have to be careful there's rules and regulations. i'm sure that is -- sounds a little closer to best case scenario. >> let's talk about the competition because there is going to be real competition that appears to be coming online whether it comes to porsche,

jaguar and others. how do you see that competition playing out? >> i think this year -- we've been disappointed. it looks like a great offer. some of the other models, the stats when you compare them to tesla aren't as impressive as we were hoping. i think it will be 2021, 2022 when the automakers get their act together. >> and by the time they get their act together will tesla have to refresh either the model s or 3 or do something to just sort of enhance? >> they have a long product pipeline that they talk about so they will be having to keep demand going they'll have to launch the y which they said could be twice the demand of the 3, they have the pickup coming. >> you have a sell in the stock. what do you think it's worth >> our price target is 220 we look at it, as i said earlier, concerns, fundamentals is what i point to investors in

terms of mix and production in the near term. >> colin, thank you. phil, thank you sir. >> thanks. >> stay warm when we come back, more to talk about we'll break down stocks briefly and talk about this weekend's big game we'll take a pause and do that because we have robert kraft coming up ahead of the super bowl take a look at u.s. equity futures at this hour

welcome back, everybody. we are watching three big stories this morning. amazon's latest quarterly results will be out this afternoon after today's closing bell as earnings season really kicks into high gear general motors is suspending production at 11 michigan plants after a local utility requested users conserve natural gas during the extreme winter cold the labor department's latest reading on initial jobless claims will be out in just about an hour's time. when we return, new england patriots owner robert kraft will join us and cnbc's eric chemi is live at the super bowl he's been posing questions to

the players there. in fact, check out this answer from patriots kicker steven gostkowski >> reporter: is there a ceo, business leader outht ere that you look up to as an inspiration? >> robert kraft.

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big day for earnings and the markets but we'll take a time out from the action to talk about the big game, the super bowl, the los angeles rams taking on the new england patriots the team is going for its sixth championship title this sunday joining us is robert kraft, chairman of the kraft group and the owner of the new england patriots and, really, bob, it's really unprecedented it is. it's never been done before, nothing close. and i -- and it's funny, too, because if you say the patriots to people it conjures up, rightly so, so many different feelings and opinions. people hate a winner and the true believers it's like

almost -- it's such a deep love and idol worship but along that success comes some people that just go, ugh, the patriots, pretty boy tom brady how did you do it? usually i wouldn't ask that question but what do you think really was the key to probably the most successful run of any professional sports team >> well, you folks know it's true in business that look at your team, how you guys have been together and how you get great ratings. >> i was thinking the same thing, patriots, "squawk box," i don't want to say that myself but -- >> but thank you. >> well, it's always used as an example in our morning meeting here with the team but you know 17 years ago on super bowl sunday, february 3, we were the biggest underdog in the history of the super bowl and all of america was in our corner and we've had a good run

and we understand everyone but we'll keep doing our best to get people to -- some of whom root against us to be doing it for a while. it's good for the networks because there is a great passion with those fans who don't like it but we've been privileged to keep continuity with two people and who are unbelievable what they do. even when you're running a business, keeping continuity and having people keep their egos under control and think about it, it's almost two decades we've been able to keep this running together. >> and the animosity, i've never heard it directed at you but we'd have to take a pick between your coach and quarterback as to who is more of a lightning rod for both the love and the

criticism but i would give credit to all three of you as being part of the magic in a bahting, whatever it is. >> it's the triumvirate. >> in the world we live in, people are looking to feel good about a brand. people in communities come together i think last sunday we had 35,000 people come to our stadium for a sendoff. they started lining up at 2:30 in the morning they saw the players and coaches for 20 minutes at 11:00 and it was such good karma and good feeling it is important that people find things outside of their immediate life to brand with and we've tried to bring pride with our franchise. >> see, i'm hearing already that

if you take the green bay packers nfl championships, pre-merger they have more. i'll be hearing immediately -- it's great i think it's great that fans are so engaged bob, i have so many things to think about. can we talk about quickly that call and instant replay somewhat do we need don't you just need to say that not every call is always going to be correct? there's things you can remember in the past in patriot games where it's like the game seems to turn on maybe a bad call bu we don't need more instant replay and challenges, do we i just keep hearing about what happened to the saints what's the answer to that? what's goodell thinking? >> well, we have one game left and i love the refs and i think they do a terrific job

and you know back in '76 the patriots were playing out at the raiders and a ref made a call on sugar bear hamilton and similar kind of play and, you know, this goes on in sports, nothing is perfect and -- but the intent is always to get it right. >> you've always got a receiver that he's not that tall, doesn't seem that fast, and you've always got one which -- in gronk and everything else but it makes me come back to the notion that someone is making those receivers look good, i guess, right? and someone has a line that's allowing him to make the receivers look good so it's hard to say it's any one person, but brady is something special he's a lightning rod, too. he's too good looking. he's too tall. his family life is too great

he's just got too many things. hate him. >> he is the real deal he's one of the greatest, nicest people he's the same guy he was 19 years ago but you put your finger on something that's underappreciated with a lot of teams. our offensive line is unbelievable and they've been doing a great job setting up our running game, protecting brady, and they're in the trenches doing it without notoriety but they are very special and probably one of our most unique special assets. >> you started out talking about continuity and how important that is. there should be so many questions asked about tom brady's future he have says this won't be his last game. what do you expect the future to hold in terms of his relationship and still being there as thequarterback with you? >> well, we've been so lucky to have him he's someone who wants to perform at a very high level and

when he can't do it, he'll want to pack it in, look, he's led the team to three straight super bowls, four in the last five yea years. people love to talk about age but we look at performance and ability to execute and he also puts sweat equity into things he has to do in the off season to prepare and be right i hope he's with us for many years to come and i believe that's his intent. >> somehow that negotiation going to go? how hard is it to negotiate with a guy you love and consider family >> he can get whatever he wants. one of the most important things to him is to win and not make money so i think he understands if we pay him a fair wage, whatever we don't pay him is going to players to make him

better and if we do well and the player who gets the most credit, it's like annuity income for the rest of your life, is the quarterback of any great team. you think back he was smart enough to understand that a number of years ago when we were negotiating. it's not like whatever we pay him we put in our pocket we use him to make the rest of the team better. >> i saw something, bob, about whether your coach, bill belichick, is not going to return do you have additional info for us on what his plans are that you can share with us? >> well, the three of you know is the key to life is enjoy the people you're working with and be passionate about what you're doing. and bill has proven how outstanding he is. he has a great work ethic.

he's the best at what he does and the history of the game in my opinion and i believe he'll be doing it for a number of years. >> that's my job to do that. we've done it for 19 years we've done it for 19 years in a prison and i think i read there have been 186 coaches hired in the period that he's been with us for the 19 years. >> would you rather be loved or respected? i kind of think maybe you're both. >> loved or feared. >> loved or feared or respected. bill seems like he might -- is he loved and feared? >> all three are good because to be loved and respected from time to time you need a little neck snapping and i think people have to know you have that side you tried not to use it too

often. >> bob, super bowl considered one of the biggest gambling days typically of the year. what do you think of the future of sports gambling >> i think it's tremendous opportunity to engage young people and also a form of entertainment that can be very modest and be great for the game we're really excited, the opportunity for prop bets and have a lot of fun and entertainment around games, i think even games that some people might consider meaning le less, combining that with fantasy is a great opportunity in the whole area of entertainment. >> and i saw you're going get a new pair of nike sneakers for the game what do you have going on? >> well, we have a -- mark parker and his whole crew have been great to me and we have a lot of fun with our air force

ones and i know my players will love what they've done for me. they follow it closely and nike has been a great partner. >> we didn't get to talk about the box business and the economy that much. we didn't get to talk about criminal justice reform and meek and michael rubin and the great things you're doing with that as well, bob. >> just an invitation to come back. >> i do remember those old helmets and i lived in boston and the patriots weren't any good so you made the patriots great. i don't know if you made them great again but you certainly made them great and it continue like that when i was there, i'll tell you that much. >> well, i didn't know if i were inferring that we needed you to move out of the community to be able to uplift them. is that what you were saying >> that might have helped. >> i loved to l.a. and helped out there, that's right. >> i'll just tell you, this whole area of criminal justice

reform, what meek and michael rubin are doing is pretty special and the objective of getting a million people out of the criminal justice system that are there unfairly is so important and i think we're on to something there. >> wow, the lights are going whacky here almost like we're at the super bowl or something. anyway -- >> and i'll tell you, the economy is doing pretty well our packaging business is still doing well and i think that's a function of what is going on in the general economy. i hope we get a settlement in china and if we do i really believe the western world is set up for a good future. >> say hi to jk, your handsome son. >> he is he's right with me he is handsome, he looks up to

you, joe. >> that's nice i know, you said he's like son number two rubin, i think, is taking my place. we have to go. we'll see you later. thank you. >> good luck. >> great to be with you. folks, when we return, we'll look at this morning's market movers plus, cloud concerns are forming for microsoft. that stock falling on a revenue miss also, make sure to keep it here on "squawk box. we have an interview with chase koch, son of charles koch and presidt enof koch disruptive technologies is our guest today. "squawk box" will be right back. ♪ ♪ our new, hot, fresh breakfast will get you the readiest. (buzzer sound) holiday inn express. be the readiest.

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dom chu apparently joins us now. is that true are you there, dom, what do you have i have no intro. >> it's not "apparently," i am here in engelwood cliffs in front of this massive wall, joe, to show you what will move the market this is morning and we'll start it off with what's happening with dowdupont 156 shares of pre-market volume after the chemicals giant posted better-than-expected profits on sales that fell short of some estimates. that miss was due in part to lower demand for autos and packaging. dowdupont said its plans split into three separate companies for later this year. still, those shares moving to the down side. shares of raytheon lower in the pre-market trade, down 5,000

shares of volume after the defense contractor best known for high-tech weaponry like the patriot missile system, also tomahawk cruise missiles posted an earnings beat on sales that missed analyst expectations. sales were better thanks in part to better demand for secretive programs within missiles systems. then we'll finish it off with an earnings pop that's what's happening with u.p.s. right now 235for 5% the package giant had a slight miss on top line revenues. its first year profit forecast range had a midpoint that fell below estimates but u.p.s. was helped by record shipping volumes during the holiday shopping season and the one we want to focus on here, general electric shares surging on heavy volume pre-market. it was three million shares as of a few moments ago, earnings missed, revenues better than expected earnings a little dampened when

analyst steven tusa said the risk reward for ge less favorable into the earnings report after a stock that's run 40% between christmas eve and yesterday's close. a much bigger pop if we factor in the anticipated opening be to you guys >> thank you for, that dom. facebook shares soaring after the social networking giant rolled out better-than-expected quarterly results. profit, revenue both crunching expectations we'll talk more about facebook and other big tech earnings, joining us is mike santoli, cnbc senior markets company ta s com. is this a turn here? >>itis turn in a sense we're realizing how negative people got. if is rallying huge on a number that was good, mucher be emuch n feared but it got people thinking the network effects of this is automatic it's rallying

hard to 168 or whatever it is, 167 in change and it was at 190 a year ago so that's -- we're still using up a lot of the fear and caution and the depressed valuation so beyond that i don't know apple's rally to a level, it got to 14 or 15 months ago we here in that zone and you look at other stocks that held up better, and we'll talk about microsoft but visa and what not, their stories are the same but their stocks aren't popping. >> are we safe because we're not back to new highs or -- >> i think we still haven't used up the skepticism that got built up now, the angle of the rebound has been so sharp that it would be very obvious and logical for it to flatten out. after a fed pop day you do get that digestion. in the meantime, microsoft reporting a slight revenue miss. joining us to break it down is

an analyst with griffin securities jay, we can call this a slight miss but the numbers beat on the bottom line 110 versus 109 that was expected the revenue miss was $32.47 billion versus $32.51 billion. so ever so slight of a miss. what happened? >> i don't think it was a miss at all it beat our numbers in both respects it was windows oem business. that was not quite $200 million negative delta but in other respects they beat. cloud lev knews in line are better the office business better linkedin had another outstanding quart quarter. >> why is the stocks down and why is there take away there's concerns about the cloud business even though it was 74%

growth in azure? is the street missing? >> we think there's strong performance. they did $30 billion of free cash flow per calendar we expect that to grow to $50 billion of free cash flow. by the way, we had hundreds of basis points margin in the cloud business so the street is missing something here as far as windows, they're expecting an improve consistent with what intel said regarding better chip availability >> there anything to read into the cloud business that inform this is debate as to whether there's a lull in cloud investment industry wide. >> well, intel and other what others are saying i would say no again, look at azure up 76%,

very strong growth consistent with the preceding quarter microsoft will continue to build out the data centers so for me as a voft ware onsoftware analy profit isn't improving because they're scaling on the capacity and microsoft is investing in its own chip technology. it's not a pause inferring from what the chip guys are saying but microsoft is actually doing in terms of its customers' c cu' consumption. >> thank you so much. coming up, the fed looked dovish turned dovish on interest rates. that's the perception, anyway. former atlanta fred president dennis lockhart will join us and then a first on cnbc interview with chase koch, the son of charles koch and president of koch disruptive technology his firm making a big investment in 3d printing that could

transform the automotive sector. that's first on cnbc that interview is straight ahead. "squawk box" will be right back. we're drowning in information. where in all of this is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you partner with a firm that combines trusted, personal advice with the cutting edge tools and insights to help you not only see your potential, but live it too. morgan stanley.

more than three dozen companies are set to report. powell pause fed chief jay powell signaling patience with future interest rate hikes and stocks responding in a big way. in a rare interview with a big name in american business,

chase koch joins us on set to talk technology beyond silicon valley as the final hour of "squawk box" begins right now. ♪ bully bully, bully, bully >> announcer: live from the most powerful city in the world, new york, this is "squawk box. good morning and welcome back to "squawk box" on cnbc live from the nasdaq market site in times square. i'm joe kernen along with becky quick and andrew ross sorkin the futures right now, the dow is down 43 or so, dowdupont is one of the weaker components there. you have facebook helping the nasdaq to a 59-point gain this morning and the s&p is also diverging from the dow jones treasury yields, interesting that below 270 as of yesterday 267 now which is -- i don't know, we say it so easily and

quickly but go back six months and i don't think anyone would have really believed we were going back. >> let's talk about stocks to watch. it's the busiest part of earnings season. the busiest day of earnings season and we have movers to tell you about we'll start with ge. shares sharply higher in pre--market trading. ge did miss estimates by five cents with quarterly profits of 17 cents a share on an adjusted basis and the ceo said ge is making progress, strengthening business and improving balance sheet. the stock which had been down in the weeks leading up to this is up by 8.3% this morning. and then there's dow component dowdupont, much lower. the chemical maker reporting quarterly profits of 88 cents a share. revenue fell short of what the

street was expecting and the company said a seasonal slowdown in automotive and appliance-related products was more to than normal. stock off by 7.75% shares of u.p.s. beat estimates. the company issued guidance that looks like it's strating whe e' the street already.ddling wher the street already average revenue per user came in 21% higher unanimous the prior quarter and that shattered what the street was expecting in terms of estimates that stock is up 12% tesla reporting back-to-back profit quarters but earnings missed forecasts the company announcing its cfo is stepping down the stocks are down by 4% and revenue despite strength in

microsoft's cloud business, they had a revenue miss we just spoke with one who who said they didn't thinks after miss on any metric microsoft says the chip shortages cut into sales of the windows operatingsystem and th probably will probably persist in the months ahead. still he was calling for it as a buy when it's down by 2.5%. i want to talk to steve liesman because jerome powell signaling patience with future interest rate hikes. he joins with us his analysis. steve? a big turn the dovish side has markets waking up to the big question -- did the fed pause the cycle or end it? the two-year note trading as if it's a hard stop 250. the yields fell sharp lift you can see the big cliff there, looks like el capitan at yosemite as the ephedrafed's st was more dovish than expected.

the fed in its policy statement kept rates unchanged, said it would be patient in considering further rate hikes and removed from the statement languaged that telegraphed further rate increases giving the doves everything they wanted fed funds futures also reflecting the idea of a stop. here's the way it looked january, 2020. be careful because this will change a lot by the second but here's a moment in time where you can see the preponderance is for no change but the second choice there is for a cut in the next year not -- definitively not for a hike economists not so sure many reduced their outlet for rate hikes from 2 to 1 but believed the fed could get hike. here's commentary i'm reading. barclay's said the interest rate sees the fed cycle as complete deutch bank writes our baseline outlook still reflects cross currents that chair powell

highlighted. this should allow for additional tightening this cycle. so we're going say are we done or do we take a pause here >> that's my favorite kind of chart. >> it just reopened again. >> did. >> it yosemite do you know that in october a guy free climbed that? i hear that i start sweating. >> why >> i have no interest in watching that stuff. >> i can't watch on a tv. >> the back of my knees get sweaty when i watch that stuff. >> me, too, and my legs get shaky. without ropes. >> steve, you look so close to the white house. where were you >> it's funny, i wonder if i could get up this is a cut out thing.

it's a live shot of a fake -- >> don't tell the secrets of television. >> come on, it's table it's a live shot -- a real shot of the white house but a completely fake thing. >> so it's not fake news, it's real just misplaced? >> looks good. >> it does look good, right? >> you don't lookout of place. >> didn't john lovitz say it's not what you say it's how you look. >> steve, i want to bring a few other guests >> brilliant panel coming up, too. >> we have the former treasury official, former fed economist and now a professor at the university of maryland also dennis lockhart, former atlanta fed president. dennis, from the perspective of what steve asked, is this a pause or a wait-and-see? >> well, i think first you have to tell me what the inflation numbers will look like over the coming months because i think their reaction will be to inflation so i don't think we can know at this stage

i do believe that a number of the members of the committee would still like to get one two moves in closer to the midpoint of the neutral range >> we didn't hear any hint of that yesterday did it take the market off that we're swinging back in the other direction? >> i just think the discussion of building ammunition for the next downturn is not something really appropriate to discuss. it makes it sound like you're raising rates in order to cut rates and that's not sensible but in the back of the minds i think in some people if they could get the policy rate a little bit higher they would be in a better position to deal with whatever comes down the road. >> is the fed on hold or just until we see the data coming in?

>> i think the fed is on hold to mid-year, i think. >> and then they will be in a position to evaluate the situation and evaluate how the inflation numbers have come in and also whether the forecast seems to be playing out or something else is happening. >> phil? >> i agree, it has to be in the back of their minds to do another hike or two. >> they say we're going look at the real economy and what's going won the inflation data to me that puts them on hold until june, at least because they'll need to see inflation tick up for a couple of months in a row before they get off hold. >> you have a very good point. all of these issues coming up with the trade nations on march 1, just two weeks from now you have the other potential deadline for a possible

government shutdown. >> they have to and it puts the focus back on the white house. the administration has the ability to take care of these things they can make progress with china, they can make progress with congress and get the economy going and lift clouds and they would be good for everyone. >> the other big issue -- is that you piping up, steve? i want to ask you about the balance sheet, too. >> he does pipe up >> i was turning to you next, i want to hear what you have to say on this, steve. >> so on the balance sheet i think it was a sort of very confusing statement. i've talked to a bunch of former fed guys the fed passed a policy in june, 2017 that specifically said it would not change the balance sheet run off unless they had reduced rates substantially. it was kind of like the odysseus

test where you strap yourself to the mast and make sure you do not -- >> wait who are the harpies? >> who are the harpies coming after him? >> what does the fed do? unstraps the rope and changes the balance sheet. the other thing they say we're going to do it it's like trying to get clari clarity -- >> yeah, i think -- >> it was the pace of runoff. >> and they're not ready to give us a number of where they're going. and i think they want the market for volatility to go away. and it was the entire target or at least confirm the higher target that the market has

settled on which is $3.5 trillion which means it's a half trillion to go which means they'll be done some time next year. >> dennis, i like steve's odysseus reference is the harpies the market force economy? >> i love your prom, el capitan, odysseus. >> dennis, you voted on that thing, right you were part of the committee when you did that strapping to the mast thing, right no now look what happened to your great plans? >> i suspect they'll revise that statement. my reading is that they will keep shrinking the balance sheep during a hold but if there were a rate cut they would have to change the policy and go to a stop of some kind but if the economy moves along as we expect and they're on hold for the first half of the year i think

they'll continue so on the terminal balance sheet side, that's another technology so what you've got yesterday -- >> the preview of coming attractions meaning what >> more elaboration on not only the numbers around the plan but exactly how they'll operate in the future so they will answer questions of how they deal with mortgage-backed securities versus treasuries. they'll end up with more mortgage backs than they want so i think there are detailed questions that still have to be worked out. >> very quickly are we looking for clarity the fed doesn't have

yet? i'll ask you that, dennis, first. >> yes, i think to some extent i suspect they have discussed this a lot so there is a growing consensus but they haven't brought it to a decision yet and that will come in meetings ahead and probably not too long from now, one two meetings we'll get a fairly thorough plan of how they intend to go forward. >> and, phil, i'll give you the last word. what's your thought on what we need to watch most at this point, what the fed will be watching. >> i agree. >> they know what they want. they won't hike but maybe they'll change the composition of the balance sheet and they can shorten that up and in their minds that will be tightening, reloading as dennis said so that is what i am looking for. >> and this is important to listen to from this panel

because people have been on the inside we want to thank former fed economist fill swego and dennis lockhart and steve, you know this better than anyone else here. >> i feel like he's been on the inside coming up, a rare interview with someone from one of the country's biggest business families, chase koch is our special guest along with the ceo of a company he's investing in called desktop medal we will talk to disruptive technology futures at this hour. the president made a bunch of tweets about china we'll bring you up to date on but when all is said and done we're down 53 on the dow so they say that some day ai will transform the human race. well, today you're a little busy transforming your call center. dealing with millions of customers a year, like this one. no, i'm pretty sure i didn't order a squirrel playing a guitar. that's why you work with watson.

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and the man in the high castle. all in the same place as your live tv. its all included with your amazon prime membership. that's how xfinity makes tv... simple. easy. awesome. welcome back to "squawk box. we've been watching future this is morning you can see dow futures are indicated down by almost 50 points this came after a gain of 400 points yesterday based not only on strong earnings reports we were getting but what we heard from the fed, much more dovish market than the -- message than the market anticipated you are seeing the s&p 500 indicated up and the nasdaq up by 60 points nasdaq getting help from facebook shares up by 12%. mastercard just out with

quarterly earnings that company reporting profit of $1.55 a share beating the street's expectations by three cents. revenue also beating wall street's forecast with purchase volume and that looks like it's up by 4.6%. >> big morning for the market with today being the busiest day of earnings season step away from matt for just a moment to bring you a rare tv interview with chase koch, the president of koch disruptive technologies i was just about the say the son of charles koch, a subsidiary of koch industries. kdt just led $160 million funding round in 3d printing company desktop metal. you're looking at it right now technology in action printing a part for a car's engine. joining us is chase koch and desktop metal co-founder ric fulop. you just put a lot of money into his company. how much of this is a bet that manufacturing fundamentally is going to change? these guys do it -- bmw is a

client, right? >> and a customer and an investor. >> is the future of metals all 3d printing? we're having a fight about tariffs and everything else. >> we believe there is significant potential because it transformed the way things are made whether plastics, polymers or metal products, it's transformational in that it removes the waste from the making of products and also if you think about the tost of the technology, it's dropping the cost so it's getting more and more of the products and technology in people's hands and the things that's exciting about it is it applies to almost any market, agriculture, metal products, medical devices and electronics as well. >> you have something there made by a 3d printer.

>> after we metric and his team koch industries wanted to -- so this is an atomizer and i'm not an engineer so don't ask me to explain the details of. >> it it's heavy. >> but what this is is this is a product made by john zinc out of tulsa, oklahoma. they focus on pollution control products and high efficiency products so this is an ie tatomr that goes into an lng tanker and it can only be made with attive the manufacturing and it can't be made by metal produces. >> you've raised close to half a billion dollars. the speculation is the company is valued around a be a billion and a half are you going to go public

>> we're focusing on customers being success. we saw you two years ago. >> this has been a great ride and it's growing we have seven other car makers in the process of adopting our technology and huge adoption in consumer electronics >> in terms of the car manufacturing process, are the manufacturers themselves going to start using this instead of buying parts from other companies? who are the winners and losers >> the consumers will get products that are better but today in a car you have 200 kilograms depending on the car 200 and 300 kilograms of cash parts. those will be cheaper to produce using additive and you won't need tooling so you can mass costumize them to different

mark markets, use design driven by ai to lightweight the part. >> how does this change the debate around tariffs and manufacturing in questions about whether companies are going to want to manufacture in mexico, china or elsewhere >> if you think of first industrial revolution it was about creating economies of scale and that created locations with better cost structure with additive, you send your miles digitally so you don't have to go through customs so there's a huge charge for global trade and the winners will be the companies that own the designs so in this case the car maker will have better operational efficiency. >> how much of this is about being investor as opposed to customer >> we're excited about the investment number one rick and his team we're very impressed we like to invest in principled entrepreneurs and we saw that

across the board on his team and desktop metal. so we are excited about the investment but we're looking at technologies that are disruptive to koch industries we believe this highly transformative to the way we might make things. the atomizer is a good example of that. so we bought a couple units to get going and we have the koch companies in front of ric and his team right now. >> you're often talked about as the heir apparent within the koch network where does koch disruptive enterprises sit within the larger frame. >> it's one more business within koch industries. we have 10 business units that touch everything from wood products, energy, electronics, a number of different industries, that is new business we started just over a year ago to focus on finding and investing in the most disruptive and transformative companies you >> ear based in wichita.

>> wichita, kansas. >> not washington? >> no. >> why not >> wichita is home for me. born and raised there. we like recruiting talent. >> shockers fan? >> huge. >> an article was written about you that said "the next koch doesn't like politics. do you not like politics >> that may have been taken a little out of context but here's what i'd say on that the koch network and what we're focused on and what my father has been focused on 2340r or 50 years is how do we improve as many people's lives as possible? that is why the network came together other people that are also engaged in that to figure out okay, how do you break barriers across education, communities, policy as well to unlock people's potential so criminal justice reform which

is the first step act just went through recently that's a great example of our approach to politics we think about what really works is having broad coalitions so we're uniting with anyone to do right on this. if you look at criminal justice reform, we worked with the obama administration, the trump administration, van jones who used to not be a big fan of our network, we've come together and worked on this to get this first win on the first step and working further on criminal justice reform and communities and when people get out of the system how do they get a job >> van jones is part of the meek kraft thing. >> absolutely. >> it's a tough row to hoe in

these global times finding people who can work across the aisle how do you do it >> if we can get a win on criminal justice reform that creates other opportunities so we're excited. >> he's a little too modest. the shockers play in in koch arena. >> they do and i'm a big fan. >> what's the coolest next thing that is going to get created by 3d printing? >> we make for the first time you can go to market in mass production and we have everything from next generation phones that will be made with this technology to metal parts in phones to many oems. >> is it ever going to be in the

consumer level >> i don't think we're -- in metal we're far from making metal in somebody's home but in mass production everything from power tools to consumer electronics to automotive, rail. >> >> maybe there will be an ipo but would ant automotive company try to buy you out right >> well, they want to drive this technology not just for their own adoption but also for the tear tier 1 and tier 2 networks so i think we are here to be doing this for the next 20 years we have a long-term focus. >> come on back. >> great conversation. congratulations, chase koch, president of koch disruptive technologies ric fulop. >> atomizer. >> he was in "the incredibles 2". >> no, he was not. close. when we come back, wall street back to being facebook's

friend we'll dig into the social media giant's latest earnings beat and the stocks' resulting surge. we'll talk about the company's latest privacy headache. you are watching "squawk box" on cnbc only ok? no worries boss, i'm one of the tattoo artists in the city. uh, aren't you supposed to draw it first? stay in your lane, bro. just ok is not ok. especially when it comes to your network. at&t is america's best wireless network, according to america's biggest test. now with 5 g e. plus... buy a samsung galaxy s9... and get one free. only at at&t.

the futures right now have worsened a little. 77 on the dow as far as being in the red. the nasdaq continues to diverge from the dow and trade fairly well in terms of upward momentum up about 45, 46 points the s&p fairly positive. and president trump is tweeting about china it's a three parter so here's a quick summary. he says trade meetings are going well, he said there will be no final deal until he meets with president xi and he said everyone is working to complete a deal on march 1 when tariffs will increase to 25% he also said everything is on the table, all the different

problems it won't be like i guess just trade or just intellectual property or just -- i think they're -- i don't know how you do that by march 1 but that's what they're trying to do. he's also been tweeting about -- i saw some threatening tweets about the wall that the republicans were wasting their time trying to negotiate and he's going to do it one way or another. he's already doing it. coming up, the busiest day of earnings season is upon with us more than three dozen s&p 500 companies set to report. when we come back, we'll run you through this morning's biggest movers stay tuned you're watching "squawk on the street" on nbc through on these roads shhh, sorry, i didn't catch that. i said ask how soon they can be here not you. right now? what's now? he says they're surveying our property now they're probably at the wrong house i don't see any hovering

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initial jobless claims just out, jumping 53,000 to a total of 253,000, last week's number was a 49-year low, welcome back to "squawk box" on cnbc, the busiest day of the earnings season with 37 s&p firms set to report by day's end. dom chu joins with us a wrapup of the biggest movers. hello again, dom. >> hello, again. i am here in engelwood cliffs, new jersey we are seeing shares of altria by 2% on 132,000 shares of volume or moving thereabouts

the tobacco giants like marlborough and skol came in line with profits in line of an list estimates the midpoint of their full-year profit forecast came in below estimates. shares had already fallen by 32% over the past year so that may be the reason for the pop. in terms of a 5% move, those shares up on 40,000 shares of pre-market volume after the package delivery giant posted a beat on earnings that narrowly missed and traders for now shrugging off a full-year profit forecast range that had a midpoint below analyst estimates. and then shares of raytheon down by around 4% on just around 10,000 shares of pre-market volume the defense contractor best known for things like the patriot missile defense system and tomahawk cruise missiles beat earnings estimates but sales posted a miss. those shares off by 3.5%

a quick check on what's happening with shares of general electric stock arguably the talk of the pre-market after its mixed quarterly report shares are up around 7%, now 9%. it was around 11 or so million shares pre-market of volume. we'll see if that holds up into the opening bell. >> dom, thank you very much. i want to correct an earlier story about blackstone's quarterly results. blackstone posted a quarterly loss that's not the case. blackstone recently stopped reporting that economic net income number. the two cent loss is a gap number it's not comparable to the estimates and blackstone is now focusing on something they called distributable earnings. that number came use in at 57 cents a share.

we'll continue to watch that stock today down to 3290 when we return, facebook is the latest wall street winner. the stocks surging after the company's earnings revenue beat swirling around the social media giant including this week's report about user data collection when we come back, facebook's response and more of its on-the-record breakout quarter we'll talk about that and so much more when squawk returns in just a moment. obvious. sometimes, they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities.

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watching the future this is morning. dow futures have gotten weaker they're down by 62 points below fair value s&p and the nasdaq are hanging in there s&p indicated up by 2.5 points nasdaq up by 50 points this comes after a big day for the markets yesterday. major gains with the dow up over 400 points and earnings news circulating around. >> facebook did much better than street was expecting julia boorstin joins us with that report and her interview withsheryl sandberg, hi, julia >> good morning to you, joe. facebook beating expectations on the top and bottom line.

earning more ad revenue per use user. >> one of the questions people have for us right now is we're making such big investments in safety and security, can we make those investments while people continue to use our products and while we continue to grow our business and i think this quarter shows that we can do both. >> this earnings report coming after a day of bad press apple accusing the social media giant of a, quote, clear breech of its privacy policies and banning a facebook research app that paid users to track their mobile activity. in this case, the people that chose to participate in this program did, but we definitely have work to do and we've done it we're going to do it as soon as

we realized we did it. the important thing is that the people involved in that research project knew they were involved and consented. >> apple pulled the plug on internal apps used by facebook employees. facebook says it's working with apple to resolve the issue as for what is bolstering facebook's stock this morning, sandberg and ceo mark zuckerberg spoke about the potential in their stories format, announcing they have 500 million active users and two million advertisers in stories also saying the watched video platform has 400 million monthly viewers. and analysts are bullish, we've counted nine price target raises many saying the company's systems prevent more scandals which have improved and now they're looking forward to continue to focus on new opportunities for business you can see the stock is up 11%. you can find my whole interview with sandberg on cnbc.com. >> nice job, thank you very much in the meantime, i want to talk more about facebook, joining us

is anthony declemente. have they turned a corner, anthony? >> yeah, facebook can be the comeback stock of 2019 the u.s. is very strong and for those that think core facebook is declining engagement, that's not observable in the numbers. you have clean beat, you have what seems like fading concerns, perhaps, on the regulatory front wi with and a stock where expectations are low people are bearish, maybe fell into a bear trap here and the stock was spring loaded for upside to pretty low expectations. >> you think the regulatory cloud is gone? >> i think that when you look at the results from europe in the quarter, you're more than two quarters into regulatory in europe, gdpr, and users returned

to growth. and the revenue was strong so even in the case where we have legislation on data and privacy. the company is working on it, they've made significant investments ahead of this and in some cases regulation will allow facebook to take share because they've proven to have resources to help write the regulation, write the laws and comply with those regulations. >> how do you get to that price target >> you're paying less than 20 times for a company growing 25% so we're looking at a target earnings multiple between 20 and 25 we think 23. we think that's achievable throughout 2019.

so are those 2020 earnings estimates money good and what happened for us who modeled financials, 2020 estimates went up and the by side expectation is for nine dollars of earnings in 2020 and that's how you get to 19 times for a clear market leader where sentiment is -- i mean, stock had been beaten into submission. >> anthony, when you see a headline like the one we were talking about yesterday, this idea that they had an app that actually apple they kicked off the system because it was against their terms of service or you read the story that they were allowing kids to use the messenger service knowing that they were wracking up huge fees on their parents' credit card bill, does that worry you or that noise >> i think that facebook is much more on the case than they were a few years ago on these issues

of data, privacy, safety, security and they made mistakes they made mistakes a few years ago but they have invested in -- 2018 was a massive investment year to tackle a lot of the issues that the press, the "times," yourself, have been reporting on facebook. some of it true, some of it misplaced and exaggerated but they're on it and i think that 2018 was peak negative press i'm not saying these headlines will go away but it's a cloud that might lift. >> anthony declemente, good to see you, my friend. joining us now to wrap up everything we've been seeing in

terms of market action, results over the past 24 hours is tom lee, head of research and fundstrat global advisers. the dow was at 780, there was a guy a that missed it when the dow moved up when he got 900 he said we will never see 800 again in our lifetime, ever it will never hit 800 again. >> there are times when the market never goes back to where it was so are we ever going to see 20 at the s&p? >> if this was the mid-life crisis, that was the low and we

have 10 years before we have another big scare, potentially. >> so you're saying 10 years from now we could go back down to where -- >> oh, no. i think 2350 -- >> we'd have a 20% correction for much higher. >> i think 2350 is the low that people have to treat like 2009 what happened last year is like weig weigh weight the number of stocks off 70% of their highs reached the highest in almost 11 years. >> so more than a 20% pullback you're talking about a rolling correction working its way through market. >> and it took so many stocks down 70% from their highs and this year the play book is probably more like 2009.

you would not think we test the financial crisis lows in the s&p ever again. >> 700 on the s&p. >> if we don't go back to -- there are times when you can say we're never going there again. i just wonder -- i would say at 800. i'm not sure i'd say 2300 although i don't know if i would necessarily be wrong or not at that point but as far as what you see now in terms of global growth, the fed here and, i don't know, the

political acrimony in this country makes me concerned but what are they -- the underpinnings of what would sustain an advance from him? >> i think earnings is showing that to have a speed bump ahead of us but not a recession. ge is probably of us, but not a recession. and then last year i think the market had a lot of concerns about the fed and now we've got a dovish pivot on the fed. two major concerns of markets last year are turning into tail winds. that's going to help markets this year. but you're right, i there's still a lot of uncertainty in washington and that keeps investors cautious >> where are you on the s&p earnings gain for this year? >> it still looks like it's going to be mid single digits. let's say 169. that's still growth from 2018. then 2020 you start lapping the

tax anniversary and it starts to look more like potentially double digits. as you get to mid year, people think about next year. >> what is that percentage gain on the s&p number that you give? >> percentage gain on price? >> 2018-2019. >> the on price? >> yeah. on s&p 5% >> on eps, 5 but i think the market is going to be up more like 10-15 this year >> not from where we started >> that's right. that means over two years it's only 15% total gain. as we told you earlier president trump tweeting about the china trade meeting. >> you saw the president's tweet that he and ptresident xi may meet in the near future. according to my sources the two sides are discussing a meeting

to take place after the meeting with kim jong-un in february the assumption is that trump and xi would have a meeting after kim jong-un. i'm told the u.s. wants really serious commitments from china before the leaders would sit down together but i'm told china wants to shelve some of the thornier issues. that's one sticking point. the second sticking point is how do allies feel about this? there are two meets back to back, one with kim jong-un, one with president xi of china without meeting with allies in between. they're somewhat nervous about that there would be some question about whether president trump would have to fly and brief president abe in japan or

president moon in south korea. that's currently the issue that i'm hearing from each side of the table in these trade talks the important detail is that this meeting would take place before the march 1st deadline. although i'm told from my sources that no location, no date is finalized at this point. we will see the president with the vice premier later this afternoon. potentially this is something they could announce there. those are some pretty important details to work out in the interim. >> talk about hitting the ground running. good to have you back. in the meantime let's get down to the new york stock exchange jim kramer joins us. i want to ask you about the earnings from microsoft to facebook and beyond, but maybe also what we just heard from tom lee just about his thought that maybe 2300 is not something we ever looked back at.

he said this is almost the same thing we saw back in 2009 where the market takes off from here what do you think? >> i think that a lot of the destruction -- boy, december was a bad month in this country for many companies and that was clearly laid on the feet of j. powell obviously he was incorrect when he said he needed four in october. he's come back and that's going to make it so it's realistic i think tom's too bullish. i think things are coming together i think the chinese are going to collapse at these talks. china is going down as fast as we are going up. he's talking about multiple expansion and earnings per share being up i don't know look, i'm pretty inclined to be bullish, but i'm not trying to hold a flag or a line in the sand we don't want to do that there's too many stocks going in

different directions for ogood reasons. he's too bullish. >> what about the microsoft stocks >> i don't know. whether it was a real serious degradation. i think the thing that was bad about microsoft was the stock was up going in. gaming could accelerate. there wasn't anything to hang my hat on versus say facebook which was not up nearly enough given the fact that they have leverage facebook goes up dramatically. it turns out that customers liked it and the advertisers liked it and the "new york times" didn't like it and the "wall street journal" didn't like it and apple didn't like it, but the readers do like it the readers win. the readers have a lot more divisions than the newspapers. >> tesla

cfo leaving? numbers, what do you think >> tesla's call was hysterical the demand is insane but they can't afford it. i think that if the cfo hadn't quit, the stock would be un. he is so much fun. can we just admit that he's fun? when he said they can't afford it but they love it, if you believe him, his company is worth more than ford by the way, what the heck is ford -- did you see ford numbers are down more than 50% in china? they can't shoot straight. that's the second time the guy quit he'll come back and the stock will get 20 more points. tesla is insane. people love it but they can't afford it. i can't afford a matisse either but i love it. he's hilarious

come on. he is going to do stand up in vegas, right i mean, he is as good as carson was, the great he's the king of comedy. >> jim, thank you. >> absolutely. make sure you catch an exclusive interview on 'squawk on the street. than silicon valley? with a cockpit fit for aspaceship. hang on. radar that senses things the human eye can't. busted. and the ability to make a thousand decisions before you even make one. was all this, really necessary? what do you think? ♪ what do you look for i want free access to research. yep, td ameritrade's got that. free access to every platform. yeah, that too. i don't want any trade minimums. yeah, i totally agree, they don't have any of those. i want to know what i'm paying upfront.

yes, absolutely. do you just say yes to everything? hm. well i say no to kale. mm. yeah, they say if you blanch it it's better, but that seems like a lot of work. no hidden fees. no platform fees. no trade minimums. and yes, it's all at one low price. td ameritrade. ♪ lies beyond the tech sector. it's about technology transforming every sector. ♪ at pgim, our bottom-up approach uses a technology lens to identify long-term winners. from energy... to real estate... to retail. finding such opportunities for alpha is the true value of active investing. and around the world, you have a partner in that pursuit. pgim: the global investment management businesses of prudential.

welcome back to "squawk box. it is a big earnings day lots of news reporting today

dow looks like it would open down about 88 points now nasdaq up about 43 points. s&p 500 up about a point i want to make sure everybody joins us tomorrow. we have a big show ahead really big show. >> a big show, ed sullivan. >> "squawk on the street" begins right now. ♪ good thursday morning. welcome to "squawk on the street." futures easing off of that 400 point rally on wednesday, big earnings day facebook, microsoft, ups and more as the market nowlooks to china trade headlines. europe is mixed. gold continues its climb and the two-year yield is near a three-week low the word of the day, patience. the fed leaves rates unchanged