from the january pay roles february 1st, 2019, and "squawk box" begins right now. ♪

>> its biggest monthly gain since october of 2015. the dow gaining 7.7% for its best month in more than three years. the nasdaq was up by 10% a gain of 9.7% oil gaining 18%. that is its best start to the new year ever. nasdaq indicated down by 26 points also, treasury yields this morning, if you want to take a quick look at what's happening, you can see the yield at this point for the ten-year, wow, down even lower. 2.6725%. >>. >> on the 1987 >> a 22% one-day drop in the dow, i think, which do the math.

it's like -- that would be -- we would leave here, you know, on wall street. they would be walking around the building like -- yeah, as it is first week goes, supposedly, the month goes, and that's -- >> those two were true >> as the month goes, so goes the year we were talking earlier that we're back to 2,700 on the s&p, and i'm totally agnostic, and i don't want to jinx anything. all the guys that were bullish last year at 3,000 or above on the s&p, they all chickened out and believed the correction. many of them lowered this year's target >> below last year's >> well below. to 2,750 i don't know where we'll end the year, but they could be so wrong. >> there you go go en. s&p had its been best january since 1987 snoo it was global, but the u.s. led the charge europe, you got some decent returns as well. asia was a bit more lackluster china was up 6%, but the others are not up

>> a disaster in emernling markets reversed rates were going up here it looked like it was -- >> you didn't see as big returns. you saw 3% and 4%. yes, it was a big bounce back, and it was momentum driven to start with as the month came and went on, it was much more microdriven you did get divergent performance in sectors and in individual stocks as well. >> youco say it was the fed being overly aggressive going incredibly dovish, and that's the big deal >> that came on the -- >> the day that apple and boeing both had great -- trfs one and then the next. i do think those were important to overall sent meant for you got tech and manufacturing >> also, apple, i load confidence at the start of the month and it came back by the end of it. >> as for this morning, some more economic data out of china. a private sur vash the china

manufacturing survey, a bigger than expected pullback in january. the second consecutive month in -- the lowest reading since early 2016 the reading came in and was expected at 49.6 as we said, in contraction territory. >> 50.05 down from 51.4 that's an expansion territory, but only just we did see some declined germany, italy, and spain. begins for france and the u.k. earnings news, am zwlon reported better than expected earnings driven by strong holiday sales the stock is under pressure this morning on cautious first quarter guidance, and shares dropped sharply during the conference call as the cfo

outlined plans for more capital espn expenditure and hiring costs. amazon web services maintained its 45% growth rate from a year aago, and amazon's other segment, which contains its advertising business, jumped 95% to 3.4 billion dollars that was a little bit behind expectations. >> that kicks -- you could get

to 150 wolf zwloowhere. >> just like home. >> except your neighbors except hollande is gone everything is calm in france don't worry about it >> france does have a wealth tax. >> well, you do as well, but it doesn't kick in until -- >> wealth tax. not death tax. are you allowed to own property in the u.k.? >> youa. >> you have appear apartment, don't you? >> just brexit >> a few years back. >> royalty >> that's right. that's right you have owned all along you have owned things all along and such she said -- it's the 1%. we're going to levy it on that what's the 1 percenter isn't that 400,000 aier or -- >> i think it's less than 400. >> rich people rich people.

>> if you are in the 1%, you are by definition -- >> in new york city, in new york city, and in san francisco, there's some level of higher tax when there is this level of headquarters >> i don't know which is the best way to do it. >> i questioned all of these plans. >> i think there is a better way to do it >> he with say it all the time you can cap the income inequality so that we don't get any more wealthy people, but you have confidence that when you take the money and give it to the government that they're going to be able to raise the starpd of living for the other people that's the problem they don't they're ineffective. organic wage growth and low unemployment and 3% gdp growth that's what helps the bottom just capping the top so we all neat meet at the bottom doesn't help, andrew wolf >> inequality is at record levels i think getting them to level that is don't feel comfortable is what is needed.

>> what if obama's higher tax levels cause the economy to stay at 1.7% for eight years, didn't give us any gret, caused the fed to stay the zero so anyone that owned anything made money. now dpou know that fwul exasser bit the income inequality? >> there are millions of dollars having to pay on the top part of that he is paying $350 already. >> fine. >> when is progressive >> if you pay an extra 10% on the top million bucks that you -- it's not anything that's being saved for future. snoo it's not the way it world war i. you don't say there is no guarantee. i mean, you can cap the top. does i'm not looking -- it's a different effect to changing the corporate tax rate on the economic growth of that particular yoer. i'm not saying drew brees. >> all have you to do is it's a very different -- >> it's not real really. money is better treat in the private sector and people that

actually -- >> positive there are policies that they could do >> they earned 90 cents, and it's always falling through the bottom >> that's different. that would make a -- good use of federal tax dollars going to support -- >> i love the idea that we've got enough billionaires and millionaires we don't want any more milli millionaires and billionaires. we want to meet at the bottom. we'll go to sweden everybody makes $90,000 a year >> i agree with that >> no one makes more or less you have a warped view of the way we do things in this country. >> no, i don't >> on the american dream call it american exception a.m.ism. >> you have a warped view of what exists. we have success. >> you don't do it very well

>> it looks good >> we did do it very well. >> senator elizabeth warren. they want billionaireses to stop tk free loaders and stop creating jobs and wealth and stop succeeding. here's what you said about her proposed wept tax plan in an interview last night with jim cramer can -- >> you when you make it that big, put something back in, and we're asking for a little fairness in the system you know that top one-tenth of 1% this year taxes all in. they're going to pay about 3.2% of their total worth in taxes to help keep everything running around here. you know what the 99% is going to pay this year they're going to pay about 7.2% of their wealth. that's more than twice as much i want the billionaires to stop

being free loaders >> doesn't even require a response senator warren said her tax auto would raise about $2.75 trillion over ten years >> loofr arguments about that. about whether it would actually raise it france has oil taxes and doesn't bring in anything like that. it's a mch lower 1%. >> property rights have been around since the 16th century. you pay taxes as you're earning the money and going for -- >> for all your criticism europe you have a wealth tax. >> property tacks, right >> that's different than actually >> look, i have -- it's almost impossible to enforce. >> how would you even figure it out? how would you even figure out somebody's net wealth? if the stock market is up, do they have to sell more of that stock? if the house values are up, do they have to reassess? >> continue to take it out >> you catch me on the right day, and i will go for a wealth

tax. the first time, like buffett starts talking about how his secretary pays more taxes, i'm ready to hit him with 70% just like that and say how does that feel, warren feel better about yourself take any of the billionaires he has made $10 billion, and he doesn't like capitalism. >> all of us we don't care because it doesn't hit us it hits you. >> let's wealth you. in the real world, you don't do it they've paid taxed on the way to get there. wealth >> the bigger point -- the government doesn't zoid to give you a certain percentageage of what you produce >> they've made their money by building a business. by growing capital by growing equity. not by getting income. that's why people feel so annoyed when they see those people make a fortune on the way up, pay a lower rate of tax than the people that worked really hard to become a doctor or nurse. >> if you are going to write a check, say if you are going to start putting how you make it

into and whether or not you get to keep it, you are getting way too complicated now. let's talk about that. >> it's complicated, so we should not -- >> you can't do it you can't suddenly say, k on, doctors, you pay this, and if you make it, you know, in building equity you may this >> we do that, yes >> which is a lower rate >> i think all the prosperities, even howard schultz thinks -- >> what's wrong with capital gains tax. you are paying it at the point of sale when you are cash rich, and it's on the gain >> here's an argument that it should be higher than 15%. >> what if it ends up making up, you know -- >> it's just how you make your money. if you make it that way, judge should he pick it? >> i know. >> you cut off your no esto spike your face. >> private equity is a small part of it the countdown is on.

anastacia is here. chief u.s. economist and managing director. first, i was talking to you, michelle rg about the claims number you don't think that that nova scotialy matters it was -- it dropped 40. it's up 50 >> exactly >> snoo we've got a relatively low number our forecast is for 135. it isn't about the government shutdown i think it's more about some pay back from an unusually exceptionally strong december number the bottom line is between the potential for payback and the uncertainty about a shutdown, it's just -- and new seasonal adjustment factors an incorporating of small

revisions. i think it's going to be very noisy and hard to tweeze out the shutdown itself shouldn't have a direct impact, and it looks like from the fact the claims numbers in general stayed relatively low through the shutdown that the if he could secondary impact isn't or indirect impact was also very minimal. >> the fed that suddenly religion in terms of a possibility that the economy is, i don't know, fragile or whatever whatever caused him to get more dovish did we -- that 300,000 numbers, did that -- was than outliar are we ready to get a 110 or 90 or something like that >> i mean, gep, it's -- >> adp was -- >> it was. but if you looked at the average over the two months, you know, a little over 200,000, again, a number like we have at 135 plus the 312, the average of the two months, again, somewhere owner e over 2,000 it's consistent with adp

it was an unbelievably -- december report, kprepgsexcepti strong every aspects of the report was really solid, and we know how the data go. we shouldn't overreact to everything that we see fundamentally, despite all the pessimism that kind of swept through the markets about the turn of the year, the data for the most part that we've seen continue to suggest that the economy is expanding at a relatively healthy pace. >> so i agree with michelle. you have to know where to look in this month's payroll report, and i would also say that as much as we want to be focused on the exact number, the fed this week has changed the calcu su for how the market is going to assess this number let's go being bah to the goldilocks scenario. if it is a weak number, as michelle has forecasted, then the market will say, great, we've got the fed support. that's why knee paused if the number is exceptionally strong, then the market will

say, great would i say if i look at irpgsz and if i look at earnings revisions, the extent to which they have been revised down is really tremendous. to the same extent that we've seen in prior instances in which the markets were actually able to inflekt higher. i think what i'm saying is the slowdown that we have forecasted in december is now, you know, maybe not almost fully, but it is certainly being reflected in the earnings numbers, and that's one of the reasons why even fits a weaker number, i think the market could still be okay with it >> what is your number today >> was it 130? 135? you p, kind of benign earnings numbers. again, i don't want to make that

siem seam like we're in any way sort of negative i think if you look at the trend the last couple of months, it would still be quite a healthy report the fed has signalled it will pai wait longer to see how economic conditions evolve i think there's a good thing to say that the markets can feel comfortable. i think the other important thing with growth, and i think the important thing i feel is that the fed made it clear that -- i think now they're at neutral, and as long as inflation stays, they can themselves root for growth >> they always do. >> let's wait and see. if inflation rises, we'll act. until then, we're going to take it meeting by meeting, and then thended up holding off and not raising interest rates that was it. since they actually had to cut three minutes.

>> what is most likely 200? less >> 170 170 is a number that we're looking for. you know, kind of right in line with consensus you know, if we get somewhere close to that number, then the three-month average is going to be about 260,000 it's going to be in line with six months average, and a little higherer than the 12-month average. despite the noise, the solid wages. >> wages scare you zbloosh a skiry number, if you will, but we shouldn't be scared >> i know. i know >> close to work it's the way it's toefd to work unless we legislate higher let me crowd everybody out thanks to our guests that was from our chief u.s. economist and managing director. when we come back, the big business of super bowl ads

we will talk to the ceo of ad giant ebdo about the price tag this time around and the strategy behind the commercials during sunday's big game right now, though, as we head to a break, let's go to the biggest premarket winners and losers, and the dow, chevron leading the way. it's up by 1.6%. endless fields of grain.... a wealth of oil....

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>> ow. >> cut it out. >> i'm not doing anything. >> quit it >> do i have to break you guys apart? >> he started it stop it. >> all right >> stop it >> guys, come on >> stop touching me. >> okay. that's it. if you don't stop, i will eat all of you alive right now >> i would prefer the break us apart option >> that was m & m's super bowl ad by the creative team at bbdo. for more on what's in store during advertising during the big game we are joibd by the worldwide president and ceo andrew robertson it's great to see you today. >> thanks, becky good to see you guys >> we hear that the price tag has gone up to $5 million for 30

seconds. i think it was $4.8 million the last time around the audience keeps dropping, and the numbers keep going up for the oods is it worth it >> i think this year the audience will actually be up the audience lab up throughout the season obviously it's the -- i think it will be up around 110 million. >> because people are rooting against them >> probably. some of them both the fact of the matter is the super bowl is still a really valuable property for advertisers who need brand salience there are some things north of 100 million people who are all actually paying attention to the ads i was talking to the crew and makeup, and they were saying how much they're looking forward to it, and you have that multiplier of shared experience. it really does add a lot of value. >> yeah. it's the one time where people actually stay to watch the

commercials? >> they look forward to it and say they like them, and they give value the work that you get screened in the super bowl is usually exceptional. >> playoff game ratings. amazing. >> 53 million. >> super bowl will be amazing. i'm not feeling guilty i'm happy. i'm not thinking politics. i'm just going to watch. i'm just excited about watching the game i feel i'm guilt-free. i'm not a maroon 5 fan i don't want to move like jagger if i looked like that, i would hurt myself. he thought imagine dragons would be a better choice >> to your point, there's going to be this year a lot nor fun and a lot less purpose and politics >> please. give us -- the humor that you see, splb like christina apple gait, it's nostalgia, and humor. >> even a neat thing that i

don't know if you have seen it, but obviously it's been held in atlanta, which is the home of coke coca-cola there was a lot of speculation about the intensity of the -- >> four downs. 15 tries to move the ball. they can either run it or pass it >> four quarters >> four quarters >> each said he was watching a lot of the playoffs in the bars. he is now spinding his days doing that, weekends doing that. >> the play bar stools playoffs. >> it's kind of like rugby, right? >> andrew thinks so. >> to what percentage of that fee of 50 million do you think companies are paying because they also know it's going to get so much replay and retweet and you tube versus ten years ago? >> way more. that's -- it's gone up every single year. if you look at the amount of pre and post-game activity, this is not a four-hour event. this is an at least three-day and in some cases two-week

event. that's one of the things that makes it worth investing because the spot itself making it, buying the celebrity, all of that is just the start then you need to invest in all of the support promotion as well >> where are you on the likes of gillette and -- do you think that's going to be more of the same >> the most political thing that's happened is acreage holdings tried to buy -- the marijuana company tried to buy a spot, and they were rejected by cbs on the grounds that they won't accept advertising that's encouraging any illegal activity, which in some states >> some states >> i think that was just a very clever move by kevin murphy because -- >> he doesn't are to pa i anything >> i don't think they ever intended to pay the $5 million i think they wanted the headline for being rejected >> now i'm back to thinking that goodell might be worth $350

million a ye -- $50 million a year now i'm bag to thinking that he is worth it. nobody is worth $5 50 million, right? what is -- >> 70% of your -- >> as long as you get a 90%. i know a lot of people that are the billionaires they create the wealth and then give it away you -- it's going to be a big day. i'm a self-starter >> big year for women. >> that's what i hear. >> 47% of the audience is ushlgly women, but this year that's more than one-third of the celebrities, women, which is up from -- and there's a specific very interesting -- a pure beauty brenda, olay, and that's in the super bowl >> i want to thank you for coming in. andrew robertson, the president

and ceo of bbdo world woid still to come, beg stock movers, including another semi -- a price proposal from the trump administration taking a look at pharmacy stocks. be back in a couple of minutes his family. his steinway, which met a burst pipe. so grant met his insurance: you are caller number 12. which didn't quite cover the steinway. but what if he'd met pure insurance? owned by members. he'd have met: lisa, your member advocate.

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it was on the low side of the affected range cypress is one of several semiconductor stocks that are

have rebounded after nvidea slash its estimates on monday. cypress up >> we're also watching the pharmacy sector this morning stocks there falling after hours after the trump administration proposed he wanteding the widespread practice of prescription rebates to middle men. it's an effort to try and reduce consumer drug prices under the draft rules announcement the department of health and human sfrss drug manufacturers wob allowed to offer discounted prices dr. r directly to directly to consumers. they say the drug prices after rebauts tend to be 25% to 30% lower, but many consumers are still paying the list price. >> coming up, a read on jobs from staching firm la salle network, as we sometimes check in with mr. gimbel we'll talk about the hottest areas for hiring aas we come down to the january sales report do you think they got the numbers right in january it's usually just a couple of

days >> after the jobs report we get reaction from st. louis fed president james bullard who is seeming confident about his stance, which was way ahead of the rest of his colleagues anyway, as we head to break, here's a look at yesterday's s&p 500 winners and losers >> wonderful, bravo. i love that. >> that was great. >> it was pretty good. >> well, it wasn't bad ry there were parts that weren't ve good. >> it was pretty terrible. >> it was bad. >> it was awful. >> boo yeah, i'm afraid so. it's okay. this is what we've been planning for. knowing what's important to you is why 7 million investors work with edward jones.

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>> we are just about two hours away until we get that january jobs report, the data point of the week joining us now ahead of that with a look at hiring and staffing is tom gimbel, founder and ceo of la salle network. to the snap shot of where you're sitting right now, tom, compared to a month ago when no one was expecting that 300, is it -- have you seen any moderation in what was going on, or do you not surprised to see a fairly strong number >> i'm confident we're going to see another fairly strong number what the definition of fairly strong is up to the economists to pick, but what we're seeing in high earnings, sea suite. >> people are still able to -- in real estate it's a buyer or seller's market.

is it an employer's market still right now in terms of negotiating wages and benefits >> it's starting to turn it's still an employee's market. you can feel that employers are -- they want to hire good people they want to bring people on, but this isn't dot-combubble of hiring anybody for anything. this is still in that post-great recession mentality. not economy, but mentality of saying we're going to hire very prudently, but we're bringing people on, and they're doing it in all sectors and all areas >> cyber security, talent is now in demand more than ever i was watching -- actually, i wasn't, but i heard about rachel m maddow if the chinese turn off our electricity during the polar vortex and there's no heat, that drives it home for me. i don't want that to happen. we need to bone up our cyber security, don't we >> i'm a chicago guy, so i

definitely want it to be warm. >> you so he that piece? had you been thinking about it >> i heard about it. what companies are doing is protecting their data. if you are in the technology space, cyber security. it may sound like a foreign language to a lot of the laymen out there, but that's really important, and i.t. continues to be, whether it's old time main sfram computing or things in the crowd. i.t. and cyber security is really a huge growth area, and it continues to be >> if you hadn't read about the government shutdown, is there anything just in the data that you have coming in that would have indicated to you that that happened what was the affect on you and la salle >> ironically enough, no if it weren't reported, i don't think we would have seen it. now, i'm not in the consumer side of the business, but from a

b to b factor, i didn't see it you know what we did do, we put out a release to try to get any workers that were furlowed and not working and giving them hourly jbz on the temporary staffing side, but that was more of a trying to do the right thing for people message, but from a day to day business operations side, no, i don't think most companies felt anything >> you still make the point that there's more jobs than unemployed people, and we've been hearing that that's going to be one of the reasons that we don't continue this pace of hiring because it's going to slow down and because the pool isn't there to find the people, but we really haven't seen it yet. it's the participation rate that's going back up do you expect -- when do we cross over that inflexion point where there's just not -- you can't find people? >> well, you have to remember that we're also looking at the skills gap and not having enough people for jobs is really a white collar -- it's a white collar issue, joe, and the jobs

report also includes service jobs, hospitality, food, things like that. the skills gap isn't always reflected in the basic jobs number >> yeah. okay so it won't be solved by the participation rate because it's not just having employees. it's not having the skilled employees. it's got to do more, right >> your question is what won't be -- what won't be solved that there's more job openings thatten people >> yeah, the skills gap. yeah >> i think that's why companies are hiring overseas. it's a global economy, and people -- companies have to go and find the talent, whether it's marketing, supply chain, procurement, sales, and find it in any state if any country, and as long as there is that delta between skbrobz available and the population in america that can fulfill those jobs, you'll see that difference. >> so when did you -- you said chicago. i saw you were in fort

lauderdale are you trying to mislead us are you one of those fat cats that wolf was talking about? do you just leave chicago and -- >> are you flying to florida >> timing is everything. i was at a board meeting for the american staffing association, and they just happened to be in miami. it work out okay >> when did you get down there >> i got down there on tuesday right before the polar vortex hit chicago. >> oh, well, what a coincidence. okay, fat cat. all right, thanks, tom we got our eye -- we're watching you and your type. we're watching you >> thanks. i appreciate it. >> i think -- i'm sorry. >> it was a nice weathered golf course you're going to, i would guess, to golf >> we work out there we have unbloefable guests you can join -- >> monday to thursday. >> yes >> monday to thursday. we're developing >> we actually do have an incredible line-up >> i'm not doubting that >> you can join tom and others

at work event, and the weather is iffy out there. believe me >> do you think davos is a big junk et? >> i've done davos >> your thoughts >> it's awe lot of work. >> it is >> we mean -- you are not flying there on monday. or tuesday >> when we come back -- taking a vacation day >> merck is set to report in the next few minutes we'll bring you the numbers and the reaction on wall street. plus, a rough start to february for one of the fangz we'll tell you why amazon shares are falling even after the company posted a strong holiday quarter. also, later exxonmobil expected to report around 8:00 a.m. we will bring you an exclusive interview with ceo darren woods right after that report. stay tuned you are watching "squawk box" right here on cnbc alerts -- wouldn't you like one from the market

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>> revenue also above forecasts for the drug giant, which, you know, you think back on merck and all the -- it's all the way up to $74 now, and almost $200 billion company. the yield, which has always been pretty significant, is just under 3% looking at it down a little bit this morning, based on what the company said, and we will delve into -- >> getting guidance too. >> let's dwefl inelve into it >> 462 versus 468. also looking for 43.2 to 44.7 billion dollars in terms of revenue, and they just have to claw back up those revenues. >> for 2019? >> yeah. >> okay. zroo for this year, i guess it

is jeez >> they're done with this year, aren't they? >> we're already in the next year 44.5 was their revenue >> done with last year >> yeah. is the street's expectations for 2019 they're saying they say 43.2 to 44.7 >> anyone that follows it knows -- >> digging through the garbage >> i tossed one of my nuts on deutsche bank earnings >> you know what else is in that garbage can? you should put that down >> there's a half of a muffin in there. >> there's a about anna skin >> like george castanza. >> at least i'm not like andrew blowing my nose all week >> i threw my nuts in there. i lost my muts >> that's pretty amazing for the relatively new cancer therapeutic. gardicil, zetia and vitorin. if you follow closely, you know the exact estimates for all of those as well. at this point the stock is down

lower. another thing they did on siep feld, remember george pulls something out of the trash right when someone is walking in to the kitchen. i think the mother of his girlfriend he is taking something out of the trash and eating it. >> who was it? >> didn't say. >> i think they said -- >> it was an eclaire it was a half eaten eclaire. ♪ >> they've done everything they did every -- they thought of everything. between that and curb your enthusiasm, every life situation has been covered you got to -- if you haven't done it, you got to go back and do it. >> haven't seen an episode of each, which i'll move on from. time for the executive edge. we want to get you up-to-date with stock movers. deutsche bank reported its annual profit. they posted a loss in the fourth quarter as revenue from bond and currency trading slumped the key point really there that the loss in the fourth quarter bigger than expected yes, profit for the full year, and less than forecast roe up to 0.4% they did reiterate their 2019 target that they can get roe back up to 4%.

i think some people skeptical that they will either way, that roe just highlights the difference in performance from most of the u.s. banks cost cutting is seemingly staying a bit of a hit on market share as well. particularly as mentioned in thi the fixed income trading down 3.5%. deutsche bank this morning, it slipped about 4% a bad couple of days for the german lender. coming up, we'll dig through the amazon report and llte you what has investors worried back in a couple minutes at&t provides edge-to-edge intelligence, covering virtually every part of your healthcare business. so that if she has a heart problem & the staff needs to know, they will & they'll drop everything can you take a look at her vitals? & share the data with other specialists yeah, i'm looking at them now. & they'll drop everything hey. & take care of this baby yeah, that procedure seems right.

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welcome back amazon reported results last night posting a beat across the board, but the stock is under pressure this morning on some cautious first quarter guidance. shares dropped sharply during the conference call when amazon cfo outlined plans for more hiring costs and capital expenditure. joining us is charles o'shea good morning thanks for joining us. >> morning thank you. >> the numbers came out on "closing bell. it held up quite well until the earnings call. so it was that guidance on capex that led to the pullback >> i have to think so. from our perspective, the investment's great we like profit we like investment for the future amazon blew its balance sheet up in 2017 with $35 billion in more debt which fueled what we're seeing in 2018 and what we will see in 2019 which is more sales growth, more growth at aws, and greater profitability.

so there will be times during the amazon life cycle it's going to invest and we've seen this since amazon began they will take a pause, then they'll invest again and that makes the investment thesis kind of difficult, but for us as long-term focus, this is just what the company needs to do. >> both on aws and the advertising business, the growth rates year over year are phenomenal but both did disappoint slightly versus analyst consensus i wonder what that is. we don't put public forecasts out for companies. we do them internally to kind of get a roll-up for the entire sector amazon exceeded what we thought it would do in both q4 and for the year mostly from a profitability perspective. profitability were off the charts from where we were. and i think that's the -- that should be the focus going forward. >> we knew the holiday spending

quarter was going to be strong which it was is there fear that could slow down significantly whether it's the quarter ahead with the shutdown or the year ahead with the economic outlook not as rosy >> first quarter is always tough with amazon. with any other retailer. you're coming off a holiday. this is one of the stronger holidays we're still waiting for walmart and best buy but we've got sales numbers from target that were really solid. we've got sales numbers from costco that were solid amazon's numbers for the quarter were really solid. let's see how it plays out >> how much of this is a retail story. and how much is aws? >> finally, the retail profitability crossed a threshold from where we said we're looking at 5% on the retail side which is impressive. walmart's margins are around the same walmart sells a lot more food. it's not really apples to apples for amazon as a retailer, agai we thought the quarter and the year played out very well. one thing we've been concerned

about in the past is amazon sacrificing profitability for sales growth that did not happen this year. there was really good profitability on the retail side aws is aws i said it's almost like a broken record aws is going to grow and margin will continue to expand and they'll continue to gain market share. that drives a lot of -- you know, that puts a lot less emphasis on the retail business from where we sit. still important, but aws can wash away a lot of stuff on the retail side. >> thanks for joining us moody's lead retail analyst. come iing up, our guest host the next hour is alexis ohanian. invested in companies including coin base and instacart. he will talk to us about tech, security, and privacy concerns and a lot more when we return. (vo) we're carvana,

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the countdown is on. the january jobs report is just 90 minutes away. we have a preview. senator elizabeth warren taking aim at the super wealthy. >> what i want is i want these billionaires to stop being free loaders. >> the senator talking to jim cramer last night. we'll get reaction to that from former new jersey governor chris

christie the gold rush of 2019. the precious metal up nearly 1800 in the past months. the second hour of "squawk box" begins right now ♪ live from the beating heart of business, new york, this is "squawk box. >> good morning and welcome back to "squawk box" here on cnbc i'm joe kernen along with becky quick and wilfred frost in for andrew this morning. very ably replacing andrew this morning. >> wilf is on his game today >> sounds like a compliment. >> sounded like a bit of british sarcasm there. >> no, no. you're representing his point almost better than he does

but why wouldn't you being from socialism land. anyway, alexis ohanian is the cofounder of initialized capital and the cofounder of reddit. u.s. equity futures at this hour -- you've lived it instead of just dreaming about it. you know what i mean u.s. equity futures indicated up about 49 points or so. nasdaq down 30 that's amazon. >> aim wearing this red tie for mother russia, actually. >> stop that that's for women's health. >> oh, i know. that's why we're wearing it. >> it's not his tie. >> you had to put it on once you got here you miss the e-mails about getting on board with this >> i have my ties at the stock exchange >> that's all right. we're all on board >> we are. we're ready to go. >> can you find anyone against women's health >> no. you'd be a big jerk. >> so we're all on board >> and let's talk about what's

making headlines at this hour. merck reporting earnings of 1 pvr1.04 a share. we've got exxonmobil out in an hour's time and chevron in 90 minutes. by the way, we'll speak with exxonmob exxonmobil's ceo in an exclusive interview after those numbers hit. amazon shares are under pressure this morning amazon beat estimates on both the top and bottom lines and had record sales during the holiday quarter. the company also gave a weaker than expected outlook and said it would be stepping up investments this year. as a result, that stock is off 4.5% look at the dollar term, amazon stock price is so high now it's a decline of $80 but still trading at $1638 this morning. apple and facebook have resolved a dispute that suspends the right for the ios operating system that followed the thought facebook was paying users as

young as 13 years old. no details on how the two sides resolved the disagreement. the data point of the morning will be the january jobs report we're less than 90 minutes away from that coming out let's get a preview now from steve liesman on what we can expect morning, steve >> good morning. this is going to be a jobs number that's going to be as tough to understand once it comes out as it has been for economists to forecast january has massive transitions in a normal time that's because of the layoff of seasonal workers, add the shutdown, the question whether the economy really is weakening on top of that and there's a recipe for potential confusion here here are the numbers expected. 170,000 which is quite a bit of a slowdown from the prior three-month average of 254,000 unemployment estimate, 3.9%. who knows. maybe a tick higher, maybe lower. the hourly average wages in at 0.3%. adp payrolls up.

let's look at the things that could influence this list. government shutdown. we don't know what's happened to the private contractors. some of them may have layoffs there. also maybe some companies needed permits to do business it was a strong december are we going to get some payback from that? the reference week which is the week of 12th had warmer than normal weather then is the economy slowing or not slowing? i know the market was convinced last month that it was this month seems less convinced that it was. a huge seasonal swing in january can add volatility to payrolls and the conviction level behind our forecast is quite low. so on the one hand, we lacked a lot of the data that might be used to estimate the jobs number because of the shutdown. but the reports we've had have been mostly strong, jobless claims, nfib all of this excludes the bigger debate are there enough workers out there to fill the jobs i've brought along a chart,

guys i want you to see why do we seasonally adjust these numbers? and this a great month illustrated. the orange line is what the jobs number looked like without seasonally adjusting it. see those swings there 3 million up, 3 million down and then the white line is the number that it looks like the month to month change. >> yeah. it's a good idea to seasonally adjust this is important because the fed's on hold anyway >> somebody wrote that data's unimportant until, like, june. >> i agree with that >> until we start worrying about june >> when will that be >> march >> no. it could be like may 31st. right? that's like -- >> i think it's march. >> 18 months of not worrying about the balance sheet and then got freaked out. >> could be next week. >> you didn't even think about the balance sheet early, did you, steve >> no, i only did a hundred reports on it. you're hitting a button this morning, wilf. and then all of a sudden everybody freaked out.

jpmorgan did a very cool google trends chart right? so references to the -- or searches of balance sheet goes like this and then spikes up in december nobody cares at all. >> it was like brexit after the vote spikes for searching what brexit is after the vote. >> exactly which was somewhat worrying. >> far be it from me to want to be a globalist, but what you're talking about is the economy slowing. i was going to say you mean here because the pmi in china along with the -- how did -- >> that was at negative territory. >> the china pmi below 50 which sometimes people look at more than the official number that was below 50, the worst since february 2016. >> there's a slowdown somewhere. >> you have to understand. i mean, i don't know if your concept of american exceptionalism -- i heard you talk about it this morning -- comes back to the idea we're immune from what happens in china, right china is -- these are rough numbers. 15% of global gdp, but something

like 30% of global gdp growth. so if that ends up -- does it slap back on us here >> that's what i'm saying. >> oh, i thought you were saying it's over there, not here. >> if you're talking about the economy and the fed, they have to think about that as well. >> along with china and the next biggest trading partner the you're row zone, it technically fell into a recession. they weren't below 50, they were still slightly above it. but it's a -- it's going to be tough to shrug off in q1 >> not a big manufacturing -- >> i want to talk to alexis. >> all right we will. shoes? what weather goods? >> 8:25. >> do you manufacture wine olive oil? >> we'll hear from st. louis fed president jim bullard. don't want to miss that. let's bring in our guest host for this hour alexis ohanian is the cofounder

of reddit. he's going to be with us for the next hour. reddit i just read became the third most-visited site in america surpassing facebook. that's huge. >> you know, that data comes to us from alexa. and they are focusing on web-based traffic. if you include mobile,to be fair, those numbers do look a little different when it comes to traffic through a web browser, i think there are a lot of folks who should be busy at work who are on reddit >> who are watching this which i was doing earlier this morning too. that gives you a great platform to talk about this debate. that's the privacy issues, what's happening all of this got kicked up again. we talked about it at the top of the hour what's happening in silicon valley and do they recognize -- i thought facebook had come through a lot of these problems until i found out they were letting teenagers download this app and paid them 20 bucks to find out what they were doing. is the message not getting through? >> some great reporting by tech

crunch, actually investigating that, finding out this was going on. and they were deliberately skirting apple's developer policies what's going to be most interesting in the response to this is treating them like everyone else is, i think, going to send more of a ripple effect for the company. i think this is titan on titan where the idea is growth at all costs, get a competitive edge at all costs and if you have to, you know, harvest all the -- >> having said that, though, if you look at the earnings, it's paid off for the company, they had numbers that were phenomenal and had everybody saying they've moved past this. it doesn't matter. >> some of this -- and i wonder, too. there's a lot of talk around

privacy within the tech community, within the valley so many of the people there from the engineers to even the non-technical folks have such a deep understanding of this and a pretty strong opposition to privacy, but more broadly speaking as you can see on the market, it seems like still for a lot folks at the end of the day, it's not that big of a deal and i think we're starting to see that shift happen because we are becoming more and more aware and in the wake of cambridge analytica, people are more aware of their privacy but it's still clear at the end of the day, the numbers don't lie. the market still wants to buy. >> do you think whether it's facebook specifically or across silicon valley that the view is still -- as long as the user has ticked this box, we can do what we want? even if they don't know what they've ticked is that still the mentality? or have they woken up to that to know that's not enough they need the user to knowingly be aware of what they're doing with the data. >> for the next generation of

founders, i think the attitude has shifted. more than ever we're seeing pitches for companies trying to protect your privacy setting up your private mail server in your home, for instance to social networks built around an idea of sharing information just with the people you care about. we're seeing that trend on the rise but for the incumbents, i think in a lot of ways, the focus has been on growth at all costs and the idea is we're going to do as much as we possibly can to satisfy those numbers. and we'll see if there's government intervention there. because that seems to be where there's more rumbling about doing something about it to force a user's understanding of what they're opting into when it comes to kids, i think we can all say there should be lines drawn in terms of -- >> if it's consenting adults, that's one thing let's talk a little bit about the role model that you are. because you are somebody who

works hard but you're also somebody who lives well. you're spoken out about what you call hustle porn what is that you were on the forefront of this, kind of identifying it >> yeah. i spoke at a conference at the end of last year calling this out. giving advice i had gotten in this age of social media, we have this ability to kind of weaponize the sort of normal, like, the sort of bragging about the hustle, the grind we would do in the office talking about how we just -- you know, we're up until 4:00 back-to-back all week long >> elon musk talking about sleeping on the factory floor. >> yes there are absolutely periods of time where you're going all in, sleeping on the floor to get something done on deadline the idea you can sustain this every day 365 is absurd. i've never met the founder of a

billion-dollar company who is actually spending all their time posting about the grind on social every day because they're busy actually working. i think for a generation of entrepreneurs, it's important and just employees, too, to know that, yes, hard work is mandatory. no doubt but posting on twitter is not hard work. posting about the work you're doing is not hard work mental health, physical health, those are things that will help you perform at that best level that's what we want from our founders that's what i want for myself and for my employees and if you look at the very grea greats, i think they would argue the time spent resting, not working is actually just as important to go all in on because that's when you get a chance to get some sanity back >> and to have some of your best ideas percolate and come back up >> absolutely. >> at initialize, what are some of the most exciting things you're seeing? some of those early stage things that the rest of us haven't

heard about yet? >> the big trend that i'm excited by and it excites me as a floridian is this rise of elder tech and i think we're now seeing 10,000 -- >> what is elder tech first? >> the software and hardware, technology solutions built for the elderly. for this generation that has really not really been taken care of in terms of software and tech because, you know, 20-year-olds are building stuff for other 20-year-olds in most cases. we're now at a point where 10,000 boomers retire every day. many of them, my father includ d edding wi ed, are now on instagram they're now used to using modern software and modern technology that opens up a massive market of potential users for people who are building software and hardware solutions for them. we've seen everything from a self-driving taxi company like voyage which operates in the villages of the largest

retirement community in the country to provide them a service we could only dream of >> it's already working? >> yes >> automatically driven taxicab that shows up? >> well, the one advantage here is because these are private roads, they can control the experience this is still training the software and the hardware and everything you'd need to be able to drive on any road anywhere. because the roads look the same. the one reality is because the cars only go about 25 miles an hour that's actually the perfect speed for the elderly. might drive some of us crazy but it actually works. and we're seeing more and more of this. there's another company called trulien financial that builds a debit card for your family member who maybe can't be totally trusted to not get taken in by some scammer and is vigilant against them getting defrauded by someone on the phone who says you own money to the irs or dupes them into a scam it's the kind of software

solutions, the kind of real businesses that have a massive market and a growing market to serve. historically not a lot of entrepreneurs have thought about focusing on and we're seeing that change now. and with that is coming real businesses and also doing some real good. >> what's the name of the financial company? >> true link financial and the founder actually built it in a sense for his own grandmother who is dealing with early onset alzheimer's. he could see the difference it was making in her life getting some autonomy back for his family, they wouldn't have to worry about, you know, her being defrauded or taken advantage of and i think this is -- and this is real business at the end of the day, but it's also serving a real good and massive market >> that's great. alexis ohanian is our guest host he's with us for the rest of the hour >> going to be fun thank you. coming up, senator cory booker throwing his hat in the ring for 2020. more on that next.

plus a breakdown of amazon's quarter. you're watching "squawk box" on cnbc i'm a veteran

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we're working to make things simple, easy and awesome. welcome back to "squawk box. let's have a look at the futures right now. pointing mixed got the dow high by 31 points. s&p lower. nasdaq down by 31 points itself. of course, it's been a pretty good week so far and a blowout month, of course, last month coming up, senator elizabeth warren taking aim at the super wealthy. >> what i want is i want these billionaires to stop being free loaders. >> former new jersey governor chris christie is our special guest. we'll get his reaction to that and his reaction to senator cory booker potentially running for 'll in ut. hejos right after this break. he's got a new book out, too, and we'll talk about that. (baby crying)

♪

♪hold on, i'm comin' ♪hold on, i'm comin' ♪hold on don't you worry,♪ ♪i'm comin' ♪here we come, hold on♪ ♪we're about to save you i'm comin', yeah♪ ♪hold on don't you worry,♪ ♪i'm comin' senator cory booker just announcing that he's running for president. no exploratory committee or testing the waters he's officially in the race. senator booker plans to travel to iowa next week and south carolina and new hampshire after that let's get some reaction to this announcement from our next guest. let's welcome former new jersey

governor chris christie. his new book is "let me finish: trump, the kushners, bannan. i like senator booker. endearing guy. i didn't understand the spartacus stuff that much. >> that wasn't a high point. that was not a high point for cory but i like him too >> i haven't kept track what the total number of possible and actual probable -- >> they're not yet up to the number we had in '16 but they're striving to go bast our 17 number it was nice. it was great for the debates and everything had such a good time >> i thought we were somewhere around 40 already. i guess that's just possible >> speculated, yes >> what sit like eight to ten actual >> i think actual in the house, somewhere with cory in now is ten. but they'll blow past 17 although really now, it moves up

so quickly if you think about four years ago, we had had about six or seven in already and people ask me all the time, who's the front runner for the democrats. remember four years ago the front runner for the republicans was jeb bush so it doesn't really matter. it's too early to figure that out. >> honestly i could -- i'm still a little bit unhappy with you. you traded me in for the faux morning joe for awhile remember you were on our show a lot. >> i came on all the time. >> then you went on the other one a lot. that's fine. >> that's, like, ancient history. >> not really. when you come on, i could listen to you until 9:00. i could, but we can't let you stay that long >> what the hell is that all about? you could listen to me until 9:00 and listen to becky until 9:30 then we're done >> we've got to talk about elizabeth warren who was on with our jim cramer -- >> another gift. please, lord, nominate her

it would be great. >> i think we've got a sound bite from -- she's very -- oh, we don't have it right now >> i could tell you what it is people who make money suck that's what the sound bite is, basically. people who make money suck and we'd like to take their money from them. >> i like the -- i think aoc said howard schultz hasn't waited long enough, doesn't have the experience to run for president. she was -- i think -- wasn't she a bartender a couple of years ago? not that there's anything wrong with that. >> she's having her moment we're happy for her. >> i think we have the elizabeth warren sound >> what i want is i want these billionaires to stop being free loaders. >> i don't even need any more than that. >> i want billionaires to stop being fro loaders. >> in my state, the top 1% in my state pay 58% of the state income tax so -- and there's a few billionaires in there over in new jersey

so how are they free loading, exactly? the 1% is paying 58% of the income tax and our system gets more and more progressive in that way across the country that's fine, but then you can't criticize them for their wealth and for their success. >> there are some that give it to their kids, but more and more i'm hearing the philanthropic efforts of a lot of these guys they make it and then give it away druckenmiller one year gave away $800 million are they bad for society when they pay taxes on accruing the billion dollars and then give it away actually, we might have one sitting right here we have one of these evil guys sitting here >> i was going to say i was wondering whenalexis was going to confess to being a free loader >> i have two minds on this, because i know on the one hand i know my parents benefitted a ton from these programs. like, they told me about government cheese. and i was like, what's that. so on one hand, i feel an obligation to the social contract and i just -- i think what i want to hear are real solutions

about how we at least maintain a floor so that people can live in dignity in this country. >> we all want that. >> i think everyone wants that i'd love to know what you think is the way to do that. >> listen. continuing to create more wealth where -- and more opportunity does two things. one, those folk who is are creating wealth and opportunity are paying an enormous amount of taxes already on a $4 trillion federal budget we're spending every year not count whag we're spending at the state and local level. that will continue to go up. it's not going to start to go down it's going to continue to go up. secondly, it gives great hope to people people will look at her and say she got elected by -- wow. maybe i can do that. >> i think that's one of the gifts you're talking about that keeps on giving. >> aoc well, she will be. if he continues to say that

folks who -- that's it's immoral to be a billionaire. people set out to be successful and then they have a really great idea and they work really hard they could become that i don't think all of a sudden they go from being moral to immoral. >> the whole democratic party is a gift that's giving right now i do think that. i think howard schultz is speaking -- i listen to what he's saying now. >> he's speaking to you now, isn't he >> he is compared to where the party is the response he got from the party shows me how far left -- i watched tom perez the other night on an interview. i just -- i don't know who they're representing at this point, chris don't you think they're screwing this up? >> oh, yeah. i mean, right now they are we're going to see what happens. you know, it's where all the energy is. we talked about that with our party a few years ago that all the energy was on the far right. so if you came into a primary and you're a republican from a blue state that compromises with

democrats -- remember, i may compromise with democrats. that may be evil if i didn't make compromises -- >> it made you effective >> i would have been absolutely ineffective if i didn't. i think part of the problem with our political system is all the energy is on the outsides. what i hear you saying is who's going to give us real solutions for things that are going to get solved like we're trying to deal with this immigration issue and nobody wants to. nancy pelosi says no wall money under any circumstances, trump is saying his thing. nobody's driving to the middle >> there was a bigger base for the president in 2016 than a lot of people expected do you think there could be a bigger base for the lelizabeth warrens and the aocs out there than you think exists? >> it's about whether they can motivate those people to get out. what happened in 2016 was that donald trump got people to vote who had not voted for a long time and hillary clinton depressed voter turnout among their base

constituency especially the minority community. they were not excited about hillary clinton. so a lot of them just didn't come out and so really it's going to be -- there's going to be a lot of energy on the democratic side this time. probably almost no matter who the nominee is the question is going to be when they start talking about what they want to do. will that scare people >> who is the biggest and most frightening candidate? if you're looking at elizabeth warren being a gift. who is the most serious one? >> i think right now it's going to be somebody like biden only because biden threatens that base you're talking about with trump. joe biden can go into central pennsylvania, northern wisconsin, michigan and he can talk to white working class americans and say to them, i was you. i was born in scranton, i was raised by a father that struggled. i've never had much money in my life until recently. i get your problems and i want to try to solve them now, joe's going to have to remain disciplined

people forget with trump saying all this stuff he says and being as bold as he is, people go, oh, joe biden, he's so stable. he a 0-2 running for president, said some crazy stuff. >> he's been wrong on a lot of foreign policy >> he said don't go kill bin laden and things >> he was against the -- against the first one, for the second one. i had robert gates on. he said in 40 years, he's been wrong on every major foreign policy and national security issue. >> i don't think that most folks unless we have a foreign crisis are going to care about that >> we're running out of time as a member of the media, i mean, can you quickly in a minute just bash trump as much as you possibly can while i have you here >> no. >> you've done that enough you've been on your book tour. nobody's been asking you >> listen. when my book is trying to get a view into what this guy is

really like and make it a little less like the cartoon character he's portrayed there's some stuff he does that i think i wouldn't do that and i wouldn't have done that. >> i don't think you should have hugged obama >> wait a minute that was in the midst of a crisis it was a crisis affecting your state. it was the right thing to do >> you're part of the problem, joe. see? you're part of the problem you work with the president of the united states to help your people and it's guys like you that have to still bring that up seven years later. but by the way -- >> i was just making the point that not everyone is perfect with what they do. >> no, that was perfect, by the way. that was perfect you know why >> but it hurt you >> well, it hurt me politically. but i have a job to do and i want to make clear to the viewers, i did not hug him there was never a hug. >> think if we hadn't brought that up, you wouldn't have been -- >> you worked with him >> and gave him credit when he was doing a good job

democrats do good things every once in awhile give them credit for it. >> i don't understand why people can't see that and recognize that >> because they're like kernen, becky. you know that. >> you turned on me quickly. you're not going to primary trump, are you >> you said never say never to that >> i said never say never to running again for president some day. not now. >> will other republicans do that >> no. listen, his popularity among republicans right now is 81%. that doesn't leave a heck of a lot of room to primary somebody. if things change over the course of the next six or nine months, people may look at it. but i think right now, it's very unlikely >> governor christie, will you come back at some point to talk about the new tax laws and other things in the states >> i definitely will >> he'll be on "morning joe. >> oh, stop. >> all right thank you. >> i have a special booker talk to her. >> yeah. mary pat is she going to be mad about the hug comment? >> yeah, she is going to be mad

about the hug comment. your phone is blowing up right now. >> good-bye. former governor chris christie author of "let me finish." >> come back you still have service? call the insurance company it's them, calling us. it's going to be a week before they can get 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 his name is hovering? look up? by using machine learning and analytics to automate claims, cognizant is helping insurance companies advance how they serve even the hardest-to-reach customers. cool ♪

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number with gene munster in just a little bit exxonmobil is the big earnings report the dow had been expecting this morning exxonmobil ceo darren woods will join us after those numbers. and the countdown is on for today's big data event the jobs report for january. it will be released at 8:30 a.m. eastern time "squawk box" will be back after a quick break.

welcome back time now for the trading block the price of gold is at a nine-month high while the dow had its -- gaining more than 7%. joining us maxwell gold and darryl krunks. good morning to you both max, if i start with you, what is the gold price at the moment most correlated to currency, inflation, actual economic data? >> right now in the week, we are seeing the dollar being a big driver for gold. and rates. they have come down a little bit. that's been a big boost for gold overall we've seen investors as well move back into gold and i think that's been a big factor that i think will sustain a rally throughout this year >> the dollar itself despite equities rallying significantly because of a more dovish turn from the fed was only down 0.7% in anuary.

why wasn't it down more? and what do you expect with this softer tone from the fed for the rest of the year >> i think it's important because the fed is much more dovish in their commentary i think a lot of market participants were expecting one, maybe two hikes this year. now the market is pricing in basically zero hikes this year with the fed on pause, that's going to put a cap on real interest rates that's good for gold as we're seeing rates moderate and potentially come down. i think especially if inflation picks up, we'll see real interest rates come back in. we've got the jobs number coming back out what's your summing up where the economy is the other reason the dollar hasn't been softer is poor data from the rest of the world >> that's exactly right. i think as it relates this morning, we think the jobs number probably comes in a little soft. some payback from a big december number i think what's interesting if you watch the jobs data here, not just this morning but over the next coming months, we've seen the biggest decline in some

of the ism data. so manufacturing had its biggest decline in the entire cycle last month. yet the jobs data had its biggest beat last month as well. typically if you look at ism, you get a two to three-month lag in the unemployment data i think the next month you're going to see softening in the labor market which i think the market will be fixated on >> and in terms of how you're allocated at the moment, defensive like gold or happy to have u.s. equity >> it's a unique environment right now. literally yesterday we went underweight small cap after an 11% month in january we think the earnings are out kind of over their skis on valuations at today's levels we see some mild upside in the u.s. we've got 2800 to 2850 on the s&p. but what's really interesting and nice, i think, coming into january is you're getting this breadth expansion.

it's been all about tech and discretionary. now you're seeing industrials lead, financials and banks do better that's healthy for the market's healthy for the economy. >> we'll leave it there. thank you both very much darryl and max all right. coming up, amazon sharply lower this morning but it's the opposite of, like, when ge goes up 5% and it's 20 cents. in this case it's down almost $80, but that's only a 4% move but it's pretty painful. stock taking a hit after its quarterly results. we'll have a breakdown of the po ahy investors didn't like what they heard turns out ge was up a dollar

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and if we are ever late, we'll give you a automatic twenty dollar credit. my name is antonio and i'm a technician at comcast. we're working to make things simple, easy and awesome. amazon's quarterly results beating expectations, but investors didn't like the guidance and some comments on the call deirdre bosa joins us with the amazon story the whole foods story, i guess, is part of it. >> that's right. physical stores. but i first want to point out the moment in the earnings call when shares started going south. have a listen. >> in a lot of ways, 2018 was about banking efficiencies of investments in people, warehouses, infrastructure, that we'd put in place in 2016 and '17. i would expect those investments to increase relative to 2018

and, you know, we've reflected what we see so far in q1 in our guidance >> so amazon is saying that not only will the pace of revenue growth slow, but costs are also going to be going up this year investors took that to mean that growth around 20% for amazon may be the new normal. the company attributed its guidance to trading regulations in india this is where amazon has committed billions of dollars. that's going to add more pressure to its international segment which saw losses widen in the past quarter. analysts are mixed on the results. morgan stanley, barclays piper jaffray raised theirs by a little the long-term story remains intact you mentioned whole foods stores, that's down 3% amazon is growing so quickly they have to incorporate them into that and it is growing at a slower rate. >> yeah. it's going to be interesting to see how that plays out

initially, deirdre, we didn't decide it was a great idea but then it was. but the opposite to go backwards to brick and mortar. now i don't know now i'm wondering. >> they've got more than whole foods now. they've got amazon go. they've got the bookstores a lot of analysts said investment is a way of life. they'd be more concerned if the company was not spending maybe we're seeing a throwback this year. >> if you talk about prime subscriptions, aws, and also the advertising, all of those were slight misses. but weren't the factors that led to the stock price decline, right? >> no. and i think generally analysts thought that aws continues to be strong subscriptions, though, was interesting. that was down. the revenue for subscription services which include prime was done quite significantly advertising still growing at 90-plus percent.

but it was growing at triple digits the past few quarters this is still amazon the company is a behemoth and still growing very quickly on pretty much all fronts >> i'm sure bezos is glad we're talking about whole foods at this point than other stuff. anyway, let's talk more about amazon joining us now is gene munster, founder and managing partner of -- ventures what should i take away from the report and the call? >> positive is that the revenue continues to be impressive call it 14% for e-commerce i think investors who have traditionally own the stock can be comfortable that this will continue to be disruptive based on the current trajectory of the business i think the negatives outweight the positives.

i looked at some analyst changes to numbers today and they had lowered their numbers for 2019 by 20% earnings numbers. revenue came down just slightly. the india piece is really a non-event. it would probably go to 1% that does explain the lowered revenue guidance but i want to return to the earnings piece to it as i have been reflecting on this guidance, i went back and looked over the last seven years, there's been three times where there's been greater than 10% earnings cuts to analyst expectations i reluctantly look at my model from 2013 where i thought we'd be approaching a 10% operating margin at this point a kwrter of that right now the reality is this. is the real question around amazon whether they should invest or not invest that's their business model. the real question is how should investors value this company indefinitely, there's going to be a rise in margins in the next few years. then we're going to go back into

a spend cycle. i guess one maybe more critical way to be put would be how do you value profitless prosperity? >> that's a good question. >> pardon? >> and what's the answer is it overvalued >> the answer is if you take a five, ten-year approach, you can sit tight. i think if you take more of a judicious kind of two to three year approach, it's overvalued let me just kind of put this -- i'm sorry? >> go ahead. >> the scoreboard's broke. and this specifically when amazon, again, trades about a six times greater multiple than something like apple this isn't some creative way to talk about the values of apple, but i think that that is a kind of -- if you think about profit, that question, there's no doubt that apple is the world's greatest company when it comes to generating profit so when you talk about this idea of lack of profit, i think comparison between the two companies is fair.

>> alexis, let's talk a little bit about this as somebody who's a founder, as somebody who wants a long runway, is it valid for the street to start saying exactly what gene just said? a profitless prosperity? >> yeah, this is why public markets fascinate me i think the position that amazon is in and that he alluded to is very much playing for the long-term. when i look at the foothold they have with hosting, when i look at the fact that they've only begun to scratch the surface on things like advertising. i just received a random sample of free product with an amazon purchase it was marketing and it was paid for by a cpg company that because of all of amazon's data, they knew i would like >> wait. i saw you post a picture of this what was it? >> an amazon brand nutella their version of it. and so we're starting -- and we've seen reports of amazon testing versions of this and it's clear that there is a

wide range of businesses that when you have that much data and insight from everything from web traffic to consumer purchasing that you can still aler upon amazon is about for the long-term. i sit here as a proud of instacart. it was a great boom because it was going to galvanize other grocers to get on board. i think the same thing with them creating more amazon go stores in the next few years, we'll see a cashier-less operation it's better, cheaper, faster it's all the things consumers want this is long-term investment, but amazon consistently is right in making these things and i really don't see this as -- >> it does come with a premium valuation. >> no doubt. that's why i stick to the -- i stick primarily to the private market when i am doing public market

investing, it is long-term buy and forget >> how long has amazon been called profitless prosperity 15 years >> yeah. probably and the stock's gone up a ton. >> i've seen it. anybody that was a non-believer has been, you know, drawn and quartered. i wouldn't bet against bezos -- maybe in other areas of his life but not in this. is this a time where you invest and five years from now you go, gosh, that was genius. maybe not. i don't know right? >> i think they are going to be massively disruptive you were talking about the retail opportunity i think that's something we're going to hear a lot more i predicted they would buy target i still believe that combination makes sense. and the idea of them taking more on retail. this is a great business model long-term. i think of long-term as five-plus years. but over the next year, i think

they're -- so just for the people who are trading for the year, they move on this is great one to own >> gene, thank you so much alexis, just a final thought about what we've been talking here today, what really interests you right now. >> you know, i still want to -- i cannot keep talking enough about the fact that things like artificial intelligence are going to replace so many routine jobs in this economy we just talked about amazon go we're invested in a competitor of theirs which are going to really change the retail world the self-checkout you had at the grocery that lets you beep yourself, that was the baby step in five years, you're going to walk into the store, take the coca-cola off the shelf and walk out. >> that's what amazon is testing. >> exactly so this is going to massively change the retail sector those jobs that are routine. any of those jobs whether it's a white collar like data entry or

blue collar like that retail scanner job, they're not growing. they're going to continue to decline. a big push i've been looking at as an early stage investor has been to encourage people, find skills that are the non-routine skills whether it's a software engineer or whether it's a welder those are the jobs that automation is not going to replace and we need to maximize. >> wait. you can take a item and scan it and the price comes up on the -- >> like self-checkout. >> that never really happened. >> it got all drudged up again recently alexis, thank you so much for being here we appreciate your time today. >> always a pleasure when we come back, we have two exclusive interviews exxonmobil ceo darren woods here after the giant rolls out results. we're looking forward to that. and special jobs friday with st. louis fed president james bullard. he is a voting member of the

fomc po a going to react to the jobs rertt 8:30 a.m. eastern time "squawk box" will be right back. a business owner always goes beyond what people expect. that's why we built the nation's largest gig-speed network along with complete reliability. then went beyond. beyond clumsy dials-in's and pins. to one-touch conference calls. beyond traditional tv. to tv on any device. beyond low-res surveillance video. to crystal clear hd video monitoring from anywhere. gig-fueled apps that exceed expectations. comcast business. beyond fast.

30 minutes and counting. we're just a half hour away from the all-important january jobs report will the number crush estimates? all the predictions and analysis you need is straight ahead plus, big interviews with

st. louis fed president james bullard and the ceo of exxonmobil fresh off this morning's earnings it's a jam-packed hour of "squawk box" and it starts right now. ♪ live from the most powerful city in the world, new york, this is "squawk box. good morning and welcome back to "squawk box" here on cnbc i'm joe kernen along with becky quick and wilfred frost. andrew is off today. but i believe we're going to have these exxon numbers i haven't looked at them yet >> i was taking a look at them looks like $1.08 a share in earnings which would be in line with what the street was expecting. also taking a look through -- oh, no, no $1.41 is the number coming out

$1.08 was what the street was expecting. that was a blowout from what the street had been anticipating i haven't taken a look at the revenue number yet >> used to be difficult. >> the problem with the revenue numbers is there's only a certain number of -- a handful of analysts give revenue estimates so it's often off on that number. you look at some of the liquids. the fourth quarter net was up $265 million downstream net $987 million. and just again, looking through this but looks like that is a big beat for exxonmobil. $1.41 versus $1.08 stock up 1.6%. >> also great results from shale yesterday kicking off for the majors >> that follows the declines they've seen in oil prices last year >> there was a time they were

making $10 billion a quarter remember $6 billion now and $20.8 billion for the year of 2018. that's why we contrast that with apple. >> capex has been a huge issue they've been talking about spending $7.8 billion that's actually down by about 13% from the year ahead of time. but we'll talk to them, too, about the 12 months. it was $25.9 billion that's an increase of 12% over what they spent the year before. they've been talking about spending a lot on capital exploration. finding new reserves and the goals they had for profitability. >> yeah. always look at that replacement production but we stopped talking about that as much because of the boom in the last five years remember peak oil? that's like, they've retired that term. it's so not real

mistake. >> one other point permian continued to ramp up in the fourth quarter production up more than 90% from the same period a year earlier so we'll talk more about this coming up in our exclusive interview with exxon ceo darren woods in a few minutes all right. the january jobs report is coming up at the bottom of the hour let's welcome our jobs panel jeff rosenberg oh, you might have a chance of being right about something. managing director and senior portfolio manager at blackrock victoria fernandez what's your number today, victoria i mean, we can't match last month, can we? >> no. i don't think we can match last month. we'll have a little bit of pullback i think when you look at the average, we're still over 200 on average for the last 12 months so i think we'll pull in probably low 100s maybe around 130, 135 >> jeff? >> so market's significantly higher than that we're at about 185.

a lot of noise in this report. but strong labor markets continue to increase in wages. although we expect a bit of a pullback here. but don't lose the message from it here. good report. a lot of confuse around the shutdown influences. we'll look for that in the unemployment rate. we think that nets out to about unchanged. and, you know, this is the strength of the economy. the strong labor markets >> how about the -- whenever i ask a wage question, it's like will it be a wage number to be afraid of when, in fact, we want the wage -- we want a wage number to be afraid of it's just kind of a perverse way because inflation fears, et cetera but you expect good wage numbers in terms of increases? >> over the course of the year we expect good numbers in terms of wages >> up 3% or 4% >> we're ticking above 3%. we'll continue 3.25%, maybe 3.3% the question here is lay bar markets are tighten.

but that helps markets to increase but not so fast that you undermine broad based inflation. the fed really took the wind out of the sail of that. wage inflation isn't passing through to broad based inflation. so you don't need to worry so much about the wage inflation figures triggering a big inflation fear it just hasn't happened. until it starts to show up in the wage inflation -- broad based inflation figures, you're not going to have a broad inflation scare. >> let's go back to what you were saying. i'll get to you, victoria. but quick will be jeff on whether we get the inflation because we don't have the bodies to put into the jobs it means the workforce isn't providing the man power, woman power we need. >> when people look at the headline payroll number, we yupsed to think of is that as telling us something about the economy. but this late in the cycle, it's

telling you about the tightness of the labor market. you have an incredible amount of openings, a strong economy, and you're not able to find the people to fill those jobs. so payrolls can go down. it's not telling you that the economy is slowing it's telling you that it's harder to find the workers >> that was supposed to happen, like, i think like two or three years. talking about the work that krueger did and all. and the participation rate was supposed to be all baby boomers. but there are a lot of able-bodied people that were able to come back. are we running out of them, too, victoria or not >> well, i think it's slowing down obviously as we continue to add more and more jobs with it's going to be harder to find people to come back into the workforce. but i think there's enough out there right now that we can continue to see this number grow we've seen it move a little bit higher over the last couple of months i anticipate we'll probably see it move higher this time as well i think that will actually push our unemployment rate up a little bit we might have a four handle on

unemployment this month. not only because of people coming back into the labor force but because of the shutdown too. the unemployment number is where you'll see effects we still have a large population out there that felt like they didn't have a good enough opportunity to come back into the workforce. and now that they're seeing this, now they're seeing wages move higher, i think we will continue to see them make their move back. >> all right thank you. we're going to have much more from our panel when we get the jobs report at 8:30 a.m. eastern time i also think -- we're supposed to have austan goolsbee, but he knows i'm going to ask him about the comments from the democrats recently he's an economist at university of chicago we've got -- just take your pick of which socialist comment you want to hear from his party. and i think -- is that why he's not here, becky? do you think he's afraid to field -- >> no. i think there's no planes or trains coming out of chicago boston doesn't shy from a fight

with you or anybody else now that you're giving hima heads up of what to think about. no, i don't see austan ever shying from a fight with you he's like a contributor on fox >> he is >> yeah. >> that's their token -- anyway. their token righty >> he's not afraid of a fight. still to come, our exclusive interview with exxon's ceo darren woods their earnings came out moments ago. shares up after an eps beat. you can see the stock there up 3.6% alpha seems more elusive today. is it because so many go after it the same way, chasing after short-term returns?

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welcome back to "squawk box," everybody. dow futures have come back down. they are up but only by less than one point s&p futures down by about five points the nasdaq off by 47 of course we are in the middle of earnings season and we just wrapped up january which was the best month for the dow and the s&p since october of 2015. it's the best month for the nasdaq since october of 2011 exxonmobil just out with earnings minutes ago too that company reporting numbers of $1.41 a share versus the

$1.80 the street expected. take a look t a the stock. initially it was trading up significantly. right now trading at $73.28. joining us now on an exclusive "squawk" interview is exxonmobil's chairman and ceo darren woods thank you for being with us today. >> good to be with you thank you. >> the earnings per share were substantially better than the street had been expecting. revenue i realize is a different game because there are 18 analysts that put in numbers that they think you're going to hit for earnings only five will even give a guess when it comes to revenue but the revenue number was less than they expected how did you manage to beat with earnings in such a handy way when revenue wasn't necessarily what they thought it was going to be. what screws did you turn to get those results? >> we had a really good quarter. you may have recalled in the beginning of 2018, we reconfigured our downstream

organization we had put ourselves in a company construct. we organized ourself on challenging ourself all along that value chain and the downstream delivered significant results in the fourth quarter. taking advantage of our integrated presence across all of the businesses that we operate. so i think a big contributor of that is end to end all the way through the organization. >> you are now continuing with that reorganization. you've got plans to reorganize the business from seven different businesses into three. what does that mean and why are you doing this >> well, you know, i think when we merged with exxonmobil, we had a lot of opportunities to focus on getting the most out of those organizations, bring them together, best practices, best processes all across this

platform we've done a great job to that we're going to hang onto the functional excellence we created through that process the next step now is to organize ourselves to make sure we're capturing all we can from the market so we're organizing the upstream business along value chains so our people can see that business and optimize it again from end to end, from production, from resource development to production down through marketing. so we're real excited about that it was a similar concept to what we did in the downstream great results in the downstream. we are very excited about the opportunity and the upstream to do the same. >> darren, one of the highlights from the release that we're going through is the fourth quarter liquids production was up 4% year over year that's largely because of growth in the permian how much are you investing in the permian burden of proof are you kind of seeing the fruits of that and what do you expect to have happen this year? >> well, we're real excited about the opportunity in the permian. we had an acquisition back in

2017 when we step back and looked a what we could do in the conventional space, i think exxonmobil can go into that market and resource play and take a different approach than a lot of the players out there today. leveraging the strength of our large global organization, our project development, the scale bringing our technology to bear in there and so we're taking a very different approach to the development in the permian putting a long-term plan in place to develop unconventional resources at scale i think that's something unique to our company, unique to our capabilities it's going to bring a different type of production, a different game to the unconventional space. i think again, we're going to demonstrate some significant value through that process >> with that additional technology with what you're doing, what does that mean in terms of what you need the price of oil to be for it to be profitable, for it to be pumping oil from the permian basin >> well, our goal is to make sure that we are going to be successful and like the returns they were getting on those

investments in very low price environments so all the work that we've been doing in the permian and really across our whole portfolio of production is making sure we're bringing to bear the competitive advantages we have as a company and bringing those to our project so our break even costs are low and we're getting good returns. in the permian, we're below $40 down $35 a barrel. we think we're going to see some good returns even at those levels >> i mean, that's a big -- >> of course that's upside for us >> that's a big game changer given where we saw oil prices fall last year obviously january has been a good month for oil prices if you're somebody who's a producer we've seen a big rebound of 18%. what do you think happened last year was it supply or weaker demand >> no, i think if you look at demand, it's been robust may come off a little bit.

we'll continue to see a reasonably healthy demand. i think that was more of a supply play. obviously it's difficult to strike the balance in real time. i think the market anticipated the iranian sanctions in what came off, what production would come off there with some of the waivers, that may have been less than anticipated. opec may have produced more than they wanted to >> are you fearful that demand could soften further this year we just got a china manufacturing number out which was below 50 the worst since february 2016 and the day the ta out of the you're you'euro zone hasn't bee good either. >> we anticipated some economic slowdown still expansion area, but slowdown there frankly we don't run the business or try to build it on a projected demand or projected oil price.

as you know, it's going to affect the pricing we're looking at developing resources at the lowest cost to supply to industry then let the prices go where the prices go and the supply demand balances take them and make sure we're respective >> great to have you on, darren. this is joe kernen and i just feel like i have to -- my co-anchor is not in today. if i don't do an esg, you know, virtue question, i just feel like i'm not -- i got kpon on. but my take on pressure to, i don't know, be a good corporate -- in terms of society, to be a good corporate citizen, i think it's very complicated. and i just wonder what your views are. if someone were to try to force you to not bring hydrocarbons out of the ground or not to move

more quickly to a different form of renewables that we've seen. over in some country in europe there was a deal signed they had to buy a certain amount of wind. it's like 10 or 20 times more available than natural gas, but they have a contract so taxpayers are paying for it i mean, do you get swayed to change what exxon and done over years and years? do you feel the pressure to do something different now? we might not have had the great renaissance over the past five years in oil and gas if you had. as we look forward to the future, we base on all the future we go to. looking at what the supply/demand balances are going to be and base our business on that the reality is concerns about climate and the drive to reduce

co2 emissions, that's a legitimate objective our company is a science and technology company we have evolved with consumer demand and preferences over the course of our 135-year history we anticipate continuing to do that so we're pretty comfortable with this drive and the desire and the aspirations of societies to move to lower emission sources of energy. i think the challenge there is finding the technology to do that today the solutions that we have is now sufficient to achieve that goal. to see if we can't fulfill those gaps and provide solutions that are a win/win solution to provide energy at affordable and reliability to consumers all around the world and populations they need to raise income growth we think technology is going to solve that we think they've got the ability to help with that.

>> hydrocarbons are going to be part of the mix there. 50 years from now -- >> absolutely. >> it may be cleaner, however you want to do it. but just, you know -- you just can't go with the prevailing, you know, whatever is in fashion at any given time. just for -- it's cold in the midwest. i'm glad we have some people that are still getting heat from fossil fuels or else they'd be -- >> yeah. i think, joe, people don't fully appreciate just the size of the energy system all around the world. it is an enormous system and it will take -- >> right someone told me -- i heard from somebody yesterday that said, fossil fuel, we've got to -- it's like, do you really think fossil fuel has been a negative for man kind over the last 300 yooers if you like being cold and warm and having cooked food, you need it sorry. >> darren, i want to thank you very much for your time.

darren woods is the ceo of exxon mobi mobile thank you for your time, darren. >> thank you, becky. thanks >> may need a pr guy down the road, you know, for exxon. >> trying out? coming up, january jobs. the labor department just moments away and following the numbers, st. louis fed president jim bullard will join us he's had a swagger in his step you should be mad at forced camaraderie. and you should be mad at tech that makes things worse. but you're not mad, because you have e*trade, who's tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. don't get mad. get e*trade's simplified technical analysis.

still to come, the january jobs that number, the market-moving number is going to come your way after a quick break. take a look at the nonfarm payroll totals ahead of that stay tuned

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welcome back to "squawk box" live from the nasdaq market site in times square. the january jobs report is just about a minute and a half away let's bring back jeff rhodosenbg from blackrock, victoria of cross investments. i think he was trying not to come on then he heard what i said and he said i'm not going

to take that austan goolsbee. austan, we don't have a lot of time you're lucky, so i can't ask you about the geographic center of your party right now where i'm sure you don't want to try to address that question. but we also have david mcintosh president of the club for growth kind of the opposite of where the democrats are. former congressman also steve liesman and rick santelli all right. we've got about 50 seconds so i don't know what we want to do with this there they are, just in case you want to look there's steve liesman. anyone have over 200 >> rick does >> where are you, rick >> i'm 210. >> okay. david? any growth >> i think steady growth you look at last year year over year, i think that's a good number >> wow looks cool with the snow in the

back i guess that's a live shot unless that's an effect. austan, what do you got today? >> i think that even though they're not saying it, i think the shut down's going to mess up the numbers. so i think it's going to be very low. but i think it's going to be artificial >> we're going to get the number let's get to ylan mui with the numbers. they should be here in about a second and a half. ylan >> 304,000 jobs nonfarm payrolls rose by 304,000 jobs in january. the unemployment rate ticked up from 3.9% to 4%. now, the labor department said that the federal government shutdown had, quote, no discernible impact on employment, hours worked, or on earnings in the establishment survey they said that all furloughed workers were counted as employed in that survey because they will eventually get paid. however, that showed that 175,000 workers were on temporary layoff in january that

drove the uptick in the unemployment rate. and the labor department said the unemployment rate would have been even higher had some furloughed workers not accidentally misclassified their status also, the number of people who worked part-time for economic reasons, that jumped by nearly 500,000 people in january. and that's almost all coming from the private sector. the labor department saying it's likely a reflection of the impact on businesses that rely on the federal government. there's a 0.1% increase over the month and a 3.2% increase year over year. there were also some big changes to the numbers reported in the previous months. november's number was revised upward 176 to 196. the december number came down from 312,000 jobs to just 222,000 jobs overall, that's 70,000 less jobs than had been previously reported the three-month moving average

is now 241,000 jobs a month. some strong sectors in january that saw lots of hiring. leisure and hospitality led the way with 74,000 jobs construction saw an increase of 52,000 jobs. health care sector, that rose by 42,000 jobs. the labor force participation rate, that was little changed. back over to you >> wow a lot to mull over there i'm not feeling as great about december i'm surprised about january. let's get reaction from our jobs panel. victoria fernandez, austan goolsbee, david mcintosh, steve liesman, rick santelli we got to go to break though now that i've -- i'm kidding by the time i get done introing everyone -- jeff, i'll start with you >> real quick, you've got a lot cough industries in here that reflect the weather despite the

polar vortex today the earlier part of january was warm you see big increases in construction and leisure and hospitality. that has a weather effect. this is a very strong report you balance it out with revisions to december. clearly i think you're seeing a weather effect in terms of the payroll headline number. >> we saw december you were higher than the average for january. but do they offset one another >> that's a huge revision. 312 down to 222,000. if you combine it, i guess i won over both weeks but who's counting i don't know here's what jumps out at me. what jumps out at me is that 63.2% labor participation rate it keeps going up. that is such good news even though it distorts things like

u-6. hourly was up 0.1% on wages, earnings that was a bit light but i really liked the year over year hanging tough another 3.2% i look at this report, even seeing the revision, lump it all together the areas i'm most interested in are holding much steadier than the non-farm payrolls. >> liesman, there was har ror on your face. you seemed more relieved when they revised september down. >> if i can correct, there's no horror on this >> shock. >> disappointment. >> there have been days -- why disappointment, joy? >> gnashing of teeth i'm yanking your chain just ignore it >> ignore you. okay, great. good idea. >> good advice >> here's a couple things. there are times i wish it was the bls that shut down and not other parts of the government. let me tell you that the 95%

confidence level for this data is plus or minus a hundred thousand and sometimes we get up to that 95% confidence level where it is plus or minus. the interesting thing and the good thing about this is you can ignore the hundred thousand reduction in december and you can say, you know what the job market is still very, very strong. right? because 222 or 312, they're both 100,000 or 200,000 above what should be the run rate of the economy. so i don't really care from an overall standpoint that the number is lower because it's not from 200 down to below 100 it's 300 down to 200 which is still a very strong number i just checked the best participation rate since september 2013 they didn't all get jobs this month. which is why the unemployment rate went up i just got to close with this thing.

what happened to the recession about which the market was so certain. they're not necessarily lagging. they're not necessarily leading. but it's very hard to see all that much weakness and that certain recession that everybody was sure was coming. maybe it happens >> let's get usa taustan's taken this >> i agree with steve it doesn't look like a recession. "b," i don't understand what happened how could you have a minus 90,000 revision? what did they miscount >> austan, real quick, what we do know about the december number, it was a very low participation from establishments the number of responses in the payroll. we do know that about december >> i think this number being as big as it is, when the gdp growth contributors are modest, it probably means that we're going to get some bad productivity again

why would the jobs numbers be grow i growing so much -- >> productivity was -- >> i agree with you. that's the strongest thing we've got going. >> austan agrees with you, rick. >> i don't know if it's too cold out here or what >> i think that's the question we have to look at is now where are we going lead? i know we talked earlier and that phillips curve is broken, but i still think now we're six months over 3% year over year with this number we haven't seen that since 2009. so i think we might see some inflation. and the concern is going to be with the average now at -- what? i think ylan said 230,000 jobs are we back to that with the fed? is this going to be a strong

enough number that now the fed has a little bit of ammunition that they could raise rates in june or later in the year. i think that's something that bullard will address and i'm interested to hear what had has to say on that >> we're looking forward to that should we fear prosperity again? if there's no inflation, why shouldn't we be happy? >> we should be happy. i'm not worried about inflation in these numbers what you're seeing here is finally after decades of stagnant wage growth, healthy, robust economy growing at 3.5% and it's being spread all around the wages are increasing at a decent rate. and a healthy rate one that's very good for us. i think what this data shows is the private sector has remained robust even as the government is twitter pated with the shutdown, the shutdown reflects the numbers in that. that will go away next month i think a all of this is a good

indicator if the president keeps on course to get a trade deal with china and the fed maintains steady as it goes. we're going to see 2019 being a good year for growth >> rick, real quick. you know, a pretty muted reaction in the 2-year here. the 2-year, we were talking about it yesterday, looked like el capitan in yosemite it was a sheer cliff down. i see it up a bip here on the 2-year i don't know if you see anything in the fed funds futures market. >> that is actually a key comment. because it isn't that we don't see a lot in twos. it's that -- >> cats are living with dogs this is crazy. >> it's kind of a peril. without any curve wiggles, we can say that, you know, there was capitulation by the fed. the entire curve, the long end looking at numbers the strong end is trying to

figure out if this data changes. regarding the fed's aggressiveness the fact it's mostly a parallel shift tells me there's a nice equilibrium here and generalized global slowing in a dearth of data it's making treasuries a little spongier than they'd normally be stock futures have moved up slightly >> i think you said it which is this capitulation. becky during a break today said the data don't matter for six months >> the fed's on hold actually, we want to see good numbers. the market's all in favor of it finally because they're not worried about the fed stepping in >> victoria, do we not have to worry about -- i mean, if the market doesn't react -- the market may react, we'll talk about that and we'll get jeff on that too whether it ever? >> i think it will in the future becky's right that right now the statement that the fed made was so dovish that i think it did

put any hikes out further in the year we still think weill have one or two rate hikes this year i think this kind of number people can put in their back pocket and say, look it's still a strong economy here yes, we're seeing global growth slowing. but we've still got good momentum going here. so maybe there's not a direct effect immediately i think it goes in the back of people's minds and it's part of their outlook going forward. >> rick, what do you think austan's finishing your sentences. liesman's agreeing with you. something weird going on >> if chicago is hell, it's frozen over. >> the question of what does herman cain think? >> pelosi just said she's going to pay for the wall. >> fake news >> that's fake news. that is fake you know what? no one's going to buy that austin, we'll have to have you

back i need to talk to you about that all your colleagues are saying about 37. >> did you see elizabeth warren on cramer's show are you -- what do you think of howard schultz >> no, no. somebody give him some coffee. give him some coffee >> can you come back i would be dodging this if i were you, too. i'd be embarrassed for you too david mcintosh and -- you go on fox. you're used to this. and steve is sticking around we have bullard now, don't we? >> middle eahe's like, true i ao this joining us now is st. louis fed president jim bullard. he is currently a voting member of the fomc. thank you for joining us today i think we're having a problem with your feed, president bullard. let's see if we can make sure

that mike is still working try one more time. >> he's not working. >> jim, i'm so sorry we're having a problem we'll try to get that fixed. we'll hold on for one moment while we do this steve, what's so important about this number -- never mind. his mike is working. jim, we're getting to you. >> oh, great >> let's look at this number this was a much stronger number than anticipated what do you think immediately as a voting member on the fomc? >> my immediate reaction is that this is very strong for this month. but you got this big revision for last month so -- and you've got some noise in this data broadly speaking aempbl over the last three months, that's a strong jobs market but we knew that i think in this stage in the cycle you know, looking at low unemployment job growth is maybe a backwards looking signal >> i have to say, you look

confident and comfortable right now. you were somebody who had been saying for a long time you wished the fed would slow down a bit. you feel comfortable with this latest statement that just came out? >> i thought this was a very good decision by the fomc. i think it set us up for good couple of years here we have normalized rates where our main competitors overseas have not been able to normalize rates. we've kept inflation close to 2% but now it's time to wait and see how the economy develops i appreciated the way the decision came out. i think we're in great shape right now. >> jim, can i just say you started that out with saying you think this set you up for a very good couple 07 years that to suggest you think the fed would be on hold for the next couple of years or you're talking about the broader economy? >> i think this concept of being on hold, i think we're -- i would like to think that we're out of the business of

pencilling in further increases that have to be made i don't think we're in that game anymore, but obviously we will react to data as it comes in if the economy is better than expected or worse than expected going forward, we're willing to move in either direction there wouldn't be any presumption now anymore that we're going to move in one direction or the other so in that sense, i think the level is good here >> there was going to be a slow and sharp downturn the fed pencilled in slowing growth but not necessarily slow growth at around 2.3% the consensus. we keep getting these decent jobs numbers i see them as more coincident. you see them as lagging. either way, what's the outlook for growth as you see it >> there's a near universal rate that the growth rate will have to slow down to the potential

growth rate of the economy nearly everybody has the economy slowing down in 2019 that doesn't necessarily mean anything bad for the economy it just means you can't go above trend forever. so i think that's basically where we are if you look at recession probabilities, they have ticked up and that's because of yield curve issues that tends to be a good predictor of recessions for the u.s. but now with the fed having made this decision, i'd look for some steepening possibly in the yield curve. we get to a better situation on that >> jim, i asked this of the chairman is it time now to reduce the runoff of the balance sheet? and could you give us a number where you're comfortable with the balance sheet going down it's $4 trillion right now where are we going and how quickly are we going to get there? >> we put a statement on that to try to clarify where we are. we're doing a lot of work on

th this i don't want to prejudge where we'll come out but i will say that in the big picture, reserve demand is going to be much larger today than we appreciated maybe even one or two years ago and certainly much larger even in order of magnitude larger than it was pre-crisis so i think everyone has to adjust to the fact that these reserves are being held for new reasons really to meet the liquidity ratio and other reasons. we're going to be very cautious about getting down to this -- to the right level of reserve demand in this environment and also we're going to run a floor system so we're going to want the funds rate to be trading right at the point where reserves are satiating the system so there are a lot of technical issues here. but the balance sheet is definitely going to be bigger

than we thought it was going to be last year or the year before. >> it's fair to say i think the tone from you and your colleagues and the chairman has changed much more over the last -- >> not from him really. >> -- three months than, say, the u.s. economic data has to what extent has that been influenced by national economic data and in particular, what other major central banks are doing or not doing. >> i think we've taken on board the global situation has not been as robust as it might have been hoped europe in particular has been weaker in the last second half of 2018. you know, china, always hard to interpret. but looks like it's growing more slowly than anticipated. and that they're trying to cope with tariff negotiations and other matters.

so we take that on board in 2016, worries about china put the fed on hold for an entire year i don't think we're quite in that situation it shows you how important these can be in monetary policy deliberations even here in the u.s. >> i'm sure you got a bounce in your step because you were so ahead of the curve on this which was the opposite of the way you were before that which is pretty amazing. but if i asked this the other day -- if someone told you that fed funds added to unemployment rate, what was the third thing -- >> inflation. >> would total eight or nine >> under ten >> would be under ten. could you explain what is happening in the world, the top three things that explain that for me please? it just doesn't seem -- >> yeah. i think, you know, those three

numbers adding up to such a low level reflects the global low rate regime that we're in. i do not think we have left this regime we've got europe and japan still with negative policy and unlikely to move anytime in the near future. we have raised rates in the u.s. on the strength of upside surprises in the economy in 2017 and 2018 but now, you know, like i said earlier, most people are expecting the economy to slow down somewhat. so, you know, having a funds rate at 240 in a world where the rest of the world is negative, i think that's pretty high rates and probably the limit of where you can go so i think the fact that the u.s. is growing faster is great. but -- the fact that we're up at 240 is really pretty high, given low interest rate regime world.

>> jim, i don't know that we have time to explain this, but what is remarkable, i think, about where you are right now and the reason why i think joe says you oughtto take a victor lap is not because you pegged what was going to happen, but because you have a different idea of how to think about the funds rate, get to a new equilibrium rate we'll see you talk more about that but i want to just switch real quickly, the market is trading more or less with no chance of a rate hike over the next year to the extent it is trading with some bias to it, it is to the downside, a cut. do you think that's right or do you think it ought to be -- where should the market price where the fed is headed right now? >> if you follow my dots, my dots say flat outlook for the future i think it is a good way to think about it and we will react to data as it comes in you can place your bets, all the traders can place bets as they wish some of them might argue that u.s. economy, this jobs report

looking very good. they might argue that the u.s. will surprise the upside others might say the global factors will come back to bite us, the u.s. will slow down faster than we're hoping for here so -- but from the policymaker's point of view what we want to do is project a flat rate and then we'll see what happens with the data. >> jim, how much of the fed's kind of new dovish take on things is a reflection of some of the immediate issues facing the economy and the nation at this point and i'm thinking the march 1st deadline for the trade talks with china, thinking about other issues that are out there, like negotiations and potential shutdown for the government again, how much does that play in the fomc is looking at and thinking let's hold off? >> those are factors there is a long list of worries. we get paid to worry we're used to that we have to see how this china negotiation works out. see if they can get to some kind

of agreement it does seem that both sides would benefit. but, you never know in negotiations you have brexit sitting out there. reading that from a distance, i can't see what the resolution will be. so we'll have to see with that. >> jim, do you ever think -- do you ever say amazon for why everything is happening and whether, you know, that explains it i don't know, does that counteract wage push inflation >> one thing i would say, people talk about tight labor markets, but my point is that the feedback from tight labor markets to inflation is extremely weak right now and it has been weak over the last two decades and just to put a number in your head, the ratio is 10 to 1 you have to have a gap, unemployment gap of 100 basis points just to get ten basis points of inflation. that's a very weak trade-off and the kinds of gaps that we're talking about aren't going to generate very much inflation.

>> we have to go real quick, but how far would you let the unemployment rate fall then before you started to get worried? >> it can go a long way. >> give me a number. 3%, 2.5% >> you can go way down and won't get very much -- >> 2.5%? 2% >> evidence nofor that is very weak. >> we have to get to the other jim. jim bullard, thank you now to the other jim, jim cramer, equally prescient in a lot of ways. what do you think of everything together >> pretty good sometimes you just say it is good mr. bullard i think is very right. the fed has optionality. if we start seeing even hotter market, i think december job market, december industrial read was not good housing read was not good. the autos are not good

there is hiring going on do you want the economy hitting on all cylinders before you decide we have to raise rates. i do not see the acceleration, i see a deceleration with the exception of some of these hiring figures if we just wanted to go by hiring, the fed funds rate would be much higher what would that do make it so we have less hiring is that our goal i think the economy can handle this rate. or the wage gains would be up. so can we just say it is pretty good and let's keep letting it play out >> yes >> i never understood that oh, my god, the inflation rate is so low, we got to do something about this and get the fed to raise rates that's not what the mandate implies. price stability and you can go to zero on unemployment if there was no inflation, right? >> we have a great country and great economy. we're negotiating with a country that i don't regard as great it does not have a strong economy. you know what, we can do really well if we just have a very good trade deal with china, have a

good trade deal with mexico, good trade deal with canada and i think we would say, we're back on a humming status. we don't have to accept 2% growth that was a fiction i don't know how that happened 2% became what we're supposed to have we're a better country than that. >> your interview with senator warren, your takeaway on that? >> well, look, when you create 300,000 jobs as howard schultz did, i think that's a pretty good thing when you do all the great things that mayor bloomberg has done, i think that including, by the way, making it so you can go to college if you can't have the money, these are great things. i would hate to see you're so discouraged that you wouldn't bother to do that. a lot have taken the pledge. if you want it earmark the pledge to have it so it goes to preschool, that's fine we're america. we're not venezuela. i'm with mayor bloomberg. >> i've been won over by howard and i would never admit it i think he got a taste of his

own -- suddenly he feels bad about being a billionaire. he's, like, looking around, like this spaeis the party i've embrd and now i have to feeled about bah what i've done it is ludicrous. thanks, jim. don't miss two big interviews on "mad money", ceos cofarbon and adp. stay tuned to have a hundred percent renewable energy goal. if we don't make this move we're going to have changes in our environment, and have a negative impact to hawaii's economy. ♪ verizon provided us a solution that lets us collect near real time data on our power grid. ♪ if we can create our own energy, we can take care of this beautiful place that i grew up in. ♪

a final check on the markets after that much stronger than anticipated jobs report that came out with a gain of over 300,000 jobs up from the 170 the market was expecting dow futures indicated up by 90 points s&p 500 up by over 4 the nasdaq down by 22 thanks to amazon. >> feel great about december and we can do it again. >> good-bye, everybody see you next week. >> january's great ♪ good friday morning. welcome to "squawk on the street." i'm carl quintanilla with david faber and jim cramer way above expectations, despite a downward revision. that plus amazon, cigna, exxon, making for a busy first day of february ism on the way in an