this is "squawk box. ♪ good morning, everybody. welcome to "squawk box" here on cnbc we're live from the nasdaq market site in times square. joe is out today our guest host for the hour is ed lee, new york times media reporter and cnbc contributor. let's take a look at the u.s. equity futures at this hour. big week for markets last week you're actually looking at the longest weekly winning streak for both the dow and the nasdaq since november of 2017 looking at the number of weeks they've been up, six straight weeks in a row of gains the dow is now exactly 7% below its all-time intraday high it hit almost four months ago back on october 3rd take look at this morning, you'll see just some modest declines, basically call this flat across the board. s&p futures are down by yeah, .03% dow futures are down by about 6 points and nasdaq is slightly positive we'll keep track of this as we get closer to the opening bell

you are talking about numbers we haven't seen in quite a while. nasdaq yesterday was up by 1.4% and dow up 1.3%. in asia, the composite was closed for lunar celebrations. in europe, early trading already taking place, you'll see that right now it's a mixed picture there. stocks are higher in london with the ftse up by about quarter percentage point the cac in france off by half a percent and the dax in germany down by .2%. stocks are higher in italy but weaker in spain and look at what's happening in the treasury market here. you'll see that the yield on the ten-year, at least at this point, is shaping up to be about 2.7% back to 2.7% after that yield being under some pressure last week with some of the good news we heard saw the yield down to 2.64%. on the squawk planner this week, tomorrow is president trump's state of the union address. it is a relatively light week

with economic data jobless claims among the highlights. earnings calendar, hear from alba fete after the close today. tomorrow, disney, bp wednesday, 21st century fox and chipotle thursday, twitter, kellogg. couple other stocks we're watching on the move this morning. ryanair among the big losers today in london. europe's biggest budget airline reporting quarterly loss hurt by 6% drop in fares overcapacity like to continue driving prices lower sony falling 8% in japan to six-week low the most traded stock on the nikkei today company reported a lower than expected third quarter profit on weak video game sales and then take a look at nissan, it is dropping plans to build its next generation x-trail suv that was supposed to be done in the uk. the car maker siting uncertainty surrounding brexit another one bites the brexit dust here. nissan says the vehicle will now be produced at one of its factories in japan meanwhile, want to jump in this

morning with our guest host for the hour, ed lee lots to chew over. we're going to talk advertising in terms of super bowl advertising. >> the fun part of it? >> it was the only fun part. >> it was the only fun part. >> i like a defensive game if you score points, you might win. but if you prevent anybody else from scoring -- >> it was a coaching match it was definitely a coaching match. >> defensive teams were great on both sides. >> look, if you're an o fis that doe there's a lot to pull from the whole point of the super bowl, hey, everyone tunes in, watches, maybe it's fun for you. a lot of people tuned out after a while. >> i guess >> we'll talk ads. but i want to talk earnings because we'll be hearing from disney tomorrow. >> it's a big media week this week. >> so this is like -- this is your super bowl. >> this is my super bowl. >> this is your super bowl. >> yeah. >> so what do you expect >> i think disney will have a

decent quarter i think we're going -- i think the expectations for them they've always sort of been in line i think they've sort of surprise here and there i think the bigger picture for disney going forward is how their streaming business will fair are they going to be on time for end of the year launch i think that will be hard. i think they're discovering that creating a streaming service is much harder than it looks despite the fact that they're a big professional company with lots of resources. that's going to be a big thing and you know, the management team that's in charge, they've got some fox people rolling into it now get a better sense of what the programming looks like they're trying to program -- >> anything on the conference call >> that's one thing they've been more willing to open up about. who is in charge, what they're doing, what the kind of strategy for the content is going to be that last part i don't know as much about in terms of the originals they want to produce for just the streaming service, how they weigh that against, well, do we license some of our stuff out to other student

services >> are they going to cannibalize people pay for in the movie theater, the "star wars" franchise. do a live action series thing, d does that cannibalize it. >> they still need theatrical. having your movie in the theater is not just for the stars, it's a huge marketing vehicle, right? >> i never thought they would be jumping the gun on the theatrical releases? >> i don't think so so but bob iger when they announced first of all the fox deal, the move to streaming, that really surprised me, not because it's not the next obvious step if you're in the media business, but he was willing to go so whole hog on it that was interesting to me. >> push this part of the story forward. the one big question mark that's hanging out there over disney right now, i would argue is the sale of the rsns, the regional sports channels that were acquired as part of the fox deal. >> they now have to sell them to

get approval. >> however, the reason why it's so important is when comcast wanted to bid for it, they had a much lower valuation on those rsns in terms of why they were willing to pay what they were willing to pay disney put a much higher preem upon those. >> you nailed it. >> on those channels so the question is are they going to get the higher premium or not >> so, chances are i think they're not going to get it. rsns is a tough, tough business right now. the reason why -- >> digital buyer potentially come in? >> a digital buyer could come in but what's tricky about the rsns, they don't have a lot of dij thal rights locked up. it's basically a middleman rights manager, you're buying rights from the teams and then you're basically selling them to the cable systems or whatever the local area is going to be. so you're getting squeezed on both sides, right? so you have contractually obligated increases from the leagues from the team owners,

where as with the cable guys they're just like, i can't pay you anymore. >> that's a great way of putting it. >> not going to exist down the road. >> i think comcast sort of figured that out in a way that made sense in terms of how they're going to bid there's some reports out there now that some of the bidders for the rsns are coming in pretty low. valued at -- looking for 20 billion for the full lot i think they're getting something like 15 now. so, i mean, it's still a bidding process, that could go up, but that's going to be the topic. >> a different topic, alphabet is coming up as well i'm more curious about this sort of back and forth between what happened with facebook and apple last week. >> yes. >> over the er certificates the were using to distribute certain facebook apps and the fact that google was doing the same thing but has not got in nearly the same kind of headlines. >> this is complicated so, kind of update the viewers here facebook has access to certain

level of apple's ios system. developing apps, improving apps, they have an ability to enterprise access to go deep into the phone just to test the apps. >> the employees are allowed to use it. >> facebook was doing, they were basically paying younger kids basically to download a version of the app that gave them what's called rude access to the phone so that facebook could see what the kid was doing on their phone in terms of other apps, what other things are they playing with so when this word got out, apple saw this, hey, no, this is not good you're violating our policies and we're going to shut you down so they shut down all of their access so all the developers inside facebook couldn't actually test any of their apps. any improvements, any updates. so there was a big, huge clash it was a huge clash. >> google apparently did the exact same thing they shut them down for a hot minute. >> well, we don't -- i mean, tim cooke could have been just as furious with google.

we don't necessarily know about that. >> because facebook is everybody's favorite whipping boy? >> does it tell you about the rivalry of apple and facebook versus apple and google? it's really telling, right, how we treat it. >> that's a good point i think they're effectively all equal rivals i think and i've said this on the show before, zuckerberg's move to unify the different messaging apps that facebook controls, messenger, whatsapp, instagram, it's a really a move against apple. that's how i read it, right, because the reason why is the most dominant -- one of the most dominant apps that apple owns is imessage mark zuckerberg sees that as a huge threat. it's a way for him to really sort of increase engagement and activity from their users. that's one thing tim cook read it the same way, hey, i don't like what you're up to here. >> final question, cnbc.com reported last week, i don't know if you saw it, i'm sure you did. >> alex is a great reporter. >> cbs, wanting to merge with via come that part we knew.

then he threw david saz love into the picture and said that discovery may or may not be part of some part of three-way combo. what do you know >> my sources told me this have been some sort of loose talk but the direction i think is the other way. i think zazlov thinks he might be a buyer. >> zaz is a buyer of cbs >> he himself in some ways has been on the hunt as well. >> buying other things to make it too big for him to be bought and brought into this? >> but there have been discussions in the past or there have been moves in the past looking last year where discovery is, hey, maybe someone might buy us i don't think it was a discussion with cbs viacom zaz is thinking he could go one way or the other in terms of what the properties look like. i think there's definite interest i don't think it's quite as far along. >> we'll have a lot more with ed lee later in the program lot of media stuff. coming up, the big business behind last night's super bowl commercials. we'll talk about the best and

the worst and one super bowl ad you didn't see last night. that's next. as we head to break, here is a look at the biggest premarket winners and losers in the dow. ♪

welcome back, everybody. we are in the chairs this morning talking about what happened last night in the super bowl if you missed it, well, the patriots topped the l.a. rams to win the super bowl, liii super bowl liii, final score only 13-3, that's the lowest-scoring super bowl in history. it was the sixth super bowl win for tom brady and bill belich k belichick. it was exactly 17 years to the day since they won their first against the same team, it was the rams by the way, they were located in st. louis back in 2001 brady is now the only player to win six super bowls. bill belichick is tied with the most nfl titles for head coach at this point. and i think it's pretty hard to argue at this point he is not the greatest of all time, whether you love him, whether you hate brady, six super bowl rings. it was amazing. >> yeah. it's unprecedented you have to give him credit. >> 17 years to win b winning this at his time. >> at his age, everything, does

he play to 45? that's the goal. >> he says he's going to he says he's back in this and last week we heard from robert kraft who told us here on this program, yeah, he wants him here too. i don't see that breaking that up any time soon. >> still winning. >> his pliability is most important thing at 41. i don't know if you saw that he doesn't eat mushrooms because he says mushrooms create inflammation and all about keeping inflammation down. >> he has a really crazy diet from what i understand. >> that's the least crazy stuff he has going on, but it works so hard to argue with it. >> separately, netflix viewer numbers were down during the super bowl last night as you might imagine, according to a tweet. viewing was down 32% compared to a normal sbuunday. i love they said that. hey, our viewership -- >> we have no idea what the base is, but yes we'll take the 32%. >> probably had great viewership during the polar vortex. all in all from an investors

standpoint -- >> i think what they were trying to say is only 32% like you all think that everybody is watching the super bowl, guess what. >> we still have 68% of our normal viewership. >> with us and watching on a sunday night. >> you're right. that's impressive. let's talk about the other big winners and losers, that would be the commercials my favorite of all the ones that i watched, i think was the hyundai elevator ad. it happened very early i kept waiting for another ad to impress me and make me change my mind first of all, i love jason bateman and the role he played was so good. you're getting in to buy a car he says, we'll take you down to the eighth level of hell, root canal, jury duty you've got to go through the talk with his son that comes on. >> vegan dinner party. >> it was like sitting in middle seat. >> you can relate to all of these thing. you've ever gone to buy a car, it's awful sell me a car and get me out of

here in less than two days it's the biggest reason that i never trade cars is i can't stand going in to buy a car and they say, oh, wait, we're buying a hyundai. and so he takes them, oh, we're going up for that. right back up to the top level and it's supposed to be easier to do it funny and effective. >> okay. my ad and i'm putting out the best and most important ad of the super bowl took place in the fourth quarter, right towards the end. by the way, back story, this ad was only created in the last week and it was voiced by tom hanks. why don't we show it to you, "the washington post" ad paid for by jeff bezos, cost $10 million to put this ad together. first time "the washington post" has advertised, i believe, on the super bowl, i think in its history. first time they've done a tv ad in ages. and it effectively is a call on the importance of journalism in society and what it actually means. it's actually an apolitical ad it doesn't talk about president trump. it doesn't talk about politics, but what it does do is show a

number of slain journalists, including jamal khashoggi. it was very powerful talks at the end with these great lines knowing empowers, knowing keeps us free. it was very emotionally charged advertisement. >> not just talking about "the washington post", brett behr, anderson cooper. >> i didn't see this ad. >> it's very important they did that on purpose. >> you didn't hear the back story. i was reading page 6 this morning, apparently that was supposed to be a blue origin ad but bezos pulled it because his girlfriend had been responsible for shooting a lot of it, so this came up in the final hour that's why this was done in a week or two's time i didn't know that either. just read it this morning. >> it's a pretty good ad tim cook was tweeting out. there's a lot of support for the ad even though it wasn't political, in an age, it very much was political in that in an age when i think journalism and news and the business we provide everyday is under fire, if you will,

maybe less so what we do, but a lot of what is done out there. >> i think it's great to have the message out there for sure there was a little controversy around the ad in terms of internally at the poest. >> you're spending $10 million on the ad, there's pensions -- >> you used the $10 million on journalism, on something else. >> was it washington post money or money bezos put up? >> it's basically the same. >> it's a private company. >> i don't know where the money came from. >> but it's straight effectively the way -- >> he's invested a lot in the paper, too we should say that i think for a reporter to see that, wait, they've never invested in -- >> "the washington post" reporters who have been upset that the idea that they're not getting more of the win that's come back in from this, this guy saved that paper, turned it around. >> there's no doubt. he invested a lot in the news room, hiring a lot more people that's true. absolutely but i think it goes to the point saying earlier, we've never seen this before. we've never seen a news

organization ever advertise in the super bowl talk about media and journalism and the importance of it yeah it's very timely. >> my pick is an ad you did not see during the super bowl. this ad was rejected by cbs. it was an ad put together by acreage holdings, cannabis company. cbs said it did not accept this ad because cannabis is schedule one narcotic this ad focuses on the beneficial health effects from using cannabis within the plant. it's a powerful ad if you've -- studies on both sides in terms of the effectiveness of cannabis we talk about cannabis and cannabis investments becoming much more accepted in the mainstream, yet for this very mainstream event this ad was not accepted. >> cross-examinatibs's reasonint accept anything that's illegal it's still illegal in states.

>> we had alex on the show a couple weeks ago who took the opposite side of this which was the dangers of it. and the issue is it very well may be that it's helpful in certain circumstances, like the one demonstrated in the ad, and also has these other side effects, which is very true of a lot of drugs. >> sure, of course certain compounds are effective. certain compounds have been studied more certain drugs have gone through fda approval ma disal cannabis has not gone through any fda approval that's the real question. >> the point was not medicinal cannabis, it was reck rigsal pot. >> it's all. medicinal and recreational is very fluid >> there's no dose or side effects. it's not like a doctor has smoke one joint in the morning and another at night it's like go get it. >> most of the medicinal stuff is in pill form, too that's where some of the fda pushback has come from scott

godlib he talked about it. any delivery system going through the lungs i can't agree with but a lot is in pill form. >> that ad was shaping that debate. >> by the way, they saved themselves about $5.5 million not running the ad and not more coverage for that ad than they may have gotten during the super bowl. >> a technique a marketing tactic for years. >> it's a good one it works. meantime, lots more to come on "squawk" this morning protests in venezuela boiling over president trump says he has not ruled out a military intervention we'll talk about that and so much more when "squawk box" returns after this obvious.

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welcome back "squawk box." president trump refusing to rule out military intervention in venezuela. the president's comments coming as the u.s. and several allies step up pressure on the socialist leader there new this morning, france, spain and the uk and denmark all recognizing juan guaido as the new interim president. this follows a weekend where thousands of venezuelans took to the streets to in dualing protests both for and against maduro. when we come back, it's another busy week for earnings we'll get you ready for the opening bell right after this break. and later, we'll talk tech investing with ann winblad and get her expectations for google's earnings report which

comes out after the bell that interview is coming up in the 8:00 a.m. hour. right now as we head to break, look at friday's s&p 500 winners and losers ♪

♪ just another manic monday ♪ whoa ♪ wish it were sunday >> announcer: welcome back you're watching "squawk box. live from the nasdaq market site in times square. ♪ good morning, welcome back to "squawk box" right here on cnbc on this monday morning. quick look at u.s. equity futures see how the market is setting itself up as the week begins in just a couple hours. dow looks like it would open off 12 points, s&p 500 off marginally as well if you want to buy barrel of crude, wti crude, this is the cost right now as we flip this screen around. you can buy a barrel for $55.32. president trump said deal progress with china is going well he made the comments in an interview yesterday on cbs let's go live to beijing for an update on the trade talks.

good morning, eunice. >> reporter: good morning, melissa. you know, it isn't really clear just how much work is going to get done on trade this week. the chinese government is closed officially for the lunar new year holiday the timing isn't convenient with president trump's march 1st deadline looming, but i did manage to speak to some officials in the government who said that at least part time they will be working and part of it is because there is still a tremendous amount of work that needs to be done secretary mnuchin as well as trade representative bob lighthizer is expected to come out to beijing after the lunar new year holiday both sides are also potentially supposed to work out logistics for another trump/xi summit. there's still a lot of contentious issues that are on the table that the two sides are supposed to work out because of the holiday, the leadership will get another read on the economy this is a big time for travel and spending for the chinese it's a lunar new year holiday which is the equivalent to

christmas and thanksgiving when families get together. they buy a lot of gifts for each other. so it's kind of seen as this gauge for the chinese consumer and this holiday economists are looking at luxury goods, a duty-free as well because of all the traveling so far estimates are there will be 400 million chinese traveling this year casinos as well as jewelry, this is the time of year when older people like to buy younger people jewelry a lot of times gold. and finally, alcohol just because, you know, when people get together for their dinners, they like to have alcohol on the table now, over the weekend, president xi had given his speech for the lunar new year holiday saying he believed the economic progress was steady, but this is going to be a good gauge to see just how healthy the consumer is and that could either put pressure on the government as this deadline approaches or possibly alleviate some of that pressure. guys

>> eunice, thank you let's turn to the markets. joining us right now for that is peter book var, cio of weekly advisory group and also a cnbc kr contributor and drew mattis. welcome to both of you peter, we're now looking at the dow just 7% below the intraday high it set about 4 months ago do you think we bottomed out we saw stocks go down 20% and lot of people really start to pan panic. have we seen the lows? >> i think based on what we have seen with earnings that remains to be seen the more he got with the fed giving them what concerned them in december and certainly beginning in october when the markets started to sell off, but earning season is very mediocre. and i think that the earnings growth rate this year is clearly slowing and could be close to zero. >> i feel like that's kind of baked into the market at this point. i feel like we've had some people who have come on and said you might be looking at an earnings recession, but that's

okay i mean, it's odd that while these earnings have been coming through and there's guidance that's been concerning, but even through that you've looked at the market continue to pick up ground. >> i think the fed has really helped out but there's only so much we can rely on the fed. we have to ask ourselves, why is the fed all of a sudden flexible. >> right. >> it's not because they achieved their goals of a 3% fed funds give or take on a normalized balance sheet they're pausing because they see something they don't like. yes, backing off has carried us to this point, but if you start to see slowing, well, that's going to be a problem because in the last few times the fed stopped raising interest rates, it was right before a recession. >> but you don't think that some amount of slowing has been baked into the cake with this already, just because i feel like the market got to that point before the fed did. the market thought things are really going to slow down. the fed is saying, no, no, no, we're going to continue on this pace for right now but maybe now that the fed has gotten in line with what the market is thinking, maybe it

doesn't necessarily spell as much bad news down the road. >> the s&p 500 is really no different than where it was a year ago we had this gigantic chop fest over the past year but if earnings really start to slow down, which i think you have the potential of because 40% of revenue sourced overseas and know there's a clear slowing overseas, at the same time, profit margins are moderating, i think that becomes a challenge what's the right multiple to put on that? that's the key question. >> drew, let's talk about what we heard from the fed because everywhere i look on twitter, there's pictures of doves being released, that this is the new fed. they are on hold and nothing really matters for the next six months would agree with that? >> i would say so. look, in december they told us they were going to go twice this year nothing i heard since then tells me they're not going to follow through on that. so that bakes in a six-month pause. what they really need to see is they need to see the curve steepen up a little bit.

see ten year yields move higher and need to see some inflation that's the point they're taking. that's the thing that will drive them. >> before they raise rates again. >> before they raise rates again, they need the all clear from the market. the all clear from the market will come in the shape of the treasury yield curve they paused to peters point because they saw something in equities they didn't like. maybe they didn't like the earnings slow down maybe they didn't like the way that was going to filter through, but what will really tell them they can go is if the shape of the yield curve means they can hike rates without inverting the yield curve. >> although when the fed first announced all this on the meeting last week we saw the yields plum et on the ten-year. >> two-year yields fell further. it steepened out a little bit. over the last week we've seen the ten-year yield steepen up a little bit everyday. gone from 15 to 18 basis points. they need 5 or 6 basis points to let them be able to go. >> at what point should we be concerned that the bond market is telling us something

nefarious. in the last time we saw this kind of streak was in 2015 muscle memory brings you back to the time in the summer 2015 when there was a chinese slow down, when this was going on with the bond market and equities didn't look good after that. >> right also to confirm that the german ten year is down 15 basis points the japanese went negative again. there's real worries about growth if you are now driving those yields back down to where they were. especially with the ecb basically done with their purchases. >> the message in the bond market or message in the equi equities market in terms of one you listen to, the one you follow >> the equity market rally was more relief that the fed has backed off, not that things are getting better the bond market is clearly expressing worries about global growth. >> where are we in terms of the economy right now, what would you say, drew. >> in the u.s. i think we're actually doing very well i think for us we're focussed on the consumer, looking at how the consumer is doing and all evidence is the consumer is doing just fine.

and i know there's a lot of concern out there about consumer confidence having dropped, but when expectations drop and the actual current conditions numbers stays the same, what that tells you is they're responding to noise, so there's something out there, oh, there's the president, there's this trade stuff. they're hearing all this bad news, but they're not actually experiencing it themselves. >> they're not changing their behavior as a result. >> they're not changing their behavior as a result. >> what about ceo confidence ceos lose confidence, then they don't spend the way we had been anticipating, they don't create jobs, they don't build things. >> that's where the equity market volatility comes in if there's a lot of equity market volatility, ceos begin to fear not hitting their targets, not hitting what they told people they will hit and that can effect hiring and investment decisions. that's something you have to watch very carefully you have to remember, though, ceos are just like normal people they just have the power of hiring and investment behind them >> just control our fates in their hands, that's all. >> yes

but if they get scared, lots of bad things happen. they get scared for the same reasons that a lot of other consumers get scared it's easy to say that they're up here and looking at something differently or they've got a bigger picture they experience the same fear as everyone else does we do have to watch when the equity market is volatile, they're responding in a way that's negative. >> very quickly, all these concerns about china's economy, other overseas economies that are slowing down in europe, should we worry about that washing up on our shores >> we should be mindful of it. but if you look at the correlations between economies of late, there's a little bit of a decoupling there are reasons some of those other countries are slowing and reasons why the u.s. isn't the last time we saw a lot of what we're seeing today is like 15 and 16 where we had the energy price declines. and the u.s. consumer kept us out of a recession even though the corporate sector had more weakness. >> gentlemen, thank you both for coming in today. great to see you both. >> thank you >> great. news just in involving po

papa johns after they have taken a stake in the pizza chain worth about $2 billion jeffrey smith has been named chairman according to this report announcement is expected later this morning starboard is said to be focussing on helping papa johns market higher quality pizza. remember on friday, the stock was down to the tune of 8% because it said it didn't get any good offers that valued the company appropriately. so we're seeing this as a response stock is up 8% >> there you go. >> gained it back. coming up when we return, two senators calling for a crackdown on corporate buybacks. we have the details on that later. when we return, we're going to talk about president trump's economic -- no, we're going to talk to president trump's economic adviser kevin hassett at 8:00 a.m. eastern time. you do not want to miss that interview. stay tuned you're watching "squawk" right here on cnbc ♪ sfx: [phone ringing] you still have service? call the insurance company

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welcome back, everybody. we've been watching the u.s. equity futures this morning, and you're getting off to not much of a start one direction or the other. dow futures indicated down just over 16 points s&p futures down by less than a point and the nasdaq is flat at this point you are talking about some big gains that you've seen in recent weeks, though, for all of the major averages the dow and the nasdaq were up for their sixth week in a row

last week and that's the longest streak since back to november of 2017 we'll continue to watch and see what happens the dow at this point is 7% below the highs. the intraday highs it set back at the beginning of october of last year. and clorox just reporting its quarterly numbers. consumer products company earning $1.40 a share for the fiscal second quarter that beat the streak's expectations by 10 cents. revenue matching with the bottom line helped by a jump in profit margins. that is stock is up more than half a percent. >> we might rename this executive time we'll explain what that joke is just a second for those who weren't on axios yesterday we're talking this morning about buybacks take a look at today's new york times senate chuck schumer and bernie sanders wrote an opinion piece calling for limits on corporate stock buybacks and blame the practice for contributing to income inequality and tax cut for fuelling a surge in stock

buybacks they should pay their workers better wages and provide better benefits requiring corporations to here, i'm going to quote, address needs of workers and communities before the interest of wealthy stockholders discuss. >> how do you enforce that that's just -- >> the stockholders are the owners of the companybasically and they're the ones who would reap the first dollar if there's anything to reap at the same time, i think it's clear that they're hitting on the exact criticism of the corporate tax cuts which is, fine, cut the taxes. where are they going to spend the money on, spending on buybacks and dividends and not investing in the company, investing in infrastructure, how does that help the economy that's a fair debate. >> every dollar goes back into the economy. >> every dollar goes back into the economy. >> agreed. >> i'll go farther there were debates when the tax cuts were first put in place about whether this was going to happen and it has happened this way. whether you could have created incentives for the tax cuts to

be used for capital expenditures as part of the tax cut project. >> we've seen it before in terms of the repatriation aspect, you could have tied that to investment in capitol which we've seen in the bush administration that wasn't done but i mean, as you said -- >> i would be more inclined to do something along those lines if i could have figured out a way to do it. >> becky, you think they had spent 100% on dividends, corporate buybacks, that ultimately would have filtered down any way >> right look, i would rather see them spending it on other things, but i think all money goes back into the economy. and i think you would have a pretty difficult time. maybe offering incentives the one thing. i don't think you can take a stick approach on this, carrot approach, this is a way you would be treated better these tax dollars were treated better if you were putting them into certain plants but money is fungible you can see games played with those type of things, too. >> isn't there a concern about -- >> i had planned to build. i'm saying i'm creating the jobs

for them now you're going to charge me less. >> a lot of the stock wealth is in sort of the higher tier, right? the upper tax bracket people who that money can flow elsewhere, too. they're buying into other equities outside of the u.s. >> it doesn't all go to the wealthiest people in america i mean, it's not going to poorest for sure because they don't own these assets. >> a lot of constitutional pollings, yes. >> i think we paint with these broad brushes when we tend to have these conversations and talk to somebody about larry fink these are teacher pension funds, fireman's pension funds benefitting too. >> they like their stock is worth more on a buyback. exactly. it's clear what senators are doing, they're taking the blunt, political tack here, it's a fair debate, but i think as you point out, andrew, more sophisticated

mechanism tied to certain investment back in, then that might be a better way to go. coming up, much more from our guest host ed lee later and we'll be joined by grant lee, the 14-year-old who discovered apple's facebook bug more than a week before the company took action a quick check of what's happening in european markets right now we have red arrows here in france as well as germany. stay tuned ♪ we're can kids in america at&t provides edge-to-edge intelligence, covering virtually every part of your retail business. so that if your customer needs shoes, & he's got wide feet. & with edge-to-edge intelligence you've got near real time inventory updates. & he'll find the same shoes in your store that he found online he'll be one happy, very forgetful wide footed customer. at&t provides edge to edge intelligence. it can do so much for your business, the list goes on and on. that's the power of &.

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what is the facebook exactly? >> it's an online directory that

connects people through colleges through their social networks there. you sign on, make a profile about yourself by answering some questions, entering some information such as your concentration or major at school contact information about phone numbers, instant messaging screen names anything you want to tell. interests, what books you like, movies and most importantly who your friends are. >> it's a throwback monday today. we showed you that clip from april 2004 because today is the 15th anniversary of facebook's -- >> i'm more interested in becky than i am in zuckerberg. can we roll that tape back for a moment >> please don't. >> there we go there we go. >> all right i'd rather look at zuckerberg. he was still in college when this happened. this is how long you're going back to this okay, take that off. >> the importance is becky has not aged a day >> yes, i have i look like i'm the there.

12.2 billion users is what they've built to over the last 15 years ago you think about what they've accomplished over that period of time >> the thing about facebook in particular, they had earnings last week. theiractive base in the u.s. has not grown in the past six quarters. >> but their revenue per user has. >> here's what's interesting there is this sense that facebook is essentially tapped out in north america meaning there's no -- there are not other people to get onto facebook so the growth is going to come -- >> except for joe. >> except for joe. >> and me too. i'm not on i could be the incremental user. but as long as they increase revenue per user, doesn't it not matter whether the base increases? >> you can only flood the timeline with so many ads in the first place. and then the growth is really going to come from overseas. we're talking about, you know, how economies are shaping up is the u.s. slowing down i mean, they're not in china around the rest of the world, that's where not just facebook

as well as netflix is a growth story all overseas. >> do those u.s. brands hold sway or are there other brands overseas that will give them a real run for their money >> netflix is a good example of that where they recognize being first is so important for brand recognition. that's where they're spending big even just to be there. and i think that's going to be the big play for a lot of the growth issue, the growth equities that we're talking about, we're looking at. and back to an earlier point, you said earlier about facebook versus google being dinged by apple. apple looking at -- someone made a point that i think i saw this on my twitter feed, google has a money relationship with apple where the safari web search you're using -- google pays them money. >> here's the die nam you can between these companies. if apple were to say, look, facebook you're -- >> you're bad for privacy, bad for users. >> we're going to shut you down

even for a week or two just to ding you but who really has the more power? i think there are users who might say to themselves, you know what? i'm getting an android next time this happens >> i don't want to have to live under this apple regime, right >> right that's where it's very sensitive. >> i think there's an actual balance. i don't think it's just apple holds all the power. i think facebook is trying to become the operating system generally anyway i think that's where apple feels a threat >> but for tonight for apple that's earnings call, spending on getting into getting into line with privacy rules. i think that's going to be an important issue. >> and the biggest sort of issue for them is going to be youtube in terms of bad actors and all that stuff happening it's one of the few owned and operated they have when we come back, the s&p posting its best january in 30 years spp it a sign of better things to come for 2019?

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any fears of a possible recession? we check out the new forecast for growth artificial intelligence during the big game. >> i call him robochild. >> that's a funny one on ai, but the race to dominate this high-tech frontier is real we'll check out the countries in the lead and sooul bowl ad controversy. >> my king, this corn syrup was just delivered >> that's not ours >> budweiser takes aim at the competition and another group isn't so happy with the ad the second hour of "squawk box" begins right now ♪ live from the beating heart of business, new york, this is "squawk box. >> good morning, everybody welcome back to "squawk box" here on cnbc i'm becky quick along with andrew ross sorkin and melissa lee. joe is off today been watching the u.s. equity futures and we've seen things

kind of fluctuating right around the flat line. dow futures indicated down by about 18 points. s&p futures down by less than a point and the nasdaq up by just over a point this morning, the new england patriots fans. tom brady, bill belichick, and the the team winning it will be interesting to see the ratings which will come out later today. we'll have more on one of the bigger ad controversies coming up as well but tom brady now the most winningest quarterback in super bowl history with six rings that he's going to have more than enough to fill one hand >> we do know a lot of people still watched netflix even though they were humble bragging their ratings were only down 32% on super bowl night. big gains this morning coming from papa john's. take a look at this stock. because starboard's value has

taken a stake in the chain ceo jeffrey smith is going to become chairman of the board at papa john's. the news becoming official just moments ago. that stock up a little over 11% right now. clorox beating consensus forecast by 10 cents even though revenue matched street forecast. bottom line getting a boost from a jump in profit margin. that stock up nearly 2.5% this morning. and there's google parent alphabet expected to report fourth quarter profit of $10.82 per share. that's the number to beat. it's up 11.5% from a year ago. revenue expected to jump more than 20% to just under $39 billion. so watch for those numbers the economy showing more signs of growth following the january jobs report. steve liesman joins us now with a follow up to the big report. >> the friday jobs report

suggests the down slooid is not coming simple two words over the weekend. what slowdown? they don't see it in the data there. jpmorgan said things could pick up now that the shutdown has ended. jpmorgan does see gdp slowing this quarter and the consensus on the street is for a weaker quarter. let's take a look at the rapid update we got in the afternoon 2.7% still tracking the fourth quarter. that's down about 0.2% over the past several weeks and there's the forecast it's a forecast for q2 still a little bit above trend, but down from the 3% we had. jobs support was not the only strong data. another strong jobs report like we had in january and growth forecasts will tick back up if sentiment turns around the consensus is also that the fed is not going to react to every report from here on in it's going to likely re-examine

the hikes, i would say, after a quarter or two >> we're on automatic pilot for a little bit like we weren't before >> two things i want to watch though i think the key concern about the growth outlook is overseas so we're going to watch exports and we're going to listen to what companies say about overseas demand. some chunk of s&p 500 comes from overseas >> we had the last hour about consumer confidence in there even if they say they're a little freaked out about some of the headline news, they're still spending the same way. how do you track what ceos are saying if they are concerned about the headline noise if they are still investing? >> there aren't very many really good -- not saying reliable. they don't do a good job of indicating what's going to happen there's the nfib which is a small business one there's brt. there's a few others

we do some here at cnbc. i've never seen one well correlated with outcomes i think the executives are just like the rest of us. they see something, they react whether it's a change in investment is another story. >> the 1.2% forecast for q1 is based on what since there's no data you said it's a forecast we don't have data what is that based on? >> it's based on their look at the fourth quarter and projecting that forward and other factors that are out there. i also think there's some unknowable discount in there for the q1 weakness that i think has them always these days depressing the first quarter outlook. and, for example, i looked at jpmorgan they're back up to 2.2% or 2.3% for the second quarter >> assuming we don't have anoth another. >> let's look at where the economies and markets are

headed guys, great to have you with us. you say there's troubling signs of the economy when it comes to spending and investment by not just business. but also households. >> yeah. so we've been seeing housing weak now for a year or so. and it's really started to tail down the last couple months. and so on that, you know, we've seen housing lead the last couple of recessions housing is a much smaller part of the economy prior to the financial crisis we don't think it's going to lead to a recession. we're expecting q1 to come in around 1 357b9%. >> how do you gauge the true strength of the u.s. consumer? look at how they're spending with things like retail sales or the housing market and say that's really how i view the u.s. consumer at this point? >> so we look at how is personal income growing, how is jobs, wages -- we're seeing wages pick up now and as these employment numbers

have shown, that part of the economy is actually doing pretty well but there is some weakness that they just don't seem to be willing to buy houses, to do these large purchases. so kind of the confidence numbers look a little stronger than the actual spending of the consumers is >> and of course, mortgage rates have come down tremendously over the past few months. so the weakness even despite the comedown in mortgage rates john, i want to go to you. let's say there are cracks in the consumer story i don't know if you agree with allen or not but does that cause you to have some concerns about the u.s. stock market >> thank you, melissa. good morning allen makes some good points about housing and also autos but the consumer is fully employed with wages rising confidence came down a bit obviously because of the shutdown and the market selloff. but the consumer is spending on experiences. i think we need to be mindful of that as well the real key for the sustainability of this expansion as well as whether or not the stock market can keep running is the resumption of business

spending i think that will really be the key. businesses spent a lot in the first half last year then with the trade uncertainty, they slowed down significantly and to the degree that we get a degree of clarity on trade, businesses can resume and invest which helps prevent income statements from suffering. also a big help to margins thereafter >> when i look at what economists are saying about 2019 and the uncertainties out there, a lot of it has to do with the government and the tax cuts. there's three components to this component number one is what will be the level of refunds did people underwithhold or overwithhold in 2019 second, the corporate tax cut has had an impact on investment. in the last year but we don't know about the effect this year. that's two the third element is government spending there was a lot of stuff appropriated in 2018 this is not relative to the tax

cuts some economists are seeing a lot of government spending still leftover where do you stand on that >> we think the extra stimulus from february and march last year, that will carry over for the first few quarters and boost the economy a little bit but it has a lot less effect than it would have if it came when we were in a recession. usually when the economy's doing well, that government spending often leads to a bit of a pullback from the private sector because those resources can't be deployed as you get further out near the end of 2019 and into 2020, that's coming off in growth. >> you know, john, going back to your point about the uncertainty holding back, for instance, business spending and investing as we saw in the first half of last year, it sounds like you're thinking ahead to a back end loaded year in terms of gains for the u.s. stock market. but we've seen a monster january. so how does it play out?

>> if you could give me a flat by march 1st, i'll take it i think we could hold the gains. as you know, february is a difficult month. but to the point about clarity on trade, business spending again. and steve made the point about the consumer, amt relief didn't factor in last year. so we look at consumer and small businesses getting about $200 billion this year. look at government spending. about $150 billion then immediate expensing relief around $80 billion that's more than $400 billion which is a 2% tail wind. so to your point, melissa, i do think it could be more back half related to the equity market in spite of the great january. >> john, send me those numbers i need to see those. those are big numbers. >> i'll get them out to you shortly. >> did you see this jpmorgan report ben white highlighted >> i'm not sure it's the same one. >> on real estate. >> and the effect of the tax cuts yeah i started reading that this morning. there's been a bunch of studies. >> and what it's done to depress

real estate prices and what that could mean to the economy. >> that's no surprise, right >> no. what i'm surprised by is it has not had -- they didn't make the correct correlation to the drag on the economy >> you hear anecdotal stuff from these areas. for example, parts of texas. you hear impact of howing prices there are parts of new jersey where it's true. there's a fed study swtudy as well on this >> you are talking about high-end housing on all of these points it's going to be met with the cry me a river >> it was saying in salt states not just high end. all the way down the line. that you're actually seeing prices go down marginally in some cases, but a lot at the high end but even at the lower end -- >> you raise spending to offset the corporate tax cut. that is not a meaningless

gesture. >> while you see those higher end prices coming down a bit, that is part of the market that's seeing more sales so it's not just the salt pushing things down at that upper end. >> john, wrap it up for us you see a 2% tail wind i think is your final number there where do you invest in the back half of the year where do you want to be? where do you see the biggest beneficiaries being? >> it's kind of an out of body experience but that's what we're doing. we're leaning toward value we're leaning thwart industrials which is you may be aware looking at the charts the industrial sector is now above its 50-day moving average and 200-day moving average it tends to be most highly correlated so we're looking at industrials, financials, and technology as our sector picks for 2019. >> john, i can't let you go. 2% tail wind on top of a 2% wind

is a 4% wind is my math right here? >> not necessarily we're looking at 2% to 2.5% economic growth. but the point i was making -- yeah, that's not a real number >> oh. nominal number okay >> exactly but i just wanted to get the point across while there's concern about the consumer, there are still -- or fiscal tail winds to the point you made earlier about the $300 billion spending package >> all right gentlemen, thank you so much >> thank you. >> thank you when we come back, the reviews of the super bowl ads have been mixed, but one bud light commercial is generating some controversy within the beer industry stay tuned you are watching "squawk box" right here on cnbc many weather

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♪ welcome back to "squawk box," everybody. we've been watching the futures this morning and they have been hanging right around the flat line they are still there dow futures indicated down by less than a point.

s&p futures indicated up by less than a point don't let this lack of volatility fool you. we've seen six straight weeks of gains from both the dow and the nasdaq in fact, that's the longest weekly winning streak we've seen for those two indices since november of 2017 the dow is now just 7% below the intraday high it hit last year you are talking about a lot of momentum we seen in the markets with the dow up by 1.4% last week also a bud light ad in sunday's super bowl is sparking some controversy. the corn grower's association marking bud light for boasting they don't use corn syrup. miller coors also pointed out it does not use high fructose corn

syrup but that abm inbev does in several of its products. a spokesperson says anheuser-busch will continue to invest in the corn industry. bud light then got another jolt of social media tv with the tie-in ad with "game of thrones. dragon arrives, burns everyone to the ground. then you see the logo for "game of thrones" for the cross promotion between the two which totally threw me >> the whole thing threw me a lot. >> what was interesting was they killed off the knight, right which is probably one of the most visible sort of mascots of bud. and they allowed that to happen. but apparently the controversy was around the violence surrounding the ad and actually seeing him gored meantime, a lot more on "squawk box" when we return. the race to dominate artificial intelligence what does it mean for the next

frontier of tech we'll discuss that story the battle between the u.s. and china. and later, the chairman of the president's council of kmim advisers kevin hassett "squawk box" returns in a mome nt

robochild, all turbo tax cpas are human beings with real emotions i'm sorry. but you're never going to be emotionally complex for that job. >> is that true, papa? >> yes >> i am sad. >> see what i mean >> he's still perfecting emotion. >> that was a moment from one of the super bowl advertisements sunday night featuring the challenges of artificial intelligence and addressing fears over its potential threat to the workforce our guest has spent more than three decades researches artificial intelligence. he's now funding a hundred strartups in this field. great to see you >> great to be here. >> were you watching the super bowl >> not really. >> so you missed that. the whole idea, by the way, is that ai will never really have the emotional sort of depth to

deal with in this case the emotions of tax returns. so this is sbointuit with -- ort was turbo tax. filing together. >> well, i think on the one hand it is true ai will not have true emotion that will appeal to people but the process of doing taxes will 80% be done by machines the humans will be displaced in the next probably five years maybe ten. >> let me ask you a question we're going to be talking to kevin hassett a little later we're going to be talking trade. within that is a battle over ip. if you were advising president trump on how to deal with ai and ip in the negotiation, what would be the issue we would do it for president xi if you wanted to pick sides. >> sure. i'll give a generic analysis ai is not an area where u.s. dominates in ip.

and that's clear that people must understand that because it doesn't seem to come across clearly through some of the new controlled documents one measures ai by how advanced the products are and the implementation and who has a better market share and who has more users and by that metric, china is caught up with the u.s. in implementation and a lot of the fundamental algorithms cannot be really patented they've already been put in open source so we find that the ip discussions are real, but not -- does not pertain at all to ai. >> is there any chance that ai right now is just completely overblown? i know this is your favorite topic. your favorite topic of ai being sort of the future which it is but the reason i say it is you hear from waymo or uber on terms of artificial intelligence driving driverless cars. and it seems like they've hit a sticking point in all of this. it's actually harder than we thought.

>> well, ai has to be to any other address. that's really hard maybe 25, 30 years >> 25, 30 years? >> for that to happen. >> okay. >> but if you just want trucks to drive much more safely than humans on highways only, that can happen in five years so i think it's important to take it stepwise. >> but just a couple years ago people were saying 2020 you would actually get in the back of the car and say take me to the office and the car would take you there you say that's 25 to 30 years away >> it can do a part of that tesla can do part of that. but not say it's as good as a human in every weather, every street that is going to take a long time >> and until you reach that perfection, you are not going to see mass zploideployment of it, correct? >> if it's going to replace all truckers, that's millions of

jobs too >> let me ask you a question you're investing in all sort of small companies. >> yeah. >> that are hopefully going to become big companies one day and you've talked about sort of data being the new oil >> yeah. >> do any of these small new players have a chance against the googles and facebooks and apple? everybody else who's got the data if you already had the oil, it would be much easier to do if you don't have ak stoesucce o that data, i imagine it would be hard. >> you have to change the game so autonomous vehicle is new game ai for health care, manufacturing, they're all new games. which there's no advantage from the existing giants. >> can you extrapolate china's lead in ai to what this means to how the two countries the u.s. and china stand in the future

economically does this necessarily mean that china eventually becomes more -- i don't want to say a superpower, but has a higher growth rate? you know, how does this help china? >> feel free to advertise for my book "ai superpowers." the premise of my book is that u.s. and china will be by far ahead of all other countries >> sure. but how about them against each other? >> i think it depends on whether fundamental research breakthroughs come out if they do, u.s. will be ahead if not, china will be ahead. >> your alternate point to that is this definitely expands the inequality that other nations will see as a result this is a magnifier of that. >> it's a huge magnifier between countries and among people in different brackets i think it's a huge problem because countries hoping to use the china or india model won't be able to do it so i think it's important that u.s. and china both take the responsibility for the whole

world. >> did you see marc benioff make a comment about this in davos that ai will have to become a human right? i didn't know what that even meant. >> i think he meant the inequality multiplier. as applied, for example -- as seen in san francisco. right? where these new expensive high-rises are being built for the ultra rich enabled by internet and ai. and while people in the lower cost housing are now homeless. so something needs to be done by the government or by corporations or preferably by both to deal with the inequality that's created zblung that's happening? >> it's already happening -- >> no, do you think the way to try to deal with the inequality is happening >> it's not. marc championed the san francisco effort to take corporate tax. there are the companies like amazon trying to deal with

retraining of the employees who are displaced. but those are small efforts. i think governments have to take a stronger view on this. this is kevin in the "new york times" after davos which you attended he said, they'll never admit it in public but many of your bosses want machines to replace you as soon as possible. that artificial intelligence and automation could have for workers. they're racing to automate our own workforces to stay ahead of other companies. >> yeah. i responded to kevin on twitter. i agree. i think action speaks louder than words jeff bezos, marc benioff have spoken by taking action and doing things about inequality. the other ceos are often saying there is no inequality ai will enhance all jobs that's a lie many are saying we'll take care of our employees let's see what they're doing we'd like to see some action.

>> what should happen? is there a public policy issue in terms of how you think the government should -- are you subjecting the government to be regulated. >> well, i think that's too much to hope for. let's hope corporations take the first step now, governments can give tax rebates for companies that do retraining because this is not about mannive unemployment this is about training for new jobs that would be created for example, senator mark warner has put together a bill in the senate to do retraining budget >> i heard a fascinating sort of view that payroll taxes sexually are creating an incentive for ai >> payroll taxes >> because the employer pays half -- >> if you don't have to pay half of the 15.3% or whatever it is >> it's basically incentive to

take people off the payrolls and that maybe what you need to do is create a payroll tax, if you will, on the other side of it >> on each robot >> on each robot >> it was proposed on the west coast. >> yeah. the robot ideas i think are a bit farfetched the workers own shares of the robot and shares the income. it's really not robots this first wave of displacement will be through white collar workers, displaced by software in the cloud >> you're not going to see a row bout >> you don't see the robot, how do you tax it? >> great to see you. chairman and ceo and author. "ai superpowers. coming up, another earnings blitz. alphabet, chipotle and many more on the calendar this week. we will have a preview take a look at u.s. equity futures. we've been hugging the almost

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we are watching three big stories this morning taking trade we'll get an update.

earnings season overdrive. another big week of quarterly results for investors. we've got alphabet kicking things off we'll have a preview and after another gang buster jobs report, are recession fears totally gone kevin hassett will be our spiagut mi up ecl escongat the top of the hour. "squawk box" will be right back. . failure is not an option. more than half of employees across the country bring financial stress to work. if you're stressed out financially at home, you're going to be too worried to be able to do a good job. i want to be able to offer all of the benefits that keep them satisfied. it is the people that is really the only asset that you have. put your employees on a path to financial wellness with prudential. bring your challenges.

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welcome back to "squawk box" this monday morning. take a look at the futures ahead of the market open this morning. right now we are in the green margely on the dow up about four points s&p 500 looking to open about a point and a half higher. meantime, take a look at shares of ultimate software agreeing to be bought by pe firm a total of about $11 billion that price is more than 19% above the close. you're looking at that stock up 18.5% with i assume our last

little chunk of it there the u.s./china trade talks are quiet right now as chinese new year is about to begin, but there are still many issues facing washington and its north american trade partners. kayla tausche joins us with more >> good morning. there still a s a lot of work going on with china behind the scenes next week the treasury secretary and lighthizer will go to beijing. they are going back and forth to get a deal on paper. this would likely take the form of a memorandum understanding. once those points are agreed, president trump and president shwe axi are expected to take a meeting president trump said he wanted to make a deal and praised xi but said he wasn't giving in just yet >> we've put massive tariffs on china. it's hurt china's economy badly. i want them to make a fair deal. we have a good chance to make a deal i don't know that we're going to make one, but we have a chance

if it's going to be a deal, it's going to be a real deal. not a stopgap. >> meanwhile, the white house is working on a campaign to support the business world for the new mexico/u.s./canada deal. and gop senator pat toomey says democrats are still resisting it quote, i don't see this as a high priority for speaker pelosi maybe i'm mistaken i don't think the path forward is all clear brady and grassley don't see a path forward without ending steel on aluminum tariffs. there are several trade fronts on which the white house is trying to get across the finish line >> and more importantly, these are some trade talks that the market has written off as a done deal not china necessarily, but the street is leaning towards that getting done the new nafta is something the

street is saying it's a done deal move on. >> behind the scenes there's a lot of consternation, a lot of hand wringing about a lot of these potentially protectionist provisions the gop says, well, you know, those were put in there to win over democratic support. but the democrats actually say it didn't go far enough. so there seems to be some issue with finding some sort of bipartisan compromise on this deal it has a signature from the three countries. that's why the market believes it's a done deal but there could be some changes, some tweaks as the white house tries to drum up support >> look. i think the reason the market thinks that is because during the entire negotiation for this, democrats were some of the loudest voices saying if the president yanked nafta, it would be horrible for business so, you know, you think that those people when push comes to shove ultimately will get on board with this. we'll see. >> and one of the strategies is to threaten to rip up the old nafta that's still in place until this new deal becomes effective. and really hold lawmakers' feet

to the fire who say they won't support this you either get nothing or you get this new deal. the hope is that they would support this new deal. >> kayla, thank you very much. kayla tausche. for more, let's welcome daniel rosen. thanks for being here today. >> great to be back. >> we are talking about just a little over three weeks before this deadline comes up that's the march 2nd deadline. how would you bet at this point? >> it's that point in the semester where your finals are looming and you think maybe you should have been going to class. there's an incredible amount that hasn't been done yet, not even in discussion you have uncertainty about what we're looking president some folks on the chinese side seems to think an okay outcome means all the special tariffs come off. whereas most folks are still feeling that while we keep the

existing 260-some-odd billion dollars in place, we don't ratchet it up. because china's not going to be able to deliver all the things that the president expects to get in a non-stopgap version of the deal it's going to take six months to a year for that to show up >> what are the implications what does that mean? >> the implication is that it's easy to tell for each size there's only so much they can do if their leaders aren't willing to make a hand shake he has managed expectations up so much about what this deal is going to mean. if you start to ask the experts, what does a real deal have to deliver? it's going to require some grueling changes on china's part that one doesn't see a whole lot of evidence right now the chinese are ready to make. >> how do you view president

xi's hand that we showed further weakening in china president xi a couple weeks ago at a meeting of top leaders warned about the political and social instability from a slowing economy. how much pressure is there and is just no further escalation to tariffs, could that actually be a win in china's view? >> so it's good we have like a week here during chinese new year to kind of sit back and ask some of those deeper questions he's got himself in a little bit of a trap. this was foreseen if china didn't get its reform work done, the economy would slag and slow down but unfortunately one can't say take another year to get your house in order and get ready for reform because that's not going to work with the american calendar >> the chinese have already put

together a proposal which would address some of the u.s.'s concerns when it comes to foreign direct investment and intellectual property transfer is that not enough >> well, i mean, what the chinese are about to do is pass a new foreign direct investment law through their national people's congress which happens after march 2nd. so we won't be sure about that until after the deadline comes up and those are going to liberalize a bunch of industries, but leave dozens of sectors where they are joint venture requirements where a company can't operate in china owning its own business and own intellectual property yet. that could all be pulled forward and china could say you know what we're going to stop screwing around with these five-year phaseouts and kind of half -- cut half the distance here and just abolish all these joint venture requirements now and show that they're quite serious. that's what we should be looking for. >> what are you telling businesses wanting to do business in china right now?

>> our view is that 2019 is not going to deliver stability for anybody in china one way or the other, if they reform, don't reform, both pathways are going to be much more bumpy than 2018 was -- >> so all of this is a side show neil ferguson said the u.s. and china may make a sweet deal, but relationships will keep souring. then says what should we call it should we call it a cold war, basically? is that where it's headed? your perspective of what you think is going to happen on the actual details of this particular trade issue >> we're going to need new analogies. a cold war is going to describe part of it but not other parts of it. the russians never anywhere close to the technology cutting edge a edge as you heard in your previous interview, the chinese absolutely are there's more happening out of silicon valley in the united states how much can china really do if there's a hard kind of coming apart of trust with one another

which is you can have a sweet deal and at the same time have souring relations which means politicians say we got done what we needed to get done. >> we have huawei going on venezuela. >> that's not even open for discussion our department of justice is going to continue to get tougher and tougher on this technology stuff. going to get harder and harder for chinese nationals to skud work in the united states and high-tech. that stuff is not open for discussion here. so we haven't really started having an adult conversation in washington for that matter bay ching as to what the future is going to be. >> thank you for coming in today. dan rosen. coming um whe ining up when, the game of earnings sort of like the "game of thrones. >> but not really. >> after alphabet will kick off a big week of earnings we'll talk about that. we'll talk expectations and so much more enwh "squawk" returns right after this

another big week ahead for the markets and the focus will be on big tech and the faang names. dom chu joins us with some of the morning movers >> good morning. many of those big drivers of that big gain we've seen have come from key tech and communications services stock since the christmas eve move some good and maybe not so good in terms of the overall scheme of things.

shares of facebook are showing fractional gains on premarket volume they are up 10% since reporting earnings last wednesday. that stock has been punished over the last year but better metrics have some of those concerns eased for the time being now, not the same kind of result when it comes to what's happening with amazon which is relatively light volume. it's down 5% since reporting last thursday given a sales forecast that fell shy of expectations now, that's an interesting one to watch there as well because those had been stable going into earnings netflix shares also showing some stability on light pre-market volume lost around 5% since reporting its results earlier this season. way back drawing more subscribers in and growth expectations are very high those shares something to watch there as well. and that brings us to today and

like you said, alphabet, the google parent company. it will post results after the close today and is another closely watched barometer of the overall tech and communication services industries. heading into the event, around 80 or rather 98% of analysts polled have a buy rating the other two have a hold. and the average target price implies a side from current levels there is optimism there from analysts pricing in a 4% move up or down on the heels of those earnings reports. so andrew, google a big one to watch today. back over to you >> joining us now with a preview of alphabet's earnings, michael graham senior equity analyst is here this morning what are you expecting >> good morning. >> good morning. nice to see you. sorry. i should have -- >> no problem. we're looking for a good solid quarter. the two things they need to do is number one, revenue growth needs to be above 20%.

we're looking for 20.5%. that's a key psychological barrier for folks. that's their search engine rolled up. the second people will be focused on is gross maher gin performance. gross margin has been coming down steadily over the last few years. largely because the fastest growing revenue items are the lower margin revenue items that whole shift should start to moderate going forward so we're looking for a much slower pace going forward than the last couple of years if they can do that, they should be able to post solid earnings growth going forward >> in terms of expenses, what are you expecting? >> well, so far they've been basically able to take this compression, cut operating expenses with good sound management and keep it flat. i think they will continue to too d.o. that and keep that flat

margin area in place once you take that and layer in stock buybacks they bought back probably $8.5 billion worth of stock this past year in 2018 we're looking for the same in 2019 that gets you at a decent earnings growth. >> you recently upgraded alphabet to a buy rating in terms of where it stands versus the other ones that dom reported, if you were to put pressure men today in the stocks, which would you choose >> we do like google with a a pie on it for ten years. pit on a hold 18 months ago because we thought it was going to be a key thing. then recently reverse that view now that we think that's behind us we like facebook right now because we think it's been overpunished relative to the rest of the group. we also like amazon and netflix quite a bit as well. so all four of these faang stocks are, you know, good for us we think that google is the safe

play it's going to be the safe haven, the defensive name in this group because, you know, the range of expectations are still fairly tight. and it's the most reasonably valued name out of the faang stocks so, you know, in a period of market volatility, this is a defensive stock that's not going to move as much as others. twlst probably upside. >> you cover netflix, by the way? >> yes >> did you see the tweet they put out last night they said their ratings were down 32% during the super bowl and i was curious whether that was -- was that a humble brag? what was that supposed to be >> i think the whole thing with netflix is they have made this philosophical decision to stay away from live and not get into the whole sports rights game which is not nearly as profitable as their core business they're all about on-demand viewing. and they want to stay that way >> so they were making a point with that.

>> i think what they're saying is there are going to be times when viewership is going to move away from us, but it's not going to be very often >> are they trying to say hey, guys, look how much people are still watching us during the super bowl >> that could be a part of it. >> that was my takeaway. i didn't know if it was supposed to be something else. >> if the country is supposed to be watching the super bowl, that is something for them. >> nice to see you when we come back, reading the economy from the white house. kevin hassett, t will be our gut next and grading jay pollft owe aerne year on the job. "squawk box" electric back in a moment it's time for the ultimate sleep number event on the

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dealing with today's expenses... while helping plan, invest and protect for the future. so they'll be okay? i think they'll be fine. voya. helping you to and through retirement. the strength of the economy. tariffs are biting and stocks are volatile, but jobs numbers keep crushing expectations kevin hassett will join us in just a few minutes the fed's dangerous game after a trio of first-year stumbles for jay powell is a criticism of the fed warranted and the apple whiz kid as the final hour of "squawk box" begins right now. ♪

live from the most powerful city in the world, new york, this is "squawk box. >> good morning, everybody welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with andrew ross sorkin and melissa lee. joe is off today you're watching the futures and right now things are relatively flat dow futures indicated up by a point. nasdaq indicated up by 5.5 this all comes after big gains we saw last week and many weeks before that. the last six weeks for the dow and nasdaq we'll continue to watch those. the dow right now only 7% below the intraday high it set in the beginning of october again, let's take a look at the treasury markets right now and

see where they stand a couple stocks to watch this morning papa john's pizza activist investor -- i shouldn't say that academy vis investor starboard value taking a stake in the company. jeffrey smith is named chairman of the company starboard said it follows a strategic review that positions it for stronger growth you're looking at that stock up now about 4.5% also goldman sachs may withhold millions from lloyd blankfein and solomon because of the 1mdb scandal they will make a final decision. interesting they have clawbacks already, but this is a specific clawback first time we've seen a bank even create an outline for something like this. also, ab inbev causing controversy with its super bowl

ad promoting bud light doesn't use corn syrup while others do its members were disappointed by the spot busy weekend for president trump on twitter and television. commenting notably on the yet to be released mueller report eamon javers joins us with more. >> that's right. he gave an interview to margaret brennan. the super bowl interview the network rolled out over the weekend. one of the sections of the interview, he was asked about his views of the eventual mueller report expected to write a report but that's a confidential report that goes to the attorney general. one of the big questions here has been whether that report will be released publicly. the president said it's up to the attorney general to make that decision. here's how he phrased it >> would you make the mueller report public because you say there's nothing in there >> totally up to the attorney general. >> what do you want them to do >> even the mueller report said

it had nothing to do with the campaign when you look at some of the people and events -- >> excuse me excuse me. that's up to the attorney general. i don't know it depends i have no idea what it's going to say >> the president there saying it's up to the attorney general. it depends i have no idea what it's going to say leaving himself a little bit of wiggle room. which we don't have a good fix on the timing for just yet meanwhile here in washington, guys, all eyes now turning to tuesday night. that's the state of the union. administration officials on friday that the state of the union is going to strive for an all encompassing uplifting tone. the president is going to list five different topic areas where administration officials say that democrats and republicans have the opportunity to work together on legislation this year we'll see if that pans out as we get closer and closer to the

2020 election cycle. more and more democrats entering the race the idea of bipartisan legislation seems a little more farfetched in this year's washington than last year's washington >> eamon javers in washington. we have some breaking news to bring you the man who was widely known as the bond king is retiring. bill gross is leaving janus. he will be focusing on his own things >> he started this fund in 2014. it reached all-time peak in terms of assets under management last february. since then it's gone down to less than half of what he once had. ten consecutive months of outflows >> it fell under a billion dollars after redemptions. that led to this kind of rash wash-in of redemptions that it's been following for that entire time all right. let's welcome our next guest fresh off of last friday's big

jobs report. we have kevin hassett. kevin, it's great to see you >> great to be back. of course. thanks >> those numbers we saw on friday were a lot stronger than people had been anticipating what was yur reaction in the white house? >> larry and i took the numbers down to the oval and i actually for the first time since i've been here, i got a fist bump from the president he was so excited by the news. you know, i think it was a very difficult month for government employees that were furloughed all of that was uplifting. it was good news the white house needed >> it surprised you, too, how big it was >> yeah. i was telling people through the shutdown we'd see a number north of two but a number north of three was unusual. a quarter where you start north of three is about 3.1% so it's a great way to start a quarter. about 60% of the time it means you're going to have a 3% gdp growth that quarter. so that's a great way to start

the year >> what do you think the overall impact from the government shutdown was where do you think it'll show up and what do you think the eventuality will be when we measure it all >> right the economic statistics that it affected the household numbers so the unemployment rate ticked up by about a tenth because of the government shutdown. we expect that to reverse itself next month as far as gdp, you know, we're starting out with so much momentum going into the first quarter again when you get a jobs number north of three, you're looking at a three handle for the gdp growth my thought is the negative effects we talked about from the shutdown will be hard to see in the data i think q1 has got to be well north of two. >> that baseline assumes we don't see another shutdown >> we'd have to go back to doing the math we did before about a tenth a week or so off gdp

>> how likely do you think that is is that something you're factoring in >> you know, i'm not involved -- yeah i apologize. i'm not involved in the negotiations i don't have a read right now. >> let's talk about the trade talks. that obviously has had some impact maybe a bigger impact on china than here. but what do you see as an impact now and what would the potential be if those tariffs actually doubled or went up in a few weeks' time? >> well, the president has made it clear that he's hoping we have a deal before the trade deadline kicks in and the tariffs have to double but, you know, exactly how much progress we've made last week and how much progress we'll make if secretary mnuchin and lighthizer head off to china is something that we're still waiting to see and so, you know, i throughout the negotiations have been very hopeful. i'm pleased by the fact the negotiations continue. but i think there's still a lot of work to do. >> let's talk a little bit about where we stand with the fed's perspective too. we heard from the fomc an incredibly dovish outlook

sounds like they're going to be sitting back for at least the first six months of the year to see what happens before they hike rates again from your vantage point on the economy, is that warranted >> you know, i respect the independence of the fed. as an economist i would say that we expected coming into this year we would have a supply shock growth north of three and that that would actually put downward pressure on prices. so what happened last year, we're looking at growth around 3.1 3rst f 3.1% for the year. and other measures of inflation headed down a little bit i think some of our models of the supply shock as tax induced supply shock have worked pretty well and so i think we could go forward with a great deal of confidence that the high growth isn't pushing an enormous amount on inflation >> you've been getting fist bumps about economic data. the stock market's been doing

well in 2019 does that put less pressure on the decision with china? if you look at the impact or maybe lack of impact in the administration's view that the tariffs have had on the stock market as well as the economy? >> right well, i think that everybody wants to deal with china the president has said that over and over while the economy is doing great and the tariffs did apparently not do a whole lot of harm to the u.s. that we're all really impatient to improve our relationship with china. you know, if we could open up the chinese markets to u.s. firms, it would be a fantastic positive for u.s. equity markets and u.s. employers and so, you know, we're going to absolutely keep our nose to the grindstone and try to improve the deal i think it's a long run play and it's a really important long run play for the future of the outlook. >> kevin, senator schumer and bernie sanders proposing new legislation this morning that they write about in "the new york times" effectively trying to limit buybacks -- corporate buybacks it says our bill would prohibit

a corporation from buying back stock. in other words, our legislation would set a minimum requirement for corporate investment in workers and the longer term strength of a company is a precondition for corporates entering into share buybacks what do you make of that >> you know, i just wish some economists would go talk to these guys and explain how buybacks work, how capital markets work the fact is we just brought trillions of dollars home from overseas to put at work here in america. when a firm like apple buys back its shares, you know, that equity goes to some other start-up firm that is investing in communities and so on so i think they're trying to make a political point about the spike in buybacks which is associated with the tax cuts but it's kind of a one-time thing. because they had this trillions of cash that they brought home again, i wish some economist would explain to them how buybacks work. you know, john cochran at hoover has written a lot about it over and over i see the

democrats propose things that are harmful for the economy. they should be ashamed of themselves >> i want to talk to you about a lurch to the left by the left especially now this is a political morning consulting poll. we often talk about how it feels like, you know, perhaps the democrats have moved to an extre extreme at the same time there are conversations about being on the extreme side the poll said that 76% of registered voters believes the wealthiest should be -- and favor a proposal like elizabeth warren's wealth tax. this would be the 2% to 3% on total wealth and 40% favored a plan like aoc's while only 32% opposed it. what do you make of that >> what i make of that is it's inherent on trained economists to explain to people how these taxes work take a wealth tax.

if it were 3%, well, that wealth delivers income. right now if you invest that in 10-year treasuries, then it's less than 3% you're talking about a capital rate greater than 100% we've got people on capitol hill proposing taxes that are greater than 100%. if you -- >> what are the policies, though, of the administration when it comes to inequality? that's what this is about. >> if you look at what's happened in the economy in the last year and it's something you should look for tomorrow, there's so much good news in this economy especially good news for disadvantaged folks. so that african-americans hit an all-time low the unemployment rate for females hit an all-time low. unemployment rate for hispanics. we've seen since 2010, a move --

the booming economy is giving us the social justice people talk about. it's doing it because that's what it takes. if you want to get somebody off welfare and give them a fulfilling life, give them a job. that's what trump's economy is proving right now. >> we've been having an ongoing conversation this morning about consumer confidence and business confidence consumer confidence may have fallen since we saw the markets get rocked around last year. it doesn't seem to have changed at this point. whether the confidence they've lost translates into a loss of spending there is a story today that suggests that small businesses are reacting a little more cautiously they say a survey they have taken of small businesses found that confidence fell to its lowest level since president trump took office. what do you think that is and do you worry about that actually impacting their decisions for investments? >> right

there's a big academic literature on how it's fed through to consumption and investment you know, the links are pretty hard to find statistically and my guess is it's the confidence numbers are noisy there was a big decline in equities in december that of course the government shutdown followed now that those expectations have been reversed will lead to positive confidence changes. and then that whole two months of negative confidence will look like a blip. if that's true, we will understand because people smooth through the ups and downs of that variable. >> great thank you for being on >> thank you >> kevin hassett, chairman of the cea. coming up when we return, you don't want to miss this. 14-year-old grant thompson, the teen who pegged apple's facetime security flaw, figured it out, is going to be our special guest. we'll have that interview before he heads off to school this

morning. that's when weomba stay tuned here on cnbc.

welcome back to "squawk box. take a look at futures and how we're shaping up on this monday morning. we are looking at lower openings across the board nasdaq looking to be down by three points i've been excited about this interview all weekend. last week the facetime bug went viral. getting a call to be heard even

if they didn't answer using facetime on friday the company apologized for the bug. as for how the issue was discovered well, apple credited a 14-year-old grant thompson who was playing the popular video game fortnite when he uncovered the problem. and joining us right now before school starts, grant thompson and his mother michelle who tried to get in contact with apple for over a week before the company responded. good morning to both of you. hey, grant, can you hear me? >> yeah, i can hear you. >> so what time does school begin? >> 9:00 today. >> okay. so we'll go fast we really appreciate you being here how did you figure this out? >> yeah. so i was just trying to call my friend nathan to see if he wanted to play fortnite and he didn't answer right away so i just swiped up and added my friend diego which forced nathan to answer the call

we could hear him without clicking the accept button. >> what did you think? >> it was pretty shocking. we didn't expect anything to happen, but like, we didn't know that this existed. so once it happened, we were both really stunned that we could hear each other without him ever clicking the accept button >> and then what happened? >> and then we just -- all three of us me, nathan, and diego tested it for about 30 minutes to see if this truly was a bug then we decided this really was a bug and it worked every single time we could essentially listen and eavesdrop on each other without anyone knowing >> all right grant, so you -- i assume you told your mother your mother send an e-mail it sounds like to apple michelle, is that right? >> yeah. >> among other things, i did, yes. i sent an e-mail i did lots of other methods of communication. >> how did you try to reach them

>> well, i first went to their website and went to apple feedback which is an e-mail form i tweeted them i tagged them in my facebook post i called them. i e-mailed them. and i faxed them and then registered as a developer even though i'm not a developer and submitted a bug report that way after all my other methods had failed >> they didn't get back to you for at least ten days, right >> right i actually did not hear lack from them until after the media broke the story one week ago today. so i heard back the following day on a tuesday afternoon just in a generic form e-mail asking to whom we'd like to give credit for finding the bug. >> so they're giving grant the credit and it sounds like they did a little bit more than that. what happened after that happened >> well, i was contacted late thursday evening by a higher

level executive with apple and he asked if he could meet with me the following day so he flew in on friday afternoon and met with grant and i in my office and thanked us in person and also asked for our feedback. asked us how we thought they could improve their reporting process. we had a nice conversation for well over an hour. he indicated in the conversation that grant would, indeed, get the credit when they issued the security update next week. and they also indicated that grant would be eligible for the bug bounty program and that we would hear from their security team later the following week in terms of what that meant >> the company actually mentioned your family in the statement regarding the bug. i'm curious beyond this, i mean, do you get a lifetime supply of iphones? i mean, it's just a bug bounty program?

>> you know, truth be told jokingly i said when the gentleman came, i looked behind and thought is he maybe carrying a macbook in his briefcase no t-shirt, nothing like that. but obviously if he was -- if he could get a bug bounty for what he found, we'd certainly put it to good use for his college. because i think he's going to go far and hopefully this is actually a field he was interested in before and even more so now >> i tell you what it looks good on a resume for college no matter what >> can i ask which executive came and visited with you? >> i -- you know, i promised to respect his privacy. he is a software -- a manager in software engineering but he has some, i think, privacy and security training. just out of respect for him and his own privacy, i've agreed for now to keep his name private >> before we go, grant, i need to ask a couple questions. i will ask will you continue to

use apple? are you going to become an android guy? what's going to happen >> i'm still going to continue to use apple because, i mean, this was just, i think, a one-time thing every now and then something like this slips through the cracks and can be found. but in general, i think apple tries to keep our privacy safe and i respect that so i'm still probably going to use apple. >> what's. the reaction at school is there a mick jagger rock star element to all this? >> quite a few of my friends know and think it's cool i've been stopped a couple times by people i don't know but that's about it. >> are you going to start looking into if there are bugs in other things? >>. >> i'm not really sure because i kind of found this one on accident which is pretty

surprising to me that, like, apple didn't catch this and a 14-year-old kid found it by accident >> final question for michelle, what's the screen time policy in your home? >> well, we actually turn our way wi-fi off in the evenings. i have a system. so i monitor >> grant, you can't be happy about that >> not too happen. >> he's not happy. he's tried to negotiate when that starts and stops for quite some time. >> does this gain him a little bit more time? >> i'd give him more time now, right michelle >> no comment. we'll try our best to work it out. >> thank you, guys michelle, really appreciate it and grant, thank you thank you for spotting the bug thank you for coming on the show good luck at school this morning. >> thank you >> i like how she said he didn't

even get a t-shirt imagine getting a t-shirt i found apple's bug and all i got was this t-shirt >> we'll send you some "squawk" t-shirts when we come back, the rest of the faang stocks to report later today. we'll tell you what to expect from alphabet and how to play the tech space overall with ann winblad. stay tuned you're watching "squawk box" here on cnbc

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good morning, everybody. welcome back to "squawk box" here on cnbc let's take a look at some stocks on the move this morning clorox shares are higher after the products maker scored a win. they got a dime better than the street was expecting that beat came even though revenue matched forecasts with clorox seeing a jump in profit margins. that stock is up by better than 4.5% also moving higher this morning, shares of alexion pharmaceuticals. beat estimates on both the top and bottom lines for its latest quarter and give a better than expected outlook food distributor sysco beat the street's expectation by 2 cents. revenue did come in slightly below the street's forecast. but sysco, that is up by about 3.1% today marks the end of fed

chair jay powell's first year in office it's also his birthday this year has been a wild one for the fed chief. steve liesman joins us now with more >> universal praise. powell was aprivate equity banker who would understand markets, they thought. and most of all spoken english some of that praise has now turned to criticism. also from the man to appointed him. >> i think the fed is out of control. i think what they're doing is wrong. i think the fed is far too stringent and they're making a mistake. and it's not right >> maybe not quite so strively but others have joined the krifl schism pointing out the stumbles here he made the market scared he thought they were going too far. and then two comments on the

balance sheet while the balance sheet was concerned about the balance sheet. on autopilot and january 10th said it will be substantially smaller than it is now. and the fed has now decided it will be bigger john taylor who was a candidate for powell's job praised generally but said there is room for improvement. >> i think there's something to be said for communicating a little better. i think maybe things seem true -- that's being clarified >> he's done a good job in exceptional times. i spoke to bill dudley over the weekend. he said fundamentally powell has a harder job than yellen during the yellen period, the economy wasn't at full employment interest rates were low. now you're in a tricky environment. the economy has been surprising because inflation hasn't shown up not to mention a full employment tax cut and stimulus from the government here's the record for powell down 0.2% on unemployment over

the years. up 0.2% on inflation and gdp, the average of this four quarters, a percentage point higher so he's doing not that much more in the way of tightening relative to that the stock market, flat since powell took office over that time he has raised interest rates by a percentage point and reduced the balance sheet. and he has pivoted this is probably the most important thing. he has pivoted policy from gradual increases in the statement before now it says the fed will be patient. we'll see. >> for more on this, let's bring in deano cass and richard fisher good to have you both. richard, i will start off with you. in terms of his communication skills, do you think he was

communicating exactly what the fed wanted or is there a problem in how he communicated >> well, first of all, i'm mindful of what mickey mantle said about baseball. he didn't realize until he got in the broadcast booth, how easy it was to play the game. we have all this commentary as deano knows because he sat in a room for quite a while and ran the new york desk. this is avery complex matter you can't satisfy everybody all the time i was asked the other day, as you know, i'm very fond of jay he's a close personal friend but i was asked what would you give him as a grade. i said incomplete. he's only been at this for a year as bill dudley said, faces a very difficult task of comple completing the exit as we called it at the table back when i was there. and it's not an easy job people have gotten hooked on cheap money. and you make easy decisions. it makes you richer if you're a

money operator things are going to be more challenging going forward. i think he does get a grade of incomplete he's a young man turned 66 today. just a kid and we'll have to see how things go through but the market is so sensitive here because they've been hooked on the opioid of free or ultra cheap money for over a decade now. and i understand their sensitivity. i think you're underestimating the fact that he's not a trained economist. in fact, he has a credit in capital markets background i think he has being insight than people give him credit for. >> what should we or what can we extrapolate, do you know, if nerms of what the fed chair has said recently? should we assume the fed now is more comfortable with the idea of an inflation overshoot and so maybe a lot of the other projections, for instance, for a recession, those things get pushed out longer? >> i'm not sure. first of all, i think richard had some really good points.

i think what we should appreciate is powell has shown the ability to pivot, to adjust, to be agile, to not get locked into a position just because he said so. so as steve just said, we went from in a few weeks, actually, from him saying we're a long way from neutral to we're just below neutral to essentially we're at neutral. now, if you had another personality in there, that adjustment might have taken much longer and the market might have been much more stressed during that period. so let's give that amount of credit i'm not sure that we have anything to read into whether he's willing to tolerate an overshoot of inflation or not. i mean, i think the fed has been trying to say our target is 2% we're not -- you know, that 2% is not a ceiling we could be symmetrical around that i think right now we have to wait and see i think we would point out that this is his first year you know, greenspan in his first year had to deal with the crash. we had bernanke at about a year

or two years had to deal with a crisis so he's had a hiccup he's dealt with, i think, well let's give him some time to perform. >> richard, i just cracked this book on the fed's independence but one of the points it makes is we essentially have the fed around to blame. and that's one of the points of the fed even existing. kwh why congress created it. is part of what's going on here a proximate cause thing? it went down, it must be the fed. >> one week it's china one week it's the fed. i would say this is a steady hand compared to what compared to the congress compared to the manic-depressive nature of market traders what you want is a federal reserve that is sensitive to what's going on. obviously gearing themselves towards creating conditions for full employment and non-inflationary,

non-deflationary environment it's important that it be independent, it be a steady hand i think it is. there are going to be little blips along the way. but you're right we got the blame when i was there. under ben bernanke's leadership for having dropped the ball. allen greenspan got it for having dropped the ball. it's nice to have the ability to point the finger at somebody else and my experience having served in two administrations before i was at the fed is congress likes to point their fingers elsewhere. they never point their fingers at themselves. and the same thing for the chief executive officer. it's nice to have a pinata which is what the fed is in this case to beat upon as long as they hold together, don't burst open and spill all the candy out to everybody and they do their job. i think that's what the federal reserve does >> i like that metaphor. pina pinata steady hand, but it's interesting the markets so latched onto this term that jay powell had from october 3rd to

the beginning of january but there's not the notion of the flip side. that is if he was that sensitive to what the markets were telegraphing in that short amount of time and changed his stance to that degree, could we see the reverse if the market is telegraphed again in a different direction? >> perhaps i think the fed should be there to provide sort of medium term message to not get caught up in the wiggles of it. i think richard had it right it's too early if you were to grade powell, incomplete is probably the right grade. let's see this thing play out. i don't think he's going to get this sort of -- get mark to market as it were day by day and just react to markets. >> you know, one thing i did leave out of my report, though, is i think some worthy praise of powell for transparency. he went to the press conferences every meeting.

i mean, to some that's controversial. there are several reports now that are out on the banking system that the fed did not previous publish that he spearheaded their publication. but my concern here is that he pivoted really sharply and is it possible you think they're going to have to pivot back if this weakness is not -- >> the markets take so much heart in the fact he pivoted right? should the markets also think that a pivot in the other direction could be in the cards? if a china trade deal happens, if all these things -- >> if he has to do it in three months, i believe that would be a blow to his credibility. >> i agree with that >> let's see what the data is, right? he's saying we're going to be data dependent let's see how the data evolves and he will react tothe data >> i want to make a point here >> last word, richard. >> you're saying he pivoted. the market wants to hear or force or hear that he pivoted. i dissect every word that's said that comes out in the press conference or statement.

i'm not sure it's a pivot. as dino just pointed out, it's data dependent if you really dissect the words on the balance sheet which is important, i didn't see a pivot there. we never assumed the balance sheet would go back to where it used to be you can't. cash in circulation is $1.7 trillion you've got to have reserves for the banking system you can't get that balance sheet below $3.5 trillion in my opinion. we assumed this all along the way. i think the market is looking for a pivot. you translate a pivot. the game is so much easier when you're in the broadcast booth opposed to at the table. >> richard, thank you. richard fisher, the former dallas fed president and dino kos. when we come back, your morning's movers and also summing up technology earnings season with noted investor ann winblad that's all after this break. stay tuned you are watchingsqwkoxon cn bc "ua b"

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welcome back to "squawk box. let's take a look at futures right now. we are indicated to open a little bit lower across the board. the dow looking to lose about 30 at the open. s&p down by 2.5. some news involving tesla coming out moments ago the automaker announcing the acquisition of maxwell technologies in an all-stock transaction. it's valued at $4.75 a share we should point out this is a pretty small market cap company. $140 million as of the close so this is worth noting. >> they make ultra capacitors as part of the battery process. i'm assuming this is a portfolio in terms of batteries? and energy >> it's an all-stock deal. somebody's got other bills to pay with the cash they have. >> that is true. meantime, under an hour

until the bell rings on wall street want to go to dominic chu who's looking at what's moving ahead of the open. >> so there's an interesting note out from jpmorgan analyst about whether or not netflix could be, again, could be a possible acquisition target. this is coming again from jpmorgan showing that maybe if apple does make some kind of an ak weization, possible companies could include net innics, activision, blizzard, or sonos this could help scale and help apple grow and in essence have them move in a synergistic fashion. the idea that netflix could be a candidate would command a large premium around a 20% market levels which would be about $189 billion. but again, speculation only they note in their notes. speculation only they don't have hints or news about whether a deal is in play. but it's something interesting to watch here as well. because these stocks have been

for the most part falling off as of late. the performance over the course of the past year has been relatively at least lackluster you can see here overall netflix shares on a one-year basis not doing as poorly but apple and the s&p 500 have been laggards so maybe something, becky, to this whole idea. but it is getting a lot of trader attention, this note from jpmorgan act what the speculative acquisitions could be for that near $250 billion pile of cash they have >> i'm sure apple's response is thanks for the unrequested advice thank you. >> you got it. the final faang company to report this quarter is set to release after the bell alphabet comes after a beat from the other companies except netflix which missed slightly on the revenue. joining us now to look at this and get her favorite technology picks is ann winblad it's great to see you as always.

thank you for joining us >> good morning. >> let's talk about alphabet first of all you are a shareholder. what do you. to hear from the company after the bell what are your longer term expectations as a shareholder? >> a couple things with google number one, we've already heard from amazon and microsoft about the rapidly growing cloud. even though we think the cloud competing platform is ubiquitous, that business is growing very nicely. we saw with facebook the blowout on the advertising dollars that they've grown the market there for small businesses and large businesses google is the other half of that duopoly. i would expect those numbers to be great i also think google is well position fire departmeed for thm >> you know, you mentioned that

microsoft had these great numbers that they reported you're a shareholder in microsoft shares too i was surprised to see the initial reaction from the street to be selling off shares of microsoft after that report. because i didn't see anything in it that looked all that bad. how did you read it? >> i read the same as you. i thought they were pretty solid numbers. and very high growth numbers on the cloud. and microsoft as well as amazon and the cloud continue to gain more and more share of the very large enterprise software market number that number is expected to grow about 8.5% this year to over $450 billion of the $3 trillion i.t. market. so you've got a really big growth market in software right now specifically enterprise software where microsoft really shines >> why does facebook seem like a runaway train at this point, ann? >> well, it seems to be going faster and faster despite the challenges it has in growing up as a company if you're in silicon valley, you

know, it seems like there's a scandal a day. i guess we're pretty close to it so it really is up to zuckerberg and company to really mold this into a long-term company i'm concerned about the long-term strategy i mentioned alphabet, and microsoft and amazon, these are companies where you can really see far into the future that they have laid tracks for really long-term large platform businesses and it is harder to see that with facebook, even though right now they're performing extraordinarily well. >> though you own shares of facebook, along with the others you mentioned, microsoft, amazon and alphabet, why do you own facebook if they don't have that same sort of long-term strategy that you can see >> well, i own it right now. >> hinting of what's to come you're waiting to hear more? >> you know, right now i think facebook has really shown that they can grow the advertising market they don't have any competition

in their core business they are part of that duopoly in advertising platform there is no way any major advertiser can't advertise on them they're growing the rest of the world despite some up and downs in the u.s. and canada so right now it is a stock to hold we'll see in the future. >> ann, i don't know if you saw this headline dom was talking about earlier, speculation, not really speculation, almost speculative suggestion from jpmorgan that apple try to buy netflix. would that make any sense to you? >> i think apple's got to do something really big the gap between the saturation of their device business and the growth of their services business is pretty huge. they're sitting on a ton of cash it would be a really bold move and i think it would make a lot of sense whether they'll do it or not is another question >> if not netflix, what? what would you like to see them

do >> i don't know. i think netflix makes a lot more sense than a gaming business but i do think that they have to grow really fast and what they're doing in health, there might be an acquisition there. they also are looking at what they might do in more of the services base across all sorts of different pieces. i think any acquisition in the services base would make a lot of sense be it in the health care space, or be it in the entertainment space or streaming space like netflix. >> very quickly, you only don't own two of the f.a.n.g. stocks, one is apple, you just laid out why, you don't own netflix either why is that? >> i don't really follow netflix. i'm an enterprise software person i really live in the enterprise software market every single day. so i look at companies like sales force, service now, opta,

these are companies in the enterprise software space that are more interesting to me than netflix. they're growing in their market share in a marketplace in enterprise software where enterprise is rebuilding their stacks from the development tools to the applications. so a company like sales force or service now is much more interesting to me than netflix >> ann, thanks so much we appreciate your time today. ann winblad from hummer winblad. >> want to get do the new york stock exchange, talk to jim cramer who joins us now. jim, we can talk football, but we have alphabet this afternoon, disney later this week what's on your mind? >> look, alphabet has a history of reporting a number i think is more downbeat than how the company is really doing. i hope they're able to put spin on why you want to own youtube we see they're getting publicity for it of their own. we would like to hear something waymo, other than the cost of click. the cost of click has this thing pegged into a second rate

company when it is a first rate company. i just think that's a shame. maybe they can change that in terms of the acquisitions that apple is doing, that wants to think of, all of them -- everything in that piece i thought was wrong. the acquisition they want to do is health care they want to move health care to be more front and center >> you're talking about the jpmorgan report? >> yeah. netflix, i proposed they buy netflix at 25, they weren't interested why would they be interested here it is somewhat disingenuous. what they really want to be able to do is expand the service revenue. i think ann is right about that. the service revenue part they're most excited about is health care and the watch because they have to make it so the watch is more important to the whole mosaic of the company. otherwise what happens, if you don't make service in watch, it is going to be once again, geez, they didn't sell enough -- didn't sell enough phones. the whole multiexpansion is going to have to come from watch and from services. >> did you see the op-ed we were talking to kevin hassett about this morning, senator sanders and schumer on buybacks? >> i wish you were on the calls.

buyback is always third. they would love to be able to grow business. they honestly want to expand the business, want to be able to give dividends, do buyback the problem with the article is that once again, it is, listen, you have to be able to give the workers more i agree that the workers should get more, but we ended unions, we came with worker mobility, you can go to another place, i just don't think that if you had what they wanted, it would be mandated higher wages, and then we would have the fed raising rates dramatically and then slow the economy. that's what would happen in this fed. i also think, honestly, the buybacks have been very limited versus what i thought the other thing -- i thought that there would be far more that would go toward buyback than we had the actual workers i think are doing pretty well, versus what we thought they would do >> jim cramer, we will see you in just a couple of minutes. thank you. don't miss jim on "mad money" tonight, exclusive interview with the ceo of clorox after that company posted earnings

beat earlier this morning. >> that stock is up remo than 4% today too. >> more "squawk" in a moment ♪ at pgim, our bottom-up approach uses a technology lens to identify long-term winners. from energy... to real estate... to retail. finding such opportunities for alpha is the true value of active investing. and around the world, you have a partner in that pursuit. pgim: the global investment management businesses of prudential. the global investment management [kno♪king] ♪ memories. what we deliver by delivering.

the man who was widely known as the bond king is retiring investment firm janus henderson says bill gross is leaving the firm he'll be focusing on managing his personal assets and his private charitable foundation. bill gross' redemptions brought that fund down to under a billion dollars. report oz on that a couple of

weeks ago, redemptions coming in for many months, ten months? >> ten consecutive months. >> we'll be talking to bill gross' former colleague mohamed el-erian tomorrow. right now looks like the dow futures are down by 24 points. s&p futures are down by under 2 points nasdaq down by 5.5 points. if you've been watching europe, the early trading there, you'll see that at least at this hour it looks like things are mixed there. ftse had been up by more earlier. still hanging on by over a tenth of a percentage point. the biggest decliner is spain. ibex 35, down by 1%. stocks down by more than .6% in france look at what has been happening in the oil markets oil, best january ever, up 18% had its best january ever. but this morning first trading day -- second trading day of february, you see a pullback in

wti, down by 67 cents to $54.58. look at the ten-year note. the yield on the ten-year up at about 2.7% earlier now 2.711% i want to thank melissa lee for being here are you here tomorrow? >> no. wednesday. >> later in the week for melissa. watch her later today. right now time for "squawk on the street." ♪ good morning and welcome to "squawk on the street." i'm david faber with jim cramer. we're live from the new york stock exchange carl is on assignment this morning. let's give you a look at futures as we get ready to begin a new trading week here at the new york stock exchange. you can see -- i'll call it flat i don't know what you want to call it. european markets open for some time and euro stocks overall, down a little bit dax down a little