it's thursday, february 7th, 2019 "squawk box" begins right now. live from new york where business never sleeps, this is "squawk box." >> good morning. i'm melissa lee along with andrew ross sorkin joe and becky are off today. we'll get to the markets in just a minute, but we want to go it this breaking news literally crossed about five minutes ago andrew, you have the details here >> breaking news from the banking industry a $66 billion transaction. the largest banking transaction probably in the last decade. bb & t and suntrust just announcing they will combine a merger of equals it's an all stock deal voould valued at $6 of billion. combined company will be the nation's sixth largest bank. i'm trying to go through what it would be behind. you'll know this better than i will bank of america, jp morgan,

wells fargo, citi, and i'm thinking what's our fifth, right before you hit -- >> by assets, it will drop out pnc would be above those -- would come gr before the goldman sachs, and this will now become number six >> the question is whether this is going to pressauj a larger dome notice effect we've been waiting for a decade, frankly, since the financial crisis, for. >> there would have to be a sweet spot due to size it is sort of this sort of market cap, this sort of assets that can merge, and a lot of analysts had been predicting a wave of regional bank consolidation, and here we are bb & t -- >> this is in the sweet spot recently we've seen the changes. the toughest regulatory hurdles exist if you are over $700 billion in assets. the combined number i'm seeing is 450 this has been permitted by change in the last couple of years.

in terms of we've been waiting for this to happen for a long time, and this really makes obvious sense, and people are talking about will it come, will it come, but i would also say this has been totally under the radar in the short-term. a merger of this size, you would have expected some kind of leaks. i guess we talked more about aier ago which ones are going to emerge, and it's gone away they've kept this very, very quiet successfully, but it makes sense that both strong in the southeast mid-atlantic area and i can imagine -- >> where does this leave the pnc's of the world, by the way then you have to figure out, you know, everyone is going to be seen looking at this deal and saying who is next you talk about the sweet spot. there's not many left. >> i think you go down the food chain. i think tchsz one of the banks that would have wanted to tie up with one of these guys >> possibly, yes >> bnp is closer on the asset cap level before it starts getting into the sort of mega cap area i would say at pnc they've been executing well on their own kind of growth levers this regionally makes sense for

these two. one of the fascinating pieces was the impetus for this transaction being technology being this idea that people really want to be able to -- and the banks themselves want to invest in technology at the same levels that the jp morgans and wells fargos and citis and everybody else are that's sort of a piece of this i want to by in gerrard cassidy right now. he is an rbc capital markets he is on the squawk newsline taking a look at this news just the way we are literally this news is out seven minutes ago. gerrard, your initial thoughts >> our initial thoughts are quite favorable. what we've been saying for some time, and i have been sounding like a broken clock, that we expected these large big regional bank mergers, and here we are we have one, which comes as no surprise that we're getting the big mergers, and i think you guys just mentioned, you know, the technology spending is one of the reasons why i think you're going to see these

mergers continue on a go forward basis. in terms of this being a stock for stock merger of equals, there is no premium on either stock. is that right? >> i think one of the things we have seen recently in the last couple of years is transactions where there's been sizable premiums in meaningful dilutions of tangible book value per share. the reaction of the markets has been quite negative. last week we saw a merger of equals of two banks, and there wasn't much at all, and the stocks reacted favorably if you can create a combination of companies with minimal book value and -- that's good for both sets of shareholders, and the market tends to react favorable to that. >> what does a combined bb & t and sun trust threaten at this

point? you have to ask yourself if you are any bank with $100 billion in assets or more, should you start to consider something like this this is certainly going to create the sixth largest bank in the united states, and i think that you should anticipate other large regional banks considering to do similar types of dealings. >> to what extent is this defensive move rather than offensive move when you see the size of investment, for example, in technology that the big guys are making is this something that needed to be done to fight back to the big guys >> i think it's part of the strategy when you can combine two companies of this size, the cost savings will be meaningful, and the only way that you can create

that value on cost savings is through a combination, obviously. i think what we're seeing and we saw this, remember, our banking system back in the 1980s had over 14,000 banks. today it's 5,700 who would have imaged in 1988-1989 that chemical bank manufacturers chase manhattan, jp morgan someday would become one bank, which is what it is today. i think what you are going to find is other big regional banks need to do the -- or consider these combinations as a way of increasing profitability >> that was sparked by national interstate banking legislation, though, gerrard. do we see that sort of push for the consolidation of the banks that remain today, or is this just going to be a story of finding new efficiencies in this kind of market >> i think there's no better way to do it than combining with a neighbor or a competitor, because you cannot achieve those efficiencies unless you combine the dwo of the banks together.

i would anticipate more of that. >> let's talk about how you think this is going to be received in washington among regulators, among those with pitch forks out given the political climate and conversation that we seem to be having every day do you think this is going to be looked upon fondly i have to imagine there are going to be folks especially on the left who are going to come out against this almost immediately. >> from a political standpoint, you are probably right remember from a regulatory standpoint last fall the regulators came out with a new classification of the banks. an asset size of $250 billion and $700 billion that was the green light, in our opinion, from the regulatory side, which is the important part, and in our view the regulators are very supportive of these types of since they've created a new category of bank which would be treated as a larger regional bank rather than

a global >> we're looking at release here, and it says kelly king will become a chairman chief executive officer of the new bank bill rogers, of course, who is the sun trust ceo will become the coo. what do you make of that going forward, that setup? >> that's clearly what you need to see is the different roles for each ceo clearly, there will be some active jockeying of positions of the different senior executives, but generally speaking in these mergers of equals, you do see both ceos taking antirole. at least initially you might recall when bank one and jp morgan chase mernled, harrison was the initial ceo, and then diment took over after that >> in terms of regional presence

here, these guys are strong in the southeast, the mid-atlantic areas. who do you think is going to be feeling the heat most of all are there other rivals strong in that region? >> i would saits probably the rivals in that region. remember, obviously lending and banking is a commodity business in efficiencies of scale are critical, and so to me that's where you are going to see, you know, the pressure on the other competitors is that if this bank can be more profitable because of the efficiencies that they will generate, then we would say it's more of a regional, you know, issue rather than having the national banks have a presence there >> hey, george, you put buys now as a result on basically every public regional that's out there on the assumption that this is going to be a transaction? i'm just looking through the list right now also, we were talking about pnc earlier, for example they do get -- they would start bumping up and it makes it harder for them to bite off a

big deal in terms of trying to capture that sweet spot before the regulators might look at this less fondly >> we have better than very positive and bullish on the banks for quite some time. obviously, it was ae painful year last year, and one of our premises why we were so positive was because we expected deals like this one to happen. it's taken longer than we thought. now that this is here and i would suspect that as he others take a look at how the stocks react today, dwoent know yet how they're going to react, but let's assume, if it is positive, others will take a real hard look at possibly joining forces with a nearby competitor >> where are we in the valuation of regionals it's a group that's up 15% so far this year, as you mentioned. obviously it's a group also that got clobbered in the december sell-off are we at fair valuation the up side possibility of more consolidation. >> i would say there are

valuations as of yesterday before the banks were still below their long-term verages. as you accurately pointed out, december was an extremely difficult month for the banks. they recovered some of what they lost in december however, they haven't fully recovered. we still felt and still do on a fundamental bays there's still upside for the banks, and essential if the stocks react favorably to this news today, there's even more up side because of expectations of further consolidation down the road >> what do you milwaukee of the fact that it has taken so long we see a slightly better regulatory environment for banks of this size, and all the attractions that we've been discussing of a potential deal like this. why has it taken so long >> i would say that the primary reason it's taken so long is that, first, obviously, you had the fall-out from the crisis we all know that then in the last three, four years it's been record profitability for the industry, and so there was no real compelling reason to have to do

something. as the digitalization of banking has advanced, it's becoming more challenging to be able to achieve this record profitability on a go forward basis, and so i was expecting that in 2020 that will be the challenging year for bank earnings this year we'll still have a good year, but 2020, more challenging, so i think now ceos are seeing that and seeing maybe now is the time to do a combination because of the challenges in the profitability from the core business that is we're seeing today >> okay. gerrard cassidy, we appreciate you calling in assist this news crossing the wire. we thank you for your analysis and look forward to talking to you more >> you're very william thank you, andrew. >> there was an 8:30 a.m. investor call about the deal that is something to watch very carefully, and it's interesting to watch stock reaction in the premarket trade. you know, given it's an all stock deal, there's no premium vetted here. we have the stocks up between a

couple at 5% take a look at what's going on in asia. of course, china, hong kong continued to be closed with a lunar new year celebration the nikkei down just fractionally .6%. breaking news just moments ago in europe, the efrmt u. slashing its euro zone forecast the e.u. announcing 2019 growth coming in at 1.3%.

>> the big earnings beat also, soft banc shares soaring on a programming note, tomorrow becky will be live from the at&t pro-am at pebble beach they're bringing us big interviews, including the ceos of waste management, chevron, cisco, and at&t. coverage tomorrow starts 6:00 a.m. eastern as we head to break, here's a look at the biggest premarket winners and losers on the dow. ibm, goldman sachs, mccdonald's. back in a couple of minutes. the future of technology investing lies beyond the tech sector. it's about technology transforming every sector. ♪ at pgim, our bottom-up approach uses a technology lens to identify long-term winners. from energy... to real estate... to retail.

finding such opportunities for alpha is the true value of active investing. and around the world, you have a partner in that pursuit. pgim: the global investment management businesses of prudential.

the global investment management i found a companyeans to who believes in me.rt. they look out for me. and they help me grow my career. at comcast it's my job to constantly monitor our network, prevent problems, and to help

provide the most reliable service possible. my name is tanya, i work at the network operations center for comcast. we're working to make things simple, easy and awesome. chip olte on the top and bottom lines 35 cents a share same store sales coming in at 6% chipolt benefitting from an increase in customer traffic and higher menu prices it is seeing the biggest growth from on-line and mobile orders which rose by 65%. now accounts for about 13% of total revenue. chipolte will add a second assembly line to meet demand it's testing drive-thru windows called they can pick up on-line orders without getting out of the car chipoltens plans to launch a program this year. brian nichols says a big

challenge this year will be labor costs rising as much as 5% the chain is working to schedule workers more efficiently 2018 was a turnaround year for the chain under nichol who took over in march. soft bank posted a surge in third quarter profit and announced a $5.5 billion stock buy-back that announcement came after yesterday's close in japan stock had a chants to react overnight. want to show you what's going on here check out this move. more than 17%. the buyback was fueled by proceeds from the ipo of its domestic telecom company the ceo saying the motivation for the move was a chronic undervaluation of softbank shares it was a good move for him personally based on the latest available ownership physician. assuming you are putting a hold up here. the stock overnight made him $3 billion. i don't believe that chuck schumer or bernie sanders will be happy about this. >> probably not.

coming up, closing the gender gap in the tech sector. we will talk to the founder and ceo of girls who code next plus, much more on the merger between suntrust and bb&t. "squawk box" will be right back. imagine traveling hassle-free with your golf clubs. now you can, with shipsticks.com! no more lugging your clubs through the airport or

risk having your clubs lost or damaged by the airlines. sending your own clubs ahead with shipsticks.com makes it fast & easy to get to your golf destination. with just a few clicks or a phone call we'll pick up and deliver your clubs on-time, guaranteed, for as low as $39.99. shipsticks.com saves you time and money. make it simple. make it ship sticks.

when yowhat do you see?itical issues facing our world, we see breakthrough medicines getting to patients in record time. we see harnessing natural gas unleashing the promise of clean energy. we see engineers simulating the future to improve today. at emerson, when issues become inspiration, focusing core strengths to create a better world isn't just a result, it's a responsibility. emerson. consider it solved.

our next guest spoke to women across the country and -- girls who code founder and her new book is "brave not perfect." thanks to have you with us the message here is perfectionism is creating missed opportunities. in what way? >> look, i think because perfectionism we're missing opportunities that we think that are too hard or that are too risky, and we let our good ideas die on the vine. we see other people pursuing the things that we thought we should do, and we're left with regret and envy i think that bravery is the key to joy >> when you spoke to all these women across the country, how did you distill that from what they told you? >> so many of them told me about unrealized dreams, right they stayed in the english class because they were good at it, but really they wanted to be a

neurobiologists. they stayed in toxic relationships because they thought that they should they got bumped, you know, on the street, and they said sorry instead of the guy who sbufbumpd into them. they had this toxic people pleasing imperfectionism, and it was really killing them inside it was also creating a leadership gap so many of them, you know, had ideas, wanted to raise their hands for that promotion, but they thought they weren't ready. they said no they had a lot of regret about that in the old days this would be being shy, and parents and teachers would be trying to get girls to not be shy. raise your hand, express your viewpoint. don't be afraid. how is this different? >> i think the way we've raised our girls is completely wrong. we've coddled them and protected them you know, we -- their dress gets messy, and we immediately fix it we let our boys crawl to the top of the monkey bars and jump head first.

now our girls are afraid to get anything other than an a you have serious mental health consequences that you are seeing because of this. we can't afford that anymore you know, today 40% of america's br breadwinners are women we need our young women to be braver than they've ever been. >> you are saying that the highest achievers at a younger age end up deciding to conform and doing, therefore, worse over the long-term? >> carol says that if life was one long grade school women would rule the world there's a study that shows that when a young woman signed up for a major in college, if she doesn't get an a in her introductory course, she'll leave it a boy is, like, i got a b. that's amazing i was speaking to a mechanical engineering professor, and he was saying that before he even puts the assignment up on the board, the guys are, like, oh, i know the answer. he is, like, dude, i haven't even put the question up yet there's this sense, i think, with young women is that i got

to know what the answers is perfectly before i even try. boys just aren't raised that way. >> i have to say, so -- >> here's my question for you. why are you so convinced that women are perfectionists and men aren't that's the part that i'm less -- >> it shows that women will apply for a job if they meet only 100% of the qualifications. men will apply when they meet 60% of the qualifications. i think a lot of this is documented in terms of what you are seeing in the workplace, and quite frankly, what i'm seeing in speaking to hundreds and hundreds and hundreds of women i do think it starts at a very young age. you know, from the time that boys and girls are 30 months old, boys are building blocks that are high. >> is this book really for parents? >> no, this book is for everybody. this book is for parents >> i have a little it-year-old >> girl or boy >> girl. >> there's two other boys. many of you squawk viewers have met. what do i need to do with sydney that's different than what we're doing with max and henry

>> well, i'll give you a fight that we had at my house because i have a 4-year-old boy. my son ae year ago says i'm scared of the dark i bought him a nightlight. plugged it in. go upstairs and plug it in i go into my room. ten minutes later my husband will come up the stairs and take out the nightlight i am, like, what are you doing he is, like, i want to toughen him up i said if sean was a girl, would you let her have -- would you let him have the nightlight? he said, yeah, i would there's these things that we do i think at a young age to kind of protect -- we think we're protecting them, but we're really kolgdsing them and wrapping them up for your daughter, let her get real messy >> i need to -- >> my wife would take away the nightlight, trust me >> girls who code founder and ceo. her new book, again, brave, not perfect. >> congratulations >> thank you in case you missed it, a huge deal just coming out this morning. sun terrorirust and bb & t ann s

announcesing a merger. a look at yesterday's s&p 500 winners and losers back in a moment endless fields of grain.... a wealth of oil.... and riches beyond your wildest dreams. there's a place where you can find all of this. in a suite of commodities-based etfs from aberdeen standard investments. everything from field crops to livestock, and precious metals to energy. all of which may help you diversify your portfolio. it's a big, beautiful world out there. why not invest in it? learn more about the commodity-based etfs... from aberdeen standard investments.

welcome back our big deal of the morning, crossing literally within the last half hour regional bank suntrust and bb & t will be combining in what are going to be the two banks that will be calling a merger of equals it's the sixth largest bank in the united states. suntrust will get over 1.6 bb & t shares bb & t shareholders will own 57% of the combined company. the deal values the suntrust shares at $62.85 a share it's a 7 cents premium to yesterday's close.

you have some additional details to share as well >> i think we've discussed this a lot already. the first thing is just an interesting insight, which i have spoken to two or three analysts whose first reaction was what, as in yes, we talked about the attractions of this sort of merger, and the obvious benefits, but this was certainly under the radar. no one was expecting this in the short-term in terms for what we might here on the call, 8:30 with the two former ceos, bill, kelly king and bill rogers, i think this is really going to talk about technology clearly, sin eshlgys and cost cutting is an obvious benefit, but the amount that the big banks were spending on technology and, therefore, it is advantage they were giving in terms of consumer using interfaces, the smaller banks weren't able to keep up, and the regional banks were threatened by that, and that's something we're going to hear from the two ceos about one of the main driving forces for this deal zbloosh when you look at the amount of money, for example, on the jpm spending these days, or wells fargo spending on technology, i mean, i looked at -- they're talking about $10

billion. >> oh, and it blows it out of the water. it's a massive multiple spend per asset size tharn what the smaller guys were able to afford and we've seen this in other industries clearly, the threat of technology in banking hasn't blown out of the traditional players in a way that retail has. the last couple of years is really picking up pace, and it's been manifesting itself of growing market share for the bigger guys. >> are you a believer in the long-term you won't actually need the branches? meaning, this idea of regional banks or local banks, that that -- that this customer relationship will matter, that you will just have the app on your phone and be a national player you'll just do it. you'll get the money >> have you ever gotten a bank check for your mobile device zoo won't even need an atm machine because most people aren't using cash. >> i'm not sure about zero, but i think massively reducing branches for sure, and i think that's been slightly muddied when you look at, say, the big six anyway or the big four taking out the two investment banks. a couple of them have tried to

expand into new regions. the slight change in direct -- we always talking about deregulation improving the smaller guys, which is true. the one slight improvement for the bigger guys is they've been able to move into some regions that previously they hadn't got licensed to operate in jp morgan is the best example. jp morgan kbraes e increased branches, and that's purely and simply because it's launching itself into a new couple of regions that previously hadn't got approval to do so. you take that away, all of the big guys are cutting branches, but, again, that's not been that politically palettable to head count cut branches, but it's definitely the trend >> they talk about $1 is.2 billion in savings let's try to understand what that is going to mean because i assume that -- >> what do you mean? do you think there's political pressure to increase wages and things like that >> i'm saying the in certain locations where they're going to, obviously, take branches -- >> it's -- >> firings, layoffs. i am suggesting it's going to be a part of the discussion, i imagine. >> i'm sure it will be >> not an insignificant number

>> as you had mentioned, a lot of analysts were calling for this consolidation had in the regional space, and even brian moynihan was talking about this specifically a few weeks ago in davos. >> the merger will come out of the the consolidation of another round of people and that still has to happen in the united states there are 6,000 odd banks, and you are find them continuing to consolidate. that's the core banking world versus the capital markets world, which has consolidated a bit. you have to look at a business by business. you can form one relatively quickly. it's very hard in the fixed income trading business, and that's more of a consolidated business because of capital pools and requirements from a core banking, the industry is very unconsolidated. >> i remember that interview >> think about in the 1980s there were 14,000 banks. today there are 6,000 regional banks. i mean, the numbers dramatically have come down mostly because of the passage of interstate

banking regulation that allowed all those mergers from 14,000 to 6,000 to happen, but now we're in an environment where there's a pressure to get cost synergies. the sector is under pressure in terms of stock performance, and that's driven also by what's going on around the world in terms of yields. >> yeah, and you also add to that the last decade capital requirements and regulatory costs have been -- >> gone up >> incrementally pressured on the smaller guys who can't afford that within their margins, and, you know, again, this is an example of something. >> i have to say now rewatching that now, because i remember i was the one on the other end of that stage interviewing them i wonder if brian actually knew something was going on at that time only because the room actually quieted down when he was speaking when he said that, there was a certain very strange pause feeling in the room. >> a lot of analysts covered regional banks and had thought had. it was interesting for him to say it i thought. >> the person who i know knew something was happening and regular will i had pushed the last two interviews he has been on kelly evans said it was about

six weeks before with kelly king i'm always pushing because he is always seen as the prime candidate for someone in the sweet spot for merging actually, weave got a slightly cheeky response from him which peaked my interest enough to say that's more than normal. again, it went away. clearly, he knew this was happening. >> go find that video. >> meantime, it's time for our squawk planner this morning with tai woods on the docket. we had a lot happening in terms of earnings today. we'll get results from twitter, yum brands, t mobile coming up kellogg, feeat chrysler, dunkin' brands and tapestry. those are all due before it is opening bell, and then the bank of england will release its latest rates decision. that's going to happen at 7:00 a.m. in about 23 minutes from now eastern time, and then weekly jobs claims at 8:30 on the political agenda president trump speaking at the national prayer breakfast. that's happening at 8:00 a.m. eastern, and potential presidential candidate howard schultz set to give a policy speech at 1:00 p.m. at purdue university a big day in ermz it of news and

news makers. let's take a quick look at u.s. equity futures ahead of the open this morning the dow looks like we would open off 164 points down right now. nasdaq looking to open off about 51 points and the s&p 500 off about 18 points. >> the e.u. slashing its growth forecast for the euro zone karen cho joins us from london karen. >> meltsissa, good morning a huge day unfolding in europe the european commission earnings -- economic numbers we're looking at having a big impact earnings, too, on the ticket as well, and the bank of england coming out shortly we're watching the sterling impact for the ftse, but take a look at how the dax, cac and tele-market. the downgrade, the revisions from the european commission have been sharp. 1.3%, the growth rate they're now expecting across the euro area from 1.9% brexit trade, high debt, all cited as ierkz the market was down half of a percent before the commission posted its foirk now down 1.3%. germany is seen growing by 1.1%.

that's down from 1.8%. >> publicist worst trading day in 27 years on the back of a q4 revenue miss, and investors closely eyeing some of the structural problems. it's not just around the trade and the economy.

it's also around the move away from some of the big agencies. there was less traditional ad spend by those u.s.-based consumer groups companies. the stock currently down 13.5% let me toss it back to you, andrew, mount st. helens, and -- >> let's talk more about the markets. joining us for that, charles campbell, trading desk specialist at mkm partners, and steve parker, head of theamatic at jp morgan private bank. charles, if i start with you, clearly we're seeing a big rally in if u.s. equities. the fed paying a big part of that data staying strong europe, we're seeing today, another glimpse of that slowing global growth. do you think the rally we've seen in the u.s. understates the risk of that global outlook that's clearly getting worse >> you have a couple of things going on you have powell pivoting once again, which was one of the three head winds for the market. you have the trade tensions between the u.s. and china we had a meeting last week

between senior policymaker from china and the president. markets took a constructive interpretation of that that was the second factor that moved out the risk curve the third factor is the deceleration of global economies, which is related to the second factor. that will probably take care of itself with central bank accommodation if the trade situation works out. you know, what we've got, december move down was pretty significant, obviously november was slielts up. october was down for the quarter we were down pretty big january had the biggest gain since 1989 those asset classes did very well crude oil up 18% crude is up even while the dollar is lower because of the expectations that the u.s. economy is decoupled from the global slowdown for now. we've seen elsewhere >> days like today make you want to continue to focus on u.s. equities over anywhere else?

>> no, actually, we're finding opportunities in other markets emerging markets specifically is an area that we think can be really interesting right now you talk about some of the trends that did reverse, which caused a sell-off, meaning the fed potentially risking over tightening what that meant for the dollar that was obviously a huge headwind for china and emernling markets broadly. the other thing to keep in mind from a stimulus and policy perspective, china took advantage of the strength that we saw early last year to tighten policy, both monetary and fiscal that's obviously shifted the work that we've done tells us it usually takes about six to nine months before that really feeds through to the economy we saw late last year was the impact of that tightening. now i think heading into this year in an environment where we may get a waerk dollar, that could be a good sign for china and emerging markets more broadly. shoo when we look at the u.s. market, do you like financials and what do you make of the merger this morning? >> without knowing the details of the merger, i think the fact that it's occurring tells you there is a positive outlook on

the fact that -- i don't think this is the type of deal you would look to make if you felt that recession was imminent. i think when you talk about the financials, you know, obviously the yield curve situation has been a challenge, but if you believe that growth is stabilizing, and in the fourth quarter we did start to see loan demand begin to pick up. that should be a good environment for the banks. >> i want to pick up on what you both said, and that was the stimulus around the world. i mean, the notion that there's going to be easy money now, the flip side to slowing growth is that central banks step in, and they make -- >> accommodate >> they accommodate, right you have that in china going on. the fact that emt uchl has lowered its euro zone growth rate makes it even more likely that the e.u. will step to the sidelines like the u.s we're sort of in a situation where you don't want to fight the central banks. the easy money is coming isn't that the flip side of all this >> the central banks are accommodating. china -- pboc has its own set of reasons. the powell fed has its own set

of reasons, and i could argue that powell induced because of his far from neutral and autopilot comments we'll leave that to a side from every for now. boe has its own ieshsz, and the ecb, futures are pricing in no rate increase at all this year, even though mario draghi and the governing counsel said next summer we'll be racesing the markets are saying we don't think so the markets are really ahead, and the e.u. is nowak knowledging what pmi, gdp's, a lot of concurrent and leading indicator economic data, and the futures market data are already pricing in >> steven, what's your top u.s. equity sector pick >> right now our favorite sector is health care i this i that, one, you get the secular growth story, which i think a lot of people are familiar with, but we've seen a little bit of pressure in the sector given concerns around drug pricing we really think boy biotech will be the big place to target big pharma will be targeting smaller companies. >> thank you very much, steve parker, jp morgan private bank

and antd charles campbell, exce >> looks like an andy, though. >> could be an andy. >> mkm properties. >> i always wanted to be an andy >> you could be an andy right now. >> you could never make it stick. i tried it at camp years ago, and i tried drew i tried andy >> you are not a drew. >> never got there >> i'll call you andy. >> coming up, we're going to talk chipolte shares a blow-out quarter we are going to dig through the numbers straight ahead then quarterly report cards. taco bell, parent yum brands, and twitter. we'll bring you those numbers and reaction from wall street. you're watching "squawk box" on a big morning here on cnbc

your daily dashboard from fidelity. a visual snapshot of your investments. key portfolio events.

all in one place. because when it's decision time... you need decision tech. only from fidelity.

the ceo of drugmaker novartis is backing the trump administration's plan to lower drug prices for consumers. the proposal would end drugmaker rebates to middle men. the pharmacy benefit managers and instead direct those rebates directly to consumers. novartis says it pays 50% of its grease revenues in the u.s. into rebates. the company ceo said returning those to patients would lower out of pocket costs and correct a distortion in the marketplace. coming up, chipolte shares are soaring after they posted a beat on the top and bottom line and a big jump in same-store sales. as we head to break, take a quick check on what is going on in european markets. this after the e.u. slashed its growth forecast for the euro zone to 1.3% we've got germany, the dax down 1.25%. stay tuned

at&t provides edge-to-edge intelligence, covering virtually every part of your finance business. and so if someone tries to breach your firewall in london & you start to panic... don't. because your cto says we've got allies on the outside... ...& security algorithms on the inside... ...& that way you can focus on expanding into eastern europe... ...& that makes the branch managers happy & yes, that's the branch managers happy. at&t provides edge-to-edge intelligence. it can do so much for your business, the list goes on and on. that's the power of &. & when this happens you'll know how to quickly react... this is a very difficult job. failure is not an option.a. 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. val, vern... i'm off to college and i'm not gonna be around... i'm worried about my parents' retirement. oh, don't worry. voya helps them to and through retirement... ...dealing with today's expenses... ...like college... ...while helping plan, invest and protect for the future. so they'll be okay... without me? um... and when we knock out this wall... imagine the closet space. yes! oh hey, son. yeah, i think they'll be fine. voya. helping you to and through retirement.

welcome back to "squawk box. we're talking about chipotle posting a block buster quarter and a big jump in same-store else a. >> valuation and cash flows -- >> no, i like the bowl i like the bowl and i feel like i can do it in a -- i think doing a healthy version. like i can sort of get away with if you don't go too heavy on the race store sales. joining us, steven anderson, consumer analyst, have we turned a corner >> i think we have if you look at where we had the health concerns, we're going on more than three years since the e. coli outbreak and i think

since the -- the more distance we put behind it, with the new ceo brian nicooll nicolle, we'rg tangible efforts 6.1% comp gain, better than expected being driven by what we vie four different factors changes in the menu. you were mentioning the life-style bowls that cater more towards -- >> life-style bowls, andy. >> sorry, thanks. >> we'll see emerging perhaps a loyalty program so i think with those four sales levers i think we can see some sustained comp growth. >> for digital sales that was driven by a partnership with door dash and other online delivery services but in terms of the real benefits that a domino's has seen in terms of investing in technology, in lowering labor costs, will we see that as well >> we will see that. we've seen in the the last few

years with panera bread before they were taken private. right now panera generates one-third of their sales from digita digital. there's an upside to that and that's growing 1% to 2% per quarter so there's still some upside. >> when you look at the share price and the quarterly earnings, how good a job has niccol done and what is the top execution? >> well, i would say at this point the key thing we were looking at was the guidance for 2019 they came in right where we were expecting as up mid-single digits and i think that's part of the reason why we're seeing a nice pop. >> and that upside, though, is going to be a function going forward of what? meaning is there some new -- >> well, i would say there's a continuation of trying to build on the digital sales layers but also we'll see a new loyalty

program likely middle of 2019. that will try to bring back not just the recurring users but also a few of the lighter users. >> in five minutes we'll hear from yum brands, taco bell are you expecting good or bad things >> we don't cover yum as a brand specifically but i would say taco bell i think has been executing well but the other, pizza hut, has a ways to go. >> fair enough. >> thank you, stephen. >> thank you. still to come, twitter set to post quarterly earnings any minute we'll brick you the numbers and reaction when that happens. plus, much more on the big deal of the day. the merger between suntrust and bb & t u.s. equity futures more broadly, they are just a bit low, quite a bit low, wndo 173 points across europe sharply low they are morning we're back in a minute d to mana, the world turns to cme group.

we help farmers lock in future prices, banks manage interest rate changes and airlines hedge fuel costs. all so they can manage their risks and move forward. it's simply a matter of following the signs. they all lead here. cme group - how the world advances. [kno♪king] ♪ memories. what we deliver by delivering.

you mighyour joints...ng for your heart... or your digestion...

so why wouldn't you take something for the most important part of you... your brain. with an ingredient originally discovered in jellyfish, prevagen has been shown in clinical trials to improve short-term memory. prevagen. healthier brain. better life. regional giants bb&t and suntrust getting together in a $66 billion merger we have the details. twitter on deck. the company is about to roll out quarterly results. the numbers and instant reaction straight ahead. and countdown to shutdown. one week before the deadline, are law makers any closer to

reaching a deal to keep the government open for business the second hour of "squawk box" begins right now >> announcer: live from the beating heart of business, new york, this is "squawk box. good morning, welcome back to "squawk box" right here on cnbc, i'm andrew ross sorkin along with melissa lee and wilfred frost. becky and joe are off. they'll be joining us from california tomorrow. meantime, our guests, krishna manhi, chief investment mment r and julia boorstin is standing by with some breaking news on twitter. >> twitter beating on the top and bottom line. while monthly users are in line with expectations, revenue growing to $909 million. that beats expectations of $868

million. earnings of 31 cents per share, six cents better than expected and up from 19 cents in the year earlier quarter. monthly active users decline by five million from q3 as expected to $321 million. that's just about half a million less than analyst expectations and that's the third straight quarter that this metric has declined the company announcing that it will not report this monthly active user number after its first quarter results. instead it will be reporting monetizable daily active users, these that's people who visit twitter's app and web site and not those that access with the likes of tweet deck. this quarter, twitter's users are $126 million, up from $115 million in the year earlier. twitter announcing 24% guiding for revenue on the lighter end

of projections, guiding between 715 and $775 million versus analyst expectations and the shift to focus on the daily users at 8:00 a.m. eastern back to you. >> the stock turned around after the initial revenue and earnings beat the change in guidance that you just mentioned around whether or not they'll continue to give monthly average users, was that expected i wonder if that's a reason for share price volatility. >> they've been shifting recently in recent quarters to talk about daily active user percentage growth so the p.a. couple quarters they're saying don't worry about the fact that users are declining because we're cleaning up the system, we're investing in the health and safety of the system, trying to get rid of trolling and fake accounts and as a result that active user is declining so

instead of thinking about mau, you should by thinking about the percentage growth so this quarter we saw 9% year over year before that, the daily active user percentage growth had been in the double digits so they'd been moving in this direction but it's dramatic to see them get rid of the monthly user entire entirely. >> a lot of analysts put out estimates for active user growth 10% was s where analysts stood for the quarter just reported. when they say monetizable daily active users, is there a difference between monetizable daily active users and the daily active users talked about by the analyst community? >> look, i think those should be pretty much line the key thing here is that twitter doesn't want to be counting people who aren't seeing ads they want to be clear with advertisers but they are not counting people who are not seeing ads so if you use tweet deck like i do, you won't be

seeing ads and they want to make sure when they're representing to advertisers how many people are using their service that they're not including those numbers. any aggregation service like tweet deck so those numbers shouldn't be dramatically off but they're trying to differentiate between from people on, say, facebook messenger. because if you're using facebook messenger, you're not seeing ads. you might see ads down the line but for now those facebook messenger numbers are not necessarily monetizable in the way that twitter says these users monetizable. >> thanks for that stick around we'll continue the discussion. here to help us break down the numbers, dan morgan. >> i think the numbers were good a beat on the top and bottom line, looking for first quarter revenue of 720 to $820 million that came in as you mentioned a little below that but i think overall.

i'm interested in what the advertising revenue was. i'm looking about a 19% increase from a year ago. that would have been the third consecutive quarter of almost 20% growth in advertising revenue. a big number because both google and facebook had strong growth in their advertising revenue sectors so i'm assuming twitter did well on that >> advertising revenue came in at $791 million so you look pretty much right in line with where we stand the curious thing about twitter, dan, is that over the 1235past quarters, twitter has traded lower seven of those 12 quarters an area of twitter jumping around what's your expectation in terms of how these results will be viewed by the street. >> i'm hoping it will be positive as i said before, we've had a good rollover from other reports, amazon, facebook, google in terms of advertising

reven revenue. i'm hoping the street doesn't overly focus on the guidance into the first quarter it seems to me -- and you follow the tech sector closely, it seems like a technology stock has to hit on every may trick for the street to applaud it if it misses any minutiae so the climate seems to be negative on tech but we'll hope that twitter gets a good reception. >> here's one thing that hasn't been taken too kindly. ff 2019, twitter sees 2019 operating expenses up by 20%, that compares to operating expenses rising 13% in the fourth quarter how does that compare with what we have been expecting >> well it's stronger growth than what we had been expecting in terms of those expense growth numbers. now, we've seen expenses at facebook grow dramatically

it's not that surprising to see expenses at twitter grow as well though that number is bigger than expected. i think part of that is that investment in the health and safety and security on the platform we've seen facebook hire 30,000 people to work in safety and security, twitter talking about how they've had a 16% year over year decrease in abuse reports from people who had an interaction with their alleged abus abuser they're very proud they've made improvement so it sounds like they'll continue to invest more because it's a non-negotiable area last year we had jack dorsey on capitol hill so as they face more scrutiny, that will be one factor driving those costs higher. >> i think the twitter earnings are interesting but i think it doesn't tell us a lot about the rest of the tech sector and i think the rest of the tech sect

sect sector, one sector that's delivering well on multiple fronts, things are slowing down but doing reasonably well. >> when you say tech sector, are you talking about faang? you're putting in this sort of facebook, apple, google world or amazon interpriz enterprise is another operation. twitter is in this very interesting place. i don't know what to call it, almost like a media company. >> in the social world, the performance doesn't tell you how things are looking for facebook because it's security specific that's the point i'm trying to make. >> fair stuff? we're talking about the high bar twitter had going into earnings report because of what facebook reported, because of what snapchat reported. shares are up 6% since twitter shares were up 6% since facebook reported earnings.

it does face the challenges as the other social media companies in terms of spending in order to make sure there are no privacy issue to make sure users are use users. >> twitter is a niche play, looking at google and facebook, the big commandos with 70% of all advertising but twitter is interesting. it has the niche market. people check it everyday they don't stay on for as long as they do on facebook we're talking about the daily average users. $325 million versus facebook at $2.2 billion and youtube and google at $1.9 billion so it's sma small. but it's still viable going

forward but not as big as the google and the facebooks of the world. >> stock is dropping down 5% what will be the key thing you're looking forgive you comfort that these headline beats is one that is as positive as it sounded initially? >> i think more color on on ex i had $350 million on ebita. you guys were talking earlier about privacy and security and we know that's a big issue with facebook and we know twitter is addressing that also and the street is zeroing in on how much it's costing to ensure that the platform is safe and that it's private and so forth so that's one thing i'll be focusing on the call in regards to first quarter guidance. >> thanks for joining us dan morgan we'll see julia again later in the show our thanks to her. stock down 6% or 7% in the pre-market. still to come, the media

giants both old and new have turned in their report cards ken auletta, new yorker magazine staff writer and author will take us behind the battle for advertising dollars and which sector is winning the war so far. and we have more on the deal of the morning. the merger of bb&t and suntrust creating the biggest bank in the country. back in a couple minutes ♪

you should be mad they gave this guy a promotion. you should be mad at forced camaraderie. and you should be mad at tech that makes things worse. but you're not mad, because you have e*trade, who's tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. don't get mad. get e*trade's simplified technical analysis.

the latest inisn't just a store.ty it's a save more with a new kind of wireless network store. it's a look what your wifi can do now store. a get your questions answered by awesome experts store. it's a now there's one store that connects your life like never before store. the xfinity store is here. and it's simple, easy, awesome. welcome back to "squawk box. dow gave up 164 at the open, s&p down by 18, nasdaq down by 45 points right now major bank merger to tell you about. >> let's talk about it because it's the big deal of the morning. $66 billion. bb&t and suntrust will be combining in what the two banks are calling a merger of equals

suntrust shareholders will receive just under 1.3 bb&t shares for each suntrust share they own that's $62.85 based on yesterday's closing price. bb&t will own 57% of the combined company if there will be a call 8:30 a.m. eastern time. i'm curious when you saw headline, is this expected for you? does this suggest we're late in the cycle? >> this should have happened a long time ago. this is a natural fit banks are a value trap the only way they get through a higher level is through these m&a types. >> all banks are a value trap or smaller regional

>> all for the most part except for long-term investors are executing fantastically well and i would put morgan stanley in that category and their focus on their asset management business makes sense from a long-term perspective. >> in terms of whether that could be the wrong approach i guess is to say that these banks have got record capital levels, the lick wety is very good, the regulatory environment, if this gets approved, if you avoid a recessionary type environment they're attractively valued relative the to -- >> you could have made that case last year or said those at the beginning of 2018. >> so you're saying because they've come down it adds to the picture? >> i think value traps by definition have good valuations. that's the whole point.

>> earnings is growing, though. >> yeah, earnings is growing but it's late cycle. the markets won't give you a significant premium for that earnings growth. that's what the challenge is it's not that businesses are bad. they're doing very, very well, but stocks aren't going to appreciate. the ceos of suntrust and bb&t will be on "squawk on the street" 10:00 a.m. eastern time. still ahead, the s&p 500 snapping its winning streak but is the index showing more sell signals right now? we'll get technical with the markets next check out shares of twitter. one of the big stocks to watch after reporting results a moment ago. pretty much in line with maus, operating expenses were higher and property expenses are higher the stock is down 7.5% we'll talk much more about twitter and tech all morning long "squawk box" returns in just a moment

people know aflac... aflac! ...but not what they do. so we're answering their questions. aflac is auto insurance, right? no. uh uh. is it homeowner's insurance? no... uhuhuhuh! is it duck insurance? nope. ahhh! do they pay me money directly when i get sick or injured? yeah. aflac! you got it. you know aflac! boom! get help with expenses health insurance doesn't cover. get to know us at... aflac dot com.

you still have service? call the insurance company it's them, calling us. it's going to be a week before they can get through on these roads shhh, sorry, i didn't catch that.

i said ask how soon they can be here not you. right now? what's now? he says they're surveying our property now they're probably at the wrong house i don't see any hovering his name is hovering? look up? by using machine learning and analytics to automate claims, cognizant is helping insurance companies advance how they serve even the hardest-to-reach customers. cool ♪ >> announcer: now the took place today's after flak trivia question how many states have dunkin' donuts the answer, 41 futures have been low. our next guest says the market can be flashing a sell signal. let's find out why

katie stockton joins as our guest host for the hour. what are you seeing in the charts here? >> short term upside exhaustion. there was an impressive relief rally after the december low, we have signs of exhaustion it increases risk. certainly higher low. >> you brought a chart along walk us through it. >> this is a generic chart of the s&p futures and we have a sell signal the like who was we have not seen since september 21 which was the day of the peak so i'm not making a bearish call but the bearish buy is still there from q4 and the loss of momentum we saw then prior to that we had another sell signal that yielded about a two to three week pullback so at a minimum that's what we should expect. >> what makes you think if we

get another pullback it stops out at a higher low rather than retesting? >> it's the improved intermediate term momentum we've seen with the relief rally because it's been so impressive. our gauges have flashed buy signals. not strong buy signals but they're there so it did improve the outlook. >> what did it flash in december >> a long-term sell signal in october based on monthly trends. >> in october? >> in october. >> that's a bad situation but i think one thing that is different in january is the fact that the fed is at a different point. does that change the down siding of you >> really any relief of uncertainty makes it better. more conducive environment to improve momentum so i'm just a technician so what

i see similar proved momentum that could suggest a higher low and that's what we look for as a bottoming process. i think we'll see additional rotation that's a shift we're seeing more on the small cap front. >> i think a short-term correction in and of itself isn't a bad thing because it keeps the fed at by a. because if the markets keep going up and it brings the fed back into play and you don't really want that. >> krishna, when you look at u.s. equities, how are you thinking about the border valuation valuations. >> our point with respect to u.s. markets, it's not earnings growth you're looking for. earnings are going to be under pressure it's the fact that the fed is out of -- is supporting the

market providing the tail winds as opposed to the head winds that makes a great deal of difference the risk premium goes away. >> what levels are you watching on the s&p >> resistance, of course, the 200 day moving average is in play and 2800 is a natural resistance level we have to look at these as not precise points but cushions in the same way the 200 day was a cushion for support to cushion the resistance and support on the down side, about 2570 down to 25 50 as initial report. >> can international equities have a similar set up for this i.e., starting to find resistance >> they do i say the pullback should be broad based globally, even emerging markets which are v gained relative strength the dollar is posed for damaged momentum over the short term but the set up is very similar in europe and beyond. >> we've been talking about the s&p regional bank index.

of course the last year was terrible for this. what do you see there? >> if you look at something like kre, it has the same sell signal but i would say it's worse so it's a year-long down trend in the regional banks. but the short term overbought sell than what framework, it does increase risk but we have seen those intermediate term buy signals that suggest we'll get a bottoming process. >> so let's assume that we actually do see that correction. from a medium-term perspective, is it buying or sell >> we want to see on that retester corrective phase so less down side momentum. i don't think that would be hard to do because that was very strong down side momentum so with those positive numbers, i

think we look for buying opportunities. >> fantastic. >> in terms of thinking about where we were december 24, people say we have to retest those lows sounds like we don't think that necessarily has to happen. >> not anymore with improved intermediate term however the retest is very common, very standard i think this environment is very much like 2015/2016 where short term volatility is going to be heighten heighten heightened yet not in 2008. >> katie stockton, krishna will stick around with us. more to come on squawk we got a big deal in the works a megadeal in regional banking bb&t and suntrust getting together it's a $66 billion merger. we'll follow this developing story all morning here on squawk the ceos of both banks will be hanging out with the guy from "squawk on the street. that happens at 10:00 a.m. eastern time as we those a break, look at u.s. equity futures at this

hour squawk returns the dow off about 153 points back in just a moment. so, servicenow put your workflows in the cloud, huh? mmhm. your employees must love you. [ chuckles ] thank you. you could say that. i love you. servicenow works for you.

still to come on "squawk box," more fed speak this time from former fed chair janet yellen she opens up to steve liesman about the current climate of central banks. that's next.

and twitter releasing quarterly results. the conference call begins 8:00 a.m. eastern time. we'll monitor that for news. the stock is trading lower plus the shutdown countdown. the deadline for a deal is one week away. senator john boroso of wyoming will be our special guest. and the deal of the day, bb&t and suntrust are joining forces in a megamerger. the conference coming aupt 8:30 a.m. eastern "squawk box" back in a couple minutes.

welcome back to "squawk box. look at futures. we are in the red. let's show you what's going on dow looks likes it will open off about 152 right now. s&p 500 is looking to open down 16.5 points down as opposed to up it's going up as we speak. unfortunately nasdaq off about 44 points. there's plenty of fed speak from current members of the central bank and former. steve liesman sat down with former fed chair janet yellen and joins us now. >> good morning. former fed chair janet yellen in an exclusive cnbc interview generally supporting the recent shift of the fed to a neutral stance she think this is year will have slower but still solid growth.

that's her base outlook. yet the lack of inflation and the growing risk of global economies and trade war means the fed should be cautious and might even end up cutting rates. would you say it's possible the next move is a cut at the fed? >> well, of course it's possible if global growth weakens and spills over to the united states or financial conditions tighten more and we two see a weakening in the u.s. economy it's certainly possible that the next move is a cut but both outcomes are possible. >> yellen, who chaired the fed from 2014 to 2018 was the first to say the balance sheet should be reduced on autopilot. she copped to that phrase but said the phrase was never intended to mean the fed ignored what happens in the economy. she said the fed should make clear that it's watching the impact of the runoff and the economy and should make changes if needed. very quickly, i don't know if

the full screen i had made in the last several seconds was made but i want to talk about this global growth quickly randy quarrels mentioned it. who's better than our staff? look at. this uk just came out with this bank of england 1.2%, down a half point for their 2019 outlook. eurozone yesterday down 0.6% and i just wrapped in there where the fed is i would wonder if they're lower now than the 2.3% they gave us in december. >> sterling now down fractional news on may's trip to brussels but you spoke about that with janet yellen as well and she is striking a tone, everyone is aware of this, but as you say perhaps people haven't factored into it the numbers yet. >> it's her number one risk. we're watching here in the states the different channels that this might affect us.

it hasn't shown up in the export subcomponent we would know more if we had the q4 gdp number which, by the way, we're going get the q4 gdp on february 28. you can write that down in your book and tune in at 8:30 we did see it yesterday in trade data between the u.s. and europe we need to watch how it will ricochet. >> february 28 very much in your calendar let's discuss this further joining us now is richard fisher, former dallas fed president, current senior adviser at barclays. good morning to you. let's start on the main topic, will it be a cut oar hike next time we see it is the balance equal is one more likely than the other? >> i watched all of steve's interview with janet and if you listen carefully to what she said it was the way you asked the question and she said

everything is possible, it's possible on the other side she said had she been plotting the dot in december she would have been thinking of two rate rises. so she was typically cautious, very central bankerish and i don't think the issue is one of cutting rates. the issue is do you hold still and for how long >> i watch the same interview you did and i thought that she was much more anxious. >> i know janet, i worked with janet for so long. >> i have a lot of respect for richard but richard i know janet well, i know you know janet well and i don't think she'd be talking about the possibility of a cut if she didn't really think that there was -- we were sort of on the fence right now and if economy could go either way. >> i think you're making steve -- i love you, but i know janet probably better than anybody who has -- anybody who

has not served on the committee with her for a very long time when she was a bank president, when she was vice chairman, when she was chairman or chairperson and -- chair but, again, she was asked a question, she answered it honest ly i'm not advocating one thing or another. you mentioned good points. the german yoip numbers were awful. the singapore export numbers and trade numbers were terrible. we have a very weak uk number, the bank of england just reduced their growth numbers significantly downward so we happen to be as janet yellen pointed out doing quite well are we able to continue to do that or not? what i'm worried about is neither the european central bank nor the federal reserve of the united states has enough

ammunition in their pocket to mitigate a downturn. i don't think the crisis has occurred but when we see the economy roll over, we don't have much to cut. we don't have much of a balance sheet to expand so that worries me and this's something that people will light on certainly negative interest rate test debt has claimed to about $9 trillion. >> so what happens if there's no dry powder, so to speak. >> that's the $64 trillion question. >> there's nothing on the table -- you don't think any central bankers have thought about this what do you think? there are no other tools that could possibly be used >> well, negative interest rates we know do enormous damage, total misallocation of credit. the fed has learned from watching the europeans, they don't like why t way the ecb has gotten themselves into a trap. we know the effect it has in

japan so this is the issue central bankers are create i have we showed that under ben bernanke's leadership during the crisis they'll be thinking this through, they're long-term thinkers and an independent able body that was important so this is my concern. we didn't move enough on the upside we're at a point where it's beginning to bite and there's not much to give back. you want to have money in your pocket and you want to cut rates to mitigate a down tournament inflation isn't the issue. would deflation be the issue in the future so we have the possibility of holding still for a while. we'll see what happens in the global economy and see if it

infects our economy and we don't live by ourselves in the world so it's a high probability. >> i want to talk about the banks merger we've seen this morning, bb&t and suntrust creating the sixth biggest in the u.s. what's your take on that what do you think the regulators' take will be >> i don't know, quarrels is a very good leader on the regulatory side on the federal reserve. i presume this was well tested beforehand i presume there was discussions beforehand they're probably assets that have to be shed or coverage that has to be shed it will be the sixth-largest bank in the united states but it's dwarfed by the big giants, the big three in particular so we'll have to see. they are going through a new series of stress tests on a horrific outlook possibility what do these different banks have to do how do they shore up their capital? that stress test mode is just

beginning now and again this has to be considered within that context. >> richard, i have to say, i cover randy quarrels and it's tough for me to get a bead on him in part because -- you want to say okay, he's deregulating now but that's not strictly true. >> agreed. >> in some places it looks like for the biggest banks he's either as tough or maybe even tougher, especially with these liquidity ratios, get down to the next tier where this merger is taking place and he's less stringent so i wonder if you can tell us your sense of the broad drift right now of bank regulatory policy. is it more favorable for the banks? >> we started the process going back when danner t terrulow was

regulator quarrels has been quite effective in making sure is the case. there's more leeway to the regional banks and the larger regional banks and the community banks and that was just so they will be subject to less immediate examination and the stress test will be different. the main thing are the so-called sifis. as you know, steve, my least-favorite acronym sounds like something you might catch at a bar late at night or something, a sifi. but i think that's where the scrutiny should be these are systematically important institutions the big banks in particular, not the insurance companies and that's where the level of scrutiny is enhanced and i think it's the right thing to do. >> richard, thank you for joining us richard bishop, former barclays senior adviser and cnbc contributor. >> is that something you're worried about? central banks running out of

bullets? >> richard is right. and that's what they're petrified about and that's why powell flipped as easily as he did in december because they know the best strategy right now is to make sure that we don't get into a downturn. if we get into a downturn, it will be hard to get out of it but with the tightenings they have done, they have built themselves cushion but it's not alive. >> but the relative difference in position. it's a tricky position when you consider the position he fell into. >> the ecb is right where it was before i guess they have a little forward guidance possibility in that extending period of when they might hike rates. >> i think before everything is said and done, everything will be coming in in a very significant easy morning >> how about bank of india yesterday? >> absolutely.

>> okay, more to come on squawk. we are all over the deal of the day, bb&t and suntrust announcing a $66 billion merger. big conference call at 8:30. we are going to bring you the highlights from that plus the battle for advertising dollar dollars. we have living legend ken auletta that will join us after the break. we'll show you how twitter shares are reacting ahead of the 8:00 a.m. hour conference call we have another huge day and media titan at&t randall stephenson, ceo of at&t will be joining us he'll join us tomorrow from pebble beach stay tuned, you're watching "squawk box" on cnbc the latest innovation from xfinity

isn't just a store. it's a save more with a new kind of wireless network store. it's a look what your wifi can do now store.

a get your questions answered by awesome experts store. it's a now there's one store that connects your life like never before store. the xfinity store is here. and it's simple, easy, awesome. the sixth largest bank in the united states and i think that you should anticipate other large regional banks considering to do similar types of deals. >> welcome back to "squawk box." that was rbc bank analyst gerard

cassidy commenting on the bb&t/suntrust merger we'll jump on that conference call at 8:30 a.m. eastern time we should note they will be on "squawk on the street" 10:00 a.m. eastern time we're going go to dom chu this sector has been on fire this year. >> it has been after lagging performance over the second part of last year but those regional banks are a big focus. you wondered whether or not there would be a big focus let's look at pittsburgh based pnc financial. it's worth $56 billion so it will be below the combined value of the suntrust bb&t deal. that company worth more than both of them individual ly shares of comerica up. comerica worth $13 billion, it could be a company that maybe

investors look towards as a possible merger play and then cleveland-based key corps also just fractionally higher on light pre-market volume key is worth $17 billion those and those other large regionals will be ones to watch as regular trading kicks off this morning also want to get you up to speed on a few other early moves outside of the financial side of things tapestry shares are down about 11%. very large move pre-market down around that point on 170,000 shares pre-market volume the fashion retailer formerly known as coach posted profits and sales that fellow low analyst estimates. also yum brands down the fast food chain behind taco bell and kfc and pizza hut reported sales that missed estimates but it reported better-than-expected sales growth at existing store locations around the world at taco bellowications and twitter shares were up

the social media company beat expectations but its current forecast is viewed as disappointing and it will stop reporting monthly active users after the first quarter of this year. thank you, dom we're going to dig into twitter more and talk about the battle between old and new media companies. earnings reports from disney there this week, ken auletta the "new yorker" magazine staff writer author of "differeen f"f. so twitter will stop declaring what their active users are. they're lower year over year and they're projecting lighter guidance because they'll have higher expenses to deal with all of the fishes go going on. is that a problem? >> yeah. they have basically a little

over 300 million monthly users that's not a large number compared to $2.2 billion facebook users total and monthly is less than that. and they have problems, how do you advertise on twitter and they don't have the advertising revenue that the facebooks and the googles and the amazons increasingly half. >> were you surprised on facebook how strong that business has remained despite the hand wringing and conversation, things about privacy and issue around the election, everything else? >>. >> yes, but they have a problem. if you gave a truth serum to mark zuckerberg or sheryl sandberg they'll tell you they're sweating about the following -- what is the government going to do not just about privacy but our size and dominance is there going to be some antitrust issues

it may not be a breakup of facebook -- >> can i ask you a serious question with the current administration in place, do you think that that will happen? plus you can targ consumer, the american public has already voted. they voted with their click everyday by staying on the platform i would have thought if people thought this was so horrific of what was happening -- and this is not a defense of what happened from any moral standpoint -- but you would have thought they wouldn't be using the service? >> would have and i agree with that, but. and the but is privacy is a burgeoning issue in america as it's much more dominant in europe and the issue of size the american public has an aversion to bigness and facebook and google and amazon are big. >> come 2020, if there's a true change in washington, i can see that being --

>> i think republicans talk as do democrats about privacy issues and they talk about size issues so it's one of the few areas where there's an overlap. >> facebook did see a user decline in the quarter the revenue per user -- but the fact that advertising revenue remains strong -- >> advertisers haven't walked away. >> means that is the case it is too big. people are making the argument there is nowhere else to go. that you have to go there so it plays into that antitrust movement against facebook. >> about to build on your point which i agree with, think about the newspapers, the magazines and the people in media world are lining up against google and facebook saying 70% of all the digital ad dollars are going to them and 90% of the growth in digital add dollars are going to them why did vice lay off people? why did huffington post? why did these companies lay off people buzzfeed, because they can't get the advertising dollars.

>> it's important to remember that, yes, these significant issues but from a security selection standpoint, that's built into the price if it wasn't for that, facebook would be a difficult -- the valuation would have been better so these risks are real but built into the price and it's still a good -- >> i think the depression in the valuation reflects that concern but do you believe it's fully -- because if you give truth serum to sheryl sandberg or mark zuckerberg and said tell me how much you need to spend to come into government compliance, the fact they don't know what the government might or might not do is a huge issue. how do you build that into a model? analysts seem to be comfortable from the reaction to the last quarter's conference call. we don't know what's built into the price or what needs to be built into the price >> is there going to be significant amount of spend with respect to all of this

the answer is yes but even with th that, i think that's just mind-boggling and the valuations therefore in our view are interesting. >> there's no disagreement that they're -- as a business they're doing great. as are the other giants in silicon valley i'm talking about if you look over the ridge, they've got problems coming up there china, for instance. >> what do you make of the fact that the likes of buzzfeed and huffington post made cuts but "new york times" reporting good numbers. does that suggest the traditional newspaper type companies have sorted out their digital strategy now >> no, the "times" has and the "times" is doing well. the "times" is the best newspaper in the world so the "times" does well, the "washington post" does well. "wall street journal," the "economist," the "new yorker" does well digitally. detroit news st. louis post-dispatch, new orleans picayune times, local

newspapers are dying and 500 newspapers have died since 2006. but increasingly they're getting together you guys have to compensate traditional media for -- like cable compensates the networks and that is another argument that's building. >> it's a larger conversation. come on back, ken auletta. >> we want to thank our guest host, great to have you with us, krishna. >> thank you. we'll hear from the senate's third-ranking republican on the impact of the last shutdown and if another can be avoid eight days from now. and tim armstrong will join us for a special announcement about u' wchg quk x"ture yoreatin"sawbo on cnbc it's the first day of school. yeah, he's so nervous.

tom is letting him know it will be alright. i know, it's a big day. i'm so proud of him. gotta go. ♪ good luck on your first day. just as we help companies advance in the digital era, cognizant is helping people do the same, by investing in skills training in communities nationwide. ♪

a $66 billion deal we'll bring you the details and what the tieup means for the financial sector. twitter beats the street the social media company topping revenue and profit estimates but the stock taking a dip after this morning's earnings report. >> and tim armstrong's next chapter. the former aol and oath ceo is our special guest. he'll fill us in on big new investments in consumer space as the final hour of "squawk box" begins right now

♪ going up to the spirit in the sky ♪ >> announcer: live from the most powerful city in the world, new york, this is "squawk box." we're live at the nasdaq market site in times square with melissa lee and wilfred frost. joe and beck kri on the west coast. they'll be joining us tomorrow from pebble beach. our guest host is jeff lewis, founder of bedrock capital we are in the red right now. let's show you what's happening. dow looks like it will open up about 150 points and the s&p 500 off 18 points. the ten-year note at 2.666 well the 666 thing -- >> you're missing a 6 but you're close. >> there was a 4 there

we have a major deal to tell you about in the banking world announced this morning bb&t and suntrust combining in what the two banks are calling a merger of equals suntrust shareholders will receive just under 1.3 bb&t shares for each suntrust share they now own the shares are valued at 6285 based on yesterday's close there's a conference call coming up we'll be all over that for you wilf will be on that call and the ceos of that company, kelly king from bb&t and suntrust's bill rogers, that will happen at 10:00 a.m. eastern time. >> on the price if we bring up the shares, suntrust shareholders will be on the stock based on the ratios on last night's close, suntrust will get the equivalent of 6285 per share.

it's a recall so there's no offer to be accept ed hurdles will be overcome and that's why you've gotten them trading higher and that's another factor, analysts note initial takes coming out, people pointing to the fact that given that it is a merger of equals rather than a big takeover of the integration risk is lower and that's why we're seeing the share prices get up to the maximum level quickly. the countdown is on as to what could be a government shutdown ylan joins with us more on that. >> good morning, wilf, there is cautious optimism negotiators will be able to reach a deal possibly by this friday. if they want to follow the rules, they have to get to an agreement by this weekend in order to get something passed through both the house and senate by that deadline of february 15. to get to yes, republicans say they need three things, they want more agents, more technology, and a border barrier. now notably none of the

republican republicans we talked to said they need to see a waltham could open up compromise with room for democrats already seeing what democratic negotiators say he would support an enhanced border barrier another sticking point is the money. democrats' initial offer was $1.8 billion for boarder security but that number is likely to go higher. the top democratic negotiator dick durbin said no dollar figure has been settled on but they seem to be closing in son an agreement the x factor is president trump. he has said that this committee and this discussion is a waste of time but also that he wants to see the process play out so we'll have to see where he stands. >> ylan mui in washington. let's bring in senator john barrasso, the third-ranking republican in the senate great to have you this morning ylan just reported about how so

many republicans are backing away from the term "wall" specifically have yous and does that necessarily pave the way for some sort of agreement to be reached? >> well, i'm cautiously optimistic as well i talked to the chairman of the committee last night in terms of getting an agreement they had the experts in yesterday about border security and focused on the fact that the experts say you need manpower, boots on the ground, technology and a physical barrier and not the entire 2,000 miles of the border but there's specific areas, 10 identified areas where they believe a border barrier of some sort is critical. >> will immigration be separated from this in terms of, for instance, amnesty for daca

president trump ad-libbed that immigrants were coming in in the largest numbers ever and people asked him did you actually mean that remark and he said yes. he wants people to come in legally -- let's make sure we they -- because unemployment is low. we need the workers in this country so is that a separate discussion at this point >> i think it is the president has been flexible and the offer he did before reopening the government, talking about these young people brought to this country through no fault of their own, that was something he offered in working to find solutions to secure the border as well as dealing with young people and giving them additional opportunities in this country with a legal status depending on how you want to work through that pro soesz that is going to be a separate discussion but i have confidence in the 17 members of this committee they know how to get a

deal done, they're members of the appropriations committee, have done this before. then the other something will the president sign it? i would say following are's akploe -- follow ronald reagan's approach which is get a slice the president will have additional opportunities if he doesn't get the full funding money. there's work that needs to be done. >> but i think you're keying in the situation, it's possible the president could say i can't do this what's the chance that happens and what do you do if that's the case >> my recommendation is he accept what they come up with in a bipartisan way and then do the additional commitment he has talked about the president is committed to making sure the border is secure if he has to repurpose other money, there are ways he can do that the president has talked about

using emergency measures i would rather he not do it. >> would you support that if that was the case? if he were to look at whatever the senators come back to him with and he says, look, this deal doesn't cover what i want, the only way to get what i want is to use -- to declare a national emergency, what would be your position purpose to do that >> well, number one is i would recommend he sign what is agreed to because that opens up and commits the funding for the other seven appropriations bill us there the end of the fiscal year soy think we need to avoid another shutdown i think nothing good comes from a shutdown at all. i've sponsored legislation to permanently prevent additional shutdowns of the government and there is a group that want to move in that direction, i'm one of those that has been very involved if the president doesn't get everything he wants, he ought to take everything that is agreed to and then say all right, i still need additional revenue and how do we do that?

do they repurpose money that's already been approved for other projects and do that or does he go the emergency route, which will be challenged it will be challenged in the house by nancy pelosi. if it passes there then goes to the senate and then goes to his desk where he will likely veto it and then you get into the issues of veto overrides that's not the way to go what we need to do is focus specifically on getting a legislative solution. >> senator, the way you're framing this is largely that the president's kind of got to take whatever is offered to him or else the fallout will be worse than his opponents do you think he is weakened when it comes to negotiating compared to how he was and does that have implications for the other big negotiation going on, which is with china >> i don't think the president has weakened the president has been resolute in what his commitment is.

i think you see the head of nato, who was here and i visited with him last week saying nato put $100 billion into fund ing o defense and military because of president trump's insistence they do it. >> i i wanted to pivot to talk about your other colleagues on the left on a different issue which is i think you're -- you saw earlier senator schumer and bernie sanders coming out with a plan against buybacks. i understood why bernie sanders took that position i was surprised to see senator schumer take that position given his own history historically and i wanted to understand psychologically why you think he has take than position and what that suggests of the party right now. >> well, the democrat party has taken a hard left turn you can see it with their

so-called green new deal i think senator schumer is seeing that's where the energy and enthusiasm and motion of the part party. all the presidential candidates, a number of whom are senators, are heading that way on the democrat side and you can kind of go through the issues they've gone through and i think it hurts our economy. if you think about the state of the union peach and how strong our economy is in terms of job numbers, wages, unemployment being way down and what we've been able to do in terms of energy, and i'm from a big energy state, wyoming, we have a strong healthy growing economy and it seems the democratic approach so to put on the brakes. >> the reason i ask about schumer in particular is he was considered a centrist moderate within the party and i wanted to try to understand whether you look at this and say is this a cynical ploy on one issue to

gain some support from those -- what do you think was driving that decision? and i think there's legitimate questions about buybacks, especially with companies that have underfunded pensions so i don't want to dismiss the issue outright but i think the approach is interesting to say the least. >> i think senator schumer was surprised by the resistance movement as it strung up after president trump took the oath of office, the people protesting outside of his house in new york and i think that has driven him to act as their people and i think that's driving all the action and the motion of the democrat party right now the party has taken a hard left turn on a dozen issues right now and i think there are things that will hurt the economy. >> what can you do

how can the republican party off set that it's perceived among our viewer base as a war on capitalism, not just the wealthy. >> and polling is suggesting it's popular on both sides which is the other major shift. >> there's a division in america right now. but we know strong healthy growing economy as a result of the tax cuts the republicans were able to pay us, the regulatory relief that came as a result that has allowed for more opportunity and economic growth, we need to continue those things we'll talk about this wonderful economic news. we're firing on all cylinders and it's really the tax cuts and the regulatory relief that is fuelling it and the left is going further to the left. >> senator, we have to go but thank you so much for your time. we appreciate it, senator john

barrasso. >> thanks for having me. when we return, the opening bell just over an hour away. check out the pre-market action because we have suntrust and bb&t announcing a megamerge they are morning. $66 billion we'll talk with jeff lewis about that stayun ted you're ear watching "squawk box" on cnbc

welcome back to "squawk box. just an hour to the opening bell and the big story is the merger between suntrust and bb&t dom chu joins us with stocks moving as a result of this transaction. >> this transaction only but they are not the only ones that are driving the action the regional bank wes told you about, those actions are driven by earnings. dunkin' brands trying to rebrand itself, it's down 4.5% on 13,000 shares of volume after it posted an earnings per share beat but missed sales expectations. sales growth at established u.s.er to locations flat dupg kin boosted its dividend by 8% also fiat chrysler shares of fiat chrysler had certain far flow metrics

and twitter said its current forecast fell below analyst estimates and it said it will stop reporting monthly active users after the first quarter of the year so a big swing over a million shares traded so far. >> we want to pick up on this conversation about twitter, social media and so many other things going on in silicon valley with our guest host this morning, all things valley venture and everything else, jeff lewis, founder of bedrock capit capit capital, served on the board of lyft, a company going public this year so congratulations on that let's talk about twitter just briefly. you look at these numbers and we were having a conversation just even about the idea that people seem to be voting with their feed in terms of users and advertisers. despite the conversation we have

about what will happen in washington it doesn't seem to have an impact on the business. >> if you think about the impact twitter has on us as a society, culture dominates the conversation, it should be doing much better than it is. >> what's jack doing i don't think? >> fundamentally you have to like the business you're leading and running in order for it to work and there's been a sense that perhaps some people at twitter, some of the people in the management have sort of second thoughts about the business. >> using jack dorsey doesn't like the business he's running >> i'm not a psychiatrist but they did away with the light -- they were talking about doing away with the like button. that seemed insane, that's a fundamental engagement mechanism. now they're not reporting monthly active users anymore

today i would have expected twitter to have been the monopoly business in media. >> is there something worse? i understand a change in how you report is always sort of jarring for investors but is monetizable daily active users, is that not a good gauge >> i'd say the big challenge is that the monetizable daily active users, reasonable gauge, the big challenge is that you indicate you have a decrease in the monthly usage and a fair majority, i assumed they're not daily active. >> so do you think -- how you're framing it, does twitter have huge potential for somebody else to come in to harness that ability that it should be making >> a few years ago it was extremely cheap and some folks i knew were talking about trying to buy it. probably still cheap today. >> but what would you do with it

and who would you put in charg of it? this was the case? >> you never want to get rid of a founder so i think dorsey is the right guy. i think one of the challenges is you need employees to get behind what the business is doing. >> you think dorsey is the right guy? >> he's done phenomenally well. >> you implied he doesn't like his own company. >> he likes square more than twitter. if i had to guess, that would be my prediction. >> i want to pivot on two other issues real quick and we have more time later. under your breath while we were having this conversation with senator barroso about what was going to happen with the wall you today me, this could be done more cheaply technology. what do you mean fwla? >> absolutely. this could be done cheaply a tech solution that isn't sci-fi. you could have productized and deployed ai for a sixth of the cost of a chain linked fence you can call it a wall if you want, you build in mesh networking there's a company that has been

co-founded by a good friend of mine, a former colleague, tray stevens and palmer lucky. >> we interviewed him. >> this company could offer a full solution, anyone who wants to call it a wall can call it a wall and quite honestfully the long runs this the only thing will prevent in the long run folks from getting over, under, driving around. >> what is it being used for >> they're testing pilots now. ultimately there are some sensors already on the border but this is a comprehensive soluti solution to me it's unbelievable this hasn't been implemented. it's shocking. >> do we know if they've had meaningful conversations with the president or the administration >> can't comment, don't the inside intel. >> we will continue this conversation with jeff in just a

bits thank you. >> thanks. coming up, we are all over this morning's two big corporate stories, the regional bank merger between bb&t and suntrust that conference call starting in nine minutes time. also this big move by shares of twitter down by 7.5% after earnings plus, former aol ceo tim arm strong after leaving oath at the end of last year he's turning his attention to the direct-to-consumer space you're watching "squawk box" on c noox

welcome back to "squawk box. futures pointing lower following quite big declines in europe today. we're down 163 points on the dow. s&p is down 19 points. nasdaq down 56 asian trade remains closed.

coming up, the latest read on jobless claims. economists expecting 225,000 new claims we're expecting a conference call from suntrust and bb&t announcing the deal of the morning. a $66 billion transaction making it the sixth-largest bank in the country. we'll bring you the ghghhilits just ahead you're watching "squawk box" on cnbc back in a moment air velocity is reading at fifteen fpm. why would you need to learn every detail about a company? firmness... nine. it's how ibm services helps retailers around the world drive growth and save millions. he's very into this. yeah. is that the standard amount? yes. feels good. when your partners are obsessed with business and technology,

you can put smart to work. first tattoo? yeah relax, amigo, it's gonna look ok. only ok? no worries boss, i'm one of the tattoo artists in the city. you mean one of the best tattoo artists in the city, right? something like that. yeah. uh, aren't you supposed to draw it first? stay in your lane, bro. just ok is not ok. especially when it comes to your network. at&t is america's best wireless network, according to america's biggest test. now with 5g e. more for your thing. that's our thing.

welcome back to "squawk box" live in the nasdaq market site in times square. we have a big deal to tell you about. regional bank suntrust and bb&t combining what the two banks are calling a merger of suntrust shareholders, getting just under 1.3 bb&t shares. bb&t shareholders will own 57% of the combined company. the banks holding a conference call as we speak wilfred frost will monitor that call what do you expect >> i'm going to come back to that ninety we discussed about technology spend because the four biggest banks last year spent $40 billion on technology. the fifth biggest u.s. bank $2.5 billion. so per bank the fifth-biggest was spending a fourth -- a quarter of the amount as the next four above it and i think

this is a merger to allow them to merge and save size this will make them the sixth biggest pnc. >> how much do you think is driven by that versus the $1.2 billion in annual cost savings that was the number they talked about in the release is a function of either closing branches, shuttering back offices. then it becomes a political story about layoffs and the like and i think that will be a theme of this. no doubt it will do and i think what we'll i'm sure here on the call as well is have they tested the waters with regulators share prices are priced in already. that is 7% premium for suntrusters. share price is already up more than that. it's being paid in b&t's stock which is why you're seeing suntrust up more than the 7%

premi premium. >> and at 10:00 a.m. eastern time, the ceos of both companies will hang out with the gang on sweet. kelly king and bill rogers will be explaining the transaction and of course fielding questions from mr. faber and the rest of the team in the meantime, i want to get over to rick santelli standing by with the initial jobless claims numbers rick >> yes, for the most recent week, jobless claims dropped 19,000 there 253,000 to 234,000. if you recall, we had the big pop last week that pushes us over to 50 what seems large after we're toying with numbers going back 50 years and if we go weak in arrears, they move from 1.77 million to 1.736 interest rates have been melting. equities will be opening softerr

and their monetary policy and mr. carney nervous about what may lie in store for the british economy and currency with all the uncertainty of brexit so we'll continue to monitor the pound and guilt yields melissa lee, back to you. >> rick santelli, thank you. steve liesman is here. what's your take >> i'm wondering if two things were going on, you had rolloff of the shutdown rise in claims but you might have had others come in as well which is a long way of saying we need a couple weeks for the data to clear. i don't know what the steady state is because you can -- we didn't have an initial pop in claims that i would have expected i want to talk about the other story we're monitoring which is the global slowdown story which we've had the bank of england come out lower its forecast for

2019 yesterday the eurozone did it. earlier last month -- in december the federal reserve did it ranly quarrels last night, the vice chairman for bank supervision talked about the biggest terrific the u.s the biggest spark is this -- >> you look at global risks. i at least will be looking at over the course of the next month is how does that evolve. >> zblelz an interview with me yesterday also made global risk the number one issue let's talk ant the pound the pound fell on the uk growth and then it came back and mr. frost, if you don't mind, we want to give you your reporting or sense on that. >> i think the interesting thing is the statement from mr. juncker and mrs. may from their

joint meeting at least gave a dl glimmer of hope that there can be some movement on the irish backstop so the economic forecast from bank of england, slight recovery from brexit flat off the back of that. >> i realize you have to listen to the call. >> i am. >> we'll let that roll the dollar took it on the chin, it was weaker as a result of that and we'll just see how this plays out, we had lower export and import numbers. >> when we talked at the dallas fed, it's a thought provoking thing when he says central banks around the world recognize the slowing and that there are no more bullets and this is something we've known now say that and to underscore, should it be alarming. >> i think no more bullets is an overstatement. i think there are bullets.

the question is how effective they are we know that the ecb can interest rate hikes. but, yes, there is less ammunition and they were creative and came up with stuff that none of us thought of so maybe they would do that again and find other ways to depending upon the circumstances i would think the next crisis is going to be different than this one. it doesn't have to be a crisis you can have a slowdown or even a recession and it's not a financial crisis. >> steve, thank you. steve liesman. coming up, wilf is back on the suntrust/bb&t call and up next, former aol and oath ceo tim armstrong joins us on the other side of the break to talk about his latest venture and some of his other big news

in the investment front and the direct-to-consumer space specifically we'll reveal the details when "squawk box" returns in just a moment

welcome back to "squawk box. we are looking at a lower open futures have been holding steady all morning long nasdaq looking to lose 53, dow down 153, s&p 500 looking to be down by 17.5 wilf is listening into the bb&t and suntrust call. he literally has his air pods on. >> in the old days you would have to hold the phone to your face. >> he's got his sleeves rolled up >> now your buds are in. >> i've gone to buds because it was hard to focus with just the one. >> sorry we're distracting you right now. >> he's saying the go two companies are almost identical, he says great regional overlap, great synergies but also saying they have similar cultures two plus two equals five. >> are you on mute

can he hear you? >> let's hope not. >> maybe he can. kelly, if you can give us a shoutout but i don't think so. >> jump back on. for more on the deal of the morning, bb&t and suntrust merging in a $60 billion year, joining us now is marty mosby, vinings sparks director of bank and sweet strategies is -- technology efficiency, is that the main driver of the deal >> well, you have technology and the ability to invest in technology but you can do that while creating synergies so you need to have the investment capacity but you also need to be able to save money while you're doing that and having a bigger franchise gives you a bigger scope to spread that technology investment over to get those positive synergies >> give us an idea of what in the context and environment of the banking industry is going drive consolidation this time aroun

around there have been many calls in the consolidation for a long time and here we are with this big deal. >> well, what we said all along is as we came out of 2010 and in this recovery as long as you're riding the wave of recovery there wasn't going to be consolidation because banks could improve profitability by solving for the problems that they had we're now getting out of that and entering the phase, that last phase of an expansion which still a couple years in our opinion. generating organic growth and those are the things that are now generating'm yes, sir growth going forward much more than just the recovery of well, rates are going higher, credit is getting better now we have to have strategic initiatives that can create shareholder value. these combinations create that for this group. >> regional banks up 1.5% on the index, marty obviously the next question will be who is next so who are your

picks? >> there's only a dozen banks in this $100 billion to $250 billion in the middle remember, if you were below 250 you got out of -- remember that deregulation was happening they jump over that threshold. went from 225, going to go above 250 to now 400 so what we'll see underneath that is that there are several of these kind of hundred to 200 kind of billion dollar banks, regions bank for instance comes to mind. you would see it has a franchise, covers the whole southeast combination, pnc has already been expanding into the southeast so regions would compliment that. you might see banks in the 150 try to get together so you look at a citizens financial in the northeast sector. >> marty, great to have you with us, thank you for your analysis.

we should note mnt bank is higher in the pre-market session -- actually higher in regions financial, the one he mentioned, 1u7.up 1.5%. the ceos of bb&t and suntrust will be on sweet but it's worth looking at the regionals because they are going to see a bid today. the former ceo of oath was out of his post at the end of last year. now tim armstrong is turning his attention to a company investing in startups that are direct to consumer, that's what the etx is about. good to see you. >> good to see you. >> what is it about? >> really simply, when i was hear almost 20 years ago for the google ipo in this room it was sort of my apartment in new york to ipo today different story which is we're pressing the go button on the new company and the new company is really focused on three dimensionalizing the

direct-to-consumer space and that space, commerce is a very, very large business, obviously globally, direct-to-consumer underneath e-commerce zbroet one of t of the most exciting sectors.grs one of the most exciting sectors. we're going to bring it to underserved markets in the u.s., we're building platforms for omni channel customer acquisition for dtc companies and we've done a series of investments we'll talk about today in the direct to consumer direct businesses -- >> so you buy these companies outright or stakes is this a venture fund >> we're buying -- it's a part operating company part venture fund and the venture fund is invested from fraction of a percentage all the way up to over 50% of some of these companies. >> so we have half a dozen companies. third love many are female-oriented companies. >> females are very good consumers and knowledgeable shoppers and what we've chosen

to do is go to companies that have unique products, unique markets, i like zero competition so we've been trying to go to places that have big potential markets and weak competitors, if you think about a business like third love, they have done an amazing job of getting out their products for the female set and they're going up against larger companies that possibly won't move as fast niche is in the college space and the college space is a 300 fwold $500 billion market and they're doing direct data and information from consumers and really substantial decision marketplace. that space needs innovation as well. >> many businesses built their business off of advertising on google we talked about twitter this morning. perhaps hopefully yahoo! and oath prior to that how much of the experience that

you had will inform this, but given the concentrated power among two or three biggies, is there a way to workout side of them >> we want to work with them, as a matter of fact one of the things that i should say the last 25 years i've been on the supply-side, the dtx company is on the demand side so with -- over the next 25 years i'll spend on the other side of my business and my guess is the partners we've invested in plus the businesses we've started are going to use those large platform bus we'll use the omni channel platforms. there's opportunity in off line, a lot of platforms that don't get discussed as this could get used for these brands so we're using the whole panacea. >> this is armstrong family money. at what point do you raise other money? he's got some over here, by the way. >> i love that

we've had a lot of people approach us, today is the first day people are finding out what we're doing but my take right now is for us, the team we have is let's figure these models out and if we raise money, let's take other people's money when these things are wired down so there is a lot of investors that we're invested in and great, great investors. >> 40 what do you think about how big these dtc businesses can get. the largest one i could think of is dollar shave club acquired by yuan lever in 2016 is the yup side capped on these things?unilever in 2016. is the yup side capped on these things so the upside, is it $20 billion, i don't know? but getting to a billion dollars for these companies would be large returns and for the investors in those and i think you hit on a key point, the reason we're launching the dtx company, many companies have used social channel, for them to

break through the $107 billion mark, they'll have to use omni channel strategies and that's what we want to help them accelerate is how to get from a potential cap of a billion. >> you invest the platform, not the companies? >> let me ask you this we've not had an opportunity to talk on the air since you left verizon and a lot has happened since then and you had enormous success selling your business to them and shareholders currently give you credit for that however it appears that verizon has tried to undo and devalue and laid next to no value to that creation. so how do you think about that >> sure. so one is, you know, i'm a big shareholder of verizon and a big fan of the strategy. let me describe where i think the company is and, again, i'll

try to describe from the outside what i think has happened is when i got to verizon they had multiple strategies in media over the course of the time we did oath we culled those strategies down to a single put platform into a singular thing i think the transition has been a tremendous focus on 5g and i think they here in a process of really laser focusing and calibrating the strategy down to 5g and taking the oath assets or former oath assets and fitting them into 5g so i think it went from a multitiered strat zwroi 5g taking the real forefront and then plugging in those assets and they're big assets. >> but they also mark the value of those assets down. >> i think there was a good will impairment which would have been about future projections i wasn't involved in that. i don't know the details but the assets themselves are incredibly valuable and i think 5g strategy is incredibly valuable. >> do you think it's a mistake for them to effectively diminish

not just the value but in terms of the clear investment in a content-oriented business relative to what at&t is doing with time warner and everybody else everyone thought that by having you and oath that they were going in that direction and then hans walks in and says no, no, we don't need to do that at all. >> i think what they have done -- and you have to talk to hans about this, but the at&t time warner deal is a big giant traditional media company deal the aol deal, the yahoo! deal with verizon and 5g is about digital so i think -- by the way, for verizon 5,g is the best. >> i know you have a lot of money in verizon, which is the better bet between at&t and verizon? >> i think verizon. >> you think owning content is a long-term benefit or mistake >> no, i think content -- >> television content, the kind of investment -- >> i think only digital content and being digital native and mobile native is the best bet. where things end up in the future i don't know but i like verizon's 5g strategy and what

they're doing on the digital side and we'll see and again i think verizon's gotten very focused. so the media business changes all the time and i think the changes that are happening today is just calibration toward the future. >> subscription versus advertising. what's the bigger opportunity long term? >> i like both this is a big debate right now but, you know, i think consumers love brands and like to be introduced to brands which is advertising and subscriptions are done an amazing job of using consumer time well and giving people direct access to brands they love. so i think both in the future will work. >> we have to one but i have one final question i don't know if you'll remember this back in -- this is a howard schultz question in 2011 you were one of the first ceos to sign on a pledge for ceos to stop fund-raising and donating and making contributions in washington because of the gridlock there. i'm curious if you have a take on his potential candidacy as a

centrist independent. >> howard schultz has been one of my mentors. he spent a lot of time with me i had a tremendous amount of respect of what he did for starbucif h ran for president, part-time pro-america in general i think howard is somebody who has done a lot for this country. i brought you your first brand t-shirt that you can have. >> thank you, sir. >> i'm super bullish about the future and i'm really happy to be here. >> we're thrilled to have you and we hope you come back a lot more often. >> i will. let's go to the new york stock exchange and check in with jim cramer we've got to get your take on this big bank deal. >> i think this is amazing bank of america got ahead of everybody, the technology.

this is an anti-brick and more t mortar play. i don't think they can keep up with the big guys because of the technology spent i think that is a great angle. >> i'm going to jump in as well. relation to slide 17 they've said they have the highest degree of branch overlap of any bank in the southeast region 24% of their branches in a two-mile distance. that's got to be something they didn't address how many branches they plan to slim down. this is going to make the third biggest base of deposits after wells fargo and bank of america. those are two of the big four they'll be chasing after.

>> at deutsc-- that's a great o. i'm going to propose something that's not going to happen, goldman and citi merging this has to happen a lot of us thought that the merging business was over with the last key deal and the key deal worked out okay >> we are seeing a lot of the regionals finding a bid premarket. is this a trend that is going to continue, in your view if you can pick up --

>> the banks have been forlorn it's incredible. goldman sachs at one point was such a big discount to book. these things have to happen. we always felt the previous regime under obama you wouldn't allow any merges. >> in what political world, though, could goldman sachs and citi group merge >> in what regulatory world? >> i mean, i don't know, if trump got elected. i don't know if you're using marcus they give you an unbelievable rate they really want to get into that business. us bank corp is a quality institution. it's too big to happen, the cold man citi i really do feel that us bank corp goldman makes so much

sense. these companies can't do nothing. how do you keep up with bank of america? you can't. i know the market's down i know apple's down. my focus is on this today because it's really cool. >> twitter is down too, jim. they were up a lot after facebook reported the bar got really high for twitter. >> you know how the drill works. we're going to get more on twitter's earnings again, revenue and earnings beat expectations the stock is down almost 7%. >> despite beating expectations twitter shares are down now

about 6.5% on lighter than expected revenue projections and growing expenses jack dorsey talking on the call about twitter's investment in improving the platform and ads. >> we've been focusing and observing a lot on what advertisers need and matching them with customers so we can place them in a consideration bucket that allows them to easily be seen and talked about which generates a conversation they can learn from and continue to hone their message as they build and lauchblg thench theirs >> focusing many questions on those higher expenses. atlantic equity writing an apparent step up in investment is impacting profitability which may not be sufficient to support the shares twitter shift to focus on daily

rather than monthly users also in the spotlight they do expect numbers to grow over the course of the year. >> the notion that a company investing in order to support long-term growth, that's being punished during this earnings season facebook was up because they kept their expenses under control. amazon was punished because they were spending as well. this is going to be a spending year investors don't like that. is that just the environment >> investors should like it. bezos was investing in growth. that company's just become a behemoth you want to be investing to building these platforms long-term. >> any details here from the bbt

and suntrust >> this sums up kelly king talking about how they can try and make the most cost cutting technology. >> individually we're strong but together we will be best in class. we will be able to leverage to create capacity for investments and technology. >> i'd say kelly king in his opening remarks, four minutes or so was roughly focused on technology the other theme i would say and bill rogers took over, both of

them talking very warmly about each other and also about their company's cultures it's a merger of equal suntrust are getting a 7% premium and 43% in termed of the mer merge. >> the business environment supports more mergers. slide 17 you pointed out with cross-cla cramer, that illustrates or underscores the notion that to achieve these cost synergies there will be jobs lost. politically that's not the popular message right now. >> we should confirm they haven't said they're going to close branches yet, but it's almost inevitable. us banking is so much stronger than globally.

region nappal banks need footino fight back against the big four. >> jeff lewis has been our guest host i have two questions do you believe that a digital player could ever take on some of the big guys or regional guys in the banking space >> absolutely. certainly the regionals i think are quite vulnerable we've seen this happen in other geographies. new bank in brazil has really grown to dominate the banking market quite quickly there the u.s. the banks are somewhat better at innovating than in europe >> do you have the entinternet becoming the splinternet >> the splinter net sort of is this idea that china is going to

control half the internet and the u.s. is going to control the other half i think a more apt term is the splatter net you're going to have china infiltrating the internet all over the world we're seeing it start to happen in the u.s. with tick tok. i'm worried about the splatter net. it's very concerning. >> make sure you join us tomorrow big interview coming up on sidewalk on the street the guys from the big merger of the morning. ♪ good thursday morning. coming up in about an hour the ceos of b brbt and suntrust. the bank of england, the eu commission cutting some growth