♪ >> live from new york where business never sleeps. this is "squawk box. >> good morning. a very warm welcome to "squawk box" here on cnbc live from the nasdaq market site and in times square i'll will fred frost >> how are you nice to see you. what's going on today? >> it's a privilege to media your lines >> they say that air time is oxygen in the tv business. i want -- i was pleased that i could bekwooet you the oxygen. >> not only that i'm in becky's chair today you know what that means i have the usa flag behind me, which is an even greater privilege. >> that is praif biggest they have there coming up at t, pro-am including the ceos of waste management, chevron, cisco, and at&t. >> we'll be joining them on vacation in just a little bit. joining us for the next hour is

ed lee, "new york times" squeezed reporter, cnbc contributor. we have so much to talk about. >> so many things happen from last night my good bs >> below the belt picks. we'll be talking about that in just a little bit. u.s. equity futures take a quick look at this hour. show you what's going on the lunar new year holiday hong kong reopened after a three-day holiday. >> hong kong was down about 1.6% at the open on this negative development that we've seen in the last day or two about china trade talks with the u.s., but recovered pretty sniesly throughout the session, as can you see. it was only down 0.2% having been closed for a couple of days japan, though, obviously still down a couple of percent 2% yourp down sharply flat or mixed today. the data more mixed as well.

italian industrial production was soft, but french rebounded, and the german trade data was better than expected there's that mixed picture across europe. week to date for europe, also fairly mixed apart from germ an, which is down 1.5 ferz are for the week as a whole. treasury yields, let's check in on those ten-year at 2.65%. >> okay. folks. here it is front page of the new york post. it's a business story, and i would also say that it's basically in every other newspaper as well. >> that is all the -- >> all of the new shows last night as well. main stream news business news. >> let's start with the story that is rocking the world. bezos exposes pecker september that the best headline >> it's one of the best because it speaks for itself >> let's explain to everybody. amazon.com's founder jeff bezos unbelievable yesterday blasted the national enquirer, accusing the publisher of blackmail in a blog post. bezos said a lawyer from the

nashlg enquirer threatened to post sexual pictures he had texted his girlfriend laurensa chesz in exchange for a statement that the enquirer's coverage bezos wasn't politically moesh ated bezos claims that the national enyourer's owner, american media also wanted him to drop an investigation to how the tabloid obtained those text messages exposing his extramarital affair he published emails he says are from the national enquirer to his attorney describing the graphic sexual photos that would be published it looked -- that's what it looked like to me. excuse me. straight up blackmail. cnbc has not independently reviewed these emails. we've all reached out to amazon in ama ami declining to comment an interesting twist to all the business insider reporting that the ip addresses for the enquirer site are assigned to amazon, meaning that amazon's web services, like the host for the enquirer's website, in another twist of irony, by the way, ami's lawyer, one of their lawyers, is a former lawyer for

amazon >> here we are in fact, the lawyer threatening some of the sort of potential -- that was one of the lawyers for amazon he moved over to ami this all hit late last night, or for a news that's relatively late, and i know a lot of newsrooms scrambled decipher what's going on in this. >> can we break it down? >> there's three pieces. you break it down. >> i want to know if you agree with these things. >> one is -- that's because we're a business network if you are an amazon shareholder today, are you happy are you unhappy? are you upset that he is involved with the washington post he actually talks about being involved in boston and the complexities he uses an -- >> complex fewer >> and what that means b, he says he is trying -- one of the things he says in the note is he says he is trying to

have investigators spend as much time on this as possible and no expense spared he doesn't want to spend his own time on this the last several days he has not spercht every last waking second >> then i want to know on the media side could there be a criminal investigation/indictment both of david pecker and of ami effectively putting this company out of business. what does this mean for the world of media in terms of how media organizations get treated as journalist oorz non-journal is when you start to see did. >> if are you a media organization that's owned by a billionaire under threat there's a million things going on >> where do you want to start? >> let's start with the investor thing. if you are an amazon investor, i think ultimately this specific thing, you shouldn't be too bothered by, right again, this involves his personal life a little bit the washington post, and this -- >> some people think it's fabulous what he just did. >> that he is standing up for himself and saying imauto not

going to take it >> there are people who hate jeff bezos on a normal day who think that he is the modern kay version of jesus i swear. >> the other point on this as well is that the share price -- it's down 0.6% so is the broader market the share price has never really reacted to this. if we rewind like a year and a half when the president was tweeting directly at companies, it had a negative effect, but it doesn't anymore. it was always short-term, and it doesn't anymore. >> i think if you are an investor, you could like his -- what he is doing, and not necessarily buy more stock, right? that's the other sort of -- that's the even way to look at it the other end of this sort of going down your buckets here, with complicating understanding this is that david pecker, the head of ami, the national enquirer, he has cut a deal with federal prosecutors, right >> bezos, how did the texts get

leaked out he hired the security guide, security guys of the stars debecker he found that, yes, we think it's politically motivated a, david pecker says that's not the case at all. you need to back off your investigation of us. they think that pecker is closely aligned with trump pecker put together a special issue on behalf of nbs at one point. >> so for saudi arabia they come in on behalf of trump. there's a lot of -- crisscrossing connections. lauren sanchez's brother who they think actually somehow -- is apparently some pro-trump supporter, and they have a view internally that somehow he was the one who got the pictures and leaked them to the national enquirer just to put the full information

out there. >> to make it as complicate as possible we were reading through bezos's post, and it's like trying to solve for x. it was cloont jtd clear what he was claiming is he trying to -- is that what's happening at the same time pecker -- he has turned basically -- he is going to help out the federal prosecution into trump, and so there's a concern that, like, is he now turning on trump? incredibly complicated it's unclear where the dots really line up >> to andrew's point about the national enquirer and ami, if they've been gifted information, whoever gifted it to them, however that person had to retrieve -- got the information in the first place, vongs they theted the accuracy, are they still fine you can decide whether this whole topic is something that needs to be chasing anyway it's not particularly -- >> we're talking about, you know, sort of the tenants of

journalism if you have information that is relevant and ami and national enquirer felt that he is a public figure. this is -- >> as long as they didn't technically as long as they did not steal it themselves. however, there's a question as to even once you -- there are many questions, but once you have the information, right, how are you use it journalistically, if you go off and publish it, that's one thing. it's another thing to then use the information to blackmail somebody else and then the question is what constitutes blackmail? can lawyers blackmail each other. >> does that constitute blackmail? are the lawyers -- jumping -- there's a lot of layers. >> the deal that ami -- that

david pecker has with federal prosecutors, that deal could be in jeopardy now, right if they determine that this is blackmail. there's a big liability there. that could have implikdss for trump. then on top of that, you know, there is -- back to your question, what was the point of -- how did you get this information? what was the point who gave it to you i think -- >> i have another question as well, which is sort of semantics, actually, more than anything mr. debecker, the security boss. >> security guy to the stars >> he said that the -- mr mr. bezos's phone was not hacked he implied in the report, according to the reporter from the washington post, that it might have come from a government entity. i don't know why -- that means it's not hacked. if this is two text messages twoen two people, and neither of them have leaked it, i would still class that as hacking of some sort. it's semantics >> there's a good chance that -- >> my point was going to be, in this wiki-leaks type age often

we celebrate when information is exposed even if it came back by hacking. clearly today the debate seems to be that that would be a bad thing. right is right, and wrong is wrong. that should be the case always >> should always be the case you are wondering about how if there was hacking involved and who -- >> the government entity, if that's the way it came from, doesn't have the right to do this >> does not have the right to did this, but i think the question is -- the question is did somehow someone stumble upon this and then motivated by the idea of embarrassing bezos and helping trump.

my sources tell me when his thing hit the web, the post had no idea. the publisher had no idea. the executives did. >> he did it on medium that's not the thing you want. amazon.com >> it's a very silicon valley move to do that. they love posting things he announced his separation on twitter for one thing. right? and the fact that he wassing to put it all out there, i mean, that to me was really something.

that's why i wonder if prosecutors -- it's interesting. federal prosecutors would be under the department of justice, which would be under president trump, so maybe they don't do anything i don't know how political you think this whole system really is, but if it isn't, a federal prosecutor might want to actually take a real look at this for the first time. you could say the entire separation a criminal enterprise that would be the argument >> you set a new standard for that, right. the other thing to note is we're talking about you don't want to make this political, but now more than ever, especially in silicon valley, tech enterprises, it's -- everything is becoming much more political. d.c. is much more aware of the power of silicon valley, and looking for ways to reign it in, while not sort of tafrping down

the economy. i think it's part and parcel of the -- >> the whole thing made me think of peter teal and gawker that was what i thought about last night you have to remember, the lengths to which peter went to go to get gawker again after gawker had outed him or -- >> that was years and years. >> it happened. >> ool every i'll be here. >> amazon stock only down half a percent. sort of in line with what futures are down at the moment not really moving in relation to the story, therefore coming up, mattel's stock soaring. the toymaker posted a surprise and its crediting a familiar friend we have the details of that next as we head to break, here's ray look at the biggest premarket winners and losers in the dow. we're back in a couple of minutes. so, servicenow put your workflows in the cloud, huh?

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of travel sites such as expedia, hot wire, and travelocity sell more hotel rooms and airline tickets. it's up 7.5%. yesterday apple confirmed it would compensate the family and make an additional gift towards the 14-year-old grant's education. no word on the value of the reward, but appear offers up to 200,000 to security researchers who discover vulnerabilities and report them. we congratulate both grant and michelle >> good work >> we love talking to them >> i hope we get $200,000

towards his education. might not that much. >> i hope so >> mr. cook, if you are watching, that's the number we're looking for. zhoo they have a lot of cash >> coming up, they do have a lot of cash. >> just a business expense sure >> barely a business expense for that >> i'm just thinking of the taxes. >> a health launch for our four-legged friends. henry spinning off its annual health business. they'll begin trading here on the nasdaq today we're going to talk to the ceo next (clock ticking) (bell ringing) it's time. time for a new kind of cloud. the ibm cloud. the cloud that proactively protects your business from threats,

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welcome back henry spinning off its annual health care business and merging it with vets first choice. the new company it listing on the nasdaq in just a few hours joining us right now ahead of today's ipo is ben he is the president and ceo. we saw you about a year ago. >> we did. >> this is a big deal for you. >> it's a huge milestone for the company. we've been working towardsthis for a year it's a big day for veterinary medicine >> because >> we're creating a new company that's going to help veterinarians be very successful we're giving them new technology, new services to help veterinarians be successful practitioners. >> for investors out there, who are thinking about what they need to do or think about your company, in terms of comps, everyone for a company like this wants to know what is the right comp how do you comp yourself what's the right comparable?

>> think think it's a unique service. the only global ecosystem for veterinarians. we operate around the world. we get to work with other like organizations that are also really important operators in this space all of these companies are committed to giving -- or arming veterinarians with a lot of technology, a lot of services, pharmaceuticals to help nem be successful in business we get to play we are like the operating system of veterinary practitioners. >> is this disrupting the veterinary market, or there's a lot of growth within the market itself >> it's an afracturive market. it has strong same-store sales growth, but it's really an opportunity to figure out how can veterinarians respond to changing client expectations how do they respond to increasing retail pressure we're giving them opportunities to help figure out how i can better compete on-line >> what are the growth pros peks you're talking about retail sales.

is that where the new money is coming in, where the -- people are spending more on health care for their pets >> it turns out we have to be more proactive as a profession right now. it's hard for veterinarians to figure out who needs what and when if we can be more proactive and communicating with clients and getting them back in office services and make sure they timely refill medications, we can create a lot of new category growth we can improve medical compliance. >> i do think your company is a little bit different than what might be considered, like, how do you actually count this out that's the issue >> there are other great human health care technology and services business. >> we're unique and operating in the veterinary category, but this parallels other successes we've had, whether it's athena

health or health equity or other organizations that have helped disrupt and drive a lot of new outcome into the office practitioner market. we're doing that in a veterinary category, and that's a global market versus on the human health care side >> the global question was coming back to my last question, and that was then going to be different nags spend a very different amount on their pets yourp is a significant veterinary market. australia, new zealand, and china and brazil will be some of the fastest growing and maybe the largest veterinary markets in the world in a lot of ways, the spend per patient outside the u.s. is maybe higher than in the u.s. market

>> i'm thinking five times revenue. >> how about that? >> that's your number? okay just want to know. thanks a lot thank you very much. >> appreciate it still to come, stock futures under pressure we'll talk earnings, trade tensions with china, and that's coming next. plus, more on the buzz story of the morning. amazon ceo jeff bezos accusing the national enquirer's publisher of blackmail as we head to break, a look at yesterday's s&p 50000 winners and losers we're back in two.

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with being back. you're watching "squawk box" live from the nasdaq market site in stooimds times square >> good morning. welcome back to "squawk box. among the stories front and center, it's the bez yoes bombshell. we'll have more on the developing story that has just sort of overtaken silicon valley and just about everywhere else things are back up and running we should tell you separately at

wells fargo after what was a major outage yesterday knocking services to some of the atm's and on-line banking apps it's all working now the issues were due to a power shutdown at one of the bank's facilities not clear how many wells fargo customers were impacted, but i don't know, i got a million emails from customers and -- >> i was about to say -- why aren't you reporting this. this is unbelievable >> there was another big bank story. i think that the interesting thing to see is how much ayre it causes customers when they can't get access to their money. it's different from if you are shopping website goes down or whatever they feel more passionate about it it should be up and running today. they keep telling us fully and clearly it's not a huge stock aspect >> even losing access for a minute or two, it's nerve racking. >> of course, it is. >> by the way, do that for a day or two, and then call me, right? that's when you have a real problem. >> it's cleerlg a case of wow, they're meant to be doing a full

review and sort everything else out, even though this is unrelated to what they've been reviewing. it's not a good look if it lasts much longer where. >> the soap opera that is sears. the saga rolls on. the retailer getting yet another lifeline after bankruptcy judge approved eddie lampart's latest bid to buy the company they offered to pay $5.2 billion. it would allow sears to keep 425 stores open and create 485,000 jobs eddie lampart seen as the firefighter and the arsonist it's a complicated situation >> take a look at u.s. equity futures. we are in the red. 94 points off. nasdaq off by 40 points. the s&p 500 off by 11. >> reporters were present, and he was asked at the end whether

he would meet with china's president xi jing ping, and he said it's probably too soon, but that the two would maybe meet in the next month of course, the reason why people are focused on this march 1st deadline, it was the deadline set by the united states back at the g20, and it's the date at which tariffs will automatically double from 10% to 25% on some $200 billion in chinese goods. that is set to happen auto plaktly unless there is a presidential memorandum that president trump signs. that would require talks to continue progressing with china, and that is happening behind the scenes remember, a deputy delegation will be going to china early next week. the treasury secretary and the trade representative will be joining later in the week, so they are still working as secretary mnuchin says around the clock for a deal the president remains predisposed towards making one there are two desires at play here on one hand, you have the president's desire and many of his outside gop advisors to

limit the disruption to the u.s. economy going into the re-election season on the flip side, you have the desire to not let this opportunity and the leverage that the president has created with tariffs pass, and to really hold china to account this time. and that if this moment passes, they won't be be able to reopen this conversation at this level again. wolf >> kayla, is there any sense that the recent back and forth on the domestic front in relation particularly to the shutdown has altered whether the chinese side are seen as tough or weak? >> well, it's worth noting that the chinese haven't significantly altered their offer. some of the things that they're offering now are the same things they were offering in 2017 an opening of the football services industry which back in 2017 the administration actually rejected as a deliverable that the president would announce when he went to china. that was not viewed as strong enough.

maybe they think the president is slightly more willing to make a deal on the other hand, china could just not be willing to do much more and hope that, you know, it's sort of death by is,000 cuts if they keep saying they'll do certain things over and over and over again, potentially the white house will change its mind cio of haverford trust if i start with you, clearly, yesterday we saw a percent or so decline in the markets, but weak to date still flat yesterday's move was that because of this trade story, or because of the global growth downgrade? >> i think the news flows from trade. if you are looking at the data that's coming out, it's really hard to see bad news

it's not 25% it's still pretty good i was sitting yesterday looking for some bearish sign. >> you are still pretty bullish on u.s. equities >> let's just suppose you thought we would get back to levels that we were at the beginning of q4. 10% or 15% earnings growth by definition, that's a so% or 15% contraction. that's very reasonable >> albeit, i guess, hank, markets are more forward-looking than just this current quarter do you think earnings growth can continue to deliver those sorts of growth numbers? >> i think earnings growth will be positive. it's still going to be positive, and we totally agree with simeon that this market pullback yesterday is all related to

trade. if you want to go back to the fourth quarter correction near bear market, it was all self-induced based on misstatements by the fed and then trade rhetoric that turned into actual tariffs and the threat of a trade war with china. we put the building block of the fed back into place. they've stepped back from the aggressive comments in early october. now all this bull market is needing is for trade to come off the table, tariffs to come down, and an agreement with china to be put into place, and i think you're going to see this bull market resume very -- in a very healthy way. >> hank, how are you positioned? what's the trade between value growth or which sectors really stand out for you? >> if you look at the market last year, you had bear market returns in the more cyclical sector, such as industrial basic

material financials. even tech to a certain extent. you have seen a big rebound. at the same time i think you do need a balance between offense and defense. you can't go all in with a cyclical you do need some defense in the consumer staples and health care sector as well >> the big tech stocks have been a large part of the rebound since christmas. can that continue? >> i think it's wise to be wary there. tech is the weakest sector in terms of earnings growth top line is only is 1% yes, they're rebounding from q4. i'm not sure that that's a great play going forward >> what's your take on that sector we did see very nice intraday recovery for google after they missed it shows a lot of buys out there. >> they were beating on the top

line this quarter, and that was a positive sign. if you look at the income statement and balance sheet, there are worse growth margins and better returns on capital. that seems like a pretty reasonable farm la if top line is weakening and growth is weakening. those better balance sheets should play well >> we'll leave it there, guys. simeon and hank, thank you very much >> earnings out just moments ago, and quarterly profits $is 1.33 a share well below revenue also coming in well below estimates. hasbro was hurt by the

liquidation of toys "r" us that's in sharp contrast to rival mattel, which is rising this morning after avoiding an unexpected profit for its latest quarter. you are looking at hasbro down almost 10% off 9% mattel, on the opposite end of that up 14% coming up when we return, joe and becky, they are in pebble beach. they're going to join us with a huge line-up of guests from the at&t pro-am. joseph is playing there, including the ceos of waste management, chevron, cisco, and at&t then we will continue with the conversation of the morning. the bezos bombshell. the scandal between the national enquirer and the world's richest man and what it all means. u' wchg quk x" yoreatin"sawbo right here on cnbc what do you see? we see a billion more people breathing free. we see access to fresh food being the global norm, not the exception. we see homes staying cooler, without the planet getting warmer.

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>>ates i special edition of the program this morning for more on that, we want to get out to joe and becky because they are at the at&t pro-am in pebble beach they've got a huge show lined up for us this morning. hey, guys. >> good morning. >> good morning. >> did you read the new york post did you read the cover on air? >> we have already done it we spent a good -- i don't know -- 20 minutes >> have you read the -- >> what's the take from the west coast?

>>. >> i hope the new york post never goes out of business >> what makes it great it's straight forward >> we'll put it up again bezos exposes pecker i must say, though >> i thought that jeff on his own in his medium post, no thank you, mr. pecker, was pretty close. >> and, by the way, i'm grad he is kind of taking this tack with it >> let's get back to a show coming up? >> we have a huge show coming up there are many ceos who are here, and plenty of them are joining us >> some of them -- the ones that are pretty good boards

>> jim fish will be joengs he is the ceo of waste management we have jeff yang, the head of red point ventures he has big tech investors. >> media guy >> one of his biggest investments, recent biggest investment just went public. we're going to talk a little bit about that he is going to be talking to us about sewn yoes and a lot of the things in the ipo market chevron ceo michael worth is here, chuck rob bins, and samuel o'neil and we'll talk to him about banking consolidation, and at&t ceo randall stevenson at&t is the sponsor of the tournament we have a lot of things to talk about. seeing what's happening on the media landscape with them as well >> mr. m&a i didn't see your coverage yesterday, and i don't have -- so be it i don't have a dvr out here. no playback. >> so -- >> like i normally do for your reports and stuff.

there's actually not -- there isn't that many. u.s. bank corps is now going to be out there pnc is out there, and they're actually closer to the limit in temz of their full size and how big they can get >> the interesting thing yesterday where analysts were taken by surprise, joe, was that everyone saw these two banks as potential acquirers of small boltons. they didn't see such a big deal like these two coming together as for the stock prices, it was also interesting to see the big caps trade down yesterday.

i think it was the potential target names, and you see the regional jump off the back of it usb and pnc are the two that are thinking, gosh, do we have to run in and do an acquisitioning ourselves now because the new merge bbnt plus suntrust will be the biggest money center by assets >> joe and becky, joe from the golf course, becky from the valley, what's the hot gossip you got out there? >> you know, you are talking to people >> we are. you know, we're trying to enjoy ourselves too, though. it hasn't been all m&a for us out here there's been -- althoughdy see jimmy dunn, and i'm glad that i had to twist his arm a little. i kind of blackmailed him.

either you come on or i'm going to talk about you being out here, and that turned out to be a good thing >> he is coming on and you are blackmailing him at the same time >> no. if he -- well. yeah, i guess so by coming on, we know he is here exactly. >> anyway, we have got a lot to tell you some of the stuff that we can't tell you just yet, but maybe later we'll slip into the conversation >> okay. we're looking forward to it. they have a huge show, and a number of things they're going to be bringing us throughout we'll come back to you guys in a little bit when we return, we'll continue that conversation about jeff bezos. the world's richest man accusing the national enquirer of blackmail. we have the full story next. as we head to a break, a quick check of what's happening in european markets right now i consulted with your grandmother's doctor. we can do the screening at her house. hi. this is the man that's going to check your eyes grandma. cognizant ai solutions are helping healthcare companies

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♪ welcome back to "squawk box. it is the buzz story of the

morning. amazon.com founder jeff bezos accusing the national enquirer of blackmail we're joined now by robert frank. >> in a politically charged and revealing blog post, jeff bezos accused the publisher of the national enquirer of trying to blackmail him on the coverage of his diverse. threatened to pub establish compromising photos unless he ends claims that they were politically motivated. rather than capitulate extortion and blackmail, i've decided to publish exactly what they sent me despite the personal cost and embarrassment. this is the quote you mentioned earlier. if in my position, bezos says, i can't stand up to this kind of extortion, how many people can ami sent bezos' attorney with photos of him and lauren sanchez

whose affair was exposed last month. if bezos said the coverage was not politically influenced, the enquirer would agree not to publish or distribute any of those photos or texts. bezos entered into an agreement with the involvement of hush payments aimed at helping then-candidate donald trump. trump has been a frequent critic of bezos and his ownership of "the washington post." bezos for the first time yesterday commenting on that criticism saying, quote, certain powerful people who experience "washington post" news coverage will wrongly conclude i am their enemy. president trump is one of those people obvious by his tweets >> one question real quick one is amazon shareholders how do you think they should feel about this whole situation? he gets into it in this letter about his ownership and how proud he is of owning "the washington post. he says when he's 90 if he gets

to be 90, that that's the thing he's going to be proud of. >> the two things i would say is number one, we don't have any of the correspondence from bezos to ami. so we don't know, it is possible that in phone calls or letters bezos' folks proposed something like this. and then ami is saying here's what we talked about so it's unclear -- >> that would be very nefarious. not nefarious, but it would undermine what he's saying >> but it's interesting we don't have any correspondence from their side to ami. >> maybe they were smarter >> that is my guess. if it was, in fact, that way the other point i'd make which is more important to shareholders and investors and our viewers which is your point. what does this relate to the original divorce which is that bezos' ex-wife under current divorce law is entitled to become the largest shareholder of this company next to bezos. there has not been a divorce

filing despite his claim this was an amicable filing we don't know anything about the future of the 16% of amazon that bezos holds and the divorce and all of this. not only stemming from that problem but also his distraction which continues and only grows by the day >> it has to >> it's hard to focus on running amazon when you're dealing with all this stuff zblif to say on a personal basis, i feel bad for mackenzie and the kids i can't imagine the phone call he has to make to her at some point saying i'm going to write this note. >> and the kids are old enough they're reading this on the web. >> i think for the kids especially it's terrible is there a different liability in terms of these divorce proceedings, that she has a higher claim >> i don't think it really -- it's a -- washington is a no-fault state, so it doesn't relate to the terms of the divorce at all but what's interesting to me is that it implied from his original tweet announcing the divorce this would be a quick filing and they haven't even filed for divorce yet which

means they haven't settled on the terms which means the future of the 16% is uncertain an even more because of this issue >> a couple big things robert frank we got to thank got to thank ed lee for staying for the hour you're sticking around >> i thought i was going >> well thank you to you it's just the three musketeers coming up, when we return joe and becky in pebble beach joining us with a huge lineup of guests including the ceos of waste management, at&t, chevron. plus toy stocks on the move this morning. mattel a huge winner up almost %.15 hasbro off 10% we'll explain when we return largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget.

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welcome to a special presentation of "squawk box. worries about u.s./china trade sending a chill through the markets. the latest on upcoming talks that have investors on edge. spotify making a big bet on podcasting is this the next frontier in the content wars plus, "squawk" at pebble beach. becky and joe teeing up exclusive interviews this hour, jim fish, ceo of waste management and jeff yang of red point ventures the second hour of "squawk box" begins right now

live from the beating heart of business, new york, this is "squawk box. >> good morning. welcome back to "squawk box" here on cnbc i'm andrew ross sorkin becky quick and joe kernen joining us this morning live from pebble beach. hey, guys, again what do we have cooking this hour >> well, we got at least -- we got waste management this hour but we got chevron coming up, randall stephenson coming up from at&t. jeff yang -- this is you supposed to be talking >> we're kind of doing this together. >> we are. i like the whole idea of a two-hour show and a one-minute commute for me so i'm ready to -- you know, i do need to go home eventually, i guess. but also wall street legend jimmy dunne will be here which is good. >> chevron ceo going to join us. >> mike werth will be here as well >> and there are big issues that are kind of involved in just

about every one of these ceos who are here some major issues happening around the globe you'll hear from it all day long but everything from china trade that's been out there to changes in the media industry and to these big consolidation in the financial industry right now too. we've got ceos who can speak to every one of these issues happening. >> how do we do the china deal if he doesn't meet xi until chan 1st? >> it's not for a lack of trying it's north korea is kind of getting in the way of being able to meet beforehand >> andrew, not to get political and, you know, we're 3,000 miles away >> i know. i know it's hard. >> far be it from me, but the left really hated getting involved with tariffs and china anyway and now the left is so mad because they're saying trump's going to get just a half measure deal it's just weird. now the criticism is he's going to accept way too little to, you

know -- he's going to get taken by xi, if you will, by a soybean promise. and he's not going to extract the really tough things he should have extracted from something that the left loathed him beginning in the first place. how does that work >> i don't think that's the argument, joe. i think it's being twisted around a little bit. i think that the argument is that if you -- >> i wouldn't do that. i don't twist. >> if the administration was going to have this fight and was going to put a line in the sand, they should be winning -- >> this is twisting now. you're a pret sell >> for the goalline from what they put on the table. but if they're not going to get that, that's a failure of the negotiation. it's not necessarily a failure of what the other side wants you know what? we're going to see each other next week. we can debate this in person >> you want it to be a favorable resolution -- >> you want it to be a favorable resolution for the country, no question but given the back and forth the

uncertainty the past six months has created -- >> right, but that would be favorable for trump though if it was favorable for the country. you still okay with that all right. go ahead >> meantime on this very topic, joe, sticking with the u.s. trade talk story, they are expecting to get back on track next week. at least that's what the administration is saying want to get over to kayla tausche in washington who's got that story >> talks are continuing to move toward a deal at the president's direction. the deputies are going to be in china early next week and then the treasury secretary and trade representative will join in beijing later if the week. if those talks go well, officials have suggested that the president would order tariffs to stay at 10% instead of doubling to 25% secretary mnuchin and ambassador lighthizer would also make a recommendation on next week's talks on whether or when or

where they should meet the assumption that meeting would only happen once there's an agreement for the two leaders to discuss but there's now less time pressure on that meeting with president trump saying yesterday it's probably too soon to have that meeting before a march 1st trade deadline that the united states set at the g20. the backdrop for those comments from the president is that there's still too much ground to cover in a deal. there's no hand shake deal for the leaders to sign. there's no paper agreement as of yet. and white house advisers want to limit the scope of the president's trip to vietnam to north korea's denuclearization an issue that on its own is high stakes enough without tacking a meeting with china on the back of that. but the president still appears open to meet with president xi the senior official i spoke to said that could happen shortly after the march 1st trade deadline is that recommendation will come from the trade secretary and trade representative we'll see where we are there >> thank you for that. we're going to continue this

conversation we made it all the way from california to washington now back to new york on the same topic of u.s. and china. bringing in our guest senator chris coons here hopefully becky and joe can jump into this conversation as well i don't know if you had an opportunity to hear what joe was saying in the way -- he was sort of positioning the democratic approach or view of what's happening in these china negotiations what is your view? >> well, let me give you another analogy that's relevant and recent north korea. president trump sort of escalated the rhetoric with north korea and threatened and threatened and threatened. we did months and months of rattling to the point where most of our allies were concerned we were about to go to war with north korea. and then de-escalating with a hand shake photo op that produced nothing of substance. returned some remains of americans killed in the korean war. some announcements about what they're going to do, but virt l virtually nothing of substance in terms of denuclearization on

the peninsula. >> the president says there would be a war with north korea if not for him >> that's great. the state of the union was as it often is full of some puffery, broad declarations, not a lot of specifics. on that particular point, i don't know how one could know that i far prefer a president trump trying to negotiate with our allies and engage china and contain north korea to a president trump who is daily threatened >> but let's talk to tariffs what would success look like in your mind? >> first, i think the president is right to step up to china's unfair trade practices we expected that they would begin to play by the rules as they modernize and open. that hasn't been the case. the way he went into this was not just to slap tariffs on chinese goods but to start by slapping national security based tariffs on some of our closest allies like canada, germany, the

united kingdom if we're going to have a successful trade fight with china, we need allies with us and a clear plan for an exit strategy i don't think the trump administration has either. i would hate to have this expensive difficult unsettling trade fight rovled with just another hand shake summit. the president got it right in the state of the union when he said there need to be structural changes to u.s./china trade and how china engages with the world economically for us to renormalize relations. >> joe wants to get in here. are you rooting for his failure in these talks >> no. i want the united states to succeed which means i want him to succeed but i don't want him to withdrawal from the field without getting significant concessions. >> joe >> senator, you remember the missiles going over japan, like, every couple of months and the worry that they could break up over japan and fall on a civilized --

>> joe, the president has a -- >> hold on you're actually -- with a straight face you're saying that his position and whatever we've done with north korea is worse than where we were before? do you know what's going on right now in terms of where south korea is in negotiations and china? do you know how this is going to pan out? you know it's going to be unsuccessful you don't think it helps that we're at least talking, smiling at each other, shaking hands, arranging new meetings so you're criticizing trump for what's happened with north korea. did i get that right >> no. you got it exactly wrong i was trying to compliment the president. you got it exactly wrong i was trying to compliment the president for gets us to a place of stasis, but saying the broad goals of his summit with kim jong-un in singapore have so far not come to pass of course i think it is better that we don't have nuclear tests and missile tests, but i was pointing out he may have withdrawn from the field without having secured all of the concessions from north korea that he was hoping for

and so i was looking for and i had hoped to deliver here an analogy to the tariff talks when you were saying the left is criticizing he can't win i do want the president to succeed because i want our country to succeed but i hear from farmers and chemical companies in delaware who say that these tariffs are really affecting their bottom line i understand the pressure on the president to get off the field and to stop this tariff war. my concern is we do it without getting real accomplishments >> moving onto the wall, i saw some of your comments about the wall each democrat has a different way of sort of maintaining solidarity with speaker pelosi but in a different -- they sort of have a different method it's got to be, you know, not really a wall or if it's a -- with you, i guess you figure there are certain places there could be some type of structure but not exactly call it a wall and have something else that looks less -- where are you on that because democrats have, you know, okayed a lot of funding in the past for border security and

they seem to be in a position that, you know, it's just hard for me to understand exactly everyone's different take on why they're against any funding at all. >> my biggest challenge in terms of the border security negotiations is finding what the president's position really is that we can then negotiate from. when speaker pelosi said that a wall is immoral, i went on fox sunday and said it's not immoral. it's a piece of infrastructure we've already got 600, 700 miles of border fencing, so-called normandy barriers that i think have made a difference in reducing illegal immigration the larger question is how should we most efficiently and effectively spend billions of dollars more like many democrats, i have voted for billions of dollars more in border security as part of broader immigration reform packages every time i hear from the chamber of commerce, the business table, they want to see broader comprehensive reform

shutting down the government of the united states for 35 days and getting nothing out of it in terms of greater investment in terms of modern border security didnot help us either with china domesticicly or with the rest of the world. >> how do you handicap this going down do you think a deal will be had with the president >> i hope so we frankly really need one it matters whether or not the president can hear, yes, he took the deal we had already agreed to right at the end of the year. it's got to happen this weekend. it is in the country's best interest we should invest more in border security >> i have one final question which is we've talked a lot about the democratic party over the past couple of weeks and the pitch forks being out on the wealthy when it comes to wealth taxes that have been proposed. whether it's aoc's comments, whether it's elizabeth warren's comments some of the other comments that have come out from the folks who presidential candidates. do you feel like the party has lurched to the left?

even senator schumer's decision to go hand in hand with senator sanders on this buy-back program. >> i'm looking forward to my predecessor joe biden being someone who has a louder voice in the competition he's going to refine the party in 2020. >> you think he's going to run >> i hope he will. better than anyone he understands what the rigors of a presidential campaign are like for yourself and your family and i think he's got a clear assessment of just how a personal and aggressive president trump will be. he attacked senator cruz with things he just completely made up about his family. so i think he's weighing that. i think he would be a good voice. and i frankly think democrats will win if we are optimistic and positive about opportunity >> okay. fair enough. senator chris coons, it's great to have you here thank you very much. coming up when we return, the other story that has the nation buzzing this morning. the bombshell from jeff bezos.

accusing the producer of the national enquirer of blackmailing him we will talk to the parent company ami. before all that, becky quick is going to tell us what's coming up from pebble beach becky? >> i was going to talk to you. and it just seems like -- >> you can tell me >> it just seems like you're coming towards me. i hear you and i saw the look on your face with some of the things you're talking about, aoc, and you almost sounded like me like, you're not saying. and the senator said i'm with biden. >> i've always been in the middle i'm right down the middle. >> where the hell are they i want to keep flying. can i keep flying or no flying can i have bacon anymore >> i saw your tweet on that. >> have you thought this through? have you people thought this through, andrew? >> anyway, andrew, we've got a great lineup of guests coming this morning let's tell you about the first

ceo. jim fish of waste management then later, jeff yang founder of red point ventures he'll give us the investor perspective on the china trade talks. stay tuned you are watching "squawk box" here on cnbc sometimes, they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group - how the world advances. ♪

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. ♪ coming up, the ceo of waste management jim fish will join us the company's north america's largest recycler of post-consumer waste. but they also just get rid of our trash. okay do not down play that business, jim. you ever seen what happens when you don't get rid of trash we'll see how china affects his business and also advances in technology. if we're going to see driverless garbage trucks in the future sounds scary like, big --

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all right. now the man whose vision is to capture value by cleaning up the world's waste. jim fish is president and ceo of waste management he joins us now. things have been going pretty well for waste management. >> things have been going great. >> as far as the stock, as far as results, and everything else. i told you off camera, to start with your bread and butter business in a strong economy, there's more waste >> right yeah but it's somewhat resistant to downturn as well. >> okay. so you have a lot of the dumpsters and a lot of them are able to actually talk to each other. you've seen that -- >> not anymore we don't do the talking things anymore. >> how long ago did -- >> we had our golf tournament last week. we went away from those. we now have a set -- >> but you have a lot of dumpsters. they never talk, actually.

but that's the -- how much of the business at waste management is just dumpsters, getting the trash residential and commercial >> 90%. >> 90%. >> 90% is kind of the traditional garbage collection business 10% is recycling >> okay. we do talk a lot about, you know, plastics and the trying to get that out of the system we talk about how much recycling material that you export to china that they use. but it's still a small part of the business, really why does it get so much attention? >> i think part of it is society is focused on recycling. last week we had our waste management golf tournament it's been a waste-free event for seven years now. >> how do you do that? there are a lot of people coming through. >> it means everything goes either for recyclirecycling, foe

for compost. all of the forks and knives, they have to make compostable forks and knives or they can't work with the event. it's a combination of effort between fans and vendors and even the players are involved. so it's a nice piece for our event to be able to establish an identity as a zero-waste event >> when you come in and replace our old friend -- what was our buddy's name he always wore black remember the last ceo >> i was thinking gary player for a second david steiner. >> so you replaced steiner you come in. the 90% of your business, what did you need to do there since that's where the lion's share of your -- are there efficiencies are there logistics? how does it work where you run that business even more effectively than in the past just not focusing on the recycling for a second. >> so we're bringing technology to the 90% >> how does it work? >> when you think about a customer interface, it's been

decades since you've been able to book your airline reservat n reservations online. we're just moving into that area so we're starting to interface the way we work with the customers digitally. >> meaning you'll come when i ask you instead of the same days every week >> residentially, it'll be on a contract basis, but commercially and industrial, those are typically going to be either on call or scheduled if you prefer. i mean, you can schedule it and say we want you here on wednesday or you can do it on call as well >> there's no more rolling out being done, is there, of smaller players in the business? >> sure. there's some acquisitions being done that was the model for waste management for a decade and a half >> you're done then? >> well, we do some tuck-in acquisitions we bought so far this year through three quarters $300 million of small companies that sort of roll into our business and there's still some rollout being done

but not like in the '80s and '90s. >> is there a compelling reason to do the automated -- >> sure. >> what about all your employees? guys need -- you have a lot of guys that are paid to do what they do. it's a pretty solid job, i would think. >> we're doing a test right now with caterpillar right now outside of denver at a landfill. they're sitting in a separate room opposed to sitting on this piece of heavy equipment and running this thing remotely. you can imagine that a millennial would look at that as being similar to fortnite or something running a game >> yeah. >> we're also looking at autonomous trash trucks. i don't see a day in the near future, probably not in the next two decades where you have a driverless truck kind of prowling around a neighborhood but i could see a day where you have a technician sitting up front who's monitoring equipment while this is running autonomously the benefit there is we have these efficiency programs today that dictate where the drivers should go. once you move to level four

autonomy, you become perfectly efficient because the driver's not really making decisions on where the truck goes it's just the driver is just making the decision. >> so landfills. they've got methane that seeps out of them. is that fair to say? there's a way of cap -- >> we capture it >> you can capture it and sell it for fuel. it's 80 times worse than carbon dioxide in terms of trapping heat >> which is why we capture it. two reasons we capture that. one is that and because it's revenue generation for us. >> is it de minimis for the revenue? >> it's not a huge component -- >> is it 1%, 10% >> it's less than 1% >> okay. yeah, that's definitely not huge >> but it can be bigger than that so we can put renewable plants that take advantage of the fact we have a fleet and those credits are available to us. that can be valuable to us >> can i ask you quickly about

recycling? we know it's become less profitable as china has stopped buying much of the waste material is that because of the trade talks or is that because china's economy has slowed what happened? >> actually, it's kind of neither. it happened about 18 months ago and china felt like the material we were sending them was too contaminated so they put some quality controls out there and so we've been in the process of cleaning that material up, but at the same time we've reduced the amount of material going to china we used to ship almost 30% of our recyclables to china now it's 3%. >> where does it go instead? >> some of it is going to other countries like india, indonesia, vietnam. a lot of it now is staying in the united states to mills in the united states. >> jim fish, thank you hope to see you back in new jersey next time >> absolutely. >> jim fish of waste management. let's get back to andrew who is back at times square at the nasdaq market site >> thank you for that. coming up, we will talk more about jeff bezos' battle

the world's richest man accusing ami one lipublisher national en of blackmail "squawk" returns in just a moment 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. welcome back to "squawk box. it's a story everyone is talking about this morning jeff bezos blasting the national enquirer accusing its publisher of blackmail in a blog post last night, bezos

said a lawyer for ami threatened to post sexual pictures of his girlfriend wanted a public denial that the coverage of bezos was not politically motivated and an end to bezos' investigation of how the enquirer obtained his texts. describing the graphic sexual photos that would be published tmz has not yet independently reviewed these we have reached out to amazon and ami. ami declining to comment to talk about this, we have an insider here that knows a lot about ami who lived inside the company. stu zakim is here. he was at ami from 2004 to 2006. you saw the news last night and you thought what >> oh, my god. have these guys not learned anything because common sense alone would say you're going after jeff

bezos and putting it in writing? there's nothing private anymore. it's going to be a public document >> spending time with them, what do you think the mote viv was? and was it political that he is doing the bidding of the white house. >> well, let's look at the political side because that's what most people are interested in right now there was a falling out, we thought between pecker and trump when all of a sudden the enquirer stopped covering him as lovingly as they did as we know with both, no one is ever out of favor. when they need you to come in, they're going to call you up and they also want to keep the communication going. so i would imagine people who are speculating that trump kind of asked pecker to do this, i think probably pecker did it for not necessarily to help trump

but he knew it was going to sell a lot of copies of the enquirer and get him publicity. it's the top story today >> let me talk to you about the blackmail and having lived inside this company yourself there have been stories for years and it really came out from the harvey weinstein of the catch and release. the idea that the company would actually, you know, pursue stories and blackmail others did you see that in your time at the company? >> well, let's see when i was at the company, number one, the enquirer was one of many magazines in the stable. i handled a lot of different things, but the enquirer certainly took time because of what it is the catch and kill is not a new concept. this has been going on long before it got broken with trump. pecker has been in this business for a long time. people want to be friends with a guy who owns a media property like he does he uses his properties to help his friends and punish his enemies. as any media owner would

that's why you own a media property to influence public opinion. he's looking to target certain people >> i would like to argue that publishers of other publications are not pursuing it in the same way you just described you think david pecker is operating in the same way that jeff bezos is as the publisher of "the washington post" >> no. but he is using the leverage that he gets as being a media owner to his advantage so it's a little more cynical when we're talking about the enquirer because of the salaciousness of that brand. but many media owners -- murdoch does it all the time people who own your company. this is why you own properties like this. because you have that ability to control what people think. >> what do you think the liability is for ami in a sigs like this legally? if you were still working at the company, what do you think the dialogue is in the room right now about whether a prosecutor is going to look at what's happened here and say this is blackmail and i'm going to go after this company i'm going to indict the company and i'm going to indict david pecker. >> more importantly and i'm not

an attorney but i do read a lot and i play one on tv, no, no seriously. when you look at the decision with the district of new york, they had to be on their best behavior one could say this violates that and could throw that out the window >> as somebody in the pr business in terms of image making, what does this do or not do for jeff bezos? because there are a lot of people today who are applauding what he has done but at the same time there are shareholders of amazon who say you know what? i don't like that he's involved in -- "the washington post" has created this distraction plus his own personal life. >> i wouldn't say it's distraction. he is the richest man in the world. he does own t"the washington post" but he owns a lot of other things the fact he's stepping up and calling them on this is pretty amazing. i think that the enquirer has gotten to where it has through the years by bullying people and having the attorneys to go after

you and put that stuff in writing is how they do business. but i give bezos all the credit. >> well, i'm with you, stu i give him a lot of credit it's a remarkable story and it's a remarkable thing of courage and bravery he had in what was a very difficult situation >> without a doubt thank you, andrew. >> appreciate it very much stu zakim, former spokesperson for ami. coming up when we return, a lot more on "squawk box. spotify making a big bet on podcasts will this be the big next battle ground the content wars we'll talk about that when we return and then joe and becky live at pebble beach this morning with their incredible lineup of corporate and wall street titans you're going to be sineeg randall stephenson and chuck robbins in just a bit. "squawk" returns in a minute

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accidents can happen anytime that's why geico is here 24 hours a day everyday. geico, fifteen minutes could save you 15% or more on car insurance. welcome back to "squawk box" this morning spotify making a big bet on podcasting spotify ceo spoke about the deal and its investment earlier this week on "squawk on the street. >> we are investing in more original content that will broaden the appeal of the platform as we're doing that, we believe obviously subscriber acquisition cost wills go down which increases our long-term opportunity. forecast boast acquisitions but it's also our own efforts in investing in creating these shows. we had 14 exclusive shows in the fourth quarter of 2018

we're doubling down on that. we want to grow the number of shows we have. >> joining us now to discuss the market opportunity of podcast is propagate founder howard owens good morning, howard >> good morning, andrew. >> you know, every month i think we're peak podcast how could there be more podcasts all you hear about is podcast, podcast, podcast then spotify buys gimlet >> i'm waiting for yours >> that would be the high sign by the way >> okay. yeah i think there's a long way to go there's a lot of leg room and i think it's really just beginning. as the masses are experiencing podcasts and as, you know, for a long time radio was so dim and such a poor experience now anyone can make a podcast. there's comedy there's drama. there's crime.

anyone can make one. but it's an escape from the madness of all the thousands of tv shows and social media. it's an intimate kind of experience and i think it has a lot of run room >> in terms of -- there's a couple different kind of podcasts anyone can get a microphone and do an interview, but increasingly these are expensively produced productions. right? so the question is how many of those can ultimately be supported? >> i mean, they can be expensi e expensively produced productions, but they're really from people's imaginations and yes, they might be scripted, but a lot of them are personality driven a lot of the most successful ones from bill simmons to gwyneth paltrow to mark marin to you name it are people using the power of their platform. i mean, at its core, howard stern's a podcast.

so i think the way these things will grow is that they will become more involved and more production value will be attributed to them but i think look at what's happening at the daily the wn"the washington post" just rolled one out i think where you have a demographic set, doesn't seem to be slowing down right now. >> is the loser radio? is this is a zero sum? >> i think radio is kind of the loser. it becomes this personal experience just like our news and just like our sports and our politics, you know, we don't watch broadly we watch our stuff and i think the experience spoken word at least in podcast is going to more and more, you

know, narrow our -- give us more choices. and i think that terrestrial radio, think about it. people still have it as wallpaper in their car but now it really to me is the podcast fop me whether i'm on my bike or my phone i think that's absorbing more and more you know, we find it use it as an exscape and it becomes an addiction. >> how many of these get acquired or any one player you look at that you could see we could be sitting here at the nasdaq could be a publicly traded podcast company >> you know, i don't know if it's that way yet, but i think there are a lot of players and gimlet's acquisition by spotify was a smart move, i think, by them spotify has been getting into

podcasts for about a year and a half now i think there will be a big audio-led revolution yeah >> okay. howard, maybe we should talk about a podcast. we should have that conversation it's a longer one and i hope i have an opportunity to see you in person. >> i would love that >> thank you very much >> i'm a big fan thank you. >> i'm actually going to kick it back to the west coast not in l.a. where you are but over to pebble beach because that's where becky and joe are right now. >> hey, andrew when we come back, we're going to get into the state of media with the cofounder of redpoint ventures geoff yang. we're going to jump into the trade war and how it may or may not be impacting his portfolio and plans he has for this new quk x"ilbeacd. fun "sawbo wl bk in a

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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," everybody. we are in pebble beach, california, this morning right now we've got an investor's perspective on the media space, the technology space, and lots of other things too. geoff yang is the cofounder of redpoint ventures. thanks for being here. >> thanks for having me. >> let's talk about the state of the media industry it seems there's content everywhere what shocked me is the

statistics i saw in the notes you had put together that we're using about 12 hours of media time right now how is that possible >> actually, in the past few years with the explosion of content, people are actually watching more media. you know, they're just watching it differently most of the media is consumed on tv and mobile platforms and how you consume media depends on what demographic you're in >> but 12 hours. you start getting to that and there's only so much growth you can go from there. like, how are people actually using 12 hours that includes facebook, twitter, everything >> yeah. traditional and digital. but we're probably pushing against the natural limits of sleep. people have to sleep i think the next big chunk of time that people will get, you don't sleep, but we're pushing it to the natural limit. the next chunk of time is when we get to autonomous driving and people pick up more time we're starting to reach the natural limits to the amount of

consumpti consumption. >> that is a funny way of characterizing things. it's hard to get above 12 hours. >> sleeping eating, and maybe a couple hours of work >> you think the history of humanity, this is a unique problem that we have really only about 50 years old and it's really sort of not a one percenter problem. people used to have to do things to feed themselves and for shelter and everything i mean, is it a good thing, geoff? i don't think it's a great thing. >> i think it's people have choice and there's a lot of great content out there. now you can watch it any way you want to watch it. >> i'm a fat bundle guy. right? where's the cutoff for the fat bundle guys? >> well, the traditional bundles -- >> you're right. i don't want change. i don't want a skinny bundle i want my infinity and i want to watch, you know, 3,000 channels. it's hard to find something. >> i mean, if you're a 50-plus

person, you're not really -- those aren't the people turning off right now and you're seeing subscriber losses from most of the subscribers are from the millennials and gen z's. one a cord cutters and one is cord nevers. >> cord nevers. >> in about the low 20 millions of people growing at 30-something pr. and those are people that are native first generation and they represent a big chunk of the population like 45% growing. and that's why there's a big concern that that population is going to become greater. but when you look at kind of people who are leaving a traditional paid tv service, you have to look at the demo the older people aren't really leaving in any big number. the concern is that you're

driving new habits and people are trying to figure out what's the new habit. how to get in there. >> from an investor's perspective, who are the winners here who are the potential losers when you have americans already taking in 12 hours of media? >> the good news is because you're able to watch anything any time anywhere, people have adapted to that. not only watching it on mobile platforms, but also in different lengths, right if you have a little period of time and you can watch shorter form content you have this -- you have meg whitman and jeffrey katzburg's company. it's not just user generated short form content you're starting to see new types of content fill the niches but i think viewing habits for treasural tv watchers, it's going to be traditional first augmented by streaming for some of these new younger people who live off stream, it's going to be streaming first,

augmented by live and traditional. and i think you're going to see new bundles that are oriented that way >> you've got disney coming on, comcast coming on. players all over the place that are trying to do this. >> apple, amazon >> right >> there probably isn't. and i think the winners are going to be people who have enough good quality content augmented by other interest level content. you saw that -- if you look at the mobile app world as an analogy, you start it off when apps came out and had thousands of apps. everybody had thousands of apps on their phone all of a sudden, people said i don't want to have to register for everything i don't want one app for the 90 different things i do. >> i want somebody to take care of that for me and put it all

together >> i don't think bundling is going away in fact, i think you're going to see more aggregation and more points so i think it's going to be a battle between the people that have enough critical mass and that's going to be, you know, disney, comcast, at&t, apple, amazon certainly netflix is there already. then the question for the specialty content networks is going to be do they provide enough value that you want a separate customer sflip or you as a customer, do you get to subscriber fatigue and say i don't want to subscribe to 20 o f -- or different -- i'll do five >> a skinny bundle would have to be so much cheaper for me to even -- it couldn't be, you know, i'd have to save an awful lot of money >> for you >> we're back to me again. >> that's right. >> and when you're picking -- >> but ask your kids >> you could leave out disney,

but i suggest when you mention comcast and at&t while you're here would be a good -- which you did. which was -- who's in danger of needing a partner or pairing up with someone or just being -- there's some that don't have the heft or the -- >> i think if you look at the specialty, more niche networks, you look at viacom you look at discovery. you probably look at cbs in the traditional linear world either they're going to provide enough value or differentiation that people continue to have a single direct customer relationship or they will combine >> with each other or others you think they get bought? >> i would think so.

and they probably would like to be on traditional linear and want to be included in these skinnier hybrid bundles that a lot of the larger distributors would create >> who's coming to you now for money? i mean, what's interesting that you see? what's the coolest thing you've seen in the last six months, would you say, that redpoint might get involved with? >> you know, i think the market had flipped from consumer to enterprise because you went through all these ideas and things hadn't begun to explode what you're seeing a an aggregation on power so consumer is a little bit harder to do that's why i think you see more and more venture capitalists investing in enterprise type things and the themes there are cloud

and sass and ai and machine learning you know, you see those things and the reason is it's a little bit easier to invest right now the entry are still lower than that on the consumer side. there's still some interesting consumer companies out there recently you know, where we're talking to this company that does cannabis distribution you still see interesting new consumer plays >> geoff, want to thank you for today. >> jerry has not been on jerry yang i'm willing to go with that until -- if he comes on -- >> we'll come on together, confuse everybody. >> that would be nice. >> geoff yang again from redpoint ventures. great to see you coming up, another round of exclusive interviews live from pebble beach the ceos of cisco and chevron. wall street legend jimmy dunne and golfing legend jimmy dunne and at&t chief randall

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"squawk box" at pebble beach. it's a power hour. interviews with more corporate leaders. this hour, chevron ceo michael

werth, cisco ceo chuck robbins, and at&t ceo randall stephenson. energy, tech, the markets and more as the final hour of "squawk box" begins right now. ♪ live from the most powerful city in the world, new york, this is "squawk box. >> welcome to "squawk box" here on cnbc. joe and becky are out at pebble beach at the at&t pro am tournament we'll get to them in just one minute want to give you a quick check of the futures dow looks it would open down 135 points the s&p off 16.5 points. then there is the big talker of the morning both in business circles and elsewhere.

amazon.com founder jeff bezos accusing the publisher of the national enquirer of blackmail in a blog post, bezos said a lawyer for the enquirer threatened to post actual pictures he text to his girlfriend bezos claims the american media owner also wanted him to drop an investigation into how the publication contained the text messages bezos published e-mails he said are from the income to his attorney describing the photos we have reached out to amazon and ami. ami declined to comment. shares of amazon trading near premarket lows off about 2% but right now we want to send it back to pebble beach where joe and becky are standing by with a special guest and a series of special guests this hour

>> great to start out right now in the 8:00 hour it's 8:00 back there it's not here. most of the oil giants posted strong earnings in the last week or so including chevron. the company reported better than expected profit in the latest quarter. that stock is almost up 9 prst in 2019. and it's been just about a year as ceo things are a good start. no doubt how long -- >> 37 years. >> 37 years at chevron in terms of operations, right? and not the upstream stuff you're much more frugal. if someone wants to go out and drill here, here, here you might say, okay. let's make sure this is going to have a return on capital, right? is that part of the way you're

managing things? >> i did grow up in our downstream business and mid-stream business where typically margins have been tighter. >> you've got to watch things closely. >> we work hard for every penny we earn. so you're careful about every dollar you invest and really focus on returns that's a good way to run a kmotty based business. >> you get any complaints from theguys that still got the wildcatter instinct? or everybody's happy >> we have to have a little bit of that in the dna of the company. you have to do it with discipline >> would you say that -- did you predict the last five years in the golden age of, i don't know, i'm afraid to say those. >> the energy superpower in

every dimension. both supply, demand, conventional, and renewable energy sources it's really innovation and an economy that will allow capital flow to good opportunities and good ideas that's been the history of our industry it's rewriting itself. >> in terms of the industry, it's easy to figure out where the oil is and gas is now than it used to be. digital technologies have changed everything the interesting thing with unconventionals like the permian, we've known where that is for a long time it's been locked in rock that is very, very hard and the molec e molecules simply won't flow through it the biggest breakthrough in energy technology in the last 30 years has not been in some of the things that have gotten a lot of attention

it's horizontal drilling, then the application of digital technologies to allow us to do a better job of unlocking the hydrocarbon in place there so it has changed everything >> you were an english major >> i was a chemical engineering major. >> i think in life it helps to have a bit of engineering in your background. in terms of how we should figure out the direction of let's say wti or brent or whatever it is, what's dictating that now? because we used to think it was everyone, body language in the middle east we'd see movement. now it seems we're more of the swing producer or it's a global picture still >> it's still a global picture the difference between supply and demand which are two very large numbers, a small shift can change market sentiment. we saw that last year with

robust growth in china and opec having restrained prices gradually increased throughout the year really started to push prices up began to produce more. we had excess supply while the headlines may be different, the fundamental things that tend to drive our markets are more similar than they are different >> that's interesting. you point to china as the robust demand that they had there economists look at it and say, wow. the numbers are slipping still 6.6% if you believe the headline numbers for growth. but how would you characterize china right now? is the demand picture there really strong or are we seeing a slowing economy there? >> we still see good demand growth in china. couldn't continue to grow the way it has for the last 20 years

indefinitely we're seeing the rate of growth slow but the absolutely growth in china continues to be something that in our markets we see and demand has been robust that's why we had record production last year you talked about my first year in the role. it was a very good year. it was our safest year ever. we had the highest production ever grew 7% on the prior year. and increased our dividend for the 32nd consecutive year. and we're able to repurchase shares so all of that comes from a robust global economy and robust demand and we continue to see that this year >> we hear a lot about, i don't know if andrew's listening, but we hear about social investing we know there's an enormous amount of pressure on the majors to either develop or move in a bigger way into renewables in whatever form you think of. or do you embrace it if you can get natural gas and

plentiful and so cheap, does it make economic sense to go into some of the other things that are ten times more expensive in some cases what should you do >> we're always looking to invest in technology in advancing the company. when it began, we produced oil for lamp oil to produce whale oil for lighting it turned out that kerosene had a less smokey light. but we didn't produce gasoline for cars and airplanes because they didn't exist 140 years ago when our company first began today we take natural gas and freeze it and liquefy it for power generation around the world. so we invest in these technologies as the world moves forward. we invested this last year in electric vehicle charging technology and some new battery technologies and in a direct carbon capture technology from the air. so we're looking for these

things the challenge with energy, the energy system is so enormous that the scale of it is -- it's hard for most people to comprehend and we need to have solutions that are economic at scale and affordable at scale without subsidies. that continues to be the challenge. to meet growing demand and the expectations around the environment. >> he runs an oil company, but you're still nice -- you're not playing out here you're caddying basically. >> i am. >> and you're okay with that i'm not saying anything. i think that's great i do i think that's really nice you actually took credit for her great round yesterday. >> i try to practice the inclusion there and at home. i'm married to a division one college athlete. >> i feel like in life a caddie for my wife. >> as you should >> i do.

sort of just works that way. economists, i don't know whether they know everything but they all talk about we need a carbon tax is that a way you'd approach this >> the details matter on these things we generally favor market-based mechanisms because they encourage innovation and efficiency as kor bonn pricing schemes are discussed, they engage in that but the policy details matter. and so we look to -- we look forward to the conversation with people >> whatst a good one look like >> well, you hear people talk about we return the money to the people so it doesn't just go into government budgets which matters. again, the scale of the system, we're talking a lot of money then the other thing is there is a complex web of existing regulations that have been promulgated in this country and around they ever world and the idea is that those would be

retired in favor of market-based mechanisms because they're more efficient for the economy. those are two big things that are not easy generally for politicians to agree to. >> if you were trying to take back the white house, would you run on this new green new deal thing? have you seen this >> we do policy, not politics. >> we're supposed to be out of combustible engines. no more livestock. i just realized we're going to have kale bacon. which apparently you can make it crispy for andrew. have you looked into the details of this? >> i'm all for healthy food. >> you are just walking -- you know what? you've gotten good at this really fast, hasn't he well, 37 years, it wasn't that fast, was it thank you. and good luck today to the team. to the team. >> we'll be out there and i'll try to give her the right club and grade the greens well. look forward to seeing you out there. >> thank you

want to see you again back in new york as well >> looking forward to it andrew >> awe somewhere interview when we come back, just getting started with this big hour of "squawk box. still to come, the ceos of cisco and at&t and wall street legend jimmy dunne. all going to be hanging out with becky and joe at pebble beach. we'll talk tech, telecom, and trading. reatin"sawbo ox"n cnbc ds 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. this is decision tech. it's screening technology that helps you find a stock

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welcome back to "squawk box"

this morning take a quick look at futures we are in the red this morning a couple stocks to tell you about. let's show you what's going on right now. s&p 500 off about 14 points. as i mentioned a couple stocks on the move. probably the two biggest and in divergent ways the top toy makers going in opposite ways. mattel surging after an unexpected profit driven by good sales numbers for its barbie and hot wheels toys. let me tell you what's going on there. hasbro shares are tumble on the other side slumping gaming revenue and the liquidation of toys r us and other factors. hasbro down 5% mattel up over 16% also, cos mettics maker coty beating on the top and bottom lines.

and arconic up after beating on estimates. plans to spin one of their two businesses off coming up when we return, we're going to head back to pebble beach for our exclusive interview with cisco ceo chuck robbins one day after an announcement on a privacy law. that interview coming up in just a moment from pebble beach you're watching "squawk box" on cnbc who says our bank isn't tech enough? everyone, look at your phones. the design thinking, the digital engineering, security, blockchain, and we will be first to market! yes. when we do we launch? unfortunately, in 2 or 3, hours. why the delay? cognizant is helping banks use digital technologies at scale to advance speed to market.

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welcome back to "squawk box. futures now are in the red let's show you what's going on it's not terrible, but not great. dow off about 120 points s&p off about 14 points. want to head out to pebble beach right now where joe and becky are standing by with our next big guest of the morning >> thank you, again. obviously everybody saw the markets tumbling yesterday after

disappointing news with a u.s. and china trade deal the tariffs could impact cisco's business if they actually jump to 25% joining us now is cisco ceo chuck robbins. good to see you. >> good to be here with you as always. >> we talked about in davos what those tariffs could mean if the tariffs go to 25%, what would that mean for your business >> we were able to manage through the 10% tariff situation, but our belief is that if we go to 25%, it's going to become increasingly more difficult for us to pass that all through to our customers in order to remain competitive globally so at that point in order, we need to look at slashing pnl or cutting. i don't think this is an environment where we want to see u.s. companies cutting r&d in light of the 5g transition and everything else. we're still optimistic despite the rhetoric and the noise in the system, i think,

that most of that could be construed as negotiation, we're still optimistic that they'll make enough progress so that they find their way to a place where they don't have to do this >> just in terms of your r&d spending, i think i read somewhere that you spent $4 billion a year -- >> in the u.s. >> just in the u.s. alone. >> right. >> so that money goes towards things like 5g development what else are you working on >> we're doing cybersecurity r&d here we're doing next generation platforms. people don't understand what we do, but everyone around the world looks at their cell phone and tries to actually initiate some sort of query, you know, a great deal of the infrastructure that makes that happen is our stuff. and as the video loads increases on the internet, the requirements are increasing on the internet so r&d is done here as well.

>> cisco and other technology companies have applied to get exemptions from the tariffs. have you received any of those exemptions or gotten any word on that >> we worked through that on the 10% and was not successful and up until recently there was some debate as to whether there was going to be an exemption process for the 25%. but i think we all saw lighthizer came out and said there would be we'll work through that assuming they start heading down that path >> i want to talk to you about a big initiative that cisco took on this week i think it was yesterday where you're actually out trying to get congress and other world legislatures trying to focus on privacy as a right for humans and work through legislation for that why did you take this on >> well, you know, we think first of all the tech industry has to actually play a role in so many of these critical policy issues and this is one that's important not only to the technology sector but also to, i think, the

world taking advantage of what this technology can do there's so much positive that can be done whether we're delivering, you know, broad band connectivity into rural parts of the world or the united states who have never had it before so we can connect people so they can become educated so they can actually participate in this global macro expansion we've seen or whether it helps us solve issues of hunger, water, homelessness if we don't get past some of these fundamental issues, we'll never be able to do that we think that all tech companies need to stand up and try to help solve this problem and get to a resolution and that's what we hopefully started yesterday. >> i just remembered tim cook was in a position to be very strident about this issue. because a lot of his business didn't depend on it quite as much as the people who run business and i think kind of the same with you, chuck. it's a lot easier for you to be out in front on this because it's not as important to

your business model. i don't think we're going to see some of those other companies come out and say, chuck, yeah, i'm with you 100%. they're like, this loud mouth. right? isn't it bifurcated in technology people that benefit from not having this initiative go forward and people who where it doesn't really matter >> i would suggest that it's not an issue that's not relevant to us and tim clearly that's not an issue. >> i understand. but as -- people that sell privacy -- >> but using i had devices, we would like to continue to trust the privacy is there i think that's one of the big principles he stood on which is great. in our case -- >> stealing people's private information and selling it to advertisers. >> exactly i can tell you going through the snowden situation for three or four years and going around the world and convincing other governments that we were not

giving special access to our products and that privacy does matter and that their sovereign rights matter, it's big to us. >> snowden is several years ago. now you have the huawei situation front and center it seems you could be in a situation where china and some asian nations are going to be siding with huawei and maybe western nations are going to be siding with u.s.-based companies. is that really happening and how big of a risk is that at this point >> we're in the early stages of all this discussion and what i know are the same things you see in the press and where countries have made certain statements you know, what i will say is that i don't believe that so many things we can do with this is to require us to maintain connectivity get the cybersecurity stuff

right, the trust right you know, notwithstanding whatever different governments think about technology providers. i think that's the focus and we can't -- we have to find a way to solve for things like privacy, things like trust, things like security across borders. so that we can continue to move forward and find a way to turn this mass iive expansion into things that benefit everybody. >> is this something we need to work together to do this or are you kind of out on your own? >> we have talked to several and lots of tech companies they all understand it because you can't build your services country by country and actually scale globally. it's just not going to work. what's going to happen is this is why you saw the european commission working so hard on a single digital market. because if you get into a place

where companies have to build out their services in a every country, the smaller countries just aren't going to stay at the forefront of technology offerings. because you're going to build out in the big countries and let everybody else just slide. >> i mean, you could make the case that maybe the laggards that it's in their best interest to get on board before, you know, to be part of the process instead of let somebody else decide what's going to happen too. is that part of your -- >> i think that's true for laggards, leaders, anybody else. >> right get involved ourselves -- >> you should. >> and here's the other thing you have to think about. and have empathy for these regulatory groups, these politicians that are trying to set regulation in the technology space that is so fast. frankly those of us living in it every day, we have to work hard to keep up with it now we're asking people who aren't natural technologists to understand it deeply and come up

with -- >> the financial services inquiries where we're in trouble. i can't even imagine with technology >> it's incredibly difficult what we've tried to say is let us partner to some extent -- we don't have to define things for you, but let us do ourpart to try to educate you on the things we understand. they ultimately get to make the decisions. but i think we can do a better job to work with them. >> is congress responsive to this >> not just congress, european is responsive. as long as you come in from a perspective of really trying to help them understand it. >> sure. >> and is it self-serving -- >> not dictate, but understand >> right it's self-serving from the perspective that we want all this technology to be deployed globally for the right reasons >> you think buybacks are okay >> i do think buybacks are okay. >> i'm just watching from a political discourse. >> do you think they're okay >> yeah. i absolutely think they're okay. i want to repatriate

when it comes back it flows down hill to where it's supposed to go maybe -- you know, i saw andrew actually said that maybe just incentivize some way for capital investment i guess it's possible to do that some of the stuff we're hearing from certain parts of the political spectrum are -- it's pretty scary >> it's almost like the regulatory discussion we just had. you have to really understand how corporations work and which corporations are capital intensive and which are not. we are not a capital intensive business so i have limited options for using capital on my balance sheet relative to m&a, dividends, buybacks. i can't just flow it into my upper -- >> it would be a good start if certain people in the political arena would know most of the jobs come from private sector. the government ones, you need to tax money from the private sector to pay for the government ones, don't you?

corporations aren't necessarily the enemy all the time >> we have an ecosystem around the world of 70,000 companies that work with us to deliver our solutions. that's where the jobs get created. that are working inside our ecosystem. >> got your rain gear ready? >> i do have my rain gear ready. >> okay. good bring it with you today. climate change anyway, thank you. >> great to see you. andrew, back to you. >> a lot more coming up on "squawk box" from pebble beach including a very big interview with at&t ceo randall stephenson as we head to a break, take a look at u.s. equity futures at this hour. we're looking like the dow is going to open off about 112 points enreturn, randall stephenson of at&t back in a moment in the country. you see so many people walking around here in their hundreds. so how do you stay financially well for all those extra years? well, you have to start planning as early as possible. we all need to plan, for 18 years or more,

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♪ good morning welcome back to "squawk box" here on cnbc it's all about the music we're live at the nasdaq market site in times square it's raining out here. i think it may be raining in pebble beach as well we'll get to the west coast in a second where joe and becky are standing by with a special guest. but meantime, wells fargo is back online. they suffered a widespread outage yesterday due to a issue at a major computer center

separately, apple says they will reward the teenager who discovered the bug it did not specifically say how much money it's going to pay the 14-year-old from arizona you might remember we had him on the show just a week ago or earlier this week. it was a great conversation. so we're thrilled for them apple has now rolled out a software patch for the issue yesterday. investors had a huge appetite for junk bonds over the past week pulled in nearly 3. billion during the week. it's the largest one week total since july of 2016 meantime, as i said we were going to go back to pebble beach where joe and becky with standing by. is it raining? you were talking about needing a rain suit. i'm suli ingassuming the weathe better or worse than is behind me >> wind is picking up here >> wind is bad out here. when it's good out here, it's better than anywhere when it's bad, it's really bad

our next guest is a wall street legend let's welcome jimmy dunne. you are a wall street legend >> oh, yeah. i'm underdressed i apologize. >> the greatest ceo golfer in history, i would think, probably you break 70 you shot your age yet? >> i'm 62, joe that's a ways off. i got eight years until i'm 70 >> it could be in a year though. >> take it one at a time we're okay >> you know the only way i'll ever do it is with nine holes. >> you're going to have a big day today. pebble beach for you crying for you to do well. >> something wicked this way comes, right they know this for sure? >> well, it's -- >> nothing like wind and sideways rain. >> i apologize for being underdressed by i'm running to spy glass. i'm delighted to be here >> what did you think of that

deal yesterday >> i think it's a very good deal i think it's really a tribute to what bbt has done. if you think about 15 years ago, i like to look at things where they've been and where they're going. and if you would have said suntrust and bb&t, that would have been unlikely it would have been other potential candidates suntrust wouldn't have been in the formula. it shows how building a business m&a or inorganic growth bb i think it's a good deal for both shareholders it's a good deal for the market too. >> what does it say about more dance partners, more consolidation. how is it going to play out? more money for sandler o'neil. >> hopefully but there'll be a lot more discussion i think if you went four months ago and announced any deal and underperform the market anywhere from 10% to 20%, the whole thing was there would never be another deal then you had an incredibly bad december

there's reasons for these stocks to come back a lot when you put together a deal like this that will make a lot of sense, it shows that size matters and that smart deals do make sense >> why is this a smart deal? why does it make sense >> you look at a lot of things people aren't looking at bb&t's business. suntrust has a good investment bank so you can have a situation where even if we do get into a less good economy, i don't think we're going to be heading towards a recession. there's a better diversification than what they can do. they're in probably the best growth market in the united states and they've got power. they have invest in technology they can get good cost saves it's a credit to bb&t to evolving themselves over the last ten years or so to get there. i think it's a smart deal for suntru suntrust >> have you been watching the 10-year? 2.63% or something what's happening there, jimmy?

>> well -- >> global? >> interest rates. you know, i'm for less transparency from the fed, actually i like to hear less from them and i'd like to hear less of what they're thinking. less of what they're doing then they should just do it and not get on and explain what they've done and what this means and doesn't mean i think interest rates are going to stay lower for awhile and i happen to believe the economy's in much better shape >> that's weird. >> the rest of the market was clamoring for jay powell to come out and say more dovish. >> he should say less. that's what jay should do. he should -- you know, very smart guy. i think the saying something and explaining the next day, we've had enough of that >> you're a warsh guy. >> big time. >> would he have got more dovish >> i think he has the ability to look at things and then change his mienld i think people would have thought initially he would have been more hawkish.

but then you saw what -- which is he understands markets and i think he'd do it in a way where it would be more effective but we don't have him. he's enjoying his life and mr. powell is in there. >> who's the last fed chief who understood markets, do you think? >> that's a good question. >> because you got to go back so far. i saw in your mind, you're thinking, not him, not her, not him. >> no. not her. and not him. i don't know >> you're going back back to volcker yet? >> well, volcker was -- he was different. you know, volcker was more decisive >> but if you're doing those things and you're not just using lagging data in the most important job in the world about thinking about the future, it makes no -- right? the markets are the only thing that can indicate what's about to happen instead of what already happened, right? >> that's exactly right. and like i said, we should hear less from them >> let me ask what you see right now in the markets you said you don't see a

recession coming, but -- >> i was very surprised by the price action in the fourth quarter. and i was as miserable as all our ceos were with the action in december so we got to recession-like pricing. and it was just sort of this notion that it's been ten years since the crisis, something bad has to happen. and, you know, it's going to happen soon. and there was no empirical data to support that. i think you've seen stocks come back pretty good since the beginning of the year. i think deals like this will make it better i think the economy's in decent shape. and i don't -- i think the market way overreacted in the fourth quarter i think the reason why you don't see loan demand they thought they would is because the tax really -- it helped the economy. it helps people's balance sheet and they just borrow less. that will get factored in over time i happen to think loan demand will pick up >> you think there's such a thing as ceeos talking themselves into some crisis? >> no question about it. and there's a lot to be

concerned about. all the trade jawboning back and forth. we're going to get to a deal we'll get to a deal that will probably be better for us over a point in time. there's going to be a deal there has to be one. >> well, that's interesting. do you think that the effects of what you saw from the tax cut, or is it an annuity that will benefit the economy year after year >> well, my view was that people took that money. they -- i think it's a positive thing. i've talked to numerous ceos one of the things they did, they talked about how this -- they were able to do this for these people and had a great meeting it was a great thing for the organization and i think business owners, you know, came a little closer to

shore. and i -- i don't think that's a bad thing. i think they wanted to make sure where they are and they're going to look at opportunities in the future and they're going to do it >> have you met maxine >> no, i have not. you have seen some of the policy proposals from certain parts of the democratic party >> i have. >> are you -- >> no. no >> i didn't even ask you a question what do you mean no? i have to ask you a question before you say no. >> i heard a smart guy say a smart thing recently i had recently played golf with a democrat and he -- and the -- >> what, you got paired up with him? what happened? >> no, no. >> i'm kidding >> with a famous democrat. and we had a fantastic talk. >> did you have a hole in one? >> no. but -- and terry malts, very

smart guy, he said we could take a democratic president, we could take a republican president, we just can't take a socialist president. and that is something that democrats and republicans ought to think about and both of them move a little more towards the middle before something really bad does happen. and it could happen. if we have -- i'm not going to go through the names but socialism does not work. >> no. >> it sounds good. everybody raves, people yell it's a dangerous thing i'm a ken langone best seller reader >> good. i answered someone on twitter today. i said i don't want to start eating zoo animals and i got flack for that venezuela. they're dining on -- >> i understand. i understand i just think it's an important time and people ought to look lez at i hate republicans and i hate democrats this country needs a

capitalistic system which we have done well for a long period of time. and that other nonsense benefits no one there's a lot of places to prove it. >> tell me i shouldn't have begged him to come on? >> absolutely. he's got an early tee time great to see you. >> great to see you. >> managing director jimmy dunne. >> on the way out, right >> all right thank you. you got your rain gear too >> i'm all set >> andrew, back to you coming up when we return, another big interview from pebble beach on the other side of this break. this time it's at&t chairman and ceo randall stephenson talking about the debt load, the fight over tv viewers, and so much more. stay tuned you're watching "squawk box," a big interview just ahead when we return (baby crying) ♪ ♪hold on, i'm comin'

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beach. we are in the red this morning dow would open off about a hundred points right now nasdaq off about 50 points, s&p 500 off 12 points. meantime, we want to get to the other side of the coast, pebble beach. joe and becky are standing by with another big guest >> thank you, andrew that is true yeah, go ahead >> we're both here joining us now is the host of the pebble beach pro am at&t chairman and ceo randall stephenson thank you for being here >> thanks for having me. >> i was walking the course yesterday watching the at&t signage. all the places it's getting played and i started thinking about the super bowl and how it's now $5 million for 30 seconds in the super bowl i don't know how much this costs, but is this a -- is this more or less than that how do you kind of look at this and say, this is what we're spending and this is why >> we've never disclosed what we pay to sponsor this. i hope jay monahan is in bed

because we negotiate the deals with him but this is the best roi of any advertising promotion that we do and we're interacting with some of the biggest customers in the b 2 b world in the world it's a great event it gets great carriage for the consumer and businesses. it just crosses the boundaries on multiple demographics >> just in terms of the pure golf fan, you know, there's only four majors. but i'd have trouble, you know, the next four this would probably be one of my -- and plus there was a major being played here later this year. so the venue here is so amazing. then you throw in spy glass and monterrey. i think it's the best non-major event of the year, don't you think? >> i obviously agree with that this is a -- it's really a freakishly unique event. you're playing with the best athletes in the world and amateurs are inside the -- >> that's the freakish part.

you're looking at me we're out there in the same ropes. >> they're playing with live ammo you're inside the ropes playing the same game they're playing and your shots matter. it's just -- it's really strange. think of what other sport exists where amateurs get into the live play with the real athletes and get to see them up close and in person >> and everybody shows up here >> i want to talk to you about the disappointment the street had with earnings last week. stock was down and i think it was the surprise in decline of subscribers. both at directv and directv now. there are people questioning on the street whether you can turn the tv business around there what do you say to them? >> the results were really right in line with what we told the street back in november. and we had said we expect to see continued declined in the traditional video business and what we are doing is now investing in a new streaming

service. it's over in warner media. now that you own a large scale media company, the idea that you can now build a subscription video on demand service that is premium, that is unique, it's leveraged off the hbo content, warner brothers content, that is where the investment is going for streaming television the traditional linear, we expect it to continue to decline. we expected that when we bought directv. we generated a lot of synergies with that acquisition. it was a typical synergy deal. you extract a lot of cost synergies. people forget within 18 months we had generated a $3.5 billion in this business still generating $4 billion of cash flow. that $4 billion is now being invested in the new platforms. so it's being invested in fiber zploimt. the fiber zploideployment is go great. in fact, it was up 6%, 7%.

we're investing in an advertising business we have stood this advertising business up. it's a unique business it's a $2 billion a year business now and it grew 26% last quarter we're investing in that. so you're seeing investment in the traditional linear goes down you'll see subscribers continue to go down as we stand up the svod service, you'll see significant growth over here that's where our excitement is, that's where we're putting our focus in our investment. >> would anything else be possible if you didn't do directv? gave you a footprint to do this. >> would have been really hard to execute this strategy had you not done directv you needed some basis to get content delivered to mobile. the world of mobile. that's what we're always trying to accomplish. we have been trying to do that for many, many years we actually got that done. we got all of the rights to begin distributing to mobile within months of closing directv. so now you do a media company, you own a media company, and you also have a great ip and you

stand up a new svod service, video on demand service, now you have just built in distribution for this svod. not traditional directv subscribers. >> is there a shareholder class that just is wants more near term results the -- it wasn't identical to what comcast experienced with sky, but initially looks like a great asset. comcast killed to get it and yet the stock, some people decide, look, the debt is going up too much, it is going to be -- the payoff will be down the road but if you're building something for the future, you see it the same way, who are the shareholders that decide i'm not going to be here so the stock goes down but long-term you say two or three years >> they're very similar plays that we're running we have put a significant amount of debt on to do the time

warner >> that's what hits people. >> that's what concerns people i recognize that i have said number one focus for 2019 is to address the debt situation. so think about what has happened here we put on $40 billion of debt to do time warner that was done in june. by the time we got to end of the year, we paid down $9 billion of the $40 billion. by the time we get to the end of the year this year, we'll have paid down 75% of that debt so the ability to service this debt is very, very achievable. we told the street straight up, you should expect us after some of the highest capital spending in the u.s. to generate $26 billion of free cash flow this year we just did 7.9 in the last quarter. 7.9 billion in the one quarter there is $12 billion of cash that will go to debt paydown we have asset sales stacked up of 6 to 8 billion. you'll get to 75% of the debt paid off as we exit this year

and imminent line to sight doing the rest in 2020. >> you did mention $14 billion a year in dividends. the yield is like 6.9% and that has some people starting to wonder, i think the majority of analysts still believe that the dividend is completely safe. is there any chance you would reduce or freeze the dividend for any point of time to pay down that debt faster? >> the reality is that we don't have to talk about that. when you generate $26 billion of free cash flow and $14 billion dividend, it is not even in the equation you have $12 billion after paying the dividend. and that is while you're investing at the highest levels of anybody in the united states of america so the cash flow characteristics of this business are unique. they really are. think about coming out of the first full quarter where we own time warner, and we have record cash flow, record operating cash flow, record free cash flow, free cash flow is up 77% over

the quarter. as we exit 2019, i think people will be comfortable to manage their debt people talk about $170 billion debt what is a $60 billion ebitda company. that's manageable. people get more secure with the dividend. >> do you hear things about the time frame for finding out, you know, the latest challenge from the government on the deal it was supposed to be the end of this month, wasn't it? >> i think -- >> do you know. >> our lawyers' expectation is it should be this month. we should hear something. >> any -- any body language about -- is there anything new because the last -- that judge was so definitive. >> there were oral arguments in front of the circuit court in december and we left those -- those arguments feeling very good about how the discussion went. but, you know, it is the courts, you don't know until you get the ruling from the judges we're feeling comfortable right now. >> andrew has a question

>> randall, good to see you. i don't know if you saw this headline, but i did want to ask you about it, it is making news. sprint filed a federal lawsuit yesterday against at&t over your use of 5ge in your marketing this is -- this next generation 5g, what you call the 5g evolution in place of lte. they're saying that that is marketing fraud, that at&t doesn't have a 5g service available to the public yet. how do you respond to that >> well, it will play itself out, obviously but we feel very comfortable with how we characterized the new service that we're launching. what we do, andrew, we go into a market, and we turn up a significant block of spectrum, wireless air ways, that we own it is rather dramatic. and we're deploying new technology that i won't go into the details of it, but when we

go in a market, and we turn up this technology, and we light up this spectrum, our customers are seeing radical increases in speed and performance on the network. and this is a step this is a step that is required to get to ultimate 5g. an evolutionary step to 5g, a critical step. you're characterizing this as 5ge, 5g evolution. we have done our homowoework. a lot of work around how we characterize this and being clear with our customers this is an evolutionary step this is a dramatic step change improvement in what the customers' experience where we turn this up and i fully understand why our competitors might be upset with this it is not a play everybody can run. it is a play that we really like and a play that will differentiate us in the marketplace as we roll this out over the course of this year. >> are you -- are you going to the oscars this year >> probably won't see me at the oscars this year. >> who is the mogul?

your mogul representative? i always saw you moving out there and -- no, i didn't see that thanks >> good seeing you guys. thank you for being here. >> randall stephenson. andrew, back to you. >> thanks, guys. great interview. coming up in 30 minutes, the eng lln wall street, get you ready for the day when "squawk" returns in a moment y. voya helps them to and through retirement... dealing with today's expenses... while helping plan, invest and protect for the future. so they'll be okay? i think they'll be fine. voya. helping you to and through retirement.

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thank you to joe and becky for some great interviews this morning. it is not even 6:00 in the morning there. >> thanks, andrew. >> 6:00. >> not yet >> you get to take a nap, joe, before you play golf >> i got to go right out take the makeup off and out. >> good luck, guys we'll see you next week. "squawk on the street" begins right now. ♪ good friday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber stocks composed their first three-day loss of the years if we close at these levels the president and xi will not meet by march and jeff bezos in the news with his bombshell allegation against ami europe is soft ten-year yield at 2.64 road map begins with the bezos broadside hit on