i'm talking -- i don't have anything for you is this -- is this -- >> this is so thoughtful it's valentine's day, and i'm andrew valentine's, apparently. it's february 14th, 2019 "squawk box" begins right now. ♪ i want to hold you until the fear in me subsides ♪ >> live from new york where business never sleeps, this is ""squawk box." >> good morning. welcome back to "squawk box" this morning happy valentine's day. we are here on cnbc live from nabs market site in times square joseph is giving me a present. i'm andrew ross sorkin joe kernan and melissa lee are here, and this is what i got i just got a chocolate a dark chocolate raspberry >> giradelli chocolate >> from the bowl outside over there. >> hael happy valentine's day. happy valentine's day.

>> he got those roses. >> becky quick, we want to wish her a happy valentine's day. she's on assignment, and we'll have more on what that assignment is and what the interview is in the meantime, some breaking news as well >> you want to get to this story. >> all the family members. we do -- >> our kids, many i daughter >> to bring you this -- >> my son. >> from cnbc jp morgan rolling out the first crypto currency backed by a u.s. bank. here's what's happening, guys. companies engineers have created what's called the jpm coin it's a digital token that will be used to instantly settle transactions between clients of the wholesale payment business only the bank's big snusal clients who have completed regulatory checks will be able to use this token. the value of the token is fixed. that's important we'll talk about that in just a second each coin is redeemable for a single u.s. dollar you remember -- you may remember jp morgan's ceo, jaime dimon has

bashed bitcoin he called it at one point a fraud. he and other managers have consistently said block chain, though, and regulated digital currencies did hold some promise. let's show you what dimon said back in october of 2017. >> i could care less about bitcoin. i don't know why i said anything about it the block chain is a technology, which is a good technology we use it. it will be used for a lot of different things god bless block chain. crypto currencies and digital currencies i think are also fine you know, jp morgan mooufsz $6 trillion digitally not in cash. if it's done digitally in block chain, so be it. it's still a block chain crypto currency what i have an issue with is a non-fiat crypto dollar crypto sterling, yen are all fine i do not understand the value of something that has no actual value. you can do what you want, and i don't care

i could care less what bitcoin who trades it, what it strads for. if you are stupid enough to buy it, you will pay the price for it someday >> jp morgan will begin using it for a tiny fraction of the $6 trillion in transactions that it completes every day. as we said, it's a -- it has a fixed price. this isn't what he was talking about. it's not going to go up in value over time. >> you can see that he was going to do -- that they might do something like this. this doesn't go against his opinion about bitcoin. that to me is the central question when something like this happens >> if this becomes the crypto currency of choice for transactions or something like this, then, yeah, the need for others seems to dwindle. particularly the ones that are pegged to the dollar there are crepto that is are

pegged to the dollar, like a u.s. dollar coin, says et cetera repeatedly, if are you able to take, for instance, a leveraged buy-out and settle that in crypto currency over the block chain, that usually takes 30 days to settle if you are able to settle that practically in a matter of days or hours that puts that money back in more quickly >> the question i would ask if you are a an owner of bitcoin or ripple or, you know, any of these kinds of things, do you say to yourself this is a great validation of this space and, therefore, there's more value here, or do you say to yourself if jpm has its own coin, and swit suisse might have hits own coin and -- maybe there's no need for these other coins, and

therefore the value would be diminished >> that wasn't today that he said those things, but he went to great lengths to say if we do do -- do do. if we have crypto kurny, it's going to be a dollar currency. not that other stuff if people are stupid enough to buy it, they're finally going to end up -- he certainly -- he doesn't think this validates bitcoin. >> that's penelope's favorite color. >> have to get him some flowers. >> yeah. get him a steak. actually, don't get him a steak. that's cory booker

get him some kale. kale chips seriously, where did you get the roses? i don't expect you to buy me anything >> so cute do you want me to leave? three's company. us equity futures are positive the dow is looking to open up 62 points the nasdaq looking to be higher by 23. positive earnings from cisco systems really helping the picture here take a look at how treasury yields are shaking out as well we do have some movement ten-year yield, 2.695% over in europe where he did get some data driven gdp data that showed that kbroet stagnated in the fourth quarter. we do have the dax up just fractionally by one-third of a percent right now.

>> are you going to hold them there the whole time >> china, there is news about -- can you stack -- can you do this trade talks have graduated high level talks steven mnuchin, and robert lightheizer opened meetings overnight in banaling. that report being refuted by chinese media, so president trump said earlier this week a delay was possible, although he preferred not to do so we're going to get a live report from beijing at 6:30 a.m.

eastern. i don't know, what's that, delay is good for 60 points, i guess, bah uz we don't really know, and we don't know if this is really leading to anything or not. snoot stork foerngers make weathermen look accurate topping a forecast of a decline of 3.2%. january imports fell 1.5% over the same period. much better than a 10% contraction that was expected, and notably, china's imports from the u.s. fell by 2.4% economists warn that seasonable

factors are in play including the lunar new year holiday, and that fell much more in february last year. before you get a chance to till me this -- >> you're going to tell it to me what's that. >> it's not good it's not good for the good guys. you are going to make did. >> this will be the biggest -- >> maniafort news? >> no. this will be the biggest 0.4% number in history because federal tax revenue, in fact, by the end of the year in 2018 did decline. zplooits possible that the 1.5

trillion -- we did -- the cboe is predicting 2018 at 3.1% first time in a long time. we've been at 3% >> it's starting off good. >> receipts call this the first day for the rest of our lives. should we do that? >> i'll take it. i'll take it it's a big day >> it is >> monumental. >> why are you wearing any kind of red >> i thought about that. because i wore it for women's health day, i wore red then i wear it, you know -- >> are you against red >> no, i wear it a lot of times because i, you know -- i'm trying to turn new jersey into a red state, but i can't do it single-handedly. i probably should have worn, i guess, red maybe i'll put one on when i get home >> i was troo ig to find

something that was reddish >> what if i just come with a bright red tie isn't that -- >> who are we listening to >> just listen to the words. listen to the words. >> for a moment i thought we were listening to a brian adams song >> it's 6:10 in the morning. this is too weird. >> coming up when we return -- >> haven't you seen most mornings >> it's worse. >> it's the end of an era, folks. it is the end of an era. it's a love-athon here separately, it's the end of an era because airbus is announcing the end of its super jumbo airli airliner we'll tell you why and dig through the company's earnings i haven't been on one of these a380s yet. i think i want to try it separately, tomorrow this is where becky -- we said becky is on assignment. becky quick is sitting down one-on-one you cannot miss this i promise you. an interview with charlie munger he never holds back. you can see that interview right here on "squawk box" tomorrow.

that's 7:00 a.m. eastern time. we head to a break where, here's a look at the biggest premarket winners and losers in the dow. - my family and i did a fundraiser walk in honor of my dad,

willy davis, who has alzheimer's. i decided to make shirts for the walk with custom ink.

the shirts were so easy to design on the site. the custom ink team was super helpful and they just came out perfect. seeing my family wearing my shirts was such an amazing reminder of all the love and support that everyone has for my dad. - [narrator] check out our huge selection of custom t-shirts and more, for teams, businesses, and every occasion. you'll even get free shipping. get started today at customink.com. you'll even get free shipping. all of you. how you live, what you love. that's what inspired us to create america's most advanced internet. internet that puts you in charge. that protects what's important. it handles everything, and reaches everywhere. this is beyond wifi, this is xfi. simple. easy. awesome. xfinity, the future of awesome.

♪ >> airbus announcing today it will halt production of the airbusa3le 0 the plane was designed to challenge bowe bog's iconic 747 with two decks, wide cabin, and room for 544 people. the first commercial a bs 3 0 flight was with sing more sailors in 2007, but the plane fell well short of expected sales targets as airlines opted for smaller and fuel efficient jets. tom he wanteder, ceo, says it was a painful decision, but the company needed to be real it'sic airbus is taking a charge of $500 million for shutdown costs and will talk with its unions about the roughly 3,000 jobs

that could be effected the news comes as airbus reported better than expected fourth quarter earnings, and the shares you see there rallying 4.5% in paris today. it's impossible. that -- you know, it's like a bumble bee that shouldn't even fly. how does that even go up >> it never made sense, and i always thought boeing was going to be right. that is like a -- >> people don't want to go to hubs and transfer to go on another plane. they want to fly direct. >> that was way too big and

unwieldy and everything else i guess it's a beautiful plane it almost looks like the howard hughes -- what was that thing called, a flying goose >> it's a massive plane. >> the spruce goose. >> bathrooms in a delta plane -- >> i could see doing it if you could open it. you know what i mean you know what i'm talking about, right? that's a small -- there's times when i go in there when i'm looking i'm going to break the window out not for me, but. >> you want to be faster >> make it worse it's a terrible bathroom people are in and out faster >> i wish we had a sound of the airplane that thing -- i mean, that does get rid of whatever is around.

i mean, better than normal toilets. >> that's like the -- it's already 1,000 feet down by the time you leave >> a lot of -- >> that's why don't look -- don't look up at the -- >> we're going to take the shuttle down to washington d.c. right now and talk to ian in washington lawmakers finished writing a sundaying bill that would avoid another partial government shutdown here to tell you what's to come next, if the shutdown is averted, elan is there live from d.c. i don't know if they're going to have a window on the delta shuttle, but we'll see about that >> you could have a window into washington here, guys. the deal is official right after midnight it could fund the government and avoid the second shutdown of the year both the house and the senate do plan to vote on it today now, this bill is 1,100 pages long it has a total of -- that

includes 1.375 billion for 55 miles of new physical barriers senator richard shelby, the top republican negotiator, called this a significant down payment on the boarder wall. she called it a compromise that investing -- votes if both dham bers will happen today the senate will go first because members of the house are attending funeral services for two legendary members of congress they want to make sure those members have time to come back and vote on this deal. the house is not planning to vote on it until after 6:30 p.m. tonight, but this is expected to easily pass both chambers and land on the president's desk well ahead of tomorrow's deadline of course, the next question is is he going to sign it one lawmaker i talked to, guys, told me that the president hasn't said he won't, so that's a pretty good sign for now

back over to you >> it seems, elan, like the president was trying to position this like he would also win out of this even though he backed down on the funding for the barrier. he actually said yesterday that we got a lot of funds for other things is there any clarity on what the additional funds for other things might be? >> i think there are sort of two pieces to that one, that was partly a reference to the many other agencies that are sort of going to be funded as part of this legislation. there's money for example, a billion dollars going towards the census, et cetera. i think that's also perhaps a reference to the fact that even if he does sign this deal, that the administration may still look to use executive powers whether through executive action, perhaps a national emergency, that that's looking less likely to try to redirect, authorize funding that has already been approved by congress in order to build more physical barriers. >> elan, i saw on a competing network a step by step defense

of how the president could characterize this as a win from rush limbaugh. it was almost point by point you say this, this, this, and this i know it's a cynical time we are in where you can get talking points from conservative radio, but, i mean, there was some merit to what he was saying in terms of this is going to go on for years. with the dmgz -- the republicans do not have 60 senators, and the house is gone, so there's no other way really at this point to move forward without closing the government, which no one wants to go through again. >> and this is the fight that we're going to see again remember, this funds the government through september 30th

that's number one. the second thing is that i think both sides are recognizing that this is a compromise senator lay high who is the ranking member of the appropriations committee over the senate, you know, he said this isn't what i would have written. i was writing it myself. that is the definition of a deal right? both sides have some wins. both sides have some gives they were able to come together and get it done because, you know, really that shutdown was so painful for so many federal workers and painful politically, i think, for both parties. >> thank you coming up, we have a wardrobe change for one thing, and then it's a key day for brexit we're going to get a live report from london on the debate in parliament today that could shape the future of the u.k.'s economy, and take a look at crypto currencies after our exclusive news this morning with jp morgan had created its own digital coin it's mostly red, but nothing that big more on that story straight ahead. we'll be back.

♪ just hold on, i'm comin' ♪ hold on, i'm comin' ♪ hold on ♪ don't you worry, i'm comin' ♪ here i come a place with one of the highest life expectancies 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, of retirement. i don't have a whole lot saved up, but i'm working on it now. i will do whatever i need to do. plan your financial life with prudential. bring your challenges.

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

all in one place. because when it's decision time... you need decision tech. only from fidelity. ♪ ♪ this thing called love ♪ i just can't handle it ♪ this thing called love >> to london now where prime minister theresa may faces some growing calls to extend the march 29th brexit deadline wilham marks joins us now. good day i can't -- it's too early for are me to figure it out. good day >> yeah. it's almost the afternoon here,

joe. yeah essentially we have a series of debates and votes coming up in westminster today. some mps calling for some motions to try and delay the brexit process some looking to try and reverse it anything voted on today will not be binding on troheresa may's government one thing to really watch closely will be whether members of her conservative party try to defeat their own government in a vote later on this afternoon what that could mean is, a, embarrassing everiment for the prime minister once again, and, b, another warning to brussels that the jo are the that she so desperately needs in the house of commons behind me is not quite as stable as she is been making out to her counterparts in brussels when it comes to them making possible concessions with just over six weeks until a hard brexit deadline, they may be less than willing to do so it doesn't seem like she can actually get any proposals through the house of commons >> yeah.

well, it's -- this is episodic, certainly. i wonder when we'll really know how everything plays out, willem in our lifetime, do you think? >> i hope for my sake that's the case essentially we've got yet more talks going on here and in brussels both between the parties in the u.k. and then with different european leaders involved as well the u.k. seems to be holding out for some kind of concession from the european union, but they have said again and again, including this morning they're not prepared to make any fresh proposals, and they're waiting for the folks here in westminster to make the next move >> okay. very good. we appreciate it thank you for your report. i finally -- do you know how to do that with the scarf >> what's that to do an ascot kind of -- >> you fold it over -- >> you tuck it in the loop >> yep >> did you not know that >> no, i guess -- you know, i might not have i do it now.

i feel really -- >> really stylish. >> yes it makes it much shorter, though it takes a long scarf. >> but warmer. >> yeah. >> anyway, coming up, high level trade talks now underway in china. we'll take you live to beijing for a progress update, and much more on the report that president trump could extend that tariff deadline yesterday's s&p 500 winners and losers ♪ my first, my last, my everything ♪ ♪ and the answer to all my dreams ♪ ♪ love stinks ♪ love stinks ♪ yeah, yeah ♪ love stksin ♪ love stinks ♪ yeah, yeah will it feel like the wheend of a journey?p working, or the beginning of something even better? when you prepare for retirement with pacific life,

you can create a lifelong income... so you have the freedom to keep doing whatever is most meaningful to you. a reliable income that lets you retire, without retiring from life. that's the power of pacific. ask your financial professional about pacific life today.

♪

zmiefrm zbliechlkts u.s. equity futures are higher on the dow. the s&p indicated up another five and change. nasdaq indicated up over 23 points got a couple of stocks to keep an eye on. the bank closes out its restructuring plan the company swipging to a profit in the fourth quarter. despite continued weakness in the trading business cisco's second quarter results beat forecast. the company saw strong sales of its net worth. prices off set any potential impact from the u.s.-china trade war, which people have mentioned. cisco many times as possibly being effected by that not this time, or at least offset somewhere cisco also hiking its dividend and boyback program. ceo chuck robbins will be on squawk on the street and a first on cnbc interview at 9:00 a.m. eastern. he comes on "squawk box", too, but he is on the west coast. it's okay that he is, i guess --

>> have you figured out how marco rubio would actually tax the buybacks have you figured that out yet? >>. >> i count on you for. >> very difficult to do when he is really proposing. it requires phantom equity >> it does we've talked about it. it's nuanced where, it really is i understand why someone would -- i mean, i understand why someone could say they're great. someone could say they're very bad, and i have seen what can happen when a ceo has no idea what he is doing east man kodak, for example. remember how much stock they bought in 1970 and 1980. >> ibm >> and also, we talked about -- we thought we were going to fick the ceo compensation and make them align with the -- they try to lower the float so that

stocks go up so their options are in the money the best deal -- remember how steve jobs used to do it >> he just reset the -- >> they look at last year and say when the options were going -- that was the best way >> that was -- >> that was something. >> awesome >> yeah. >> it was steve jobs oh, it's steve jobs. i love my e phone. >> i don't think the iphone was around they had something we loved. >> i pods, probably. meantime, let's recap the big breaking story of the morning from cnbc at the top of the hour jp morgan, rolling out the first crypto currency backed by a u.s. bank companies engineers have created the jpm coin that's what they're calling it it's a digital token that will be used to instantly settings transactions between clients of its wholesale business payments -- of its wholesale payments business. the value, importantly here, will be fixed. this isn't like a bitcoin or a ripple or a zcast or name your other kind of currency this coin is redeemable for a

single u.s. dollar that's the peg, and that's the way it is. jp morgan will begin using this for only a tiny fraction of the $6 trillion in transactions. it completes every day initially. you know, it could soon do a lot more than that >> high level trade talks now underway in beijing, and a new report says president trump may extend the tariff deadline by two months the first of the two days of discussions. there's growing expectation here that the two sides are trying to hammer out the framework of an agreement that would ak as a basis for a summit between president trump and president xi at a later date, possibly as early as next month. the feeling is that any final decision is going to be made by those two leaders if they do

indeed meet. now, so far what we know is that a lot is on the table, but there hasn't been a whole lot of progress on some of the stickier structural issues or how to enforce a deal once it's all worked out however, the two sides might have more time because bloomberg is citing sources as saying that president trump is considering extending the deadline by two months a 60-day extension now, separately there was a trade data that he with got out of here for january, which really gave us a good look as to how the tariffs are impacting the trade relationship between the u.s. and china it might not be the way you would think. the export figures to the u.s. in january were down, but they were up overall by 9%. more shipments to a japan, europe as well as to southeast asia now, what was even more interesting is how sharply imports to the u.s. fell by 41.2%. that's been a raising a lot of questions as to who is and who

is not being hurt by the tariffs because this data, though it is just one month, seems to suggest that american exporters are actually getting more hit than chinese exporters, and also, lends to the argument that you hear a lot here in china among the business community that even though the u.s. is an important market for china, it has limited influence with the chinese because the chinese at the end of the day can sell to the rest of the world guys >> can we wish her -- is that okay happy valentine's day. do we know whether -- is that okay happy valentine's day? >> yeah, people celebrate -- yeah oh, thank you. happy valentine's day to you too. people celebrate that here >> are you still on? okay as long as it's okay okay, good >> do not mention the animal who shall not be named >> valentine's >> i'm just checking everything now. >> that's not real

that's not -- that's not true. >> in the meantime, let's talk about the broader markets. they have been climbing on optimism about the trade deal. joining us right now is jason, the head of asset allocation for ubs global wealth management also, what do you -- what are you doing, joseph? joseph is giving me a look >> i've been waiting for this all morning. >> what are you waiting for? >> this intro. >> joseph, how about that? >> awesome are you reading ahead? >> shhah pos hnik. they put it in phonetics for me. >> i saw him on the guest list all night, and i have been looking forward to it. >> i have been studying trying to figure out if i would be able to say it properlily >> you looked ahead? i hate when you look ahead >> i did >> i like when i see your expression when you first see -- >> headlights. >> portfolio manager at tcw.

good morning to both of you. let me start on this end it of in terms of this trade deal, how much of this do you think is an overhang how do you think is actually built in that there will be a deal, and how much does it even matter what the deal is so much as the handshake and a photo op at this point? >> i would just say it's been valentine's day at tcw and new america for the last three and a half years we've been running this fund it's been fantastic. i would say that the trade deal overhang has been in the market, continues to be in the market, and if we do get a trade deal i think the stock market continues to have a great deal in 2019, and it will be a great year in 2019 because expectations are very low, everybody is very negative going into 2019 q4 scared a lot of people. scared a lot of people out of the market for us we entered q4 carrying 10% or 11% cash. we put all the cash to work in the quarter. it's been a great start to the year i think -- >> you put all your cash to work

in december? >> in q4 we entered q4 -- >> a lot happened in q4. >> which part did you capture the beginning of kwrhad or the end? >> we captured the right part of q4 with the buys we benefitted coming out of that in the beginning of this year and, you know, people are worried about 6% earnings growth and not being enough for the stock market, but nobody is talking about the fact that the market multiple is 15 or 16 times and interest rates are still record low levels. >> for your thesis to bear out, i'll come to you in just a second, but for your thesis to bear out, do you need to see multiple expansion we've had a lot of people come on the show and give us all of the reasons why this could be a tough year, and they can go through the comps and they did do earnings. there are a lot of reasons why things break to the down side, and you look at them and think what is it that could break to the up side? i want to know what could break to the up side >> so many things. snoo he get continued good

growth the expectation is for 6% earnings growth. that is low expectations generally if you go back and look at the last 25 years. expectations are basically we're not going to get much growth, and when we surprise on the up side with better growth, we're going to have much better earnings growth than people expect, and the market multiple, which is hitting at one point higher than historical numbers is probably going to go up two or three points, and you are going to have a 10% or 15% or 20% 2019, and nobody expects it. >> love it in the air. you are going to put a pin in it what's happening here? >> we've been also overweight risk at the bunch mark a little early in december i think it's paid off since then i think we're also probably more constructive than most people on how this year could play out given the moves we've seen since december 24th, it's -- you know, it's going to be a slower grind. >> i thought you were more skeptical than he is >> i think now what we've seen is the market moving 15% over the past two months. the risk was 50% chance of recession. now it feels like the market is more fairly priced the up side scenario, though, is

want so much earnings. it's kind of multiple expansion. a scenario where i think you can get the equity markets going much higher is fed stays on held you get to the goldilocks scenario it's almost like a 95 sflaro where the fed raised rates and paused, and you saw a reacceleration of goet the stock market would spook by the fed chairman >> the powell put is on. >> it is on. if that continues, the stock market is going higher in 2019 >> okay. jason joseph, thank you, guys. appreciate it. good to see you. happy valentine's day. >> so we're ready for you next time >> i can't wait. dow compoen ebt, coke, due to report fourth quarter results at the bottom of the hour we'll have those numbers and the market reaction for you as soon as they cross and then later, florida senator rick scott joins us to talk about the border

security legislation that's up for vote today, and en f 29.e is on the senate be right back.

zmienchts an update on the massive psych cyber attack from ek question fax. in september 2017 it was revealed the personal data for more than 140 million people have been exposed in a security breach then the data disappeared. cnbc spoke to eight experts, including data hunters, who scour the dark web for stolen information. all of them agree that the breach happened, but none have been able to find any trace of the data now it hasn't appeared on underground web sites and it hasn't popped up in stolen identity case. a new theory is gaining traction it says that the thieves could

have been working for a foreign government and are using the information to try to identify and recruit spies. you can read much more about this theory right now on cnbc.com >> interesting i'm going to cnbc.com during this commercial break to check it out, but in the meantime, when we come back, dow component, coke, said to report results in just a couple of minutes. you don't want to miss them. they may move the market we'll bring you those numbers as soon as they cross that stock is up 5% in 2019 so far. head to a break and take a quick check on what's happening in european markets right now got green arrows across the board when we return in just a moment at&t provides edge-to-edge intelligence, covering virtually every part of your finance business. and so if someone tries to breach your firewall in london & you start to panic... don't. because your cto says we've got allies on the outside...

...& security algorithms on the inside... ...& that way you can focus on expanding into eastern europe... ...& that makes the branch managers happy & yes, that's the branch managers happy. at&t provides edge-to-edge intelligence. it can do so much for your business, the list goes on and on. that's the power of &. & when this happens you'll know how to quickly react...

the end of last year the transports led the market in a significant retreat but since christmas eve dow transports are up 18%, outpacing the rest of the market what does this mean for things to come for the rest of 2019, joining us now, don broughton. you made the case in your notes near, golly, transports are so good at predicting things and they were the first to go down but what did they predict? where is that recession on the way down they go down then back up. i know nothing now. >> well, happy valentine's day to you, joe. good morning you know, it was a -- i think a bit of a risk-off trade. you look at the volumes, especially in asia and to europe to a lesser extent, air freight volumes signal that there's

problems in those economies and the u.s. markets translated that into additional problems potentially here, fedex didn't help us with that when they -- on december 19 came out and announced that they and themselves were a lot more sanguine about the foreign economies, especially the european and to a lesser extent the asian economies and so we were selling fear and nobody was buying and -- in the fall of the year. >> okay, so they obviously are a good sort of measure for the underlying movement of goods in the economy, right has anything changed with the digital age that makes it less -- you know the airlines are are there too and they might not move in tandem with the rails and other shippers so do we have to revise the -- sort of a transports 2.0 right now

>>. >> you make a great point. if you took the airlines out of the dow jones transportation index, the dow jones transports would become more predictive it's not the stocks that are omniscient, it's the underlying goods that tell you what's happening in the economy you're right about the data. the freight waves sonar platform you can see realtime, how many loads we're seeing in the domestic economy, we're seeing record amounts of the outbound tinder volume index coming out of l.a. right now that tells us retail sales will be strong. why? because retailers are pulling volume, e-tailers, retailers, however they do it, to stock it and you're seeing more and more and more data, realtime, on what's happening so much data that we're now even on march 29 they're going begin offering freight futures on

those moves and that's a big event in the marketplace because it's based upon -- first of all, we're able to do it because of the amount of data out there and it will allow people to make hedges against these swings up and down in particular markets >> what are you seeing overseas, donald, and specifically in europe you've sent over a bunch of charts but one caught my eye, that's european air fright versus eurozone pmi. it shows air freight going lower even before january of 2018. we do have coke earnings, don, so a quick answer here on europe. >> it's simple, air freight are high value low density big swings up and down are valuable and that's been a great indication of what's happening in the economy so when those volumes are going down no big surprise, the european pmi is poised to disappoint as well. >> don, thanks so much. >> hold on one second.

don, is there one stock 100% in the transports corps that's 100% correlated >> not 100% correlated but we love the fedexs and the people that deliver e-commerce. >> okay, not all transports are created equal. >> my point is the airlines are not because you're moving people moving goods is moving the economy, moving what we make, produce, consume, et cetera. >> i guess we had to get to these numbers. they're exactly in line. >> here we are 43 cents a share in the fourth quarter in line with what wall street was expecting, revenue was delightly above consensus, stock is moving fractionally we'll have much more on coke's quarter in just a few minutes and coca-cola ceo james quincy will join sweet to talk about the quarter at 10:00 a.m.

eastern time. coming up, much reaction to coke's fourth-quarter results. that stock moving in the past few minutes and later senator pat toomey will join us to discuss stock buybacks and why he thinks limiting buybacks is a bad idea stay tuned to "squawk box," you're watincnchg bc when you look at the critical issues facing our world, 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. at emerson, when issues become inspiration, focusing core strengths to create a better world isn't just a result, it's a responsibility. emerson. consider it solved. there is a chance that's the last time.

300 miles per hour, that's where i feel normal. i might be crazy but i'm not stupid. having an annuity tells me retirement is protected. annuities can provide protected income for life. learn more at retireyourrisk.org annuities can provide protected income for life. i cowe can do theyour screening at her house.

hi. this is the man that's going to check your eyes grandma. cognizant ai solutions are helping healthcare companies advance diagnostics and prevent blindness in patients with diabetes. everything looks good. you have beautiful eyes. ♪ what do advisors look for don't just track an index, help me meet a client's need. is the fund built to sell or built to last? etfs are only part of a portfolio. so make it easy to explain. give me a quality fund that helps me get clients closer to their goals. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully.

love is in the air. >> this is so cute do you want know leave >> you don't need to leave but could you switch seats >> investors falling for stocks as china trade talks heat up. plus, time to kiss and make up a vote expected today to keep the government open. the latest on border security in today's vote from senator rick scott. and millionaires are making a proposal -- will you tax me? the head of patriotic millionaires joins us to discuss the group's request to give money away it's valentine's day, 2019, and the second hour of "squawk box" begins right now ♪ and i will always love you >> announcer: live from the beating heart of business, new york, this is "squawk box." >> a little whitney.

happy valentine's day, everybody, good morning, welcome to "squawk box" right here on cnbc i'm andrew ross sorkin along with joe kernen and melissa lee. happy birthday to becky quick who is doing interviews today. dow jones looks like it will open up higher and the s&p 500 looking like it will open higher >> that was "the bodyguard" wasn't it? >> kevin costner. >> before the latest "bodyguard" which was a cool series from the uk on netflix. >> i saw that, that was good. >> i liked that more than the kevin costner. >> here's what's making headlines. after reaching a deal on border security and government funding this week, lawmakers have completed work on writing a bill the vote is expected tonight the january deal that provided government funding and ended the shutdown expires tomorrow night.

so the question is will the president vote on it meanwhile, a shutdown is delayed this morning retail sales are out along with the latest producer price index and the weekly report on initial jobless claims when is gdp? that was delayed and we'll know for the year. you may want to call in sick because it will probably be above 3% it's on the 28th too bad it's not on the 29th because then we could skip it. >> because, joe -- but then there was the news today that the tax revenue was -- >> you really -- >> which everybody expected by the way. >> you really want to compare. >> it's patriotic. >> i want gdp to go up >> are you one of the patriotic millionaires. >> you one of them you're either not a millionaire or not patriotic because you're not a member of

that group, are you? >> i am not but we'll talk to them about taxes. >> they named themselves that. that's what i like not to congratulate themselves or anything but if i don't say myself -- any way, j.p. morgan, chase is rolling out the first cryptocurrency backed by the u.s. bank called the jpm coin. >> a big deal. >> it will be used to settle transaction between clients of the bank's wholesale payment business kind of interesting to have something that has stable value as a digital currency. instead of something that can be 20,000 or 2,000. >> if you're going to settle transactions you want a stable price. if you're going to settle deals. >> sometimes people paid ten times what they thought they were paying, other times a person got a tenth of what he thought they was getting that's exaggerating but it makes a big swing if you're using it it's more than a commodity than a currency, right? anyway, you know this, do you

still have your thing on -- >> the bitcoin bug >> yeah. >> wait a minute, did you take it down on "fast money"? >> we did take it down. >> that's a buy. >> why it's been down for a while it's still down. >> i'm buying. >> i want to make one quick point. bitcoin has not -- you know what we're saying the impact is crowded out. >> there are many other reasons why bitcoin is fluctuating at this point. >> it's been stuck at 3500 days. >> matching estimates reportedly up a profit of 43 cents a share. sara eisen is here with more on these numbers. >> i want to point out one other metric for coke. >> investors like that from coca-cola and its new ceo james quincy it's why the stock has outperformed up for the last 12

months, outperforming other staples. the weak spot is the guidance. the earnings outlook 208 the street was looking for 223 i just talked to james quincy, the ceo. he said our biggest head wind looking out is currency. the dollar has moved against them, strong dollar started to make an impact on earnings this quarter and will continue to do so if we stay at these levels. quincy also told me generally we expect less growth in 2019 than 2018 because of macro. he said the dynamic -- it looks more dynamic if you look at the global economy they're saying particular weakness there in argentina, for instance he did say that diet coke did very well in the quarter they've revie ttalized diet cok. it had a flat year after shrinking for the last several years thanks in part to the new flavors and they're rolling out a flu other few others includiny

acai. >> ugh sorry. not my favorite flavor. >> they've put in another flavor, the vanilla orange flavor is supposed to bring you back to the credreamcicle. >> cream psycicle. >> any way, they're trying to complete against la croix and all these other flavored waters. pricing went up, they're raising pri prices whether in freight or materials so that was a big story as to why pricing was strong but volumes were weaker in north america. >> but in terms of the decline of 1.6% it's the outlook, the currency wind. >> that's a big head wind.

>> that's pretty much what it is volume was light also it's been an outperformer. >> what if jay powell hadn't gotten dovish? the dollar would be stronger you never see coke when they have -- oh, we beat by four cents because of a weaker dollar. >> no, it's always an excuse for bad performance but i'm not so sure i would make the jay powell lin link i think the outlook for the rest of the world got worse. >> i think the opposite of the powell put once you got the government not shutting down and you got a china deal possible then it's -- they got no reason to hold back on raising it. >> the point, though is that around the world it's more dovish. >> what's that >> central banks have gotten more dove fish the past few weeks. >> not just powell. >> in relation. >> yes. >> well it could be worse if we

were expecting a hike at the next meeting. >> no question when you have company like coke operating in more than 200 countries, strong dollar, you'll feel it. >> thank you for that. in the meantime, let's get to dom chu who has the other morning movers in the marketplace. dom chu? >> i want to key off this conversation you guys are having about earnings right now because we decided to take a look and see where we stand with regard to how the earnings season is shaping up what we have in essence is about 18 companies in the s&p 500 reporting pru ining results tod. the results have been generally positive we've had about 71% of companies come out and beat their earnings estimates and 62% have beaten their revenue estimates as well so this has been pretty good on average over the longer term, earnings beats typically around the 64% mark in the revenue side so that have's something to keep an eye on.

we have, again, a move here, a blended earnings growth, if every company reports as expected it's still going to be about 17%. this is q4 we have about 6% revenue growth if that remaining quarter of s&p 500 companies reports as expected now among the quarter of companies that have yet to report that we will be looking very closely at, we've got names like walmart, also craft hynes, home depot, discovery, lowe's. all of these reporting over the next couple weeks. they could be market movers and they tell us about the consumer and home building side of things then if you're going to talk about the expectations, the forecast looking forward if you, melissa, go back to october 1 of last year, analysts on average were looking for s&p 500 earnings growth in the first quarter of this year of around 8.1% fast forward to today and those

expectations have come down so much that we are now expecting a negative 0.3% growth rate in q1 earnings for the s&p so melissa i guess the point here is there has been a ratcheting down of expectations akin to what you were talking about with regard to coca-cola and the head winds there, we'll see if that plays out more and i would point out another thing melissa, andrew, joe, if it came down to a choice between diet coke and coke zero i would go with coke zero. >> same here i agree. >> i would go with coke. >> i would go with diet coke. >> if it weren't empty calories. warren buffett still drinks hi-test. >> i like the taste of diet coke better i got so used to it it's hard for me to get away from it. >> thanks, dom let's drill down on the markets and earnings the s&p off to its best start of the year since 1991. jeff saw is a chief investment strategist at raymond joins and we also have the co-investment strategist at pnc services

dom said so perfectly encapsulated this notion that people were just positioned incorrectly and now they're positioned to the other side of the boat so where are we in temples of how much the market has gone up in relationship to what people are expecting, the downward revisions on earnings we've been seeing. >> i think it's a mistake. i think earnings will continue to come in better than most people expect. we had a sell signal on this show on october 2. we identified the selling climax, one of the worst selling climaxes i've ever seen that ended on christmas eve we said the market was going to rally into the mid-february energy peak. it's mid-february, i'm looking for some kind of blowoff top this week and then an attempt to pull back but there's no way we're going retest the december lows. >> no way. amanda, would you agree with that that the farther we get from december 24 lows, the more unlikely it seems to investors

at least that a retest is in the cards. >> yeah, well we absolutely agree that a retesting of the lows just doesn't make sense given the strength of the backdrop currently i think the key question, though, is what are investors going to be willing to pay for the growth factor that we're seeing this year so i see it very unlikely the market gets back to the peak valuation multiple wes saw last year. >> so what are you looking for in terms of valuation? what are you willing to pay for earnings this year >> we've already gotten about a point and a half of multiple expansion on not a lot of additional earnings growth so we had expected coming into this year that really the market was going to be driven largely by earnings growth i guess the challenge is sort of where we go from here. we've had such a strong start to the year, certainly q4 earnings season has been better than the consensus had feared but i think

as earnings season starts to wind down, some of the looming macro challenges are likely to come back into focus, certainly trade negotiations, brexit and so from here we don't think the path really to the end of the year is a straight line hire, we think it's likely to get choppy. >> jeff, we got earnings from coca-cola and it's the outlook hitting the stock this morning in terms of a currency being a head wind specifically strong dollar and the dollar if you look over the past year or so is up roughly 7%. do you think that will be a head wind going forward for some of the other multinational companies? companies that are exposed to international sales? >> i do not. because i don't think the fed is going to jack rates up that much in 2019. i think the dollar probably takes a rest and pulls back a little i don't think it's going to be a head wind. i think earns will come in better than the majority of people think i do not believe in negative earnings for the first quarter of 2019 and i think people are

underinvested because no not many of just seen a stecular bul market. >> and we got the bank of america/merrill lynch managers survey that indicated for the first time since a financial crisis, people are favoring cash their allocation of cash isn't s the highest since the financial crisis is it people being underinvested to jeff's point? >> i think that's the case it's hard to get excited about a couple percent return on cash so we are not in the camp of saying cash is the place to be right now. we think there are a number of pockets of opportunity but we would be using some of the volatility in the market to rebalance, to longer run strategic targets. we do like emerging markets, we like midcaps, we think there's a lot of opportunity and

infrastructure i think in temples of the growth versus value split we think there's more opportunity on the value side of the equation so there's a lot of opportunities still left in this market. >> the strong dollar doesn't scare you out of the emerging market trade, amanda >> no, because we're definitely in the camp that we think the lion's share of the move in the dollar is behind us and we're also in the camp we think china will reaccelerate later this year they put at least 63 separate actions in place to reinvigorate and stimulate the economy and so we think this is a potential upside that the market isn't currently appreciating so as goes china so goes em so we think there's a lot of opportunity there. >> thanks, guys, appreciate it amanda and jeff. coming up, a cnbc investigation into private jet security that has industry grows, so do concerns surrounding flight safety

details are straight ahead. later, senator rick scott talks budget, border security and taxes. stay tuned bcn re watching "squawk box" o cn my experience with usaa has been excellent. they really appreciate the military family and it really shows. with all that usaa offers why go with anybody else? we know their rates are good, we know that they're always going to take care of us. it was an instant savings and i should have changed a long time ago.

it was funny because when we would call another insurance company, hey would say "oh we can't beat usaa" we're the webber family. we're the tenney's we're the hayles, and we're usaa members for life. ♪ get your usaa auto insurance quote today.

[ ding ] show me just add magic. hey toothless. [ ding ] [ gurgling ] [ ding ] show me cartoons on netflix. [ ding ] [ cooing ] [ door closes ] [ cooing ] ♪ [ ding ] show me fish on youtube. say it and see it with the x1voice remote. from netflix, prime video,youtube and even movie tickets. just say get "dragon tickets". last month, robert frank told us the story about private aviation company jet smarter and there's new developments

what do you have coming up for us >> from weapons to drug, customers voicing security concerns about jet smarter now tom ridge, the former homeland security chief, is at the center of those questions. a cnbc investigation coming up next people know aflac... aflac! ...but not what they do. so we're answering their questions. aflac is auto insurance, right? no. uh uh. is it homeowner's insurance? no... uhuhuhuh! is it duck insurance? nope. ahhh! do they pay me money directly when i get sick or injured? yeah. aflac! you got it. you know aflac! boom! get help with expenses health insurance doesn't cover. get to know us at... aflac dot com.

investment opportunities beyfirsthand, like biotech.ne because your investments deserve the full story. t. rowe price invest with confidence.

>> welcome back to "squawk box." one of the selling points of flying private is skipping tsa lines and screen bug for customers of jetsmarter, the lack of security has created new questions about the role of tom ridge. a cnbc investigation into j jetsmart jetsmarter's business revealing information about security on those flights.

>> reporter: it was the private jet flight that became infamous. cnbc obtained a video of a volatile dj threatening to kill other passengers aboard a jetsmarter flight last fall. >> i advise everybody to back the [ bleep ] up >> reporter: jet smarter the celebrity-endorsed so-called uber of private jets in the wake of our report, jetsmarter sent this e-mail to members touting its security saying its proprietary safety and security infrastructure on the ground was designed with guidance from tom ridge, the first secretary of the u.s. department of homeland security. ridge, named to the board in 2016, said jetsmarter's security measures were designed to not only comply with federal requirements but to exceed them. but customers and crew told cnbc that jetsmarter does not always follow its stated policies

daniel have lvalenti is a jetsm member boarding a flight in austin, texas, two and a half years ago when a fellow passenger revealed he was carrying a handgun. >> while we were walking the gentleman next to me turned to the pilot and in these words said "i'm carrying." >> reporter: valenti said the passenger turned over the gun to the pilot. jetsmarter refused to comment on the incident. >> at that point i started to have some fairly serious questions about the safety on these flights and who is on the flights. >> reporter: tsa guidelines for private jets say passengers should be positively identified by the aircraft crew the agency says private jet security and screening are required to meet tsa standards which are confidential the prohibited items on a commercial jet are also prohibited on a private jet. jetsmarter told us it has stricter and more deliberately enforced security procedures than other private aviation

companies. it says it runs digital background searches as well as additional canine screenings and checks for unauthorized explosives, weapons, narcotics, and other items prohibited on boa board. but customers said bags were checked by dogs at some airports not others in most cases passengers themselves didn't go through a metal detector or physical check and sometimes they say they witnessed dangerous lapses this drug paraphernalia confiscated from a passenger as well as this suspected marijuana. the pictures taken by crew members. jetsmarter member sally horchow says she witnessed occasions where security was enforced? >> they had drug-sniffing dogs and those dogs would find the cash that smelled like pot or whatever >> reporter: however, she told us jetsmarter was also popular among people who it appeared

could not pass tsa checks. >> i met one person on an earlier flight he explained one of the reasons he signed up for jetsmarter was that he was detained at jfk after getting off a commercial flight with a bunch of pot-smelling cash and that was a hassle so he was happy to have this new option. >> when i would talk to people on the flightes occasionally they would tell me that they move weed between states where it's legal to have it and illegal to have it and that they were able to utilize jet smasma as a big part of their business. >> this isn't just jetsmarter's specific problem as more private jet companies sell seats on demand through these apps and crowd sourcing, becoming more like uber, they become more like commercial flights without the security and this is the issue. you're getting on a plane with eight or ten strangers, none of whom have gone through any screening and it's becoming more like a commercial flight but without any of the tsa requirements >> is there no unified standard across private jets? the implication of that float

from tom individual that they design the security protocol, it wasn't one designed by the federal government. >> well, the federal government requires only two things when you get in a private jet someone to make sure you're not on the tsa no-fly list and the other is to make sure you're aware of prohibited items or hazardous materials. that's it. anything else is up to the pilot and the management company but there's basically zero requirement. >> private jets don't have the same requirements commercial jets do in terms of cockpit door being enforced >> it's often open this industry grew up around flying with your family on one plane or with your colleagues from a company this is a whole new area given birth by technology but the security hasn't caught up yet. >> so what will happen >> we have no indication the tsa is looking at. >> it it should be, though. >> it might taken a issue like our video to prompt something to happen. >> it's a long way from an open cockpit door, too, what you see

in commercial flights where the pilot has to go to the bathroom and they put up a chain link fence. >> but the private jets weren't designed for this. >> it doesn't mean someone can't fly one into a building, you know what i mean that could happen any time it seems like if someone had in the their mind and you're on. >> we heard from pilots who say something has to be done. >> you would think. >> they probably feel unsafe. >> robert, thank you. coming up, senator rick scott will join us to discuss china trade talks, border security and much more then, they are rich and they are mad about taxes, but not for the reason you may think the chairman of the patriotic millionaires will join us to discuss tax reform and more. as we head to break, look at u.s. equity futures, we are okg bg at a higher open, dow lointoe up 67 points stay tuned 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. a cfp professional is trained, knowledgeable, and committed to financial planning in your best interest. find your certified financial planner™ professional

at letsmakeaplan.org.

♪ i can't get enough of your love, baby ♪ ♪ girl i don't know, i don't know why, can't get enough of your ♪ ♪ love baby >> i love the on valentine's day, these images of people kissing. >> i can't wait until you guys kiss each other later on. >> they're not kissing each other. >> coming up, senator rick scott will join us to discuss border security, taxes and much more plus stocks you need to watch ahead of the open on wall street today. we heard from dow component coke this morning

we'll get a check on the markets plus much more on the big announcement from j.p. morgan which is rolling out its own cryptocurrency "squawk box" returns after the break. ♪ what kind of love is this we see breakthrough medicines getting to patients in record time. we see harnessing natural gas unleashing the promise of clean energy. we see engineers simulating the future to improve today. at emerson, when issues become inspiration, focusing core strengths to create a better world isn't just a result, it's a responsibility. emerson. consider it solved.

you mighyour joints...ng for your heart... or your digestion... so why wouldn't you take something for the most important part of you... your brain. with an ingredient originally discovered in jellyfish, prevagen has been shown in clinical trials to improve short-term memory. prevagen. healthier brain. better life. welcome back to "squawk box. i should just say what's called the doughnut pub everyone knows the way to my smart doughnuts on valentine's day. >> you got the chocolate, hu. >> they just sent this over. meantime, votes expected on

the border security compromise to prevent another government shutdown i should haven't done this. >> you should haven't. >> president trump doesn't like it but there are indications he'll sign it. ylan mui is in washington. take it away. >> andrew, president trump has been non-committal about this, though there's hope on capitol hill that he will sign it. yesterday trump said he does not want another shutdown but that he wouldn't make a final decision until he saw the text of the bill and could, quote, look for land mines. trump did speak with senator richard shelby, the lead republican negotiator last night. after ward, shelby tweeted trump was in good spirits and that he told the president the bill's $1.4 billion for physical barriers is a down payment on the border wall. the official text of this bill came in just after midnight and in addition to border security it also funds about half a dozen government agencies. a few of the other important things in this bill includes 1.9% pay raises for federal workers, a $1.2 billion increase in infrastructure spending, half

a million dollars for a rural broadband pilot program and $77 million for irs to implement the new tax law. now, leadership from both parties are calling this a bipartisan compromise and they're urging rank-and-file members to support it. the senate is expected to vote on this bill first, then it will go to the house for passage some time after 6:30 p.m. so that mean this is should be on the president's desk by friday morning and there's plenty of time for him to sign this ahead of the midnight deadline tomorrow if that's what he chooses to do. back over to you. >> thank you, ylan let's bring in our guest joining us now, senator rick scott do you know what taxes are, senator? in florida that would be a new concept. i don't know how you do it down there. i just know that there's probably not going to be enough room for everyone at some point in that state. it might just fall off and sink into the ocean. >> isn't it great? governor cuomo is complaining about florida having too low taxes. well, i was governor we cut taxes almost 100 times and guess

what our economy grew we added 1.7 million jobs, our gdp was up over 30%, our revenues grew and we could invest in things we cared about so tax cuts seemed to work pretty well. >> if i had a camera on you and you didn't think anyone was watching when you were -- when you saw this new deal, this new green deal come out and you watched elizabeth warren or -- who else wanted the -- oh, that was bernie at 77 are you like, yes, yes do they have any idea that what most -- i don't know, maybe most americans don't feel that way anymore but to me it just -- i see it and it's like, got, keep going left keep going >> well, i mean, they're not thinking about what americans want what do americans want when i was a governor i said they want a job, they want their kids to get a good education and they want to be safe you can't do that when you kill the economy. that's what the new green deal does we won't have airplanes? i mean, we're going to have -- oh, by the way, what happened to high speed rail in california? >> wait a minute, you're

forgetting, bacon, right airplanes is one thing but bacon? seriously. >> no fossil fuels this is the craziest thing we'd head in the direction of venezuela. socialism does not work. look at venezuela. everybody's poor everybody -- no one has money. >> i get in trouble for making faces, i can't help it, andrew, i can't. my face just moves anyway, what about this deal that the president -- you do you know one way or another well whether he'll sign this deal to keep the government open >> i believe he'll sign it i don't think it's a good deal we don't want to shut down government, none of us want to shut down government, it's the wrong thing to do, i don't believe in shutting down government but the democrats ought to go down to the boarder, i was down there last friday down in loredo, texas, and sit down and talk to border security and -- that's what they're saying, they're saying they don't care about that person's security they don't care about american

security the drug cartels sending drugs across, they showed me pictures of a terrorist that came across. there's -- if you don't fund security, if you don't fund technology, if you don't fund barriers then you don't care about american safety. that's where what the democrats are saying. >> i keep hearing that trump has turned it into a political football but i would say to them, look, trump ran on that and, you know, i'd say he won the election and they tell me he didn't win the election because he didn't win the popular vote but i'd say he did win the electoral vote and became president so enough people seemed to agree at that point that they wanted border security so the only reason i can see that all these democrats have flip-flopped from the way they used to be -- because they used to want it, right? we have tape of president obama and across the board agreeing with these things so the only reason not to is to deprive

trump of fulfilling campaign promise, right >> it's just politics. >> am i wrong, andrew? >> they want their kids to be safe. >> is that not what it is? most people thought it was a good idea until he decided to take it up, right? >> i think politics of taking the stand on itbeing a wall, the iconic nature of what that represented and the demonization of foreigners and whatever you think that -- i think that created a very complicated -- >> he shouldn't mention drug traffickers or sex traffickers or criminals >> i think you can because clearly there's an issue. everybody wants a safer border. >> it doesn't mean he's saying everybody is. >> i think the politics -- >> what about people that come and -- >> on all sides because i think for democrats the wall became this iconic sort of representation of a closed society. >> shouldn't be, though, that's conflating it. >> i'm suggesting -- >> conflating illegal with legal immigration. >> but i think the president

often times did conflate legal with illegal. >> do you think so, senator scott? >> well, florida is an immigration state. we did a poll after my election back in november, i think it was close to 69% of hispanics in my state wanted stricter enforcement over immigration laws i think it was 69% so we all want security. that's what this is about. this is not about how you do it. we know we have to have barriers, we know we have to have more technology, we know we have to have more people but up here it's -- i think andrew's right, it's all about politics it's what you call it. and it's wrong we need to take care of our citizens we need to take care of our border security. >> i think there's a way to do it and i think there's a politically palatable way to do it by the way, absolutely believe the democrats -- when nancy pelosi said it was immoral to have a wall -- >> that was extreme. >> i like to think she was saying a complete and utter wall but it was then taken as any

type of wall or any kind of fencing at all was somehow immoral. i can't imagine that's the case either having said that, i also think caging children in these terrible situations also has its own immorality and i think that created -- there wasn't a sense of humanity about how to deal with this and that then created this sort of toxic atmosphere. >> but the law needed to be changed because there's no way to -- that was a horrific result of the law being as it is that you can't detain people if you don't -- if you keep them -- you know, that's -- it just wasn't being enforced that was during the obama years that that law came out senator scott, what would you do about that what's the answer to not separating children from their parents? >> well, first, you shouldn't separate kids from their parents. but the way you do this is you fix other laws why don't we do this why don't we have real border security why don't we take care of the daca kids? here's the other thing we're not doing. i think we all agree that children that came here with --

somebody else brought them here, they didn't do anything illegal, we raised them and educated them, why don't we make sure they have a path to stay here? we have a lot of people here from other countries under a temporary protective program, why don't we have a permanent solution far it's like up here they want to talk about things but not do things it's a bunch of actors they say they care, they don't care >> i was curious about your take on your colleague, your peer there in florida, marco rubio, coming out with a plan earlier this week to try to tax buybacks how do you feel about that as a former ceo and, of course, governor and now senator >> i'm for lower taxes, lower taxes, lower taxes, smaller government i'm also to make sure we don't -- i want to grow the number of jobs i don't want to grow the size of government it's already too big so i'm for all the taxes that we can reduce >> have you had a conversation with him about it? >> no. i didn't hear about it until yesterday. but i am -- i don't believe we

need to tell our companies -- give them more rules, i want them to think about how they grow and create more jobs. i grew up in a family without jobs i know the importance of jobs. >> but do you think there's a fair argument to be said which is that one of the impacts of the tax -- of the new tax reform plan effectively has been a lot more buybacks and that in a perfect world -- and i'm not saying taxing the buybacks would get you this -- that we'd ultimately want that money in terms of a reductive economy would be put back into capital expenditures and hiring and all those things which appreciate is not necessarily going to happen as a function of taxes but wouldn't it be great if we could figure out a way to incentivize that >> i think people should be able to allocate dollars the way they want if companies can't figure out how to get a better return on the cash they have in their balance sheet, give it back to shareholders we don't want companies to sit on cash. remember years ago people complained because apple had too much money on their balance sheet. so we don't want that but we

don't want them to give the money back to shareholders it doesn't make sense. let companies figure it out. shareholders will figure it out, companies will, and we'll grow the economy. you get more regulation, you get less jobs. >> senator, i don't know what we do with taxation it's fairly progressive now. >> cut it. cut it cut the taxes. >> but we -- if there was a way to use increased taxes and direct it solely towards reducing the deficit, cutting spending and paying down the -- at least not letting the $22 trillion get any worse, would a conservative decide that would be an effective use to somehow stop the debt from getting to $25 trillion which at some point it's going to start hurting our economic growth so if that's what you're interested in, sooner or later we have to close that gap somehow i'm not talking about more

entitlements, i'm not talking about trying to redistribute it because i don't know if the government can -- organically i think we help people more by higher wages and better jobs than just redistribution. >> why don't we do what we did in florida we cut taxes almost 100 times over $10 billion and guess what? we grow 1.7 million jobs in eight years and i reduced the state debt by 30% over $10.5 billion. so if you grow the economy, you get more revenues in and you can cut your deficit i went from a $4 billion to a $3 billion surplus and paid off debt for the first time 20 years but you have to grow the economy. you don't grow it by telling people how to run their lives. >> do you think this is resonating with people, senator? the polls are now that a majority of americans want to raise taxes -- stop the presses, they want to raise taxes on people in have more money than they have.

i don't think it's hard to get a majority there do you think that will resonate the 2020 election? >> i hope not because it doesn't work if you want more jobs, give businesses the opportunity to grow and prosper and compete globally >> but they're not spending it on capital investment. they're spending it on buybacks, shareholder appreciation, things like that. >> well if you give money back to shareholders that will let them figure out how to reinvest the dollars. >> he's got all the answers. i'm trying but -- anyway, thank you senator scott. >> don't try for me. try for the american people. >> to raise taxes? >> no, no. >> so it is patriotic. >> just have the conversation. >> you're all very virtuous. senator, very good to see you again. thank you for the conversation. >> coming up, he's the chairman of the group of millionaires who

say tax us morris pearl of patriotic millionaires will join us after the break. stay tuned, you're watching "squawk box. oh, wow. you two are going to have such a great trip. yeah, have fun! thanks to you, we will. aw, stop. this is why voya helps reach today's goals... all while helping you to and through retirement. um, you guys are just going for a week, right? yeah! that's right. can you help with these? oh... um, we're more of the plan, invest and protect kind of help... sorry, little paws, so. but have fun! send a postcard! voya. helping you to and through retirement.

♪ love stinks, yeah, yeah, love stinks ♪ ♪ love stinks welcome back to "squawk box. a wealth tax, ongoing conversation on this program and, of course, around the country, even in the days of occupy wall street, that's when the patriotic millionaires were founded and it's a group of high net worth individuals dedicated

to redistributing wealth in america. i think joe should be leading this segment morris special here, chair of the patriotic millionaires and it's nice to have you here on valentine's day. love is in the air. >> thank you. >> help us with this it just -- look, there's a lot of loopholes in the system and i'm all for closing them and all of that. the question is, what is the right number when you see elizabeth warren, bernie sanders, name your -- aeast coaaoc with 70% numbers, what do you think of that? >> look, this nation was created with tax rates much higher than we have now. the problem is that people are not accepting this growing inequality that's what we saw in 2016 in the election, that they wanted a change and they got a change but in a different direction. >> what's the answer let me make one point which is i think there's a myth going on about the higher tax rates on the very high end. not to say that there weren't on

the rate card, if you will, but the actual effective tax rate was significantly lower in large part because there were a remarkable amount of deductions that were available to people that at least under today's tax code they are not in the same way. >> look, even today the wealthy people are not paying taxes at the actual rates on the rate card people of great wealth are getting their money from things like long-term capital gains i pay a much lower tax rate than you guys who are getting big salaries because all of my taxes are investment income. my tax rate is 16%. >> so what's a fair number for you? when warren buffett was doing -- it was the buffett rule, 30% as a base minimum what number -- what's the proper number >> i don't know what the number is but we should have people who earn a lot of money paying higher rates and people who have less money we have the opposite now it's upside down people who are very wealthy are paying lower taxes than people who work for a living. >> did you name your organization yourself? the patriotic -- why not call it

the virtuous patriotic millionaires just really go for it? how are you deciding what patriotism is versus someone who thinks small government, economic growth helps the most people how does higher taxes, redistribution which generally hasn't worked, how does that define patriotism to you and why are you entitled to define it? >> well, patriotism is what this country founded on they named these states commonwealths because we need common wealth to do the thing that make this country great. >> supreme played this -- you know, learned hand, the most cited judge in history, probably, wasn't supreme court but here's what he said and he specifically says that there is not even a patriotic duty to -- i guess you disagree with him. but once taxes over and over the courts have said there's nothing sinner arranging affairs to keep taxes as low as possible everyone does it rich and poor alike. now, the other thing, let's say

a man found a company, becomes a millionaire, creates hundreds of jobs, leaves all of his money to charity, never pays taxes, is he one of the selfish greedy millionaires or can he rise to your virtuous patriotic millionaire level? >> people who leave all of their money to charity are -- >> they don't pay taxes. >> that's true >> that's not -- >> but i have an interesting question for you would you consider some form of -- >> sounds like a deduction limit on charitable contributions, for example? >> we're fine with charitable contributions. learned hand was right i think everybody pays the taxes they're required to pay. so do i. that's why i think we need to change the rules we can't run thiscountry on sort of a pay as you go basis of everyone wanting to pay what they want. >> why do you think that taxing millionaires and giving that money to the government is money better spent than millionaires deciding what charitable organizations to give to which could be universities, it could be -- you name it.

>> it could be. >> why is that a better distribution of wealth >> plenty of people have things named after them in universities, but we need a lot of things that aren't famous, things like highways and sewer treatments and all the things that make america infrastructure that we need to run on we need voters deciding how to spend their money. >> i don't disagree. the question is how do you raise the money. what is the fairest try do that? if you could do one thing to the tax code, what would you do? >> i would make our taxes the kind of tax rates we had in the 1950s and '60s when we built the infrastructure that made america great. >> but there's a whole group of people that are not necessarily not patriotic that feel like growing government extravagantly and taxing the private sector and the risk takers is counterproductive to growth therefore you don't get the growth which creates jobs which creates the tax dollars and allows you to do these things

and instead of getting 3.5% growth, you get 1.5% growth with all your feel-good initiatives and you're hurting the people you supposedly are feeling patriotic about helping. how do you know that i'm not right about keeping money in the private sector being better than the government >> because people in the private sector, investors, people like me, people who are retired people are making all of their money, they're not doing anything to help growth. there's nothing i do to help growth i run an advocacy organization full time. >> that's you. >> let me ask you one question replace stevee thteven schwartz, replace him with steven spielberg. because i think people may have different views of these -- of what's going on here but if i told you see the strength spielberg was not going to make the second or third movie that year because the rate was marginally at 70% or 80%, is that a good thing for the country? is that a good thing for society? i suggest -- i'm not saying -- i

leave it to you. >> look, i've never heard a businessman saying he'd rather say in bed and earn zero rather than getting 20% or 30% or 40% of the money from a business that doesn't make any sense. even at a higher marginal tax rate you still get more money creating a business than you do not creating a business. >> we've seen plenty of wasteful government spending, we've seen redistribution efforts that don't work i just don't see how you can -- i must be a selfish greedy millionaire. i've saved up. i used to get your e-mails and i thought they were insufferably virtuous i'm sorry. >> we'd be happy to send you more. >> please don't. >> we'll continue this conversation because it's a good one and important one. coming up, senator pat toomey joins us, plus more on j.p. morgan's announcement that it's rolling out its own ypcuency we'll discuss, "squawk box" returns after a break.

♪ ♪ our new, hot, fresh breakfast will get you the readiest.

(buzzer sound) holiday inn express. be the readiest.

. steve mnuchin and other negotiators trying to work out a trade deal before tariffs shoot up. the house and senate working on a government funding bill that would keep the lights on in d.c. we'll talk about what's next on the washington agenda. j.p. morgan goes crypto, the bank launching its own digital coin a year after ceo jamie dimon called the most popular cryptocurrency a fraud the final hour of "squawk box" begins right now

♪ do you believe in love, do yo believe it's true ♪ >> announcer: live from the most powerful city in the world, new york, this is "squawk box." good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square, i'm joe kernen along with andrew ross sorkin and melissa lee becky is off today the futures up 75 points or so and nasdaq indicated up 26, s&p indicated up six or so the treasury ten year is hovering around 270, 269 this morning. a couple stories investors will be talking about -- happy valentine's day, by the way, everybody. u.s. negotiators in china trying to bring love to the air andom an agreement on a trade deal ahead of this march 1 deadline when tariffs on billions in chinese goods are set to spike treasury secretary steve mnuchin said earlier today he was

looking forward to talks with his counterparts mnuchin and robert lighthizer are leading the negotiations after three days of lower-level meetings which focused on details including enforcement of a potential deal which is crucial, especially when it comes to the issue of ip and intellectual property. separately, both the house and senate expected to vote today on a deal to fund the government and avert what would have been the second partial government shutdown in just two months. the bill provides for about $1.4 billion for physical barriers at the southwest border far short of what president trump called for but trump is still expected to sign the bill by midnight on friday. and european plane maker airbus electing to shutdown production of its now famous, almost infamous a-380 model after 12 years in service airbus making the decision to stop building what was the world's largest airliner in 2021 because of weak sales and all customers have ordered a little more than 300 of these planes.

far short of what airbus originally forecast. republican senator marco rubio has spoken out on limiting stock buybacks but his gop colleague senator pat toomey thinks that could be a step towards socialism. i guess kind of a baby step. joining us, senator pat toomey did you say that or did we make it more incendiary >> a little more incendiary. i did say that about bernie sanders's and chuck schumer's idea on stock buybacks i think marco is mistaken but it's not socialism. >> not socialism but senator, we have so many of these discussions and every once in a while i'll say something and andrew will nod and he'll say something and i'll nod one thing andrew did say recently was maybe there is a way to incentivize capital investment rather than just trying to juice your stock price and get it higher so that you get your -- you hit your bonuses

as a ceo is there anything to that? >> yeah, there absolutely is you know what is a good way to incentivize investment how about full expensing on capital expenditures and a lower marginal rate on corporations? that's exactly what we did in our tax reform and what's the result massive wave of increased capital expenditures and tremendous economic growth and demand for new workers and rising wages as well i'm not sure what the problem is we're trying to solve here yes, there have been stock buybacks, too, because in part we also fixed the flaw in the international component of our tax regime so that companies can bring that money back home without experiencing another penalty layer of tax so some companies have more cash than they could deploy so they did the sensible thing, return it to the people who owned the company so i just don't get this -- the alarm over a perfectly normal healthy aspect of a market

economy. >> senator, what was your view -- if you remember, under president bush there was an effort to bring back and repatriate capital and part of that repatriation was tied to capital expenditures with the idea being that what we really wanted to do was build factories and invest as opposed to buybacks which do you think is a better approach >> look, it's much better not to have government dictating what a company should do with its own money. what we ought to do is have incentives as neutral as possible what we have right now i think makes all the sense in the world. being able to fully expense a capital expenditure, what more incent conservative you provide? and having a lower marginal rate on the return you make on that investment is what makes us competitive. there are times when a buyback is a perfectly rational thing. and by the way, as we all know, most of that money simply gets

reinvestment somewhere else. it's a great exercise in reallocating capital there are new companies being formed everyday. companies growing that need capital. if someone is sitting on a boat load of cash that is beyond the ability of their -- to make a productive investment with, by all means return it to the shareholders. >> i don't know how you legislate what i'm about to say next but what do you do about companies that have what might be described as underfunded pensions and other liabilities, for example where at the same time you see them pursuing buybacks and three, five years later suddenly they end up in bankruptcy and guess who is holding the bag? all of us taxpayers? >> i think first of all you should put underfunded pensions in a different category than most other liabilities most other investor went in knowing what they were dealing with pensions are for employees and they don't have the ability to do the due diligence and walk away from a bad deal if that is

what they are getting so i think it's legitimate to consider that separately and consider the circumstances under which we require companies to fully fund their pensions congress passed legislation making the problem worse and the private sector problem -- which does exist -- is a tiny minuscule fraction of what we have in municipal and state government but you raise a value point. pensions should be properly funded >> senator, it sounds like you believe that buybacks hit the record we saw in 2018, which is $1.1 trillion, because of that initial repatriation of cash that added to the coffers, companies didn't know what to do, they bought back shares so by extrapolation, should 2019 see a decline in buybacks? and if we don't, will you say that maybe there is a problem here in terms of companies not spending the money on capital expenditures, on factories, workers, et cetera >> i'm glad you raise this point. this is where the fundamental flaw i think in senator rubio's underlying premise here and that is this notion that a buyback comes at the expense of a viable

profitable return on an alternative investment that could be made. that's not the way business managers run their business. they're making every good investment they can. their goal is to maximize the return they can make and it's only when they've exhausted those possibilities and they still have cash that they then make that allocation i do expect we'll see stock buybacks diminish somewhat because i think part of it was driven by the repatriation but i don't see buybacks as a problem. they occur after the investment has been made and investors take that money and reinvest it. >> senator, in large part that conversation about buybacks and everything else seems to stem in part from the tax bill and from what people perceive as loopholes in a society that isn't working or a code that isn't working. we've talked about it before i'm curious if you have a different view today one of the things that was going to be in the tax plan that the president pushed for and for inexplicable reasons to me

didn't show up was the issued of carried interest do you have a take on whether carried interest is still a loophole that should be fixed? >> so i feel pretty strongly that we ought to consistently take appreciated assets and tax the gain on that at a capital gains rate that's what happens with carried interest so i think it's better to keep it the way it is we made some changes, we lengthened the holding period for assets that is necessary to get the carried interest treatment but i think tax ago gain on an asset as a capital gain at a lower rate makes sense. >> when you said earlier that we've had an explosion in capital investment, that's what we're waiting for, isn't it? what's missing that's been disappointing, has it not >> no, i don't think so at all we had one quarter where the number was off we'll see what -- i expect that comes back but we had a tremendous year for capex in 2018 that's driven a lot of the economic growth, it's going to

continue to enhance productivity, part of why wages are growing for workers. that's working as we had hope. >> senator, in the political backdrop of everything we're seeing right now, what are you expecting when you're in a closed room with some of your associates who are they going to run, the democrats, in 2020 what do you think of this whole spectacle that we're seeing right now? how will it play out will it be way left? are they going to come back to biden or he too old? >> look, let me guarantee that i do not have a crystal ball for this i can say it is amazing how far this left ward lurch has gone. this green new deal is like unbelievable that anyone would take this as a serious set of proposals and yet every democratic presidential candidate that i know of at least among my senate colleagues has endorsed it.

this is unbelievable >> it is unbelievable. and they're saying -- i saw amy klobuchar say well it's aspirational and i'm behind that and then i saw people are getting mad that mcconnell wants to put it up for a vote. >> we should vote on it. >> but that's mean because you're going to make people -- you should don't that, it's not ready yet. >> let's have a debate over whether it's reasonable to eliminate fossil fuel from america. >> all right. >> thanks, guys. >> thank you coming up, media in the spotlight. we go rapid fire on three stories that could impact the future of the sector and your portfolio and it starts with cbs amid a shareholder lawsuit that alleges fraud by insiders selling stock before les moonves scdupublicly accused of sexual mionct stay tuned, you're watching "squawk box" on cnbc es risk. and to manage this risk, the world turns to cme group. we help farmers lock in future prices, banks manage interest rate changes

and airlines hedge fuel costs. all so they can manage their risks and move forward. it's simply a matter of following the signs. they all lead here. cme group - how the world advances. you still have service? call the insurance company it's them, calling us. it's going to be a week before they can get through on these roads shhh, sorry, i didn't catch that. i said ask how soon they can be here not you. right now? what's now? he says they're surveying our property now they're probably at the wrong house i don't see any hovering his name is hovering? look up? by using machine learning and analytics to automate claims, cognizant is helping insurance companies advance how they serve even the hardest-to-reach customers. cool ♪

welcome back to "squawk box. let's look at futures. we are indicated to open higher. the dow is looking to be up by 87 points, s&p looking to add 7.5. we have a push-pull here with coke coming in the outlook was disappointing and shares are down by about 4%. meantime, cisco had better-than-expected earnings and shares are up 4% in pre-market. >> we have three big stories that we are following this morning to tell you about. joining us right now for rapid-fire reaction to all three, ed lee, cnbc contributor and "new york times" media reporter let's go to the first story of the morning. cbs. the tv network set to report fourth-quarter numbers after the

market closes. this comes amid a lawsuit alleging executives sold almost 3.5 million shares of cbs stock before the sexual harassment allegations against les moonves went public. ed, your take? >> well, i think bigger issue around cbs, they're still looking for a ceo. >> they looking for a ceo or merging with viacom? >> earnestly looking for a ceo with the idea that, hey, if we're merging how do we do this? >> but what executive nairobi died in good exec would take this job knowing full well that in the next six to 18 months there's a not unreasonable chance that they will be out of work. >> and that's why they're having a hard time finding people that -- i've heard they're having challenges, even without a merger, it's a tough call. it's a hard job to fill. the environment will be challenging going forward and you have to have someone with a forward look. >> why is the board of cbs not

saying, look, if we know we're going down this path eventually anyway, just do it around call a spade a spade? >> you're hinting at the right thing. the acting ceo, there's a strong chance he gets made full they announce a merger with viacom in the next three, four months and then they have to figure out fine, if that happens who runs the combine company bob bachus who runs viacom he's an upright light in cherry's eyes so that's a good chance the big story is -- the second part is how are their numbers looking at >> that's the number you're looking at for this afternoon. >> they want four million subscribers by this year for cbs all access, another four million for showtime it's modest but that's the growth story for cbs. >> for those playing at home as not mr. kernan -- cramer likes to say if you're playing at home so four million and four million are the numbers to beat.

that's show time and cbs. >> the second media story we are following, t-mobile, john legere and sprint executive chairman were on capitol hill yesterday the two testified in front of the house energy and commerce committee defending their company's proposed $26 billion merger. >> the outcome of this merger will be a significant increase in supply in the form of eight times the capacity that our network will make available. it will bring an 87% decline in the price per gig of data and jobs will go up so this is do dramatically different. >> unfortunately, as you know, sprint doesn't generate any cash flow and if we've got to build this network on our own we need to spend between $20 billion to $25 billion. we'll have to go to the banks and bond markets and borrow that money. in order for us to pay back the investment in 5g, unfortunately, sprint is no longer going to be able to be the price leader. prices will go up. and i'm going to reiterate one thing we don't talk enough 93% of the cash flow in this

industry is being generated by at&t and verizon that is exactly what is as close to a monopoly or due woply is in this country. >> here's the political question if you believe the trump administration and the regulatory regime right now cares about 5g and you read about it constantly -- >> we want to beat china. >> do you let this deal go through irrespective of what it will do in competition and where do the competitives sit in mixes here >> i think the trump administration wants it to go through. i think the fcc and doj haven't indicated that they're concerned about this deal despite for years and years and years the idea of only having three major carriers could be a concern for consumers. there has been pricing pressure on wireless bills so i think consumers -- >> that's like one part of the cpi that goes down consistentlyy

>> i think anyone want who wants cell service already has it so they're just fighting for share. >> our third and final media story, the future of television. the cord-cutting the end of pay tv as we know it >> that's it that's the big question? >> that's the big question. >> it's not the end of tv as we know it. >> but you think we'll see a step change -- tim cook talks about a step change in cord cutting this calendar year. >> apple has never laid out a cogent media strategy. yes people are going more to streaming and paying less for television but they're still paying for it. that's a big thing to look at and as these new entrants come into play, at&t has a service coming out, disney will have a service. people will buy more streaming services. >> i'm throwing one wild card in because i mentioned tim cook and apple. there's news march 26 they'll announce a new media package that would include magazines, newspapers and - >> and video they have some originals they spent money on then they deal a channel the way you have on

amazon prime. >> but the newspapers they want to partner with, the "wall street journal," the "new york times" and others -- >> the big three. >> -- are fighting back because they don't want a share of 50-50 revenue split. >> 50-50 but even the 50 they're not getting the full 50. they're sharing it amongst usage so of the remaining 50% left, if people are reading the "journal" or the "times" or "washington post" articles they'll get the bulk >> does the package work without those three? >> i think it's not as good and those three don't participate in any meaningful way. >> ed lee, cnbc contributor and "new york times" media reporter. >> thank you, sir. coming up, j.p. morgan and its ceo jamie dimon jumping into the cryptocurrency sector with a newly announced jpm coin jpm coin yeah remember, dimon is the one who called boyne ed bitcoin a fraud when we come back, a report on what at first glance looks like a flip-flop from america's

biggest bank executives. you're watching "squawk box" on cnbc this is decision tech. it's screening technology that helps you find a stock based on what's trending or an investing goal. it's real-time insights and information, in your own customized view of the market. it's smarter trading technology, for smarter trading decisions. and it's only from fidelity. open an account with no minimums today.

and it's only from fidelity. ♪ ♪ our new, hot, fresh breakfast will get you the readiest. (buzzer sound) holiday inn express. be the readiest.

welcome back to "squawk box. j.p. morgan is rolling out the first cryptocurrency backed by a u.s. bank in an effort to transform payments cnbc banking reporter hugh san joins with us the coop hugh >> this is like bitcoin put on a business suit, got an mba, went to business school, decided to become respectable it's a cryptocurrency but it's backed by one of the world's biggest banks. it will be a walled garden the public can't use it. only people are institutional clients who have been vetted for koic anti-money laundering can use. >> it know your customer. >> know your customer and most importantly it's important for people to send institutional payments, cross-border payments, things like debt issuance, if ipo moved the blockchain, this is a way for payment to happen. >> is this just with j.p.

morgan can other banks use it >> other banks can use it. j.p. morgan is the biggest bank to bank in the world so if if you want to transfer bank, you're on one end, give them money, dollar to dollar they'll turn into jpm coin, do the transfer and they turn it back into money. >> the one and only question i have is if i'm an owner of bitcoin, z-cash, ripple, ethereum, is this validating the world of cryptocurrency and therefore the value of these other currencies go up or does this say you know what this new currency and currencies like it will ultimately become the standard bearers and they'll crowd out and make unnecessary all thebitcoins and ethereums and everything else? >> perhaps the latter. this is what happens they take what's good about it, they transform it for its own needs and they use it --

>> except if you told me this is a walled garden and bitcoin isn't, right >> sure. >> there may always be a need for almost a universal version of crypto. >> one doesn't exclude the other and i think a lot of people in the bitcoin and crypto community always believe there had would be consolidation among the tokens eventually that there are hundreds of tokens and it will be narrowed down and you don't need so many and this is a step in the direction where you have an outside player saying we're going to use it for transactions. >> we talk about jamie dimon and his comments he cited the use case. if you're living in venezuela, if you do things illicitly over the dark web, you still want cryptocurrency like bitcoin. >> on this jpm coin, does that crowd out or prevent other banking institutions or financial services companies from transferring their own? is this trying to become the standard does it matter. >> they want to have first mover status other banks can do it.

if you're citi they can create their own. if a central bank decided to create their own crypto that would be the gold standard as opposed to this. this has a shot but it's still early. >> hugh, thanks, great story coming up, three big pieces of economic data are up in just minutes -- retail sales, jobless claims and ppi we'll have that when "squawk box" returns in just a minute. woman: friction points, those obstacles that limit a company's growth. i try to find companies that turn these challenges

into opportunities. it's these unique companies with creative business models that will generate value for our investors. that's why i go beyond the numbers.

♪ love is in the air, love is i the air, ♪ ♪ oh, oh just seconds away from a bunch of economic data literally a bunch. yesterday we called the guy a hot shot lawyer. i saw the journal they called him a lawyer who's been involved with very high-profile cases. >> prominent. >> i think that's better in the style book instead of hot shot that's demeaning kind of and if you're not a hot shot what are you, just a boring -- >> mediocre, competent. >> just okay, like those at&t commercials. are you a good lawyer? i'm okay. >> are you nervous about the surgery? yeah, me, too. the latest on ppi and jobless claims plus the fourth quarter sales data was related to the

shutdown i'm waiting for gdp, so is andrew this will factor significantly into gdp which was also delayed. >> i'm rooting for 4%. >> everybody's rooting for 4%. >> because of the lag effect of cash for clunkers. it's finally working, right? all those -- >> i'mi rooting for america and jobs. >> let's get to rick santella. >> let's start out with retail sales, we're expecting up 0.1%, we're disappointed, down 1.2%. if we look at exautos, it was down 1.8 ex-awe toes and gas down 1.4%. the number that plugged into higher numbers, down 1.7%, very weak now let's look at initial claims, shall we from 235,000 to 239,000. it pops 4,000. continuing claims move up slightly in 1.736 to slightly

over 1.77 million for our january read on producer price index expecting up 0.1% down 0.1% if we look at ex food and energetic's up 0.3, somewhat similar to yesterday on the cpa. so we see the core up a bit and if we look at ex food and energy on a trade number that's up 0.2% it's down a half percent more than our last look in december, this is january. and year over year trade 2.5, 0.3 lighter than december so the january data on ppi is cool on the headline, about as expected when you get to the ex food and energy numbers in year over year light. so it's going to be fascinating at the end of the month when we get our look at fourth-quarter final gdp as we are halfway through february andrew, back to you.

>> thank you, rick we have the managing director of jm institutional services who joins with us more on the numbers your take on how the market will react to it this morning >> i don't think they're going to love it what we want is low ppi numbers, we kind of got them but we want the other numbers to be good so the market wants to convince ourselfs there's reason that the fed are on hold that are exogenous, things like china but the real data is coming in good and other the last couple weeks we've seen a jolts number at all time high, a relatively blockbuster non-farm so we like to believe those things are going well but that there won't be inflation to pressure the fed into moving because we're comfortable with the fed being on the sidelines that's the single biggest reason why we've had this meteoric rise since december 24. so we didn't get anything to counter that but it couldn't be better i wasn't surprised the s&p lost a couple ticks seeing that because of weak retail sales

>> in terms of how you think the market is going to react or not, we have the government shutdown but how are folks in chicago thinking about china >> i truly believe that 2800 is like a ceiling in the s&p 500. to go above that we have to have some sort of resolution from china that the market believes, we might find out in a couple years that it was a bunch of political talk but it has to be good talk that we think we can bite into. without that, i don't think we can go to 2800 i think there's one thing to get a sugar high from the fed being on the sideline bus we have to see something real and fundamental to take us back through that 2800 and make a run for the highs. by the way, i think we will see something come out in the next couple weeks that puts china in the category of okay, this is solved but that's what we need in my opinion. >> okay.

rick, rickste sflrks. >> i'm glad you came back. considering how compressed these ranges are, we're down a couple basis points in every majority since the numbers. the dollar index went from a slight positive to a negative so, you know, we can all talk about the data and how great equities are looking and how we're better than the rest of the world but i'm impressed the market focused on this weaker inflation and weaker retail sales and ever should remember jim is right when he talks about lower inflation being a trigger for pause but in the final analysis, this isn't about the fed, it's ant the economy. i'd rather see hotter inflation, it's mostly accompanied by hotter retail sales and a bert economy and i think that's what investors are thinking as they look at the markets in trade andrew, just wanted to point that out. >> rickster and jim. >> i'm not talking about disagreeing with jim i'm just talking about the

immediacy of what the market seems to want right now and the market doesn't want to worry about the fed. that's what they think could spoil the party. the economy and the stock market often times are not in'n sync. >> the one and only jim muir owe, the one and only rick san tellful -- santelli. >> now we're going to talk about the economy. how does this feed into gdp in your view? >> i think retail sales number was the key focus and it was disappointing. the consumer was losing momentum going into this final number for 2018 but it also reflects the government shutdown or the initial days of the government shutdown so the question is does this weakness reflect a bigger issue or is this temporary weakness and we should expect a rebound as we wait for the january and/or february figures? so this is going to take a

little more digestion to determine exactly what this means. near term, however we would expect this to save off a sizable amount from fourth-quarter gdp, we're seeing the street lower estimates and we could talk about a number below 2.5%, closer to a 2% gdp level. >> closer to 2% for the kwourt qua -- cou quarter is what you're saying? >> for an annual trend we're looking at a 2.5%-ish pace with what we saw for 2017. >> in terms of getting a true grip on the economy, i'm curious, december you noted the slowdown, january we had other external forces such as the government shutdown. we might not get clean data for a while. >> you're right and i think in part that's why the fed has taken this more patient tone they're pointing to uncertainty abroad and risks of contagion in the u.s. as we talk about an

importation of deflationary pressure bus this is also the fed trying to get a read in terms of directional momentum. have we hit a precipice in is the economy going to lose momentum from here that remains an unknown and uncertain city not a good thing for the market. >> let's say inflation came in hot. i think this is what the markets are looking at it did seem according to jay powell in his latest statements that the fed is more comfortable with an inflation overshoot so we shouldn't be concerned about inflation. >> well, i don't think that's a concern right now. i think the bigger concern is the disinflationary trend. obviously cpi still above 2% but the fed is focused on the pce. and it's shown clear signs of waning momentum with the

headline and the core. now back to that 2% level and pushing below the 2% target. >> does your outlook change much for the first half of the year given the data we saw this morning? >> remember this is one day point. we're looking at a longer term trend and what we see overall is that the consumer has been increasingly reliant on temporary factors like ramping up credit, drawing down savings. we haven't seen that sustained improvement in wages we saw a back up but we think it's too late with the risk of recession now looking like it's gaining momentum in 2020 and beyond. >> lindsay, thanks so much for joining us we should note in terms of future we have seen a reaction

in the few minutes this batch of data has been released we've evaporated the gains we were expecting for s&p 500 dow futures looking to add about 13 here. we are seeing notable movers, comb cola is down, sis sccisco but we've seen some movement. coming up, our conversation on taxing the wealthy in america with former economic -- former council of economic advisers chair austan goolsbee. how much should the rich be paying and are they better off one year after the trump tax cuts that debate is coming up stay tuned you're watching squeaks on cnbc. and check out shares of coca-cola. at low, the pre-market despite beat tong top line and matching on profit expectations they're warning about a strong ll a the affect it will have on future results we'll be back. ♪ hold on, i'm comin' ♪ hold on

♪ don't you worry, i'm comin' ♪ here i come ♪ don't fence me in. ♪ let me be by myself ♪ in the evenin' breeze, ♪ listen to the murmur of the tall concrete, ♪ ♪ send me off forever, but i ask you please ♪ ♪ don't fence me in. special offers available at your local mini dealer. what do you look for i want free access to research. yep, td ameritrade's got that. free access to every platform. yeah, that too. i don't want any trade minimums. yeah, i totally agree, they don't have any of those. i want to know what i'm paying upfront. yes, absolutely. do you just say yes to everything? hm. well i say no to kale. mm. yeah, they say if you blanch it it's better, but that seems like a lot of work. no hidden fees. no platform fees. no trade minimums. and yes, it's all at one low price.

td ameritrade. ♪ his family. his steinway, which met a burst pipe. so grant met his insurance: you are caller number 12. which didn't quite cover the steinway. but what if he'd met pure insurance? owned by members. he'd have met: lisa, your member advocate. who'd introduce him to gustav: leave it to me. a temporary address, temporary ivory, and help him get tickets to the mozart festival. excuse me, grant likes beethoven! uh, the beethoven festival. pure. love your insurance. ? case you missed it, we got big economic data moving the

markets. here's what happened retail sales falling the most in a decade 1.2% gains for the futures evaporating. i mean, we were up triple digits, we're now -- dow looks like it would open up by three or four points nasdaq still looking like it could open up higher but the s&p 500 turned red this morn morning. >> we thought the holiday season was so great. >> and when do we switch back to thinking -- see i thought powell was thinking things are good maybe i'll shift back to more hawkish and this would seem to indicate that they might say exactly how they are in terms of they say data dependent versus data. >> this is real data. >> this is not hiking data.

>> we constantly go back and forth about whether good news is good news or bad news is good news but at least for now teachers are up they were up 60 or 70. >> i guess we haven't seen the retail numbers yet but -- >> what about the government shutdown how does that play into this. >> that's what i was asking lindsay about because that's -- this is data for december. the data in january is also going to be contaminated by the overhang of the shutdown a move off of dollar index had been close to year highs and we've moved off on that so the ten-year 2.652%. >> was there a wealth effect issue in december?

meaning you watched the markets tank and where are you going go to the store during christmas? >> there's a wealth effect issue but i dismissed your buddies dalio and krugman like where do you see this and for what reason you see something like this then you wonder maybe. it's one data point. how does this compare to -- with 300,000 people getting hired, who doesn't have any money to -- and wages going up for the first time in a while? there's conflicting data we need more. >> we need more data. >> now we are negative. >> we'll be plugging through those numbers, we are in the red. let's get a check on stocks. dominic chu joins us from headquarters with more good morning, dom. >> good morning, let's look at some of the big earnings movers.

shares of coca-cola down by 3.5% on close to 400,000 shares of volume the soda giant matched wall street profit estimates and posted better-than-expected sales and organic growth but its full year profit forecast fell short so shares down big also watching a positive sign of things shares of canada goose are flying high so to speak around 350,000 shares of pre-market volume after it beat profit and sales estimatings and raised its full year sales and profit guidance the maker was helped by better growth in its online and company-owned retail out lets. then shares of bloomin brands moving to the upside the parent company of outback stake house and bone fish grill locations posted better than expected profits and sales and gave better than expected full year guidance. it was helped along by better sales growth at its carrabba's italian grill location shares up 5%

nearly 10% making it the eighth best start to a year ever for the index and the best start since a comparable time period back in 1991 so as we talk about the markets it's been a nice run off the bottom since december 244. this could be a place that we see a bit of a pause and maybe some of that playout with the data we've seen affecting the futures market back over to you >> we've been talking about taxing the wealthy joining us to weigh in, university of chicago booth school of business -- >> there he is. >> austan goolsbee he served as chairman of the council of economic advisers under president obama and austan, i want you to start about thinking about the legacy of the university of chicago in terms of the economists that have graced those hallways, some of the greats of all time including you, i'll say that ch

take that down what just happened is there anything in recent history from the democratic party in terms of tax proposals or green new deal proposals is there anything that gives you pause at all or are you just full bore behind it 100% where are you, austan? >> well, i'm not for this specific green new deal proposal i thought that it went too far for me the idea that we should be trying to get more clean energy and more sustainability and we should take climate change seriously i am for that. >> okay, how about the tax proposals, though? i don't know what giving people unwilling to work a paycheck, i don't know what that has to do with the green economy and some of the other things in there. >> i agree with that now, in fairness this was one proposal by two congress people, one in congress, one in the

senate and that was a fact sheet that they pulled down. >> i hope so. >> so it sounds to me like you're vest ago little too much hope in one proposal. >> wait a minute, are they chuting down peter lugar's any time soon? the steak house in brooklyn. >> it was talking about getting rid of air travel, replacing 99% of cars. it was a -- moreover an out there proposal. >> a turkey club will be a -- toast and tomatoes or something. it will be awful >> if you're trying to use that to justify the bush -- >> how about 77% on -- how about wealth taxes how about some of the other stuff. >> let's just return to the trump tax cut which remains -- >> oh, you still don't like that. >> -- the most unpopular tax cut in the history of polling in america. it has a 28% approval rating despite being a $2 trillion cut. how did that happen?

>> i remember when obamacare had a horrible -- for eight years it didn't have -- >> obamacare is much more popular than the trump tax cut. >> but for eight years it didn't and you told me that's because people -- >> we're waiting. >> you told me people didn't understand it. >> i'm getting tired of so much winning, joe i'm getting tired of so much winning. maybe people will realize they've been deeply wrong about this tax cut and actually massive growth is right around the corner. >> where are you going to be on january 28. >> where are you going to be on january 28 i guess unavailable when the gdp number comes out higher than 3%. >> january 28, it already passed >> february 28 are you going to be unavailable that day 50% above anything you ever got. >> you mortgage your future and you can go along with the growth. >> you talking about those eight

years from $10 trillion to $20 trillion >> look, 2017, donald trump's growth rate was 2.2% 2018, with the glorious tax cut with a 28% approval rating is on path to be since world war ii from a deep recession. >> joe, i know you're older an

dirt but we're got to go back 40 years for you to respond. >> regulation after regulation you put on obamacare that's your biggest initiative for the first two years. it's going to be 3% for 2018 most likely. >> 2.8%. >> we'll see sounds like rick who does he sound like >> help me with this in terms of where you think the democratic party really is, i know where you are and i think you think of yourself as more of a moderate or closer to the center relative to the green new deal but the question is whether you think both the party and the country are moving in that direction. >> look, i would say there's pretty widespread feeling among the democrats that a, it was a mistake to give a $2 trillion

tax cut to high income people and korcorporations there's widespread agreement among non-democrats about that too and they want to reverse it. they want high income people to pay more of their fair share >> would you be in favor of treating capital in the same way we treat ordinary income >> i have been in favor of that in the past. >> are you in favor of it today? >> well, it depends how you did it the details matter i think the argument that for high income people we should allow half the tax rate on capital income that we allow on actual earned income is a little bit goofy. >> in terms of how the markets have reacted to this retail sales number, the worst in nine years, is it concerning to you

or is this a number to look through? >> mostly to look through. you've got to get a lot more data before you conclude that if this continued, i think people would be talking about we might be in a recession. i think overall the economy is going pretty well. the jobs number was quite strong as you know for years i've been saying that the fed is way overconfident in what it thinks growth is going to be a year from now so they've used that to psych themselves up into we're going to be able to raise rates all these times and they systemically disappointed something like 36, 37 quarters in a row i think we're chugging along but we're not chugging along at a fast enough rate. >> if i had to pick a number, i think i'd look at the 4%

unemployment before the retail sales to decide on a recession, wouldn't you >> yeah. i think that's right i agree with you look, this is a bad number but we have had good numbers in a variety of things. it is true that with government shutdowns and threats over the debt ceiling, historically those are some of the biggest destroyers of consumer confidence usually it ends up being a temporary smash. >> i know your proposal is to release the gdp on february 29th you just would rather have it not come out at all. we've got to go. >> if it's a bad number, you owe me dinner. >> do we have to eat it together no thanks to austin goolsby the biggest decline in nine

years. i want to get down to the new york stock exchange. help us make some sense of this. what do you think really happened here? >> i was very vociferous that j. powell was very wrong. friday was actually a very bad holiday season and a lot of it may have been the wealth effect as you mentioned but what powell said put us in a bear market and made a lot of people pull in their horns and the economy had just been rolling over on october 3rd when he came out. i said this over and over again. the homework indicated things had gotten very weak he had not done the homework i don't know who he was speaking to but he came to his senses after christmas. job growth here is so great in this country i'm willing to overlook what powell did i'll forgive him because he was

a rookie and it was a rookie mistake. that's what rookies do. >> when we hear additional numbers from retail, what do you think we're going to be hearing? >> things are very strong. january was really good. i've checked in with top six retailers and things are actually quite better. these guys make mistakes they're not royalty. they don't do enough work sometimes and they're busy doing other things and it's okay >> happy valentine'saymy iend d, the future of technology investing lies beyond the tech sector. it's about technology transforming every sector. ♪ at pgim, our bottom-up approach uses a technology lens to identify long-term winners. from energy... to real estate... to retail. finding such opportunities for alpha is the true value of active investing. and around the world, you have a partner in that pursuit.

pgim: the global investment management businesses of prudential. the global investment management onmillionth order.r. ♪ there goes our first big order. ♪ 44, 45, 46... how many of these did they order? ooh, that's hot. ♪ you know, we could sell these. nah. ♪ we don't bake. ♪ opportunity. what we deliver by delivering. you should be mad at leaf blowers. [beep] you should be mad your neighbor always wants to hang out. and you should be mad your smart fridge is unnecessarily complicated. but you're not mad, because you have e*trade which isn't complicated. their tools make trading quicker and simpler. so you can take on the markets with confidence.

don't get mad. get e*trade and start trading today.

our final check on the markets, now down almost 100 points sysco was helping earlier. >> the retail numbers, worst in nine years. >> there's real doubt now about the u.s. consumer, which you would say before you never bet against the u.s. consumer. but think of all the headlines in december. as the markets went down and down and down, it became headline news. >> we had the fed, we had china and then we had i think the wealth effect. >> cramer says he knew it was weak and since powell backed off it's turned around back the other way. we'll see. i still can't imagine recession this year.

it would have to be such a quick turn around from that last jobs number. >> the jobs were positive. make sure you join us tomorrow i think this glow that we've been feeling, i think it's going to be -- >> love is in the air, folks happy valentine's day. ♪ stop i been thinking of you ♪ let love keep us together good morning we are live from the new york stock exchange let's take a look at the futures this morning because you saw it. yo