we're leave at the nasdaq market site. we've got a big day ahead. we'll be talking about north korea and so much news one of the other reasons we have a big day ahead is becky quick is in mit at cambridge >> i'm here at mit because today is the launch of the schwartzman college of computing this is a brand new move for this university. the biggest overhaul for the school since the 1950s.

>> artificial intelligence and what was united states was potentially falling behind in terms of how china has been making advancements. he has obviously been a long-time person who has been very close with china. people call him the china whisperer. he wants to make sure that american interests are also first and foremost for the forefront when they come to some of the issues with artificial intelligence $350 million as part of a billion dollars that they've raised we'll be joined by steve to talk about -- wile be joined to talk about how they're using the gift to overhaul the school and to make sure that overall intelligence touches on every branch of the school it's a complete redo we'll talk all about it and what it may mean just for american interests with artificial intelligence too.

>> it is the news of the morning. the north korea talks are off. what does that mean in terms of the trade talks with china that's going to be a big question this morning. the dow off, by the way, about 33 30i7b9s this morning. nasdaq open off by 30 points the s&p 50000 off about five points let's show you what's happening overnight in the asian markets you're looking at also the picture of red the nikkei hang sang and shanghai composite down. nikkei taking the biggest brunt and european equities right now. also, a bit of a red picture with the exception of the

italian ftse finally we take a look at treasury yields. the ten-year right now is at 2.672. joseph >> one of our frequent guests, i don't follow him gordon chang saying that president xi is watching, and saw that wait a second. expecting a lot of people. some type of signing ceremony at 2:00 p.m. >> that was gordon chang and china. >> i have seen both takes. i have seen takes that this emboldens china and seen takes that this gives president trump more negotiating leverage.

>> let's eamon thisz i'm going to read this because they work hard on these things high stakes talks between president trump and north korea's kim jong un ended earlier than expected overnight with no deal joining us now from vietnam. what struck me more than anything, i don't know if you were around for it, eamon, was kim jong un fielding a question from a reporter and actually giving an answer that's never been done before. has it this f that's the only thing that happened there, and his answer, i thought, was pretty amazing as well. i don't know if we can actually believe him 100% it was still amazing the american reporter did ask kim jong un a question and asked him ultimately if he was willing to denuclearize, and kim jong un responded true a translator and

said if he wasn't going to denuclearize, he wouldn't be here in hanoi for the summit with president trump on a government to government level. here we saw an american reporter have a chance to ask the north korean dictator a question that was a remarkable moment ultimately here, it was wheels up at 3:50 east coast toad time. that was after he scrapped a lunch meeting with kim jong un they literally left the table set for lunch as the president walked out of the negotiating table here they scrapped a planned signing ceremony for what was billed as a joint groemt, but never specified. that didn't happen either. at a hastily called pris conference, president trump explained what went wrong here and explained his thinking in walking away from this deal. here's what he said.

>> basically they wanted the sanctions lifted in their entirety, and we couldn't do that they wereotology denuclear a large portion of the areas that we wanted, but we couldn't give up all of the sanctions for that we continue to work and we'll see because we had to walk away from that particular suggestion. we had to walk away from that. >> the president saying that he had to walk away he said he walked away in a friendly way, though, and he values his relationship with kim jong un. they'll keep the lines of communications presumably open this president not committing to any further summit with kim jong un saying it could be a long time before the two men sit down together face-to-face. both sides seem to be suggesting that even though these talks broke down, they're not back sliding. the north koreans have signalled to president trump, he said in the press conference, that they are want going to resume nuclear

testing or missile flights that's a key element of concession that trump got from their side last year, and also for his part, president trump signaling that he is not going to resume those joint military exercises with the south koreans. that was a concession that he made last year at the singapore summit both sides appear to be holding to the concessions that they've already given. a lot to consider there. there's ways of denuclearizing part of the country where the main facilities are still existing we know everything, don't we we know where they are.

>> you have nuclearized another part of the country, and that's not good you are dealing with the potential benefit of wenz. >> a cynic would say that it gave kim jong un another opportunity to be seen with the most powerful man in the world, and to be seen as at least by his countrymen stabtding up to the demand of the most powerful nation and on the planet that i guess that's the cynical view is that that is something to gain that approximate r. is something that north korea gets from meeting with president trump, and i don't know what -- then again, the president gets -- >> one thing he said over the years is -- one of the things analysts have said over the years is that what north korea wants as much as anything else is just respect and a position on the international stage, and previous presidents have not been willing to give kim jong un or his father that respect and

that position on the world stage and in front of a global media audience this president was willing to do it to take a chance at getting at a deal. the question that i have coming out of all this, joe, is what was it that they saw on the u.s. side that allowed them to go forward with the summit in the first place? there must have been some indication from the north koreans that flfs a deal in the offing otherwise, why travel halfway around the world to sit down only to get up and walk away several hours later? it seems like there was something that led them to believe to get to a deal and whatever that was -- >> i'm glad he didn't take the sanctions off. you can imagine the -- what we would be reading in the papers today if it was a deal that wasn't worth doing it was a lose-lose we were talking about that yesterday. it would be tough to get enough. i don't know how you come out of it and where you get a clear cut win anyway cnbc contributor michelle caruso

cabrera to get her reaction this morning to this news i'm also curious not only what you think happened overnight there, but also what the implications are in terms of the u.s.-china trade deal and our relationship with china as president xi has been watching all of this. >> well, the deal fell apart along what we have seen the deals fall apart in the past over, which was sequencing, right? we know that from the special envoy to north korea it was appointed by the united states speech stanford in january. he said that the north koreans had agreed to dismantle their uranium and plutonium enrichment facilities.

>> i think there is a secondary message to the president that it sends a message to the chiends that they will walk away from the deal and if he doesn't like the terms, he is not so eager to have a win that he will take anything i don't think that's the primary motivation about why they walked away from this deal with north korea. i think the primary motivation was that they consistent like the terms. >> let me ask you this, and i know joe called it the cynical view, but i think there is a

widespread view, especially among the diplomatic core of those who have been in this world for a very long time that these talkszbroolts u.s. was lgt to make concessions that maybe in theory could have brought kim jong un around number one, you get to keep your job, right it took regime change off the table. also, we will help you look at the way china and vietnam are right now. they have somewhat of a market economy, an improved economy,

and yet, the communist party is still in power they don't have democracy. you can thread that needle whereas i think maybe in the past they were unwilling to have any kind of foreign direct investment, any market liberalizations because they were worried about retaining power. >> we're going to talk to michelle a lot more throughout the show you still out there? i'm here >> i have one question, which is to what extend do you think that the michael cohen -- the michael cohen haergds yesterday weighed on the president throughout any of this. >> the president ultimately, though, declaring yesterday's hearing on capitol hill a fake hearing and suggesting that michael corner lied repeatedly during the course of that hearing except when he suggested that he was not aware of any evidence of collusion with the russians that part the president was

willing to accept. other parts of michael cohen's testimony, he wasn't willing to accept it was definitely something that was occupying some of the president's brain space. >> we will see you back here in hanoi in a little bit as well. thanks >> coming up, a power player in the investment world blackstone's steven schwartzman weighs in on the summit with north korea. trade talks with china gives us his read on the markets. as we head to break, here's a look at the biggest premarket winners and losers in the dow on this morning where what's going on in the world. down 36. i don't know doesn't seem that significant. we'll see. endless fields of grain....

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schwartzman college of computing launch it's a brand new school that's taking place with m. i. it's going to be overhauling mit, and we'll talk about that in a moment we're joined by the two people leading this innovation. steve schwartz han ma is the chairman, ceo, and co-founder of blackstone group and rafael, the president of m.i.t gentlemen, thank you for being here today it's great to see you. a very important day you are somebody who understands china very well. how do you think the chinese read that today? zblie think the chinese will be disappointed the americans are disappointed i can't speak for the north koreans. what the north koreans put on the table as a precondition was not achievable it's really sort of a shame.

it's always good for people to meet you press something forward a bit, but there was no deal to do, and china and the u.s. really have, you know, almost identical types of objectives. china really wants a denuclearize the korean peninsula, as do the united states it's a disappointing day i don't think it changes much about the trade negotiations between the u.s. and china >> there are two takes on how china might be viewing this. one take it that they would look at this and think, okay, president trump didn't get this deal, so he will be more desperate to get a trade deal done with china. the opposite is another view that's out there that says, wait a second, president xi watches this joe was just talking about gordon chang's reaction to this. he says president xi sees this and thinks, okay, maybe this puts more pressure on us

we can't come up with a deal that we have no intention of actually sticking about i. they think if anything goes wrong, there's nuclear waste that will come into china. that is their number one concern. they would like a demile an hourized, you know, denuclearized north korea. to the extent it didn't happen, actually, moves the countries together further >> china and the u.s. because they both want to accomplish the same thing, and didn't have the benefit of doing it. >> why doesn't china put more pressure on the north koreans to do that? i mean, we've always heard that they're the ones positive who could really turn the screws on the north koreans because it's about the only place that they're continuing to --

>> the game isn't over this is somewhere in the first quarter of the football game with four quarters don't overread where the game is >> okay. let's talk about why we're here today, and that is the creation of schwarzman college of computing leer this is a big gift you personally gave $350 million. it's $1 billion that's being put to use, but why did you do this? you're not affiliated with m.i.t. this is not your alma mater. what happened? >> rafael is very convincing that's one reason. what's really driving me is that artificial intelligence, quantum computing, machine learning, robotics, all of these new technologies are going to change the world. now, people say things like that from time to time, and it doesn't really happen. this this is going to happen it's happening already it's going to be profound.

what's important is the u.s. be competitive on a global basis, and that's part of the reason that i did the gift. it's also important that these technologies be introduced in a sensible way it's called ethical issues, work force issues because the opportunities for large unemployment exists if you just dump these technologies into the system, and in that way, it's a somewhat different analogy, you control, like, nuclear power and other things with nuclear you're going to have some rules of the road, sensible introductions, things you won't allow the technology to do or at least schedule it. this is sort of the challenge of

the next ten to 20 years, and at the same time it's going to lead to improvements of enormous magnitude. it's the new world, and we're in it even if people don't know it. >> there's so much that is there's a lot that we can go through on that answer let's start, first, with just the competitive nature because we think of the united states as being the leader in just about every scientific and computer edge on these issues the 60 minutes report is suggesting that china is potentially going to take over when it comes to a.i. and at some level they are ahead of us. what do you think of that? >> there are different types of evolution. what's important is this type of technology with other countries has more what you call industrial policy. their government is helping their universities, their companies. we have a pretty remarkable ecosystem, if you will we have three companies that are

active in these areas. the u.s. government hasn't been, you know, particularly active, which is -- which has to change. the universities we have here are without peer they need more money going into this field part of this is coordinating a u.s. response, and if we can do that, which is what i'm interested in, you know, i live here, that we can re-energize what we're doing we're already doing a lot of really great things. there's a lot more that can be done if we get government, universities, and our companies appropriately coordinated. >> let's talk about what you are doing with this. you are not just taking this and creating a few extra professorships or changing a few departments. you are actually changing the

entire setup of m.i.t. this has been called the big e change to the university's structure since the 1950s. what are you doing what's different with this >> well, let me just start with what steve said. the world is changing and rapidly, and the world is actually demanding a different kind of graduate, and i call those graduates bilinguals graduates who are -- who come and study whatever they wish to study, finance, engineering, science, economics, whatever that is, but who also are familiar with using these types of new tools, computing and a.i. tools to practice a proficient that's what the world needs, and that is what the students recognize the world needs, and that's what we are creating here we are creating a college in the schwarzman college of computing. we are integrating those compute and a.i. tools every student here, no matter what he or she majors in, will

be very comfortable using these new tools. that's the key thing that i'm doing. >> how does that work in practice >> in academia schools -- and we have five of them -- basically are designed to advance the disagreement within the school they're safely contained units, and basically that's how they become successful. that's typically in academia that's here as well. it's a charge to help integrate all the majors and on to receive feedback about how the tools are being moved. >> let's get to the question of ethics and how you do this in an ethical manner in terms of promoting a.i. there are concerns, steve, as you mentioned that, people will lose their jobs to the computers or to the robots or to the

machines there are also concerns that we don't quite understand what artificial intelligence can do you have people like elan musk or bill gates who have said that this could be the end of the world because the computers get there fast and decide they don't like us necessarily be the ones to stick around. how do you handle all of that and make sure this is being done in a thoughtful and ethical manner >> i think -- let me just say this much. i do not believe that a.i. will mean the end of humanity i don't think that will happen >> that's good >> i think it's good news if you believe what i believe, but i think the key point here is that it's important that we study that, that we study how is the developing technology in a way that we can deploy the way so that we don't make mistakes.

we have to recognize the right way of deploying it, what is the ethics of using it properly, what are the policy that is we can use it properly, and that all has to go. >> there have been some protests, students, some professors who have said that they're not in favor of this what is your response to them that they don't want big business basically involved with this they don't want artificial intelligence what do you say to them? >> i -- if the questions are about stopping the advances of a.i., i don't know that it can be stopped, and it's not about m.i.t. advancing it. the whole world is moving. just having an institution or even a nation stopping it is not going to make a difference things will move i think the important issue right now is, as steve said, how do we deploy the right way technical flogs really reflect the vaulgz of individuals who develop them and the individuals

and the culture they live in the issue is what kind of humanity we're going to have and that's why these all have to be integrated together. >> i want to thank you both for your time. we'll be here all day because, again, this is the launch of the schwa schwarzman school of computing here at m.i.t. we'll be here throughout the morning. when we come back we have a continued line-up from guests from m.i.t. this morning we're going to bring you an interview with two certified geniuses who are using artificial intelligence to disrupt the field of health care "squawk box" will be right back after a quick break.

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to financial wellness with prudential. bring your challenges. coming up, market reaction to the nuclear summit in vietnam. might be cut off at the knees where, we'll show you how stocks responsibled overnight, and in early trade right here at home plus, we'll get you ready for the big number of the morning. it's our first look at gdp in the fourth quarter it is due at 8:30 eastern time you do not want tomiss that. we head to a break, and take a look at yesterday's s&p 500 winners and losers

our top story president trump ending the nuclear summit with north korea early. he said he walked away after north korea demanded an end to all sanctions, but it was a friendly walk-away stocks in south korea fell overnight. let's show you what happened then right now u.s. equity futures at this hour are in the red. investors try to make sense of what this means and potentially what it means for the relationship with china and the trade talks as they continue dow jones off about 33 points right now. nasdaq off about 30. s&p 500 looking to open down about 5.5 points let's get to our markets roundtable right now gabriela santos is a global market strategist and -- michelle caruso cabrera, gets a

lot of tweets. they d -- did anyone love you as much until you were gone did you notice that? it's amazing that happened -- i want to try that >> i love twitter. >> just kidding. >> anyway, so ed brings this thing where he has a little acronym. >> that's why i need to start with him >> the only things that derail a bull market are rsvp, which stands for recession >> shocks. >> valuation >> valuation >> and policy. >> policy mistakes >> see >> i like that it's not a -- it's -- you did it in rsvp. valuations are not cheap, but not a 28 times earnings. the shock, it can happen at any

time a recession is something that is possible, but not likely >> eventually we'll have another recession, but we don't think and the consensus isn't that it's going to be any time real soon of course, we'll be looking at the gdp report today, and some of the data has been mixed recently we had that bad retail sales number so far most of us think that the economy is going to continue to grow at a slower pace, granted, and -- i don't think there's a recession on the horizon, and that will be the next big market event. >> and i also -- we've talked recently you felt a little negative going into december, i think, is at least the way you explained it to me, and you bought december at the lows. you seem to be saying now the gains are in for 2019. you don't have the a year-end target for the s&p you don't do that. >> if we did, we would already be passed it

>> that's what i mean. you're at least negative or -- >> we're still overweight stocks in our port groel, but not by a lot. i think the gains we can expect between now and the end of the year will be pretty limited. >> are you like a 2,750 -- there's a lot that got there they got so shaken out, the weak hands were so shaken out by a december that they're 2,the00 target for 2018 became a 2,750 >> i think we get to the highs by the end of the year, i would be delighted i don't think it's likely, but it's possible. i think what's happened is -- >> we're in a really sharp surge. one of the best in january and february that we've ever had >> you say it's jug just going to stop? >> it might be useful to look back further the s&p is almost identical to the level it was in the middle of january 2018. yeah, there's been a tremendous amount of ups and downs. the overall level of stock market is unchanged over the last 13 months we should expect to continue to

get continued volatility i think the market will work its way higher, but i don't think we're going to see a big surge >> gabriela, i guess that you may think that ed is on to something here because you have pointed out that earnings already a accelerating, and the gains are multiple expansion, and that may have been brought about by a fed is that where you are? >> that's right. i think, you know, the actual multiple has followed a bit. the underlying earnings estimates -- here in the united states as well as abroad it has been a sentiment driven rally and not quite a fundamental driven rally i think to get to some higher

levels here, we need to see a turnaround in that fundamental picture, and it has got to come from better global growth, which we have yet to see >> i don't know what would suddenly make that a more positive outlook for just this year, do you you still got brexit you still got trade issues you still got italy. we have all these things nothing has been fixed >> and all those issues fit together in this bucket of policy uncertainty that's exactly what has been driving the weakness globally. it's fed through lower business sentime sentiment, lower cap-x and lower export orders. unless we see a big turnaround here in that policy uncertainty, it's unlikely to see a big boost. >> did you want to -- you're so negative you just think the market has been wrong for, like, years, right? you just want to say that the market just is awful and it's going down >> my role here was to talk about the impact of the summit and you can see from the markets that it's not much >> you know what, i wasn't going to point it out either, but --

no, no, but the market's reaction yesterday and today, it doesn't necessarily look like there's a constitutional crisis on the horizon either. at least not yet >> not yet >> in this country, right? >> yeah, okay. >> thank you >> thank you >> coming up when we return, news just crossing the wires about how high-profile could line the pocket of uber and lyft drivers. we will explain when we return then, later fall-out for an end to the nuclear summit. could this preview of what we might see during the other negotiations the trade talks with cnahi stay tuned you're watching "squawk box" here on cnbc

uber and lyft drivers may have a chance to benefit from an initial public offering. the "wall street journal" reporting that both ride share hailing companies -- i don't know why that's a tongue twister -- those companies plan to give some of their drivers a chance to buy ipo shares now, the paper says some of the most active or longest standing drivers would get a cash award with an option to put that money towards stock in the ipo's it's typically difficult or impossible for ordinary investors or employees to buy shares at the ipo price. in many ways this could be a

good look for these companies. especially uber, which has had its own issues at the same time, boy, if that stock were to drop, joseph, and you think about the impact that that would have, especially on drivers whose literally income on a weekly basis is so important. i think there's a potential cost to backfire. it will be interesting to sew what happens >> we love ip oes ash where i wanted to have -- i don't want anything to happen >> i want the ipo to happen. the question is whether if the driver -- >> it will be fun to watch >> it's different do me. it uber and lyft want to literally give stock to drivers -- you know how we always use taxi drivers. whenever the cannies ask us about the market, it's tough it's different you are right. coming up, becky will sit down with two mcarthur genius workers and two m.i.t. investors to at nt.eah re hltca th'sex

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welcome back everybody joining us right now to talk about how ai can make improvements in the health care system is dina welcome. pleasure to have you with us today. >> thank you >> i want to talk about the amaze things you are working on.

you have been working onsets up a wifi box that can read and monitor peoples movements, breathing, heart rates, how does it work and what do you do with it >> it wouldn't be amazing if you have a smart wifi without have been to wear sensors on your body so one of the ways that we started thinking about this is all of these new advancements in machine learning if we can analyze the signal using these models we can start getting information that is impossible traditionally like being able to see people and be able to monitor your breathing in a different room. >> it sounds creepy. what's the medical application >> we all know health care is a big problem today.

one of the major issues is coronary diseases. in coronary diseases we know many are if you react to the exacerbation area. we have to put all of these sensors on them today. >> heart disease, alzheimer's, all of that copd, depression even >> you can do it without all of the invasiveness >> yes the person livers thes their lie naturally. >> let's talk about what you're working on you have been developing a computer program that can read breast mammograms more ak cur

rattly >> today they are trained to look at the image and analyze current disease. you can start teaching the machine what humans are doing today which is identifying but what is more exciting is to teach them to do things we cannot do. it is known cancer doesn't develop yesterday to today for humans it is hard to analyze all of the changes and say this person is going to be sick in a few years. we have teaching machines to look at where the outcomes are known so they can identify subtle changes and then predict

the outcomes what is exciting about it our system is at a general hospital cht so f so far it helped to read around 40,000 mammograms. >> you were diagnosed yourself in 2014. they didn't catch it in 2013 or 2012 >> absolutely. i started my research and discovered that my was delaying by two years it was diagnosed quite small i realized that it is a very common problem only 15% of the patients that have, so majority don't know they are at risk so my thought was it would really use technology and help

us to make predictions humans cannot do today. >> i want to thank you very much we have a short amount of time but i appreciate you bringing these advances to us >> thank you for joining us and thank you for the work you're doing. >> thank you >> thanks you. coming up we'll get the market reaction to the news overnight. no nuclear deal between the u.s. and north korea. we have a live report next later dradramatic changes. we are talking about gold launching a hostile bid. bristow will join us in about 15 minutes. we'll be onset here. i consulted with your grandmother's doctor. we can do the screening at her house.

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talks breaking down and both sides leaving lunch and a nuclear deal on the table. the latest on what's next and

what it could mean for the president's leverage china is straight ahead. a hostile bid from barrick they join us to discuss a mega merger commodity market and the global economy >> and former google cloud ceo diane green joins us to discuss cyber security competition in the cloud and the future of computer science the second hour of squawk box starts right now welcome back you're watching squawk box good morning becky made her way to boston for

the launch of the college of commuting. she will be bringing us guests all morning long we will be checking in with her in just a bit. in the meantime take a quick look at u.s. equity futures. dow jones looks like it would open off about 22 points the s and p off a little over4 points and a lot of questions this morning about what took place overnight. >> yes i got up this morning and wanted to see what happened at 2:00 p.m. with the signing ceremony i looked at my world clock and it was already 3:30. nothing good happened. overnight president trump departing after failing to reach an agreement during his second summit with north korea's kim jong un. the president said he walked away from talks with kim after it was clear the two sides

remained at odds after ending the nuclear program. it makes you wonder whether it was the end goal for kim jong un to stay nuclear and to get the sanctions ended. i hope that's not it but. >> yeah. air force one and hours ahead of schedule they scrapped to plan lunch. the table was set for the lunch at the moment the talks broke

down the president suggesting although he was willing to walk away from this negotiation he may also be willing to walk away from others including the china trade talks. >> speaking of kline thchina wel on our way of doing something special. i'm never afraid to walk from a deal i would do it too if i didn't work out >> so the president clearly sending a message from here straight to beijing saying he is willing to walk away from the trade talks. the official deadline is

tomorrow here the deadline will be extended and we'll wait to see whether they can come together with a better negotiation than he and kim jong un were able to come together with today >> you know how in the past just out of nowhere some comments can come from the north korean government but just some really over the top nasty kind of -- what are the chances there a week or two that we hear something like that and that it's all smiles right now and we'll continue to try to make progress is there a possibility we just actually go a couple of steps back from where we were or will this progress be maintained? >> the rhetoric is fascinating

it is floury aflowery and fiery at the same time we haven't seen any bluster or fiery comments on the north korean side. it may be coming there's no way to know that the president said when they twa walked away here they walked away happy he couldn't accept the deal that was on the table the question i'm left with after of all of this why did the president think there was a deal on the table in the first place? something may have given the indication there was the ability for the government to denuclearize and accept sanctions relief something gave him that sense or maybe it was just entirely pure optimism that they could get

something done here or was there something that lead them they could believe -- >> we'll have to do that to figure out what happened here. >> i imagine people will be looking for that i imagine something might have been said. don't you think -- and you have spoken to this, president trump and kim jong un are unique individuals to put it mildly and could have very well been the president's hunch or get or his straight optimism he could some how do something once he got to the table. >> it could have been. you know, the president had spoken about his gut, his instinct, his feel he is a confident man. he felt he would know within a few seconds of meeting kim jong un whether there was a possibility of success he goes on instinct. he feels they have the ability to judge somebody else's character. so maybe it was simply that,

that the president want today get face to face with kim jong un and have that walk by the pool that we saw them take earlier today in order to really gauge the man and gauge whether there was something possible here or not. he couldn't do that through layers >> you know, even me, i'm optimistic from the viewpoint that you take kim jong un into vietnam and you see what's happening in that country. people don't have food in his country in many cases. it's the 21st century. if i were trump i would be thinking there's no way we venn clully we don't get to that point. i know that it's dear to him, the whole nuclear weapons for his own survival but the prospect of bringing it into the 21st century and having the prosperity i think would come there, i think it's a huge carat but we talked about it a lot

he is not starving >> yeah. i was going to say complete and accurately that. the economic incentive is look what happened here in the former north vietnam. we are standing here which fought a brutal war against the united states decades ago is now prosperous people are buying cars, motorbikes, participating in the global economy i took a picture of a soldier in that military uniform standing in front of the prada outlet here you can see the global economy takes place here that was the lure the president presented saying look what can happen if you join the family of nations. for kim jong un himself he is not starving he is extraordinarily prosperous it is one of the highest luxury vehicles you can buy he is doing just fine

personally the question is whether he cares about prosperity or not. if he feels he has an iron grip. it will not influence the decisions of the people down the food chain from him. >> i think that's it in a nutshell thanks we'll be checking back with you. at least for you you're really seeing the world >> yeah. we were in argentina a fascinating opportunity to see the world through his eyes in this sort of rolling carnival that is the white house. >> yeah. >> not too shabby. all right. we'll see you. >> all right joining us to discuss the impact on the markets chief investment officer, michelle, cnbc contributor you know a lot of stuff. just listening to the

conversation with him, do you see what i mean? we see the standard of living that can be generated from it. how can anyone not want that it's hard for me to imagine. let's go come into the 21st century let's go >> sure. i think it's what keeps him in power. the question you have to ask is does he think by improving the economy that keeps him in power longer there is a social compact in that country, right? we will give you prosperity. don't ask for democracy. so far that's what happened. you can say the same thing about vietnam or does he have an attitude like the cubans the minute they get very nervous about what they see that happens in the population. so that's probably the way he is thinking about whether or not

there will be economic advancement. can i answer more about maybe what fell apart here today >> yes >> we know on the special envoy he said that kim jong un promised the we rat case and that this part, this summit was about what would the united states give in exchange for that kim jong un wanted the lifting of all of the sanctions. here is the thing, a nuclear program has two items to it. there is a missile capability. i don't see any offer or discussion about whether or not he would give up the missile capability if you want all of the sanctions lifted you need all of the program to be eliminated both key components. so he has to come back to the table with more if he will get that much from the united states >> that's a good point

your thoughts about what happened and the impact on what we do here, the markets. >> i think from a geo-political standpoint it is interesting from a market perspective it's not that relevant. what is relevant for the market today are two things, whether global growth will stabilize and if things are going to stabilize in the future and if it will reach some sort of a trade deal. i think on this front this situation in my judgment improves the odds of reaching a settlement so if there is an impact of all of this on the markets it's that i think the pressure is going to be intense on trump as well as china to arrive at some sort of a settlement they know things are fragile and they can break apart >> so will it be a settlement that both sides benefit from or it will just be a -- sort of a rubber stamp settlement

>> a trade deal with benefit everyone >> with no teeth or? >> no. i think with people who are kind of really well informed about the issues, i think the likelihood that is some sort of a band aid thing i don't think it is a possibility. having said that i think getting all of the things that trump administration wants is probably unrealistic as well. i think this sort of frames things for them. it has to be a give and take and has to be a long-term engagement rather than trying to find a settlement >> what do you think it means for the bigger -- is it really bigger isn't that sick that we are so -- we think so much about china and trade? it's like okay this might not work out. what does it mean for our money? unfortunately that's how we think about it the bigger issue is whether

there will be tariffs, not whether or not there's nuclear on li on liveron >> i take the president and secretary they did not like this deal and that's why they walked away a secondary consequence is that it sends a message they could be tough. the other market impact here we should watch for is what if the north koreans decide they will launch another missile he said kim jong un promised he would not launch another missile, that he would stop the testing. that's important for a coupleovcouple o reasons. they would not be relieve today have missiles being shot also, every time they do not test it retards the progress of their program. the reason they could have such an accelerated progress that was

really breathtaking is they were doing so much testing. the stopping of testing if that continues that is good what would be very market negative is if we did see a in testing. you have to ask what does the united states do in response to that >> i think a few more have to fail before they go down that path i think in their judgment this president is probably their best shot this the best opportunity they have had i think they will stick with it longer and launching missiles doesn't help testing missiles doesn't help. >> thanks. stay with us and stay close. we'll be seeing you again soon coming up when we return the top corporate headlines and company's hostile takeover bid we'll have a conversation with

him directly about it. she was hired to help build the computing business diane greene will be joining us to discuss her next project and cloud computation. stay with us you're watching squawk box on cnbc 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

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the number out at 8:30 a.m it is to show the economy grew at a 1.8% annual rate. the report along with many others delayed by the government shutdown shares are falling in premarket trading. a major shareholder saying it does not support the deal to buy celgene and they are accepting too much risk in the transaction. they say it is being purchased and will create substantial shareholder value. a number of pedestrian deaths hit a 30-year high. >> i'm going through horns

because people like spotlights >> they are stopping >> stops to read their taxes >> thiit's always the same thing i have to look up to see that. i do not -- no i have apple play where i can do all of my messages and do it all verbally >> yes coming up, digging for gold, the ceo on the bid squawk box coming right back 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...

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take a look at gold this morning. $1,327 joining us right now is mark bristow. we are thrilled to have him here let's talk a little bit about the price because i think that perhaps more than anything else has shareholders scratching their heads in large part. it was a leak before at effectively a lower price than he was trading at >> you know, good morning. combinations like this one don't come often in the gold industry and it is all about the hole being larger >> right >> that's a reality many this proposal on the price i have always said

we can't keep offering premiums and they wash out. >> right >> so it's better to have a business strategy that delivers value to shareholders. in this case we are absolutely sure it will deliver at least $7 billion of nav. >> right >> for the shareholders. it is almost 50/50 >> how much of this transaction or the attempt to pursue it is motivated by an effortto spoil the other deal this one being with gold corp this is gary goldberg. he called the bid a desperate attempt to muddle up our deal suggesting it isn't a deal to buy it but it is an attempt to play the spoiler in their other transaction. >> if you want to be at the temperature of a food chain it

is quite important to own the majority of the assets in your industry we have five in the combination. gary newmont has a couple more gold corp. has none. we want to double up on the assets in the industry >> have you spoken to gary >> we are. i actually shook his hand. >> and was it just a shake of the hand or was there a separate pleating what did he say back to you? >> hello mark. >> that was the end of it? >> yes >> so what happens next? >> our job is to convince shareholders this is a better

added proposition and that's what i'm doing i'm working very hard. we have back to back meetings. we will catch up with big shareholders and a few hedge funds as you know. we are onto toronto and we'll continue on that 50% of the barrack shareholders represent 60%. >> i know you'll not want to answer this question or you feel like you're tipping this hand. in terms of the economics what's the bandwidth you have to spend more >> this is what everyone -- >> this is the billion dollars question >> the billions of dollars >> this is the eco chamber of the world. because it is being done in the past let's get over there. let's decide how much value is in this deal, logical value. many of the shareholders have been complaining management

doesn't focus on value i'm about value. our board is about value we have a young team of executives that are also about value. that's what it is all about. we can deliver more value. >> let me ask you a question about value and being able to manage not just an institution of this size but this is rob he said in an interview if they get together they will be so far out in front of the everybody else in terms of size i don't know how you manage a company of that size. >> it is so easy when you look at it it is one. what's happened -- what the case is today is that they split up the fences we put it all together and it's easier to manage that's my home ground. that's like falling off a bus.

the other key asset is in south america. we have a great team that can pick it up as a normal course of business it's about how your management structure works. i don't believe in corporate offices. we want people on the ground running our businesses >> let me ask you a broader question about the price of gold if you're sitting here what do you think the price of gold will be and how do you think it relates to what powell is doing? >> i think the price of gold goes up and down not necessarily in that order but the pressures are more on the upside than the downside for many reasons. the u.s. politics, the u.s. economy, whether you can -- you know you can't do that europe and where it is going to get to with brexit and of course the eastern part of the world

and where that -- how that balance works out. gold is a measure of the complexities or normalities of the world. so up rather than down >> we interviewed warren buffet. what do you think when you hear him make the comments he does about gold >> everyone is entitled to an opinion. at the end of the day i have been in the gold business my whole life and i created a lot of value for my stake holders. it is a great business to be in. it is very energizing. it helps immerging markets it is a fantastic metal. >> a longer conversation we hope to have you back as we continue oh, it couldn't get off the set without me asking, do you own any bitcoin? >> no. i don't think it's the right currency >> did you -- >> no. gold is the only currency you can't print or make.

>> not yet >> we'll talk to you soon. >> thank you all right. coming up, communication breakdown in north korea we'll debate what's next for that country and whether or not it's going to hurt the president's leverage for trade talks with china squawk box will be right back. sfx: [phone ringing]

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top of the morning to you andrew shares of hp down around 13% on 55,000 shares. the bulk of that being driven from the earnings report it fell short of expectations. analysts at bank of america did a double downgrade of the shares to an underperformed they sited lower confidence of that print business. those shares off 14% shares of tesla up around 30,000 shares of market prevolume

they are calling it one of their fresh picks. they think it is over demand is overblown. shares of dollar general lower by around a percent or so helped lower by a downgrade they decided among other things that the evaluation run up so again, a big move lower for system of those shares and then dollar general off by a percent. >> thank you becky is at the opening of mit's new commuting school it is some of the smartest people in the industry, becky. >> we have a commercial coming up when we return diane greene will talk about who has the edge. plus, the huge opportunities in health. that's next right here on squawk box. igns of opportunity. but with opportunity comes risk. and to manage this risk, the world turns to cme group.

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welcome back right now i'm joined by cloud computing pioneer as well as the cofounder and former google cloud founder.

thank you so much for joining us today. >> great to be here. >> we are here to talk about ai and how it is kind of disrupting industries across the board. where is it? where should we be thinking of ai and how it should play into other industries and what it does >> well, it can suddenly take all of the data industries have accumulated and they have accumulated a lot and clean that data up and do computing on it to discover new incites. where you see that playing out, one of the earliest really in use today practical applications is call centers. you can augment the humans tremendously you can see it in financial services, fraud detection and health with diagnostics. people can -- any where you can

look at more data than a human in their lifetime might even be able to see and detect the patterns and adapt to and learn from it just similar to a human learning from looking at image after image you're going to be able to do things in a way that augments humans very powerfully so you can detect one of the examples in medicine it is diabetic where they can diagnose that from looking at the retina as well as a democratic to they would be able to >> that you are this problem >> yes >> and if you get it early you can do something about it. >> how quickly are things changing right now >> i think it's probably one of the fastest changes. i mean what's happened is

historically commuting has always been important. it was constrained by how a human could code up an to analyze and, you know, compute on something now you can combine the data with the compute it can learn from the data and so once you start doing that you start getting incites you have never gotten before that can kind of leapfrog what you're able to do in the industry you can look at energy, financial services, the media, gaming and health is a big one. retail is using it for customer connectivity once you can do that you can do things more efficiently and do things more effectively. the big challenge is integrating it into the current work flows

you can't just throw aai at the problem you have to make it work with the humans that are working and the way they do things and adapt it >> china has more patents in ai and more start-ups and more papers published than the united states does. do you think they are beating us on this race with ai >> i think that the chinese government is certainly funding a lot of ai and we need to fund ai more. we need to fund research more. i would say we have an amazing assembly of the top ai here in the u.s. and both sides are working really quickly part of ai is having a lot of compute and having a lot of data the more you of both generally

the more accurate your results are. in china where you have a giant population they have a lot of data to work on. so we have challenges in bringing all of our date to together and ensuring privacy of that data. >> here in the united states we care about privacy china, not so much how does that constrain things and how can you win at ai without compromising peoples data >> we are developing incredible days to ensure to privacy of data i'm sure it's something that will happen here at mit and other places we are finding ways to bring data sets together actually there was recently an interesting study done on health data for common childhood

diseases it is something that would be hard to come by here. >> and joe, go ahead >> i'm just wondering at this point, are we going to be able to compete with our system in that the money that is required be nice if we had the same type of participation as the chinese have in terms of funding things, can we do it or are we doomed to be second do you think. >> i think here in the u.s. we have so much momentum and understanding of what's needed and for instance part of ai there is sort of this no chip, in ai, people are building it so

it's the entire stack and the u.s. has been doing well there we have a strong semi conductor industry so the funding is needed it is to be funding this i wouldn't say it is all over by any stretch of the imagination zb. >> thank you very much for your time of. >> thank you >> diane greene is on the board. you meet each other half way after no agreement will the breakdown of the talks hurt trade talks we'll talk about that. check out the futures. they are actually not positive for the dow. it is up just over 11 points

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don't get mad. i can customize each line for each family member? yup. and since it comes with your internet, you can switch wireless carriers and save hundreds of dollars a year. are you pullin' my leg? nope. you sure you're not pullin' my leg? i think it's your dog. oh it's him. good call. get the data options you need and still save hundreds of dollars. do you guys sell, other dogs? now that's simple, easy, awesome. customize each line by paying for data by the gig or get unlimited. get $250 back when you pre-order a new samsung galaxy. click, call, or visit a store today. factory activity contracted. it fell at the fastest pace. it is another sign the chinese economy is losing steam as the trade war drags on

china says the u.s. an north korea must meet each other half way. the president called chinese leader highly respected leader who has been very helpful with north korea. here is what he said about trade talks though and walking away. >> speakingover of china we arl on our way of doing something. i'm nifr afraever afraid of walo a deal >> what does it mean joining us is evan is deputy chief of mission and charged at the u.s. embassy it is always currently a sen yo senior adviser michel michelle, evan has interesting perspectives you dealt with a couple of

members of the family. the more things change the more things stay the same the whole idea about whether north korea comes into the 21st century in terms of the way vietnam has, china has been urging that for years and even kim's father knew it would mean a change to the strangle hold they have on every aspect of north korean life. >> they may not want to do that. >> i don't think he does want to do that. the chie knnese and others havee pressing it for decades to implement reform back in the clinton administration it was one of the architects we used to offer to the north koreans. there was an eerie resemblance

offering opportunities to bring them into the 21st century, all of the things you referred to. they studied economic reform they studied vietnamese economic reform they said thank you very much. we are not going there because of the impact it would likely have on their ability to centrally control their country and control their people and they were not willing to let their -- >> not even the regime it's the kim family >> precisely >> so one family and their wishes to be -- >> exactly >> many people today saying that the north koreans need to be shown the path to the future if we give them examples they will go down this path. they know these and studied them >> they have chosen them >> they have closhosen not to >> so michelle, i keep asking

that question for days now why wouldn't they -- why wouldn't he want to be seen as the father of modern north korea and the person that brought prosperity to his people and he is tooling around in a $300,000 mercedes it's the tip of the iceberg with how he is home in north korea. is that really the gist of what we are talk about? one family's self-interest will prevent this from happening? >> it is all about his self-interest. it brings up a lot of really great points about what we have seen in the past from the north korean leadership. i just wonder if as time has evolved the chinese model and the vietnam model might be something they are more willing to look at now or kim jong un might be more willing to look at now. it is not his father or

grandfather. two, there is a lot more time that has passed where the trump administration can say don't worry. see, you can still stay in power even if you do economic reforms. maybe it prolongs your about it toe stay in power if you structure this where you give them prosperity or greater degree of prosperity and they don't ask for democracy. has that changed over time as you see the evidence if where you want to call it that that can happen in china and vietnam and whether or not kim jong un is a different person than his father and grandfather there has been an expansion of markets. csis has done a lot of work and found there's more than 400 internal markets where they are already getting their livelihood so there's some changes that have happened that would be

considered reforms to us it would look very small >> that ruins the whole carrot in the stick wouldn't you do that so what carrot, what do we have to use >> one of the things we learned the hard way back in the '90s is that the north koreans were not inclined to incentives we would offer them so as to prevent them from developing a nuclear weapon now they have the nuclear weapon and we are trying to use incentives again incentives by and large do not work >> what would work >> the plan b is not military action i think it would be a disaster quite frankly the one thing that kim jong un values more than anything is the existence of his

regime and the stability of his resh regime and to the extent we do that it will get his attention >> you need china to make them harder >> we need klichina to do more we need to exercise more leadership >> becky had a great interview with and made the comment it would bring china and the u.s. closer together. >> as the chinese look at this breakdown i wouldn't quite call it a breakdown it is a major bump in the road as the chinese look at our options and think we may be going down a harder path they may respond by putting a little more heat and that could be a good thing >> you're positive about the president's efforts to engage or >> i have long bonn an advocate of engaging at the highest level in order to get them to make the

strategic decision i have been arguing now for about the last three or four months they made the decision and it is a decision to keep the nuclear weapons. i think the president got a full dose of that yesterday >> all right michelle, we have insight every time we are trying to figure it out dennis will discuss the fed, the economy and so much more gdp numbers will be released and we'll be watching that number closely as they hit. back in a moment ♪ (butcher) we both know you're not just looking for pork chops.

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fourth quarter growth is the number of morning. reaction straight ahead. and a look inside, the fed, this morning's number pushed the central bank to or double down

we have his take as the final hour of squawk box begins right now. ♪ good morning live from the nasdaq market side in time square i'm here with andrew and becky is in cambridge, massachusetts today. you're not out in the really -- >> that's right. >> not in the peoples republic of cambridge you're down in the industrial place where, you know, there's -- it is like night and day. it's changed though. i think it is much more urban and developed than it was long long ago back in the stone age

>> when you were here in your old stomping grounds >> yes >> we are here today for the college of computing launch. it is part of a billion dollars given to create this knew school, college of computing it was in terms of the chinese getting ahead in terms of ai it has more patents. they have more companies, more start ups in artificial intelligence and they have more papers too a lot of it is what we have been talking about in the last half hour, just the idea that the chinese government have invested a lot of money what's happening here is they are redoing the entire school. they are taking it and weaving it into every one of the disciplines here we spoke with them earlier today. he pointed out that he thinks

that his students are going to be bilingual whether it is in commuting science or economics or linguistics, whatever it may be doing but they will be getting an understanding of how artificial intelligence are working and how it can help them in their industry. it is the first time any university will be taking an approach like this it is the way the school set up since back to the 1950s. they are planning for big changes here we spoke with steve here today he was the one that started this with his $350 million donation we got to chance to talk to him about that he is an expert when it comes to kline f china and the united states. he has also been an adviser to the chinese leadership he is somebody that can understand both sides of the position that is important when you watch these talks with north korea kind of collapsing

we got the chance that toalk to him. one is wlehen he would think its good for us because president trump will be more desperate to make a deal. we'll be talking about all of those issues when we come back there a little bit we'll talk about ash carter and his take on all of those things too. back over to you >> if you go to yale all i did was drop the name and i was like -- it was unbelievable. now it will be like that at m.i.t. i think it makes me think. >> you know, billionaire, every once in a while they do great thing. i think it's nice that a guy is able to give back to such an extent it is like it's a wonderful life would there be an m.i.t.

institute at this point? will you go over and see -- >> go over and say hi to tyler -- oh, here we go again. he is is director of the david coke institute that's the old center for cancer research >> that's where you did your work >> yeah. >> where is that from here >> you'll need ai for genetics and everything else. it makes sense >> they can do the heavy lifting and weed through so much more. >> it's a great shot of you with the snow behind you. it's very nice very nice. >> thank you we'll be back to you soon. it looks like it is sticking let's check the futures. up about 7 or 8 points on the nasdaq the s&p down over 2. treasury yields 2.67 last time i

looked 2.68 j.c. penney up sharply this morning. they reported a profit of 18 cents per share. shares of horizon are surgingment thsurging. they are up over 21% a new drug designed to treat act ifr thyroid eye disease. we are an hour from the big economics number we'll be getting fourth quarter gdp. this is a number we have been wait are for quite some time in part because of the government shutdown we have new commentary from the federal reserve vice chair, steve. >> yes i'm here richard is speaking right now.

he says the economy expanded at a robust pace in 2018. i don't know what the number will be for 8:30 but he says growth will be slower and still solid in 2019. cross currencies are buffering the economy. global growth is slowing and uncertainty. a couple more. he says monetary policy needs to be especially data dependent and they can afford to be patient. let's look at the forecast for the number this is an estimate of tracking the forecast out there at 2% the dow jones at 1.8 it is a slowing of 3.4%. the forecast at 1.9% some of the questions around this growth number, there are a lot of them. trade effects. we had a surge some think it might have been a

result of people trying to get in before the tariffs were put on it ended up boosting inventory we don't know if it is weak or strong the retail numbers were terrible also red book numbers were strong take a look. we ramped up to 4.2 in the second quarter now in the third quarter we expect it to slow to what the still thought to be trend but we might learn more about that today. back to you. >> okay. thank you. we'll see you back here at 8:30 for that big number. in the meantime we'll bring in another special guest. >> in the federal reserve it is to find out whether it is truly data dependent how will it react? joining us now is former atlanta fed president and i guess first off do you see any irony that it is possible i guess we don't end

up at 3 f%. it could be partly because of the government shutdown. did president trump or whoever you blame for the government shutdown, did he ruin the possibility of hitting a 3% year >> you know, there is irony in that i guess it is characterized pretty well. that is that it's a gang buster year it is a strong year even if the fourth quarter comes in weak some of the numbers that steve put out a few minutes ago i think are what i was thinking. that is probably around 2% for the fourth quarter the year overall is very strong. >> it will only match what 2015? there was a 2.9 -- president obama had a 2.9 right? is that what it's going to be for the year >> when you look back at the last decade or so mostly we have been in a 2% economy

we have had a couple of years where we did better in that and approached 3%. you know, the trend rate of growth that most economists believe is the long-term gross is around 2% so when we have a year at 3% or better that's a very very strong year going into 2019 i think most economists and certainly is fed economists think that we are more likely to go back towards the trend around 2%. >> i don't know. if you look at the political environment and kind of optimism that came from deregulation people use the word four or five if we end up in our best shot below 3, that would have to be considered a disappointment don't you think?

or if we were to average 2.5 for the next four or five years would you look at that like a 50% boost from where we were >> if we were to average 2.5 for the next five years i think it would be a big success when you consider sort of the drags that underlie this economy -- >> productivity growth drag until that growth number actually shifts to something higher 2.5% would be a good result >> we don't hit 3% i have to buy him dinner if i lose i have to buy him two dinners which is even worse for me so i was hoping for -- >> the last time i saw him he looked pretty lean and mean. i don't think he'll each too much >> no desert for him what was the retail sales number

and how do you put that together i guess retail sales is more volatile and we should use the jobs number to get a true snapshot >> yeah. one of the things i learned in my ten years is don't overreact to any single monthly number it could be that there was an effect of the shut done and effect of the volatility and the financial markets ain the fourt quarter that perhaps made the consumer a little more cautious. i haven't dug deeply into the numbers to see what the difference between cyber sales or online sales and retail were but the retail number for december was a disappointing number i don't -- i wouldn't make too much of it >> okay. i was curious. maybe it is a political question it does feel like there seems to

be -- and it's not bipartisan consensus on this but this sort of new math on debt and deficits in the united states, this idea that we can blow out the deficit in a much more meaningful way and what it could do to inflation or not given the various views coming from various economies, where do you stand on that right now? >> that's the new monetary theory which is suddenly in fashion. people are talking about it a fair amount. i'm skeptical quite frankly. maybe i'm old fashioned but i believe we have to have fiscal discipline and our leaders should be fiscally responsible starting now and that there will be in one way or another a reconning over time if we are not fiscally responsible i would also say that the assumption of new monetary

theory is that the fed will print money. i doubt anyone will take that view >> all right thank you. former atlanta fed president i appreciate you coming on today. >> coming up when we return right here on squawk box president trump returning to the u.s. lacking a deal on north korea and nuclear program. that fell apart overnieght. can we expect any progress in the near future? ash carter will join us and weigh in on theesse ey questions that's coming up right here on squawk box was ahead of its time.

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welcome back to squawk box we have a bit of red it has gotten red as the show has worn on here nasdaq off 24 points the, s&p off about 4 points. we have more now all right. we have actually figured it all out since we last spoke with

you. >> okay. good we think kim jong un is doing pretty well and to stay in power he needs to keep the status quo the best it is for the kim family >> yeah. look, he is making decisions based on his own personal situation. he would be wary of destabilizing anything that's going on there it worked for him and his family personally it hasn't worked for just about everybody else in the country. it is working for him there will be an economic boom and the country in general he pointed to the example of what's happened in vietnam where

the economy has been very strong over the past several years in the wake of vietnam opening up it wasn't enough the president said ultimately he was willing to leave here even though they did have a deal drawn up on paper. here is what he said >> it could 100% sign something today. we had papers ready to be signed it wasn't appropriate. i want to do it right. i would much rather do it right than do it fast. >> and no real plan for what happens next the president said there's no agreement on any further meetings between trump and kim jong un. it might be a long time before they see each other face to face we are trying if figure out where things stand now we know the north koreans committed to not continue testing nuclear weapons and not continue with their missile test it is committed to not resuming

military exercises it looks like they are both going to allow the concessions to stand >> all right we have to run we have to go quick. you know tomorrow is friday. >> you won't be able to tweet it >> we have news just in now from condition by it is to for human and animal consumption. so martha stewart, we'll see whether that helps the stock get

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welcome back president trump wrapping up his summit with kim jong un early without a deal on any of the nuclear issues we want to get back to becky in c cambridge. steve is on this very topic, becky. >> he is somebody that closely a vised president trump and somebody that closely advised him because of the interest he has taken in general he has done a lot of giving there including to some universities there some people look and say the chinese will think oh, my gosh this is great news for us.

the other is that he would say wait it means we'll have to be negotiating and make sure we come up with deals that have meaningful deals on the other side as well here is what he has to say >> they have almost identical types of objectives. china wants a denuclearized. to the extent it didn't happen moves the countries together further. >> you mean china and the united states >> china and the u.s. because they want to accomplish the same

thing. >> again, his bottom line is when it comes to nuclearization they don't want to share a border so they have to be disappointed he does not think it will have an impact on trade talks happening between china and the united states. >> i guess we have to go we have numbers at 8:30. it should be fa irly interesting the latest read, the first look at the fourth quarter i ink this what it is we'll have that when squawk box returns. ♪ to walk along the lonely street of dreams ♪ ♪ here i go again on my--- you realize your vows are a whitesnake song? i do. if you ride, you get it. geico motorcycle. 15 minutes could save you 15% or more.

welcome back we are seconds away from the weekly jobless claims and gdp numbers. we have an expert ready to respond when we see the numbers in about 30 seconds. the futures are lower this morning. actually right at the flat line

for the dow. s and pr s&p down a little. after closing higher the ten year is at 266 and 267 even right now. rick is standing by for this number in chicago that we have been waiting for finally it's here, rick. >> yes yes. from the end of january to today we'll start right out with it, up 2.6 that is definitely more solid than the number we were looking for. if we look at the internals while the consumption was lower expectations was for 3%. exactly equal to our last look if you look at pce on a quarter over quarter basis it was all up 1.7 and that's a hotter number

both by a tenth than expectations the wait was worth it. there were much lower estimates. we are trying to handicap how the first quarter is shaping up. on jobless claims, 216 last week and moves up to 217. you add 8,000 and move up to the current number of 225,000 continuing claims a week moved from 1.7 to 6. last look to 1.805 million you know, the response in the marketplace, interest rates may be holding at the upper end of a recent range they moved up and that's pretty inkreeb incredible it is older than it would be if it is released on time it definitely has kick to it, joe. you're right to be looking forward to this as we color in between the lines that we were unable to get more clarity on.

>> do we ever do a yearly number before we get more revisions i don't think you can add up the four quarters. is the year going to come in at three? does it matter what's your math on that >> well, let's look at it from an investor's standpoint i think investors are cognizant we have ramped up by 100 basis points prior to this everything is funded in politic. i understand what you're getting at here. i think the ongoing issue should be more focused on how it will effect our gdp it is more man it has been averaging the last seven or eight quarters >> okay. thank you for that joining us right now is nathan and former economist we also have steve i want to start with you

help us put in perspective some of the retail numbers we have heard. >> there has been a lot of talk about that there are other surveys, master credit card data the red book was stronger. i was at dinner. you can imagine how exciting it was last night there was a lot of talk about what the real number was we had strong job growth and decent wage growth in a 3% range. there were tax cuts that were out there. the retail number came in bad and it came in late. there were some on whether or not there was a link between those two. rick is absolutely right it raises questions about whether or not things are slowing. we also have monthly data. it seems to be better than we

thau thought. >> okay. you want to explain where the retail numbers look like and what it means? >> well, the december number was a disaster it really does seem to be out of sync with a lot of indicators we were seeing. walmart earnings were very strong the level of consumer sentiment through the fourth quarter, it was down a little bit but it was very high. we have since seen it pick up substantially. the labor market and wages have stayed solid my feeling is very much that the u.s. consumer supported by a strong labor market and strong balance sheets are likely to continue to drive this ongoing expansion. >> if you're here this morning are you rethinking some of the

things you plight hamight have n the past month or two in. >> he was getting specific over the last two days where he talked about real gdp in 2008 coming in. it is a bit above 3% now i think, you know, in total the tendency should be to write off the december number. it is not a good indication of activity in the fourth quarter it probably isn't -- shouldn't be taken as too negative a sign about the launching point for the fourth quarter j. powell said the u.s. economy is in a good place yes. it is. >> to the extent -- >> what did you say? >> sorry, andrew i want to put meat on the bones there. i get a 3.1% year over year clang for this download is the way a lot of economists look at it the other thing that's jumping

out at me is this 13% increase in software spending it is a lot of the place where people thought they might see some of the tax cut impact that is where we are seeing it equipment was up let me get that. it is 6.7% it runs against the monthly data here it is sorry to interrupt >> yeah. let me ask you the question. to the extent we look at these numbers in large part it has a approxima proxy for what's going to happen to business investment >> there are two answers to that question the first is kind of a formulary answer it would cause concern about overheating. maybe it is old school thinking but this fed and i think the economics community is thinking differently about thisnow.

so what i'm hearing a lot is we are not going to hike rates now for fear of inflation. we'll let this thing ride and see what happens here. >> you think that's the smart approach >> i do i think there are meaningful risks in the global economy. my sense is that china is stimulating but it hasn't really hit economic activity in china or passed through to stronger activity in the rest of the world. consistent with that the european date data have continued to be soft

so they have still in place. given all of that it makes sense to be patient and to watch and wait and see where things go you know, it may be that as the year progresses the year for further rate hikes will strengthen i think they are prepared to do that if it becomes necessary >> what do you think the fed should do? >> i think what i'm pretty sure they will do is not lead they want the data to show it is appropriate to tighten which means they are basically on hold for the first half of this year. if it shows we are growing above trend and it accumulates it will show up in cost of inflation and the fed will be back on the table. think about how much it changes from november, december to now

they can change back pretty quickly as well. >> what is your betting line about what will happen when your clients call you and say give us your view, what is the house view or the house view >> house view is it will be higher by the end of the year and market participants are underhiking to which the fed will tighten that is because the u.s. economy is solid there are lots of global risks china in the process of steady growth as lodge as politicians don't derail the expansion we'll see cost pressure but not for the first half >> okay. we'll leave the conversation there. >> andrew? >> yes >> real quick. this will be a discussion later. we are not seeing a lot of

excuses that might have explained stronger growth. i'm not seeing a big contribution from inventories and trade. it looks solid not by government inventories and trade. that's what makes it loolk pretty good. >> thanks, guys, appreciate it coming up we'll head back to becky for another big interview. who do you have coming up? >> we have ash carter coming up. we are here to talk about artificial intelligence. with the good comes the potential for bad. we'll talk to him and get his thoughts about what happened with the talks tay wodith north korea. we'll get all of that when squawk box comets right back

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>> welcome back. futures up about 25 on the dow nasdaq offer by 13.5 after the 2.6% was well above where the street had gotten to after that retail sales number. i think they were back to one eight or so. it was 2 to 2.2 and the first number we got and it could be revised to 2.6 president trump commenting earlier this morning here is

what trump said earlier on the possibility of a deal. >> i could have 100% signed something earlier today. it wasn't appropriate. i would much rather do it right than do it fast. >> and perhaps no better person than becky's next guest. >> we welcome ash carter he is new an m.i.t. innovation fellow faculty chair of their technology and purpose project his new book is due out in june. it is about his time at the pentagon thank you for being here >> thank you >> before we get to the reasons you're here today let talk about what we heard overnight. these talks collapsing with the north koreans. was this the right decision to balk awa walk away? >> you can't get something for

nothing. we are asking for irreversible denuclearization that's the right thing all we have gotten so far from north korea is a pledge. remember, that pledge isn't new. it wasn't new to president trump. it wasn't true to president obama, president bush too or president clinton. that pledge was first made by north korea in 1992. they haven't lived up to it. the issue is getting them to live up to that. that means a plan and it seems that the president was saying where is the plan that takes us step-by-step to you dismantling your program and step-by-step to us relaxing our pressure they seem to want all relaxation, no steps >> so where does this leave us a lot of people said this is the most pressing problem facing us. would you agree with that is this. >> i would negotiate and it's

difficult but the only way to succeed is coercive diplomacy where you have sticks and put them on the table and you say we can go upwards to a place where there's relaxation and you have peace or we can go downward to a dark place which none of us wants where the probability of war which would be terrible. we would win i would tell you that. it is a terrible war or at a minimum continued pressure on you. you'll to pick between those two. that's the only way to do it that has -- i think this isn't the end. i think the president indicated he will go back and try again. kim jong un will have to rethink what he is willing to do to make concrete steps forward, not promises

in return we should make concrete steps in his direction but only gradually >> let's talk about what you see in terms of artificial intelligence, the promise that's out there, what kind of hope do you have >> well, artificial intelligence is now a word that's covering all kinds of things. in general the ability to assist human decision making is a really powerful thing. i can be a good thing. like every other it has an upside and a downside. anything to exploiting the upside we need to protect ourselves. what do i mean i think it's very important and i made this the defense department's policy that when it comes to taking human life on behalf of the american people and american security which is one of the things the defense

department must be able to do, we won't have weapons for which there will not be a human involved in decision making. what i had in my mind, suppose i come out and talk to you the morning after we have done something mistaken like an air strike where innocent people have been mistakenly killed. if i came out and i said to you, don't blame me the machine did it you would crucify my and you should we need to be morally responsible for decisions. it's fine to have a computer assist us but there needs to be human responsibility that is going to be one of the big challenges going forward it is a design criteria for engineers. they need to build it in such a way you can explain how it came to the decision. >> you have also spoken more broadly about the public purpose when it comes to technology

ceos, what they have the ability to do and the responsibility they should hold i think you thought it was something that your mentors all had. you're not sure ceos today have the same >> my mentors came from the manhattan project. they invented what we could call today a disruptive technology. it sure is nuclear weapons. it ended world war ii in their eyes and kept the peace during the cold war they also knew they created a terrible lasting danger to human day. the same people that worked on the bomb worked on arms control, missile defenses, civil defenses, nonproliferations, all of the ways of trying to make us safe despite their invention so they taught me with the power of innovation comes responsibility for the ethical side of it

you're right there needs to be more of that in the tech kpuncommunity today. one of the things of the launching commuting here at m.i.t. is a dedication that the institute has and i commended at for it for ethical application of technology. we try to teach that to our students here. this generation of students, they're hungry for it. they look at things going on social media, they look at things in a.i., things going on in china to use a.i. repressively they look at the potential for bioengineering to change life. >> the baby that was just dna edited born in china >> yes, who could not possibly have given consent to anything like that. they look at jobs and training and how the transformation of jobs can leave people behind we can't have a cohesive society

if we just barrel forward and leave people behind. they want to be devoted to technology for overall good. i think that's great >> china has made it part of its 2025 plan to be the leader in all sorts of things including artificial intelligence nape' they don't have the same concerns about privacy how do we compete with them on that front is this a war we win >> well, we can't just play defense. we do need to protect ourselves against intellectual property theft and poaching of ideas. we have to be excellent and the best in this technology, as we have been in so many for so long that's still within reach. we still have the best people and the strongest companies. my personal view, strong view, is that the government including

the department i used to run has a role in the country's future in technology. remember, when you're doing scientific research, not all of it has an obvious immediate application. profit making companies aren't necessarily going to do all the kinds of work that will really bring the future and profit making companies don't necessarily automatically have the same public spirit that we try to express through our government so it's important that we have an initiative like theirs. i hear this 10 blt$10 billion nr this is the country that builds cities with no people in them. so i don't know that a $10 billion program adds up to $10 billion of quality work. we've got to stay in the game

and stay competitive it's not just a matter of military strength and economic strength it's also so that our values can continue to be embodied in technology if they're the values of the chinese state, a communist dictatorship, i'm not for a cold war with china, i'm just saying it is what it is, it's a communist dictatorship nap's not the values of america. we want our innovators to build into what we do the values that we stand for in this and all other ethical and moral ways. >> thank you former secretary of defense ash carter. >> do you have time for lunch up there, becky, or no? >> yeah. i'm actually staying i'm doing a panel later today so i'm not going home until late tonight. >> i can't give you my picks then okay. >> sure. send me something. >> i'm not sure it's still open. >> hi, guys. it's ash

i just want to say hello. >> good to see you thanks for joining us. >> likewise. always good to be with you >> let's get down to the new york stock exchange. jim cramer joins us now. gdp was higher than expectations, jim. i want to get your view on what this does to what you believe how to handicap the china negotiations now given what happened with north korea yesterday. >> well, i still think the major thing that happened in china was you had the exports orders worst in ten years, you have manufacturing worst in three years. i continue to come back to the fact that they need us it's not a narrative that you hear very much i love what ash carter said. he said they're communists did you hear him call them communists it's about time. it's not the way of american life and i think the communist

system is rolling over here and they're going to need us more than we need them. who know whether the military agrees we've got to start talking about a new narrative which is that i'm tired of it and so are you we just had a great gdp number and it's going to get stronger we have to say this is the false narrative that the chinese are kings and we're pitiful helples giants. >> the gdp number depends on your narrative and where you're sitting. it's half empty and half full. if you do year over year fourth quarter it was 3.1 i told austin if we do go to dinner he's got to have kale burgers and free range carrot

juice. >> kale is my middle name. we serve kale at one of our restaurants. it's the least ordered thing. >> what about kale margaritas? >> no. i do have a carrot margarita gdp is good and getting better and more people are getting hired. >> he's gloating it's weird to see people so happy that it's declining. >> i'll get in on the goolsby dinner i'll take him to sparks and give him some lipitor. >> yeah. let's have steak maybe he'll come out to brooklyn. >> i would love that brooklyn is the fastest growing city in america. i know that's bad too. we would have welcomed amazon. we're pro job. i know, dangerous position now in america. >> it is we'll see you in a couple

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a quick final check on the

markets after we got that gdp number dow a bit higher nasdaq off about 20 points s&p 500 off about two points we'll be digesting the gdp number, north korean news and so much more. "squawk on the street" begins right now. ♪ good morning welcome to "squawk on the street." we are live from the new york stock exchange amazing how many people don't see to know that carl is on assignment. let's look at futures as we get started with trading 30 minutes from now our road map starts this morning with what is the strongest economic expansion since