good morning, everybody. welcome to "squawk box" here we are live from the marketsite in times square. let's look at he can quity few turz yesterday, we saw s&p 500 and nasdaq setting highs nasdaq up about 1% gaining 95 points dow up 83 points but did not make up for the losses the dow experienced last friday. this morning, you are seeing a slight give back dow down by only 12 points s&p down by about two, nasdaq down about nine. they've been up three of the last four days let's look at the treasury yield. looking at the 10-year yielding 1.839%

>> a lot of red on that board. >> these are modest moves. >> market turmoil. someone tweeted me that. futures aren't up a half percentage point pull out the market turmoil boards several headlines out of beijing overnight. china's exports rose imports are higher than expected china's trade delegation arrived. we are learning more about the purchased targets that china would agree to at the phase one trade deal signing telling us china will commit to increase purchases from $32 billion over two years china will also pledge to buy an additional $80 billion $53 billion in energy supplies

and $35 billion of u.s. services over a two-year period but will only only cost them half as much they are no longer a currency. >> you missed the other piece of information. >> they are allowed to no longer a currency manipulator. they aren't going to do that was there a quid pro quo >> there has to be not a coincidence. treasury secretary steven mnuchin said yesterday, china has made enforceable commitments to refrain from the commitments. that is why it has been a number of months since they were named a currency manipulator yesterday ahead of this signing. >> did they change the behavior? >> they agreed to sign the phase

one deal >> they are not going to talk about any of these other things. you are so excited you can't engage in any of this? here we go we have some major news taking place in the world of business overnight. >> larry fink, the ceo of blackrock announcing the firm will make investment decisions with environmental sustainability at the core in his letter closely watched. this considered a water she hsh the world of business. did it with purpose over profit two years ago which turned into the business round table letter last year and dominated the conversation for very long in the letter, he writes, quote, the evidence on climate risk is

compelling investors to focus on core finance and in the near future, sooner than most anticipate a reallocation or capital. making sustainability integral to portfolio construction and risk management. exiting investments that present high risk. launching new products that screen out fossil fuels and strengthening commitment to sustainability and transparency. it tends to be voting geagainst boards and management that don't disclose sustainability and sustainability goals those will include target date programs you'll start to see 401 k programs if you had a target date fund. >> does this mean they'll sell

off all of their requirements. >> if you are in an actively managed fund, you'll get out of all of those right now, most of the actively managed stuff, you'll see a gradual move out unless you see a path, if you will, for them in a major renewable-like way we'll talk about it and see the interview as we sit down with larry fink to talk about all of this if you own the s&p 500, you still own it i think his view is that over the next five years, there will be a meaningful shift such that. and we talked about it it may be in the next five to ten years, the thing on our screen that shows the futures of the s&p 500, there will be a different version of the s&p 500

and a different version of the dow. i asked him what went through his mind in writing this year's letter, one that he said was the hardest one he's ever written. >> well it was the hardest letter i've ever written i do believe i became more emotional as i wrote it about what we need to do and more importantly, my reflection on my 40-odd years of being in finance and all the different crises we've dealt with in my career. it is clear to me, the physical changes we may see are more permanent. we don't have a federal reserve to stabilize the world in the five or six financial crisis that occurred in my 40 years of finance. this is bigger and requires more planning and more public,

private connections together to solve these. i do believe many of these could be solved but the actions would begin now. >> there have been a lot of companies and firms that talked about sustainability and climate change none of the largest money managers thus far have made sustainability and climate change a central core tenant why do you think that had been up until now >> many reasons, one, you can debate whether the science was real or not or more accurate over time, we are seeing more evidence that science is real. two, we are hearing from more and more clients worldwide i'm talking about clients from the middle east to south of the united states to the north, china all throughout europe, clients are now asking us more

and more questions about climate change sustainability and the physical impact of how should they think about it as the largest investment firm in the world, it was very clear to me that they were looking for more advise from us. we needed to focus on how this is going to change in the last year, we have seen more and more sustainable products and more demand probably the most important inference from my observation is that i believe we are just beginning a major reallocation of capital >> what do you mean by that? >> i believe more of our clients worldwide believe in some form of the science, if not all the science, of climate change they are asking how should they be better prepared in their investment criteria. more are looking for a more sustainable portfolio to be more

prepared the other thing i've made elusions to, i think this will change the municipal bond market areas more impacted by climate change will have a harder time to finance their debt if they don't focus on the impact of climate change and their district, region and cities. i believe countries who don't focus on it could have serious impact related to climate change from what i see, we don't have a loud enough conversation we are now focusing on this redistribution of capital. i believe we are going to see more and more investors looking for advice where they should invest their money to help us, we need more transparency this is one of the key things

where over eight years, we have been writing more long term letters. nothing to be more long term than climate change. we are asking all companies to report under the tcfd, so we can have better granularity at the company level to see how they are performing i truly believe the purposeful companies i write about are going to be those focusing not only on their stake holders but on the long-term impact and how it affects their company. >> do you believe in the science? >> i believe in the science but i did not write it as an environmentalist i wrote the letter as a capitalist and to prepare clients for a redistribution of capital and provide them with an

investment portfolio >> you can watch the entire interview and we'll bring you more from it throughout the next couple of hours. >> this is, as you said, we are all going to davos next week this will be the single biggest topic there. pointing out that this will be the single biggest topic we don't spend enough time talking about it i haven't appreciated the amount of energy and effort companies and money that they are spending whether amazon, walmart but they are buying forests there are internal charges taking place that would charge each other's departments not shadow money but real money. >> walmart has gone sto store-by-store to make them more

sustainable. >> i think we are talking about something much more significant. people will get to carbon neutral, carbon negative -- >> i don't think you should talk about it purely in terms of -- i think you should talk about sustainability natural resources, what goes into the ocean >> plastics. >> who is not for sustainability nobody is for temporaribility. for years, arguments have been made that we'll run out of things we will run out of fossil fuels eventually we will transition to sustainability fuels to go immediately towards noneconomic sources of energy at this point -- in davos, they are going to talk about ending the fossil fuel based economy.

>> joe >> don't interrupt me. you are not going to end the fossil fuel based industry soon. >> i don't think larry fink is trying to do that. he would like to if he could. >> i know he would he's been lefty his entire life. >> apple would like to. >> you don't need to fix ate on carbon >> andrew, you know what was interesting -- >> you don't need to fix ate on carbon >> you don't need to the idea that larry is doing this, he has not been in the forefront. there have been millennials taking the seat at ceo as, andrew is saying if he had done this 10 years ago, it would be better for investors >> over the past 10 years, it has been a terrible investment that is true

>> but we fill have a fossil fuel based auto con my globally. >> one of the things larry is saying about fossil fuels specifically, i would argue today, he's going to get a hit from the right and left all sorts of different ways. >> i agree >> people will say he's not gone far enough he's saying, look, there's a transition period. there is a cost to that. we have to be mindful in how we get there. >> you force people out of jobs along the way. >> i don't think he's said that. having said that, a lot more companies are spending more time than we are talking about that are talking about these issues spending real money hitting their bottom lines related to these issues the fact that he's having this conversation, no other u.s., american major investor has had

that conversation the way he did and that's why he's significant. >> once again, we are having the conversation and they are all still flying to davos on private jets no one is walking the walk yet now, there is a big thing what we need to do. there is aoc and bernie here willing to spend $40 trillion because it is so eminent then there is the epa has has a lot of people skill skeptical. appointed by trump who is a skeptic as well. name your favorite climate scientist. i can name ten that are skeptical. can you name a signaturele one >> call every business leader moving to clean energy >> i'm not saying that

>> we are running a show about businesses and their stocks. >> powered by fossil fuel and the lights are on. are you swimming to davos. let's have the discussion, andrew >> you are trying to make light of it. >> no, i'm not i'm a scientist. i do not believe trace co 2 causes every adverse weather event we've had for 4.5 billion years. okay. >> your commercial break >> coming up, talking market strategy, a world without fossil fuels. u.s. equity futures down 47 points we'll hear more from jp morgan citigroup and wells fargo around 8:00 a.m. eastern. "squawk box" will be right back.

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(. the s&p and nasdaq are at record the dow closing in at 29,000 look forward to what is next on the markets. the group owns more than $2 million. the authority of a new book about elizabeth warren and how her presidency will destroy the middle class and american dream. really >> i think so. >> what about bernie >> i think they are about the same arguments would be the same. >> which initiatives are most

hanous in your view for the economy? >> the most that get attention is medicare for all. the big price tags i focus more on the book and this warfare and this decision that everything in society is wrong because big powerful people are trying to hurt. >> if you truly believe we are at a tipping point, i guess $30 trillion is not too much to spend at this point, to save the world. >> what do you think of larry fink >> there are a couple of things that stick out to me the number one thing we'll hear from our investors he's sayings that the number one thing we are talking about is climate change

i confess i'm skeptical. i would think they are primarily talking about their investor returns. the whole thing to me, i get the merit. from a pr standpoint, it is important. i want to see that for me as a natural gas investor i don't believe the left when they talk about co 2 emissions if they are not big pro natural gas people we know america is declining in emissions. i'd like to see people back it up with that kind of support >> there is sustainability no one is going to argue you need an economy that is sustainable too. everyone has benefitted more than probably any other single entity we didn't run out of stones in the stone age. we will transition away from it.

you can't spend $20 a kill owe wat when you are getting it for $1.50. >> we talk about how regressive what they want to do is. the percentage we spend on our heating bill is a small portion of our income. it is a huge portion for lower income, middle class people. the idea that they have these broad changes where you can't control china's pollution and you are going to have the economic impact, i don't think the risk/reward is properly aligned now. >> thank you at least we are having the conversation thank you, david coming up, a new read on the health of small business we'll bring you those numbers next later, we'll kick off earnings seasons with numbers we'll have instant analysis and reaction on wall street when

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into out with its final read on small business for 2019. >> good morning. the index sinking to a dip in

december this is a historically strong reading, the weakest december since trump won in 2016. well above the average of 98 about six points below the all-time high. uncertainty is on the rise small business owners saw a rise in earnings trends along with those who believe they are to expand the business. optimism looking ahead to 2020 for both to improve and higher real sales to increasing skilled labor say it is the single most importantproblem followed up by taxes and government red tape. this has been the case most of the year most of that uncertainty may be on the mind, this is weighing on it we saw this in q 4 20% said they had unfilled positions and weren't able to

find skilled workers to fill those. >> that is a little counter to the jobs report we saw on friday that is a spooker to the job's report this may be a good har binger to what will come in 2020 >> definitely on their minds but they do want to hire which is a good thing >> one issue that didn't come up with trade with china? >> it was earlier in the year, it wasn't in this report they've called it out several times in the year, they didn't call it out in december. >> thank you when we come back, u.s. attorney general clashing with apple over privacy and security. we have an update on the terrorism organization causing an upset in technology kicking off earnings season.

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good morning welcome back to "squawk box" live on cnbc looking at equity futures this hour it has almost become normal to have some green on the screen. dow looks like it will open down about 40 points, nasdaq down, s s&p 500 looking to open down about 4.5 to 5 points. >> talking about some modest pull backs i'm very curious to see what everyone thinks about this william b william barr calling out apple in response to the pensacola

shooting >> it is important to know who and about what the shooter was communicating before he died we have asked apple to help unlock the shooter's phones. so far, apple has not provided any assistance >> apple pushing back saying, it responded to all inquiries and turned overall information tech firms have previously argued creating vulnerabilities would make users less safe we've dealt with this in the san bernardino debate. i don't know where i stand in this one >> talking about the terrorist organization, if they say the keys don't exist, that's one thing. in the past with san bernardino, they said they had the keys but wouldn't do it

the last one, a number of months later, the justice department said, we don't care because we hacked into it anyway. >> they used israeli intelligence >> why didn't they do it this time has apple changed encryption >> i think this is true of most law enforcement, they want a ruling in their favor that can become the standard. >> right so it doesn't take months. >> it may be that they know how to get into this phone but it may be from a legal perspective, they want a ruling on the books. the question is, would that be the right ruling that's an interesting question >> in general, we need to protect our privacy. >> in general. >> with that, i remember last time with tim, even though it is

william barr and terrorism, there is always going to be a reason to throw it all away. this time -- >> this time -- what other saudi -- >> all he's looking for now is more information happened to justify calling this terrorism >> they are looking to find if there is anybody else. they've gotten rid of all of the saudis on that base. >> if apple wanted to get into the phone without making other phones less secure a lot more to come on squawk we are learning more about what is in that phase one trade deal. ju younes yoon will break it down for us we are awaiting results from jp morgan we'll bring you those numbers. you can always watch us live on the go do it right now on the cnbcapp

we are right back after this

welcome back u.s. and china expected to sign phase one of the trade deal expected to happen tomorrow.

eunice yoon reporting on the purchase deals china has agreed to as part of that deal. >> good morning. sources familiar with the text told me under the new deal on wednesday, china is going to be ramping up purchases of u.s. goods by $200 billion over the next two years with 2017 numbers as the benchmark this is the way it breaks down agriculture $32 billion, manufacturing, about $80 billion, energy $53 billion, services at $35 billion. there has been a healthy dose of skepticism about whether or not china will be able to reach these targets. not so much in agriculture and energy because this is where china does have the lead mainly in manufacturing and services one example was boeing planes. that china hasn't really stressed a whole lot of interest

in buying the 737 max and not some other models as well. what do you do, do you force them to buy these when there really isn't a need? that's one of the big problems people are talking about another one is that china hasn't or that the deal itself, hasn't addressed a lot of the issues that would open the market to create that kind of need some of the barriers to entry or none tariff barriers, procurement, state subsidies, industrial policies haven't been arrested and left a lot of the people i've been talking to calling this pure fantasy as well as true comedy. there is the broader concern people have, that is that because the goals are so unattainable, that you end up building in a dispute between the u.s. and china and then the

tensions that people are hoping will go away don't necessarily go away. guys >> of course, the question of enforcement and how you deal with many of these things if they are not met eunice, a lot to talk about. we'll have you back soon we are moments away from kicking off earnings season. jp morgan is set to report soon. we'll bring you those numbers. don't go anywhere. "squawk box" will be right back. e and help keep you active and well-rested. because hey, tomorrow's coming up fast. nature's bounty. because you're better off healthy.

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welcome back to "squawk box. we are awaiting quarterly results from jp morgan due out any moment

our own mike san tolli is here s well >> people are talking about recession and credit losses. provision is relatively flat the critical thing we can look at is net interest margin. how well do they manage as interest rates start to come down here. changing the prices on the positives is critical. >> you've always liked jp morgan obviously, everybody likes jp morgan what bank from a stock perspective have you liked going into the earning season the most >> jp morgan was the first one to come out from under that. we are looking at banks with a lot better valuation

>> let me break in we are heading headline flashes. looks like the fourth quarter number for jp morning morgan is $2.50 a share. these are headline flashes i can't tell you everything that goes into some of these numbers. they do say the end book value was up 8% to $75.98. noninterest expense, $16.3 billion. return equity 14%, provision from credit losses $4.413 billion >> pretty good on the bottom line the trading line is what we don't know much about. it seems like a good enough. the big question taken after this great run is to absorb

whatever is in these numbers it is pretty high. >> what is your knee jerk reaction to that question? is there reason to still have previous in the stock? >> they are looked at as the high-quality safe place. that's the first place they kind of go to that has since shaken out and gone to more discounted stock like citigroup >> i guess that's the result >> the catch up. it was falling behind. it still has farther room to run in 2020. >> what is fascinating, you only have been a third of analysts recommending it right now. they've gotten up to the point relative to the banks. this is going on in every sector the mark eet is going for the b winners and just building up the

premium. >> almost like yogi bara, the place is just too crowded. >> i think you could bank on them talking about consumers very strong. >> as you said that, let me read the blush. u.s. consumer continues to be in if that's telling you something important about how long we have to worry about defaults, banks are okay. >> is the corporate debt market telling us that or is it aligning itself with treasuries. >> the spreads to treasuries are tight. the question is is it that there's a global scarcity of reliable yield and that's causing this that's a bigger question. >> do you want to weigh in there? >> yes we have a credit cycle monitor

that looks at when we're going to see the cycle turn. in the past we said we had so many banks on strong buys. that discount was coming in and our model was telling us that it wasn't going to happen we have a horizon between 2020 and 2021 before we start to see that percolate as we got that discount last year really favorable on our outlook. we now caught up so we have to look beyond the high quality names to look at the ones that are less likely to be the first entry point. >> your top entry point name. >> like regions financial. that's the key thing this quarter. they interest rate swaps that come on board and they'll increase their margin when everybody else's is still going down so it's an anomaly but their discount with that fundamental fact is one of our favorites. >> i still don't have the full

release but let me throw another headline at you. fourth quarter average total loans up 3% excluding the impact of loan sales in home lending. what does that tell you? >> that the economy is doing well if we're looking at 3% year over year or sequentially i want to make sure. >> i don't know. >> i bet it's year over year because it's about 1% per quarter so the 3% would be in line with what we are seeing recently if it's 3% sequential that would be double digits so that would be too strong. that would be in line with what we have expected and seen with consistent and economic growth it's not robust growthment it it's not sustainable and consistent it's possible. >> hanging over the group in a less obvious way is whether the huge banks will be disrupted they're not going to have their picks of the faster growing parts of financial services.

they have been gaining market share and customer relationships and deposits they seem to have a good enough mouse trap in terms of digital but when you see visa buying a start up for $6 billion yesterday it shows you there's a little bit of urgency to say we have to make sure that we're playing here. >> it does set a high bar for the other banks as we kick off the earnings season, correct >> or just basically what we're going to see in the rest of the group. because the provision costs is right in line with what we have seen which has been flat over the last year. so credit costs aren't going up. we had to fight a little bit on the margin pressure. that's about to begin to stabilize and we have just balance sheet growth underneath that so profitability has been sustainable and higher than what valuations have been reflected. >> it's only three months later. jp morgan did well three months ago. who was the under performer? >> there's not really any

falling that far behind. what is so interesting is like if you take earnings per share growth over the last three years jp morgan was 19% 2018, 9% in the 2018 we expect only 5%. if we look at the group as a whole it's 13, 6, and 7. they're all pretty much getting the same macro, favorable sustainability in their profitability. there's not been anybody that's stood out as somebody that's losing out in the process. >> jp morgan shares are up 1% though. >> the stocks are off their highs. it's not as if they're coming in absolute highs the large cap bank index are still a few% below the early 2018 highs depending on the index that you look at. not jp morgan but in general they have obviously cooled off. >> we'll see a lot of you this morning. we'll check in with you later

too. >> more bank earnings on tap we'll hear from citigroup and wells fargo. and della airlines up around 3% the next few months. we'll bring you the numbers and first on cnbc interview with the ceo after the break. don't go anywhere. you're watching squawk box on cnbc whether your beauty routine is 3 steps... or 57, make nature's bounty hair skin and nails step one. it's the number one brand uniquely formulated

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and the astro's caught stealing the scandal that rocked major league baseball. we'll break down the penalties and what it means for the sport as the second hour of squawk box begins right now good morning welcome back. we do have red arrows this

morning after some great numbers yesterday. s&p 500 off by 2 points and the nasdaq off about 13 points but all of that coming off of record closing times. wilfred frost joins us with a break down of the numbers. >> good morning to you the main reason is actually a massive beat versus expectations on fixed income trading which i'll come to in a moment revenue 29.2 billion eps 257. expectation was 235. i'll start with the core part of the business which will effect all of the others. the interest related part of the business sonnet interest income came in at14.3 billion

it was only down 1 basis point all of that part of the business effected has been less impacted than perhaps people would have expected and average total loans was still off 3% so still a nice amount of loan growth at this stage in the cycle. trading ahead of expectations. so essentially a billion of extra revenue there. that was up 86% year over year low expectations last year and well ahead of where people were forecast it was about 100 million and it

looks like a full extra billion or so relative to expectations guys a big miss by the analyst. >> no, it hasn't rallied at the start of the year as much as everybody else's. >> missed on that in particular. >> yeah. but that's a lumpy thing it's hard to put it in there then i think all the analysts have missed it they have a few things right that particular quarter. the only thing that i'll say which is the big reason why it's still way better than it's peers

for the quarter but actually the full year return was higher than that. >> dow just turned positive thanks to jp morgan. dow up by 1 point. thank you and we'll see you later with all the other bank earnings that we have. >> see you later here's what is making headlines at this hour we have two more major banks set to report before the opening bell we'll get the latest numbers from wells fargo and citigroup city is expected to post a 14% increase in earnings while wells fargo is seen reporting a 7% decline. visa is buying plaid for $5.3 billion plaid provides the technology for apps like venmo. >> i try to be plaid. >> wear it or use it

>> no, tried to do it. i talked about it three months ago when i was trying to get something hooked up to where i could pay with my bank account all i needed was online banking. >> was it draft kings? >> it was either that or something i'm else bitcoin. all right? anyway, they wanted me to -- there was instructions on writing your own code to do so have you ever tried to use it? >> no. >> i got into a certain point where i was so out of here have you ever evdone it? >> like html code? >> go into it and see what you need to do make sure that your identity -- try to go in and look at it. >> as far as the code

i somehow got directed to it and somebody said you could use plaid so i went in to say i needed it. but i didn't out with quarterly results let's get the numbers now. >> i'm not the only one that gets a little bit overwhelmed at times with current technology. it's a boomer complaint. are you on instagram as well >> not on instagram. we'll talk about that another time let me give you the numbers on delta. beating the street by a wide

margin the estimate was to earn $1.40 a share. revenue better than expected 11.44 billion per quarter. let's discuss these results. you're well above the expectation here. >> it's a great day at delta we announced our full year results. not just the fourth quarter but the full year. best record results. revenues, profits. in our history and we're proud of the team. there's strength and they're up 7.5% but also we have been able to translate that down to $6.2 billion profit for the year up 40% for the full year. >> with regard to the fourth

quarter was thanksgiving better than expected? was it a shorter period between thanksgiving and christmas what was it that people did not fully appreciate >> it was a strong holiday period and as a result of that we delivered great results. >> we'll talk more about your result in just a minute but i have to ask you about what is dominating the news in the airline industry and it has to do with boeing new ceo dave calhoun started yesterday. give me your perspective in terms of both dave as an executive as well as what you think he will do now that he's running that government. >> i have known him for a long time i have a tremendous amount of respect for dave the leadership he will bring has been tested in his past two years with general electric and other roles he has been in

he knows the company well. he'll be able to get in and have an impact. you'll see his name continue to elevate at boeing in terms of making the type of changes. >> any reaction to the text messages and the e-mails that came out last week really it was pretty clear that many of these engineers or some of the engineers at boeing had little regard for the customer, the airline and they use some pretty derogatory language. >> it's been widely reported that there's a cultural issue at boeing for some time now and they'll clean it up. >> does that concern you that there's a culture issue? >> it doesn't. it's not effecting us directly boeing is a great company. produces incredible technology they need to get through the distraction. >> let me ask you about what you call the premium revenue that continues to grow there

you have an ecosystem where people are paying essentially miles as currency and you had a record growth in fourth quarter. it's $150 million added to the bottom line, right? talking about all the technology that we'll bring accessing that same distribution platform and customers really want quality service. we're not an industry ten years ago where it was very much to determine it around how we performed and and we're able to get customers better value for money and better product for money.

>> do you find they're more willing to pay for miles so to speak? we see 70% of the customers that do buy up to a higher class product will do so on a repeat purchase. >> 2020, what are you thinking >> it's looking like a goodyear. it's off to a good start top line revenue is growing again, up 5 to 7%. we hope to grow our earnings but most importantly i want to give thanks to the delta people an amazing team of people. in the service business. they put it on the line every day for our customers. just proud of them. >> ceo of delta joining us when they beat on the top and the bottom line. $1.70 a share versus the estimate of $1.40 a share. back to you. >> appreciate it when we come back a lot more on squawk including this. the firm will make investment decisions with environmental sustainability at its core it's a we'll be talking all

about it we'll show you the exclusive interview right after the break. ♪

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letter is out and the world's largest asset manager now announcing the firm will make investment decisions with environmental sustainability at its core the subject to my column this morning, in that letter he writes the following the evidence on climate risk is now compelling investors to reassess core assumptions of modern finance and in the near future and sooner than most anticipate there will be a significant reallocation of capital. yesterday i sat down with him and talked to him about why he is doing this now and what it means for municipalities some of it may be his clients where fossil fuels are a major component of a local economy heres what he had to say. >> the climate change is going to require a huge transition it's going to be 40 or 50 years so we're not running away. we need to have an organized plan for those countries heavily based on hydrocarbons.

for those countries, for those states and those municipalities, our job is to inform them of what we're seeing as an asset allocation we're not running away from all hydrocarbons because we do believe they play a role we believe natural gas plays a very large role in the energy transition so we believe this is a process. not just -- we're not stopping we are -- we did make a statement that coal is not a good investment now but the most important thing is through that transparency our job is to provide better risk analytics. better risk adjusted returns. >> but your letter effectively suggests that long-term fossil fuels will not be a good

investment we want them to provide more transparency and move forward toward that. >> the trump administration has a very different view about climate change it doesn't believe it right now. what do you tell members of the administration, politicians that don't believe in climate change about what you're now trying to do i believe we need to be more prepared for this. i believe it's proving that

climate change is real and having a very large impact i also believe that if we are going to be fair and just we need to also focus on this transition many people are going to be left behind with this transition. we need to make sure, and this is unfortunately with government officials they're focussing on more of the short-term at times than the long-term what i'm talking about is a long-term trend that is going to have a remarkable impact on valuations of companies, valuations of industries, and we believe there's going to be some industries that are going to be better prepared. some companies in the energy mix will be better prepared and those are the type of companies we're going to be investing in so we're not running away from the companies but we want better transparency and companies are becoming more prepared for this. >> typically the day after your letter is released you get sometimes on the order of hundreds of phone calls and e-mails and other correspondence. >> yes.

>> what kind of reaction are you planning for perhaps bracing for this year? >> well, i mean, you know, you have to have a thick skin for this i don't do this because i want to be yelled at, but we'll have some components of people that are not going to be happy with the letter on the other hand, i do believe most of our clients, you know, the majority of our clients are going to be thankful they're going to be looking for us to be helping them think about these issues that being said, you know, i have been doing this a long type there's been years where i would say 70% of the people loved it 30% hate it. i'm not here to tell you whether it's going to be 30 or 30/70 and i can't tell you if the far left or far right is going to hate it more or love it more i'm doing this pretty blind right now. you read it. what do you think? >> do you expect ceos to look at

this and say thank you larry, you're now going to give us cover to make some of the changes we want even if it's going to hit our own short-term profits? or do you think they're going to call you and be furious? >> i would say the majority will be thankful. i mean, i'm not doing this in a vacuum i have been interviewing and talking to many people about many ceos and how they see climate change impacting their business i'm not here to represent that i'm going to have 100% love and kisses, but i'm not -- i didn't write it with that in mind i wrote it in mind as the world's largest asset manager to try to inform more people of where we believe asset allocation is going and the world of finance is moving toward and we all need to be better prepared. >> for the full interview, you can see it on cnbc.com but i do

think this is one of those days where people will -- >> i think we're going to talk about this for many, many years and the sustainability conversation you'll see from more companies i'm already hearing and getting e-mails from people about plans that big companies are making. they're going to have real costs to them and ultimately impact their bottom line in good ways and bad ways sustainability matters. >> sustainability. >> some of it is really, but i mean, the bottom line is we're on a planet with resources and we need to be careful to shepherd what we're doing on this planet.

no one is against susta sustainability nobody wants unsustainability. it's temporary and fleeting. if you're not sustaining life you're doing something wrong. >> you're going to have investors that are taking effectively activist positions by the biggest divestment program in the last decade. >> you're going to have people investing with their own ideologies. >> i would not make investments based on their ideology. i just wouldn't. >> i want to be clear. i don't believe this is a political view. >> i do. >> i know you do i think he is making an economic view that there's an entire generation of younger people more interested now in these issues than ever before and when they sign up for their next index fund and their target

dated on saying, you know retirement in 2050, they're going to take his new fund that screens out fossil fuels and screens out companies that are not sustainable and that's going to change the entire economic decision let's just hope that cooler heads prevails but economic sustainability, obviously $30 trillion new green deal is not feasible it's not economically sustainable. >> he's not talking about that. >> i know that he's not but why does it split beyond political ideologies why are they way out here and on the other side -- >> i don't think that jeff besos is a politically minded person. >> i guess you haven't read the washington post.

we almost got out of this. we're going to have another segment for you at 8:00. you can force me into defending these things but i'm going to davos. i don't want people throwing something at me. >> thanks for the ideas when i'm sitting next to you. appreciate it. >> i don't like it i don't want to be a denier and heretic. i don't want to go to jail. >> this is not a religious issue. it's a capitalist issue. >> it's a belief system and it's a belief system not based on solid science. >> our capitalist system says we need to go to break. the scandal that rocked the baseball world major league baseball hitting the houston astros with huge penalties for cheating taking it a step further and firing the gm and the manager. we'll talk about the business of baseball right after this break. i can. the two words whispered at the start of every race.

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i have higher standard for the city and the franchise and i'm going above and beyond mlb's penalty. today i have made the decision to dismiss a.j. hinch and jeff lunel. >> the general manager and manager are both out of a job following the cheating scandal that rocked major league baseball the astros are going to pay a fine and forfeit some draft picks. that begs the question is cheating in this case, cheating to win the world series worth it that was jim crane, the owner. and that was notable what he just said. by the way, he could, you know, he could beat you at golf hands down, that guy. >> there's no doubt about it but like you said, joe, he made a statement. this was a big statement that was made because major league baseball had already handed down in essence what is the max punishment that you could give out from the league in this

case as the owner of a franchise you can do what you want there but let's take us through some of the numbers they're not big compared to the billions that we talk about because we talk about big business but in the world of baseball these numbers are large and in some cases unprecedented. the reason why, first of all, what do they get from winning? the houston astros, they did, by the way, get a record $30 million pay out there for winning that series and the valuation of the team for jim crane's team actually went up by almost 3 quarters of a billion dollars since that span in 2016. now what did they give up? the numbers don't compare at all. it's a $5 million fine but that's the biggest fine that major league baseball can give out in this situation. they did forfeit this could be a nuclear option the first and second round picks not just for the coming season but the season after that as well we also wanted to look at the other instances that we have seen some cheating scandals lead

to some of these big moves first of all the patriots and deflatega deflategate. a $1 million fine and they did forfeit their draft pick in 2016 lance armstrong, a $5 million settlement and this is the big one, vacated of the 7 tour de france victories that he was apart of that's the big option. you just take him off the record and of course alex rodriguez in his steroids scandal, estimated $25 million in loss salary, suspended for the rest of the season but a. rod in his own words back in the day said that the brand value, what his hall of fame aspirations were, what he gave up in terms of his network and portfolio probably more than the $25 million in salary so a big deal and more to come on the red sox side of this equation as well we'll keep you updated back to you. >> a lot more to come on squawk this morning jp morgan results are out. we're going to hear from the

city very shortly. we'll get their numbers. break down earnings straight ahead. plus democrats in des moines for the 7th presidential debate. the top 6 candidates will be tackling topics in fourth quarter investments and we'll discuss that in a couple o minutes. later the consumer advocate is going to join us to discuss the executive changes at boeing. what he is going to hear is all coming up right after the break. stay restless with the icon that does the same. the new rx, crafted by lexus. lease the 2020 rx 350 for $419 a month for 36 months. experience amazing at your lexus dealer. wean air force veteran made of doing what's right,. not what's easy. so when a hailstorm hit, usaa reached out before he could even inspect the damage. that's how you do it right. usaa insurance is made just the way martin's family needs it -

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. welcome back the markets will try to build on the rallies to highs today as earnings season gets underway officially joining me is the chief investment officer it's great to see you. >> thanks, becky. >> earnings season is out. jp morgan comes and beats eck peckations jim cramer said you'll have to start hearing from companies that say things are better than anticipated. now you have jpm beating what does that mean? >> first quarter is always the

most conservative for guidance every year so you're probably going to get nice beats this quarter which puts us into positive territory. we're really watching forward guidance for the rest of the year we think expectations might be too low. we're capping cap x and margins. >> if you think guidance is other low for the rest of the year, we're thinking the markets keep stopping it and momentum is picking up it has to end at some point but if you're seeing them raise guidance that gives them a new leg as to why the market should continue to run higher. >> i agree 92% of your return last year came from expansion, right only 8% came from earnings growth this year we need the earnings growth to kick in at 7 or 8% our highest deal for all of last year starting in march-april was tech we rotated and we think financials make sense. a couple of quick points there, financials are the only industry in the decade since the financial crisis where you have

still seen multiple contraction. financials have come down. and you still have what we would call really strong balance sheets and economies >> i think that you can stay with the more credit card type oriented higher finance. the credit quality is good there. >> jp morgan and bank of america? >> even a visa, mastercard, they're in the news this morning. those types of firms. >> what did you think of visa's purchase of plaid? >> smart purchase. they touch one in four households across the country. it's the piping and the plumbing

and the infrastructure of that industry so i think that positioning them very well they paid up a little bit in price for it but they probably had to to get something that's that strong. >> some of geopolitical concerns we were heading into at the end of the year don't seem quite as strong at the moment looks like the phase one signing with china tomorrow and you also have tensions with iran cooled for the moment how do you read the situation? is that a time to get really optimistic about things or could things change like that? and then of course iran. so last week iran fires on bases in iraq and goes up 95 basis points and falls by 10%. that tells you that positioning is not overbought or overextended at this point

outside of financials is there something else that you like or is there something that you'd steer clear of >> the strongest earnings grower this quarter is going to be utilities, surprisingly enough 11 to 12% earnings growth. but we would fade the utilities and they look expensive here >> why do they look expensive? >> you typically have your cap rates are low with interest rates being low. they have been bid up quite a bit. it's just way too expensive. >> what was the other point that you were going to make >> we still like consumer d

discretiona discretionary. earnings are going to be down this quarter so our three top ideas still remain tech, financials, consumer discretionary you still think large over small. still us. over international and jamie diamond said the same thing. good to see you. >> you too thank you. >> coming up, the democrats are going to take the stage tonight for another democratic debate. taxes and health care are sure to be a topic of discussion. a preview of what to expect is next a reminder you can always watch us live on the go on the cnbc app. we'll be right back. sometimes, the pressures of today's world can make it tough to take care of yourself. but nature's bounty has innovative ways to help you maintain balance and help keep you active and well-rested. because hey, tomorrow's coming up fast. nature's bounty. because you're better off healthy.

democrats are going to take the stage tonight for the final debate before the iowa caucuses. the director of the hutchens center on fiscal policy. either of you gentlemen and i'll start with you, do either of your gentlemen believe biden is

still not the presumptive nominee at this point? is it totally up in the air at this point he stayed stubbornly at the top even now with a second position has moved around it's bernie now but still biden at the top. >> i'd say it's slightly better than 50/50 that he gets the nomination but he doesn't have it nailed down and i think one of the most interesting things over the next few weeks will be does mike bloomberg comeout of the box and start to be a bigger factor in the race of course he won't be on the debate stage tonight but he's spending a lot of money, ads everywhere and i don't think he has gone away. >> yeah. that would end up -- i guess bloomberg would take biden's place. it would be bloomberg versus bernie at that point. >> absolutely. >> i think bloomberg is positioning himself if biden doesn't do well in the next few primaries to clean up on super tuesday and it will be hard -- >> the billionaire versus the

socialist? who wrote this script? >> i feel sorry for the guys that write these political dramas you can't make up stuff as good as what's going on now. >> no one would say democrats wouldn't have a very clear choice in that situation the thing is that bloomberg is like the black swan. nobody knows the impact of someone really with unlimited financial resources and sort of unlimited willingness to spend them in a political race not just 50 million or 100 million but billions. >> will we find out once and for all whether you can do it that way? i'm not convinced that you can yet. are you? >> how many i mean, how many internet ads can you buy there's a saturation point the next billion. >> i saw bloomberg, 4 or 5 in a row. >> there is a limit as to how much air time there is so if he buys up all of it he also freezes out the other candidates from being able to

take some of the spots >> i wish he was more excited at the end when he said i'm mike bloomberg. >> and i approve this message. >> i wonder if all of these democrats tried to kill each other on the stage. >> there's no front runner >> and if -- nobody wants to go -- there was a great piece in the washington post over the weekend talking about the idea that if biden or any of these folks are losing -- lose in the next couple of weeks frankly that by the time you have super tuesday nobody wants to vote for a loser and all of a sudden he has this new shot. >> it's a contested nomination if there's not a clear winner or a clear front runner on the first run going into it. it could get super interesting too. >> the idea that they're advertising on the super bowl. it makes that the contest. the president is here, michael bloomberg is here. that's the contest it's not anybody else's contest. it's an interesting thing. i don't know if that will happen that way and there's lots of

issues that make it very difficult for mayor bloomberg. >> what i think is so interesting this time is that you could see bernie sanders and elizabeth warren go after each other on stage to this point they have been -- i was going to say comrades in arms but they have been on the same side and have been very courteous with each other. do gloves come off tonight >> i think they do each candidate has to distinguish themselves to try to get an edge in iowa. we're going to see all the stuff about did he or didn't he tell her that a woman couldn't win? i think we'll see the iraq faultline. sanders will definitely go after biden on you voted for the iraq war. we'll see the faultline between those people that want to have incremental change and those that want structural or revolutionary change which the other group thinks willer the identify the vot-- terrify the

>> you mention comrade in arms maybe it's time for elizabeth warren to remind people that bernie sanders is a comrade and socialist. she likes to say i'm a capitalist to my bones that's a clear distinction he isn't just a progressive liberal democrat, he's a socialist that seems to find it difficult to say things about communists like the soviet union. maybe that's a distinction to draw in that debate. >> she can't afford to alienate his people that's why she is so cautious. at some point, she has to say i'm better than he is and here's why. >> i just remember a lot of elections in the past and you really don't know at iowa. you have no idea remember the recent contests. >> no, absolutely. >> it could be that we come out of the south carolina, nevada, new hampshire and iowa without a clear front runner which will

make super tuesday really, really different than it's been in the past. >> or the option that biden continues to lead. continues to be a weak front runner that continues to win he's the one guy that seems to consistently beat donald trump in state polls not a very exciting sort of outcome but maybe, maybe that's what happens. >> he was rounding up some support in recent days all the mainstream democrat backers. they have been with kamala, some of them. and they're now with biden he is the default candidate. unless it's bloomberg. >> i agree with you. if i had to put my money on one person right now i wouldn't put a lot of money but i'd put it on biden. >> the most insane option isn't really bernie sanders, it's mike

bloomberg coming out of nowhere, being a billionaire in a party that seems to hate billionaires spending billions. that would be like the wildest outcome. >> it happened to the republicans. >> but it wasn't somebody that came up through the ranks. >> came from nowhere. >> especially when it all about -- that's all they're talking about. >> somebody that came from nowhere and used to be a member of the other party. >> >> all right. >> no, used to be a democrat. >> >> who knows. none of these names work anymore. >> we'll see you later and talk again at some point. >> you guys didn't disagree on

it >> when we come back, twitter co-founder ev williams on social media stocks, political advertising and much more. check out the futures at this hour the dow had moved into positive territory. now it's down by about 3 points below value. s&p futures down by less than 2 points after closing at a record high yesterday the nasdaq down by 9 points after closing a record high as well we'll be right back. brokerage accounts,th new your cash is automatically invested at a rate that's at least 20 times more than other advisory firms. personalized advice. unmatched value. at fidelity, you can have both. there's one thing you can be sure of. they're changing by the nanosecond. that's why cognizant created a unique engineering approach to design and build new digital products.

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it's a long-term view. health care and education. and notably beyond meat which was the firm public exit joining us right now -- we can just say he's one of the creators of the modern internet. twitter of course. this is the guy. what other fabulous things what was the original? >> blogger. >> that's what i was thinking. >> in 2003. >> so we have a lot of topics to

talk to him about but why don't we just start real briefly first with the fund and what you're trying to do with it >> great today is a big day for us. we're announcing our third fund. we're entering our 7th year and this is a major growth milestone for us our third fund is $271,828,182. >> how did you choose that number >> those are the first nine digits of one of the most important in mathematics oilers number. so we like to see e equals ov 3 for us. >> were there more investors that wanted to get in at a certain number and you said we can't do it because we need for it to equal this certain number. >> we're not a cannabis fund this is a tradition for us our first fund was 1, 2, 3, 4, 5, 6, 7, 8, 9.

we love to celebrate math and science. it's a lot of the cutting edge technology that we invest in getting our third fund to e was a lot of work but we did it. >> it's named after leonard oiler, a swiss mathematics. >> founder of the houston oilers >> no connection there a little bit older. >> oh. >> let me ask you about one of the things on the show, private valuations relative to public valuations in this marketplace right now. it feels like the transition of at least the last year where there were very high private valuations and then came down in the public markets and how you think that's changing the landscape or if it is at all. >> i think we got it right with beyond meat and our private valuations are much lower than the public market valuation that we see with that company that's been a fantastic return for us and a fantastic proof point of the work that we do but to your question, i think

silicon valley sis increasing it's focus on profitability. we do focus on making sure that every investment that we make, there's a thesis and a path to profitability and we're seeing more investors focus on that we're seeing some of the late stage companies start to do lay offs to reduce the burn and get closer to profitability. maybe that's anticipation of how they're going to be valued. >> let me ask you a beyond meat related question it relates to the news this morning in terms of refocussing his firm around climate sustainability issues and stuff like that. he says it's an economic decision he says it's not a political decision or a science decision for him personally he thinks of the world as investors, millennials and others are moving toward sustainable investing. do you -- obviously that's part of the trend beyond meat. >> 100%. >> how far do you think that goes how quickly do you think it happens? >> well, i think it's happen

right now and beyond is a point as james said but it goes back to our original thesis which was -- we don't think of ourselves as impact investors. we think of ourselves as financial investors who are choosing things that are addressing major problems. if you figure out how to do that profitably it's going to be a huge business. it's in line with what larry is saying it's not just new generation choices. it's a necessity so what we have seen with beyond and other portfolio companies is about lower carbon diamonds. there's all of these things that people are choosing because they realize there's a better way to solve these problems. >> how much of that is for example, apple, the big silicon valley companies that do have big balance sheets that are now moving in this direction in terms of the work that they're doing at cost to them by the way because you see apple for

example now running all of their operations in the u.s. off of carbon neutral. >> well, it's a cost to them and but there's a bigger equation there. i know in silicon valley, for example, employees care a tremendous amount about this stuff. and it becomes a real issue not to do that. >> we think high carbon companies are fragile. they are at risk of a price on carbon fundamentally changing the economics of their business. we can flip trillion dollar energies to low carbon food, energy, transportation, resources. it costs less to operate than a diesel bus. >> before we let you go, i have a couple of social media questions for you, tick to ck,

what do you think? >> it's fun. >> do you use it >> i played with it. i like to understand all the new things i haven't yet made a video >> snap? >> snap, i think evan is one of the greatest product thinkers there is and i'm sure that they'll come out with lots more creative things. >> very nice and polite. thank you, appreciate it. >> thanks for having us. >> coming up, more big banks report we're awaiting results from citigrp. 'lbrg u e mbers as soon as they hit ure protein. high protein. low sugar. tastes great! high protein. low sugar. so good! high protein. low sugar. mmmm, birthday cake! pure protein. the best combination for every fitness routine.

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4th quarter results are just out. wilfred frost has the details. >> thanks. revenues at 18.3 billion the expectation was 17.9 eps adjusted was 190 comparable to 184 so a nice little week on both lines. it's trading that has lead to this so not quite for the same magnitude. so we have an update early december at the goldman sachs conference they said then trading overall would be year over year. it's actually up 31% and like jp

morgan that's where they're up 50% year over year they had 2.9 billion the expectation was 2.5 billion. about half a billion their equity trading was behind estimates. 500 million or so versus estimates of 600 million so the takeaway here is that trading in late december was much better than expected but both banks are very much focused on the fixed income area. and goldman sachs for example compared to morgan stanley as for the broader parts of the business, the consumer business grew in every part of the business it's something they have been talking about as of late their net north carolina was ahead of expectations about 11.7 billion more for them because of better margins than volumes the loan growth was 2% and that was expected 2.63% holding up better than expected so a similar theme but less of a

magnitude of it to jp morgan's results. fixed income trading the big reason and interests sensitive parts of the business doing a little better than expected overall as we look at the shares they're up about .5% perhaps because jp morgan was better there up about a percent or two. that wells fargo number you were chatting about i'll point out that it looks like the big area for why the bottom line is so weak there is higher expenses than expected. 15 billion or so compared to 12.8 billion expectation >> we'll dig into them now a little bit the fourth quarter results are out. the bank missing on the top and the bottom line saying the expenses are too high. it needs to be more efficient. is that how you talk more about it mike is with us as well. you're director of bank strategy what do you see? >> one when you look at wells fargo, this is just adjustments

as you get a new ceo want to take care of anything that is in the closet that needs to be taken care of. cleaning up. it just gets washed away what we're going to look for is in 2020 it's more to come. so more investment, more taking care of the reputational issue that's the things that we want to see is this going to get farther down the line or do we have more to come as we go through the next year? the revenues have been declining. wells fargos have. the balance sheet constraints. so as we go through this and revenues begin to stabilize and set the platform for them to be able to grow again when we get to 2021. citigroup is an opposite story revenues are getting better. expenses are actually coming down and returns are moving toward their goal of trying to even actually get to the 12% return on common equity that they have been putting out for

the last couple of years they get right on top of what we expected this quarter. even with a little bit extra in capital markets and we continue to expect the returns to move toward the long-term targets. >> mike? >> yeah. i would say with wells fargo there has been a sense out there that the expense base is too high it's been slowing coming down. it's a lot of extraordinary expenses in there but a quarter like this and this message from the company i think builds the case for really streamlining because they have the caps on their potential growth citigroup is really checking off a lot of the boxes here. it's been seen as a restructuring story but really operating performance is good but i think the story too, it doesn't always stay consistent but the trading line clearly tremendous demand for corporate debt did translate into good volumes or good marks. >> what do you think about the ipo market and how that kind of has played out how it has impacted the banks lines? >> it's been slightly

disappointing in terms of overall volumes and i don't think it's seen as much of a driver it will be an important piece. it's not really been the place to look for a lot of growth. >> the ipo business has been the driver of some of the investment banking in the last couple of years. >> it's still early. we need to listen to the call. they'll be addressing the issues part of the whole management transition is were they addressing it aggressively enough there's not anything left on the table. they're going to deal with the regulatory overhang and get that taken care of in 20. >> but i think that's

interesting. we can qualify this as a kitchen sink order but if there's more to come, it's not a kitchen sink. >> it's kitchen sink in the long-term you would think. even if there's higher investment those expenses will move lower it's just not going to be maybe the next year. it may be 2021 and beyond when you start to get back recalibrated and they'll be positioned because of the franchise they do have to outperform as they come out from under this. >> is he doing the right things in the early days? >> you have to when you start over you need to make sure that you take advantage of that. once he creates a base you'll be held accountable so what he wants to do is make sure that he takes care of anything that needs to be addressed and they'll create that base and move forward. >> i mean, i think -- >> the question is exactly how much it is for the long-term i was talking about jp morgan getting market share that's one of the places that

it's getting it but the drivers of where they are geographic pretty strong housing market. >> does it matter that buffet has sold some of the shares? >> i don't know that it matters that much and i think that the company and the stock are already in the penalty box before that. i don't think that's one of the big drivers. >> are any of the ones that you like right now undervalued >> yes. >> which one >> there's some superregional banks. >> none of the bigies. >> none of the bigies. >> citigroup is the only one that has that left but when you start looking at the superregional banks they're out of favor because of what we were seeing in the margin but as we're seeing these banks performing better if that theme can continue to foreshadow what they're going to be able to report they should be able to be the ones that get more of a catch up

the world's largest asset manager is announcing the firm will make climate change the focus of all of it's investment strategy >> in that letter he writes quote, the evidence is compelling investors to reassess core assumptions of modern finance. he also says there will be a significant reallocation of capital. yesterday i sat down right here in new york and i asked him about the moment over the past 12 months that made him decide to make this fundamental shift. >> i think it was just over time more science more research. my team came out with a physical impact on climate change

and that left a big impact and then from reading our own internal document that we have distributed and published, when i was at the u.n. and when i was at the imf, and all of my travels, three times to china this past six months, every conversation whether it was 20% or 100% was related to how should i think about climate change in my portfolio or how should -- i met with governments, even governments in the middle east were asking how should they navigate more solar and more wind. the movement toward renewables is very powerful for them because their ceiling on production is only based on production and not how much they

sell so if they could reduce the amount of domestic need they could actually sell more so this is -- so in every area more and more people are asking us how should they be more prepared >> what do you tell people that will look at this and say this is just marketing? a hedge fund manager last month said that black rock's record was appalling and called this green washing. >> i read that i would like to challenge that person because he doesn't know what we're doing we have not been that transparent about what we are doing. we have 4,800 companies where we haven't changed -- where we voted against people we don't post things like that he's responding to a few proxy votes because that's all that's been public. >> you have seen outside

organizations that rank financial institutions based on how they have voted and black rock has ended up at the bottom of the list. in many cases we had them change their views and the one thing that i have said in all of my letters, be engaged with us. have a conversation. do not wait until there's a proxy season so there's few points where the proxy is the big point i'm very proud of many of our records because i know, which is nonpublic all the time that we changed management's position on so many hings.

so all of those people are going to have much more to see how we do it and i'm very proud of how we look at this. >> how much of this though is driven by investment and getting ahead of the narrative, if you will or what should be the goal which is to save the planet. >> especially in the united states living under the rules where you're required to only focus on the maximization of return those that believe we have to save the planet, i understand what they're saying but we're living under a different rulein this country and we have to live under that rule >> do you think that should change >> i have an advocating for it to change quite considerably it started changing under

president palm balm aobama and d itself under president trump this is something that i do believe needs to be relooked at but what we are saying here we believe under maximization of return it will be a portfolio that outperforms so the main component of the letter is saying this is going to be a great investment over the next ten years and it will also help the planet. >> for the full interview with larry fink go to cnbc.com and we'll continue to talk about this topic i imagine i imagine this is going to be a big topic this year. still ahead on squawk, consumer advocate ralph nader is going to join us to talk about boeing but still the phase one trade deal with china. it's going to happen tomorrow. the key question would actually

fix any trading problems take a look at shares of jp morgan city and wells fargo all reporting results this morning you're looking at citigroup and jpm up wells fargo off by close to 3%. you're watching wasquawk right w on cnbc. this is the age of expression. everyone has something to say. but in a world full of talking, shouldn't somebody be listening? so. let's talk. we are edward jones. with one financial advisor per office, we're built for hearing what's important to you. one to one. edward jones. it's time for investing to feel individual.

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that's the same day that the treasury department said it will no longer consider beijing a currency manipulator joining me is the republican from indiana and senator it's good to see you today. good to be on. >> what do you think about what you heard in terms of phase one. >> well, i say finally and i think to me when president trump made this a big issue it was long overdue chinese, whatever they do, they're playing the long game. they have great patience, great endurance but it happens to be in the run i think they're feeling the pinch in their own economy so i'm happy they're coming to the table.

and yes we can get rid of the currency manipulator for now but the chinese do what they need to do to keep their long-term plan in place and they have been executing that fairly well so it remains to be seen whether they'll have technology transfers and dumping it on the markets. they import over the next two years. 2017 is a benchmark that comes in the form of agricultural energy products but also manufacturing and services

it does look like they are agreeing to do less of a forced technology transfer but as you mentioned terriverification is tricky question here how should we be handling enforcement? how do we check up on it >> let's trust in terms of the agreement and verify very carefully. the markets are looking weak due to a chronic oversupply and this is a real breathe r for them they had a heck of a year in 2019 so just for the agricultural component i'm less worried about big corporations that have taken conscious efforts to either move their supply chain there -- it was a good eye opener for them i think the key thing is it took president trump to take them on and yes, they fired back and hit

agriculture, hit farmers, that's going to be part of the ebb and flow and i say, let's watch it if they really start changing behavior, blend into the fabric of world trade in general, it will be good for them and us and they will find out they might even be a currency if they liberalize their political system in the long run and don't do this just for show and really change their behavior. >> if they don't change -- let's say they make a lot of agricultural purchases, that's important to farmers in your state. if they don't follow through on some of their other promises like the technology transfer, what do you think the president should do in response? >> first of all, it's highly visible and i think that the president will do what he has done up to this point. he'll say hey, you're not living up to your end of the bargain and there will be issue.

>> i don't like tariffs. i'm a free trade, free market guy. if they don't think anything else would have gotten their attention. >> so you think the tariffs should come back on if they're not living up to their end of the bargain? >> that will be up to president trump in terms of he obviously understands how you work with the chinese and this is where they are more normalized in their behavior it will especially help agriculture. farmers are hurting more than any other sector of the economy. i'm happy for that in and of itself >> what makes you think this could be a goodyear. >> first of all when we did the tax cut and jobs act in december of2017

we pay the tax rate and when that changes you take it down to 29.6 from 39.6 that was a big deal. that's where jobs are created. that's why we plowed through trade issues with china and so many other areas where recovery at this stage of the game normally would flame out.

thank you for your time today. >> you're welcome. >> coming up, ralph nader on the culture at boeing. one comparing boeing designers and supervisors to clowns and monkeys. supervisors were the monkeys anyway, apple plus apple versus uncle sam. details on the latest high profile privacy fight between the tech giant and the government stay tuned you're watching squawk box on cnbc alexa tell me about neptune's sorrow.

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delta shares are rising after they beat the top and bottom line. the airline had a very strong holiday season and delta had good success in decommoditizeding it's business he continued to elevate at boeing in terms of making the type of changes. >> take a look at shares this morning up $2. coming up, breaking economic data the greatest read on consumer prices stay tuned right here on cnbc.

we're live and we're just two seconds away from breaking december cpi data. we have been watching the futures this morning we're flat the nasdaq and s&p closing at record levels yesterday. they're all down by a couple of points this morning. rick is standing by. take it away and no revisions in the mirror let's look up 2.3. also light up 2.3 front and back exactly as expected also exactly as we noted in the november report and finally if we look at the core index, seasonally adjusted, that number hasn't changed much.

so all in all we're looking at data that is not hot, not cold maybe just right from perspective of keeping the fed at bay we see the preopening futures are rallying just a little bit in treasuries, pushing yields down and of course the equity markets which have been on fire for the most part have had some magnetic lift to rates but considering the run like the nasdaq index certainly seems to be on the short side with regard to how much of that is pushing interest rates up. >> thank you let's get over to steve that joins us with more would you agree with rick's assessment >> pretty good but you don't get there all that easily. there's a lot of gyrations in the numbers here for example, apparel which you know was way down was very modest in fact, declined by 1.8% after the government started using

some big data in this price series it was down 1.8% in october and now it's up 0.4% so that seems to be correcting gasoline prices up 2.8%. so that is obviously isn't the headline number. medical care up 06 and prescription drugs up 2.1 and then so offsetting that is a bunch of 01, 02 and 04 on commodity so it's not like there's a whole smooth that's how we get there there's one other issue that we're watching not for this month but maybe for the future months is that the gap between the cpi number that everybody in america follows versus the inflation number that the fed is following is widening we'll see how that follows but as far as the fed is concerned, quite mysterious as we talked about which is given how tight the labor market is.

we're just not seeing the inflationary pressure. >> holding steady all around. >> steve, thank you. >> meantime i want to talk about a topic we have been talking a lot about over the past month. boeing expected to cap the rocky 2019 with weak december deliveries david calhoun's second day as ceo on the job at the same time bloomberg reporting boeing convinced him the year before the fatal 737 crash. pilots didn't need simulator training he is urging the board to cancel joining us to talk about all of

this is ralph nader. thanks for joining us and helping us make sense of where we stand in -- i hate to call it a saga but it has become that. he has been on the board he is part of the problem where the planning for the 737 max and into union activity and and

it's just a shadow of itself it's hard to see any qualifications to turn the boeing corporation around he approved the $80 million package after he was fired >> when would be a fair time and way to measure david calhoun's success or failure in terms of trying to fix the problems at this company recognizing your view that he is not the right person to be in that job

first of all he has to elevate it that's one they did make a final good decision after having to reverse themselves on simulator training that's going to cost at least $5 billion. similar training for the pilots around the world on the 737 max. but he has to change the culture of the corporation and he comes from a financial background. >> that's going to take some time let me ask you a question about money and compensation even just yesterday we were debating this issue. as you referred to and the number is closer to $62 million rather than 80 but he did not recei receive severance. however he did receive compensation that we understand he was due because it was differed compensation over his 35 year career he was paid a salary and put a percentage of that into differed comp and had vested shares you're arguing that he still should not have been paid that

money? >> well, he bungled the whole corporation. >> i'm not dismissing the problems i'm suggesting that was he entitled to that money but to the extent that you have been paid, a certain amount of money, you put some of that aside as part of a differed compensation plan you believe that was still at the discretion of the board and they made the wrong decision to pay it out. is that your view? >> they may be obligated in terms of how they bungled the company they should have pushed for forfeiture and also his collaborators came away with millions of dollars too.

and this is the subject of a lawsuit. the boeing company in collaboration with the faa still refuses to disclose the technical details of boeings proposed software fixes. that's why under paul hudson they filed the suit for failure to respond to freedom of information act request. it's still business as usual he still has senator wicker doing nothing in the senate. but there's very little cooperation. what kind of confidence do you have at this point >> well, it's a little confidence in the new administrator but he's still

hobbled by his predecessors that were still there and they're part of the problem. usually when there's a tremendous corporate regulatory crisis, people lose their jobs well, finally he has lost his job but not the faa. the faa still hasn't asked congress for an adequate budget and staff. it's still this delegation abdication posture instead of regulation of the boeing company. >> before we let you go, i want to pivot to another topic. news this morning. i want to get your reaction to something that larry fink told us about climate change. here he is talking about the scale of the issue and how the firm plans to deal with it we don't have a federal reserve to stabilize the world this is bigger it requires more planning. it requires more public, private

connections together to solve these problems and i do believe many of these problems could be solved but the actions have to begin now. >> what he is doing and how do you do it in a way that both is sustainable but also economically viable for people on all parts of the economic ladder there >> well, he has made these statements before and the question is whether he could exert the $5 trillion there's a new book coming out and the pentagon is severely worried of climate chaos and climate disruption that's another powerful arm that could reach the climate denier donald trump in the white house and then the third is the federal reserve is starting to

get into this. and being replaced by renewable energy we have to take them off the shelf and put them down. there's no greater disruptor of the economy than continuing the status quo. >> okay. appreciate your time and perspective this morning thank you. >> you're welcome. >> got news on the latest privacy battle josh joins us now with more. >> so attorney general william barr now taking a hard shot at apple. remember there was the fatal attack of a naval base last month in florida three service members illed.

we have asked apple for help in unlocking the phones so far apple has not given any assistance. >> but apple now hitting right back says it suffoffered what i could. namely information from the icloud acount from the alleged killer it's servtored on servers but t can't access from locked iphones. if it created such a bad door then the good guys could access the devices but so too could the bad guys it has lawmakers sounding off. for example, lindsey graham threatening tech companies you'll find a way to do this or we're going to do this for you back to you.

>> for more, let's bring in the managing director and anything that we're seeing in this latest that you think is a threat to the recent upward move in stock. maybe it's looking for an excuse to pause or is this not going to be it? >> hello, dan? did we check him in? or -- oh, we lost him. all right. we will -- we'll bring him back and find out whether this is -- this is interesting to talk about and getting into privacy issues and everything else but it is something that hasn't been cancelled. >> i wonder if this is different this time because last time that this happened in december of 2015 it was a public battle for a few months this time is a little bit different because of the backdrop of the china trade dispute.

obviously tensions coming down at this point with the signing between two countries taking place tomorrow but tim cook has done a masterful job walking the line between the two countries that are very important. both in terms of the customer base for apple and in terms of how it does it's operations and supply chain this adds into this debate whether or not he's going to continue to do that. in the conference call the other day no one had a landline. i guess we'll go to break. i don't know if we'll get him back. >> in the meantime we'll tell you what to watch ahead of the opening bell on wall street. let's take a look at the big banks that have already reported this morning jp morgan chase, dow component up by 1% after much better than

expected numbers it really helped out by about a billion dollars over what the analyst had been anticipating. citigroup did well on that line too. they beat overall expectations when it came to about a half billion dollars. there's a lot into this quarter. right now wells fargo shares down by 3.6% tesla shares higher in the premarket once again this morning after yesterday's 10% surge. we're going to get jim cramer's take on that in a moment the stock right now trading at $542.92. right now a reminder watch us live on the go on the cnbc app stay tuned squawk box will be right back oft music) - did you know that americans that bought gold in 2005 and even now many experts predict the next gold rush

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welcome back this morning. take a look at the futures coming off of record highs things were in the red we have now turned positive. dow up about 26 points nasdaq looking higher as well. looking to open about half a point higher

joining us with a look at what's going on underneath the surface and how investors should be viewing it from a technical perspective is chris it's good to see you today. >> great to be here. >> so your baseline, just looking at the s&p 500, we know what the headline has been, what's happening beneath the surface. >> let's paint the context here. when you put it in context, they're really good. >> meaning look out we have been running so hot for so long be careful. >> consolidation or pull backs what do you do when trends are positive you buy them you broke out above the 3050 level. there's really good support. about 6 or 7% below us that's about as bad as you do on any consolidation. the trend is up. you have to wait for one to

happen a lot of people have been waiting for that to be coming we do not get that when that's the case. >> can you put more money in >> let's talk about what is mor take a look -- >> emerging markets. >> yes this is the e.m., which basically had a bear market in 2018 you had a 40% decline. you then spent the better part of 2019 in a base. we've only just broken out here. sentiment is less aggressive, price is less aggressive and areas of the world like hong kong and china are just beginning to emerge here remember, the pmi in hong kong is 38. so it can't get worse from a fundamental perspective, but the stocks have stopped going down i also think supporting the e.m. call is the dollar rolling over. the dollar peaked in august, rate differential is starting to change the spread between u.s. tens and

german tens is compressing i think that makes the case the dollar is starting to turn the 50-day crossing below the 200 day for the first time in two years. >> that's key, back here >> and look at the message metals, copper and gold breaking out. i think that speaks to a weaker dollar we look at opportunities away from the u.s. e.m. is timely and the dollar helps that call one stock in particular captures a lot of themes. alibaba, one of our favorite names. another stock whose improvement reminds us a lot of 2015-2016, coming out of that bear market and a bear market down 140%. y 40%. >> let's go back to the s&p 500, people watching this

>> is a pull-back 3% to 5% >> greater than 3 to 5 >> people are waiting for this and almost like waiting for gaudeau. you say put additional money into the s&p 500 ahead of the potential pull-back? >> in terms of what is most likely look ex-u.s markets consolidate through time sometimes. 1996 is a great example. election year. a huge year in '95 you spent february through september just marking time in '96. when it looked like clinton was finally going in spring and fall of '96 the market resumed higher that's a reasonable road map for 2020 mark time over the spring and into the summer and ultimately s&p resumes higher later in the year >> chris, thank you very much. great to see you.. >> thank you >> andrew, back over to you. >> chris and becky, thank you. want to get over to jim

cramer, he is in san francisco this morning nice to see you. you were up early on the west coast there. because we were emailing each other at way too early for you, i don't know what you were doing. should we talk bank earnings first? >> look, i think that there's great disparity. typically you don't see that charlie scharf at wells fargo that was terrible. jamie diamond and jpmorgan extraordinary. citi best performer of the group last year, it could happen again. it's selling nine times earnings stock is barely above tangible, company is buying back 11% of the float. there's been more than 1 billion shares bought back since mike corback came in. i like that one and i think it is by far the easiest one that you can buy in terms of valuation. >> you used the phrase "kitchen sink." do you think that's what's going

on with wells fargo and represent an opportunity as the stock is down 3.5% this morning? >> efficiency ratio looks good betty on charlie scharf is a great thing to do but i don't know geez, wells is typically not losing share we haven't heard that. but they're just awful, and i just, i just don't think wells fargo can be as bad as that number they are in the end a bank banks make a lot of money. >> how are you feeling about tesla? you drive any teslas out there >> i love tesla. i keep think being that unbelievable scoop you got with larry fink, i think is the most important thing we talk about for i don't know how long, certainly not just today, and i keep thinking isn't tesla electric vehicle isn't that the kind of thing that if you're wanting to be in larry fink's dictum, you would sell gm and ford which aren't doing enough versus tesla. even though they're trying tesla is the ultimate larry fink stock. larry seemed emotional, is that my imagination or was he choked

up at one point, andrew? >> i think he's emotional about it but i do think he insisted and i believe him, that this was something that took, i mean in terms of making this decision, was a 12-month process, he was writing this letter, changed a lot and it was much more about, frankly, the clients, the science and what he thinks is about to happen in terms of a huge rotation in the market. now that rotation may take five years, may take a decade, longer. >> 50. >> i think he's trying to get ahead of it. >> jim, we just had ralph nader say that jamie diamond's fault because jpmorgan is still invested in fossil fuel companies. >> no. >> do you think we need to divest >> no. i -- no. look, i think you have to be -- look, we had chevron on last week and mike is saying we're totally cognizant of what we have to do and we are doi ining best i just think it's just being a better citizen

you just fossil fuels as mike wurst said you'll be in fossil fuels 30, 40 years when oil was at $26, these stocks were substantially higher than they are now. it's something to think about. >> the other piece of this, when we talk about it in the context of fossil fuel companies and energy companies, i think this is going to be hitting companies across the board, i think we're going to see lots of conversations about companies trying to get to carbon neutral. amazon and others talk about that idea, sometimes even trying to get to carbon negative but that's going to come at a cost >> well, i don't know. i mean, clorox, if you want more compensation, if you work at clorox, you have to come up with sustainable ideas, and he is rewarding managers who do, and he is not rewarding those who don't. so i think it's entirely possible that if you're clever enough, you can do both, and remember, the earth is a stakeholder, as we learned from

mark benihoff. is larry fink catching up with what others are doing, no. he'll set a standard i do not think in the end that it's going to matter, if you miss by a few pennies, if you are protecting the earth i really believe that. >> jim cramer, nice to see you, sir. >> great scoop great scoop. >> in san francisco on "squawk on the street," in just a couple minutes. >> you have a great line-up i guess from the jpmorgan health care conference. we got to go we'll be right back. guest room, so you can live with us. i'm good at my condo well planned, well invested, well protected. voya. be confident to and through retirement.

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what we do here at dana-faber, changes lives everywhere. everywhere. everywhere. everywhere. everywhere. that's it for us on "squawk box. join us tomorrow "squawk on the street" begins right now. ♪ ♪ but what i really want to kno is, are you gonna go my way ♪ ♪ and i got to, got to know >> good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with david faber at the new york stock exchange kramer is at one market in san francisco as he covers the jpmorgan health care summit. futures steady here as earnings season kicks off jpmorgan, citi, wells and delta planning to watch as we come off record closes for the s&p and nasdaq cpi highest since late '18 our road map begins with the b