>> announcer: global business leaders are here in davos. this hour, the ceo of uber, its growth, path to profitability and challenges ahead

this is a special edition of "squawk box" in davos. good morning we are live from the world economic forum in davos, switzerland. i'm becky quick. let's look at what is happening with u.s. equity futures the dow up triple digits about 107 points s&p up by about 11 and nasdaq up by about 49 points you'll see at this point, the ten-year is yielding 1.771%. the death toll from the coronavirus in china has risen to nine. confirming 440 cases of the flu-like virus exist

another 20 people have been isolated the first case has been confirmed in the gambling area of macau there has been confirmed the first case in washington state who came in from china we were discussing with the ceo of sanofi what this means. yesterday, our own meg was doing reporting on this. she was able to track down that regeneron is working on a treatment for this similar to how they developed a treatment for ebola. earlier today, i spoke with the ceo of mederna they arepeutics.

they are working on a vaccine. now there has been the first case of human-to-human transmitting they have to look at how this is transferred. what is interesting, they have developed a cancer vaccine they can develop and get into the patient in 40 days they are hoping to use that same technology to now do it for a contagious disease very interesting >> the flu vaccine the rhino virus, which is the common cold virus.

>> the question is how quickly does it mute ate >> it doesn't look nearly as deadly as sars >> at this point >> you don't know how quickly this mutates >> i sat down with the president and discussed this and many other topics here we go it is great to see you, thank you for joining us again in davos. we've done this before >> that's right. >> before we get started, we'll talk about the economy and other things the cdc has identified a case of coronavirus in washington state. if you remember, sars achffecte

the gdp. have you spoken to the cdc >> we have it totally under control. it is one person coming in from china. we have it under control it is going to be just fine. >> okay. president xi, there is just some talk in china that maybe the transparency isn't going to be what it should be. do you trust we'll know everything we need to? >> i do. i have a great relationship with china. i just signed the huge deal. i do i think the relationship is very good >> let's talk about davos. you were here two years ago. even the new york times, your favorite, acknowledges that davos elite are accepting that your policies are working and the u.s. economy is the envy of

the world. your press coverage here is favorable. back at home, it is all impeach, all the time >> i had a busy day yesterday. a lot of leaders with pakistan and others in addition to businessmen all over the place i did get to see some of it. it is a hoax a total hoax i think the team did really good the facts are all on our side. the republican party has never been this unified. 195-0. twice. we have three democrats voting with us from the house >> do you think there will be witnesses, mr. president >> i don't know. if everybody tells the truth, it would be perfect read the transcript. take a look at the transcript. it is really two transcripts i had a first call, which was perfect. i had a second call, which was

perfect. you notice they don't mention the calls. they talk about everything but the calls. read the transcripts the other thing is speak to the president of ukraine he's been great. i have to tell you his foreign minister has been great. they constantly say there was no pressure they don't knee whow what we are doing. they got the money president obama gave them nothing. he gave them pillows and sheets. i gave them tank busters it is a disgraceful hoax >> we had a four-hour show yesterday, i don't think the i word came up >> you asked me the question >> i know. i needed to ask it i really want to talk about what we are seeing over here. we came davos expectliing to he about this esg, stake holders,

climate change in four hours yesterday with the ceo of bank of america, all they wanted to talk about is the strength of the u.s. economy it is the envy of the world. i think if you have a strong economy, all of these ans lariur issues are easier to deal with >> between the tax cuts and regulationship regulations. we have a consumer in the united states that has never done so well we have tremendous potential we've done so well i think we'll do better. we have tremendous potential >> the market is up 50%. november 9 is the day you need to do it, not the inauguration

>> thank you >> we are starting to see this banted about the reexpansion of the fed's balance sheet? >> i think it is the opposite. the fed raised too fast interest they brought up the rate too fast they didn't drop it fast enough now you look at the negative interest rates >> are you hoping it comes to that in the united states? a lot of people don't think it is a great thing it hasn't worked well. >> they don't know yet

it is so new i want to know who are the people that buy and invest in germany that end up getting less money. vi to find these people. we are paying higher interests than the fed i would do a lot of things >> is chairman powell in the dog house? >> i don't want to talk dog house. he raised the rates. >> are we get a good level >> i think the rate should go down the dollar is very strong. we have a very strong dollar it sounds good that is good in many ways. i've created almost 700 manufacturing jobs, the past

administration said manufacturing is dead. i said, tell me about that you can't do that. we've had a tremendous success it is harder with a strong dollar i want this to be strong and so great you lower the interest rate and these things will happen >> we came close to 3% last year the china trade war. do you attribute that to the fed being tight for too long some of the uncertainty affected the gdp. >> a lot of people are thrilled with that.

me, i'm not. number one, the fed was not good as far as i'm concerned. that was a big blip that should have taken place one of those things. we had boeing. the big strike with general motors we had things happen that were unusual to happen. including some unbelievably powerful storms. with all of that, had we not done the big raise on interest, i think we would be close to 4, 5,000, 10,000 more points on the dow. that was a killer. they admit to it i was right. i don't want to be right but i was right. >> some is say the uncertainty for ceo's in dealing with china and the future may have hurt capital spending do you expect that to come back? let's talk about phase two if we get a chance >> the big thing, number one, it is a great deal for us

important for china. their supply chains were breaking it was tough for them. i was not going to let it happen i still have that negotiating chip we are starting phase two soon the relationship now with china. >> the relationship i have with president xi, president for life not that bad considering he's for china, i'm for us the deal is an incredible deal they'll buy $250 billion it could go higher than that

>> i heard it was just going to be ag bots >> this phase one is an incredible deal. in the end, it could go to $250 million. not only that. when we go back, i'll be signing it >> the uk next. >> the uk next >> yes that could start soon? >> yes we have started. we are starting with europe too. to be honest with you, europe has been very, very tough to

deal with. they've taken advantage of our country. i wanted to wait until i finished with china. i met with the new head of the commission we have to take action that would be very high tariffs on their cars. saying that, i don't want your audience to get nervous. they are going to make a deal. they have to we've had a tremendous deficit with europe.

i think it will be harded for boris. i never played my cards. i wanted to do china first mexico and canada first. they are done. now we are going to do europe. we had a very good conversation. i would be surprised if i had to implement the tariffs. >> i had one of your guys. kudlow, we asked them about tariffs. we acknowledged that you want to rebuild the defense industry >> big focus >> in the second term, will you raise taxes or lower spending? >> we'll lower taxes we've cut taxes in half and taken in more revenue than when the taxes were high. no one can believe it. we've taken in more revenue with the tax cut.

so that will be a priority >> i'd like to refinance and payoff the debt. joe, i made a $40 billion deal with japan a massive deal with south korea. nobody even knows the number it was a horrible deal now it is a great deal you add mexico, you add canada, china. we have about 10 countries we are dealing with these deals were horrible. in many cases, they didn't have a deal we have massive potential and growth you'll see that middle to the end of the next year >> i came up with the three b's. biden, bernie and bloomberg. >> all very different. michael is spending a lot of

money. he has no chance he used to be a friend of mine he went a little off he had to deal with hillary clinton. it wasn't going to happen they were playing with michael as terrible. you look at his numbers. i don't know if joe will limp across the line and he can't even put a sentence together or even bernie, whoever it is, i'm ready. >> yesterday, the news it hit the dow the news is the summer before -- >> very disappointing company. this is one of the greatest

companies. i am so disappointed in boeing had a tremendous impact. it is so big more than half a point of gdp. boeing, big, big disappointment. >> apple >> i like them a lot i feel like we should start finding the bad people out there we can deal with apple frankly, i've helped a lot i've given them waivers. competing against samsung. that would be the number one competitor from south korea. it is not fair we have a trade deal so samsung would get the no waiver i want them to help us a little bit. apple has to help us i'm very strong on it. they have the keys to so many

criminals and criminal minds they can do things they have the problem recently in florida they could have given us that information that would have been helpful. >> i understand both sides of the argument when you are dealing with drug lords and terrorists and murderers. i don't care, we have to friend out wh find out what's going on >> facebook. >> i met him he said i'm number one in the world. he said congratulations. >> should he stick to his guns with the political ban >> he's done a hell of a job he has to do what he has to do i've heard he's going to run for president. that wouldn't be too

frightening. he said you are number one i said that's very nice. it is always nice. you know who number two is modi of india. he has 1.5 billion i have 350 we are going there soon. by the way, our relationship with india, china, japan and other counties better than ever. literally better than it has ever been. >> waiting for comments on elon musk he is doing rocket those rockets coming down with no wings i've never seen it before. we have to protect our geniuses, we have to protect all of these people that came up with the

light bulb and the wheel and he's one of our very smart people we want to cherish our people. he's done a very good job. shocking how well. how it has come so fast. you go back a year, he's going to be building a very big plant in the united states he has to. he has to help us. >> do i dare entitlements is. >> we have tremendous growth it will be toward the end of the year at the right time, we will take a look at that it will be the easiest of all things >> are you willing to do things you weren't willing to do in the past >> we also have assets we never had. we never had growth like this. we never had consumer like this

taking in almost $10,000 per family our country is the hottest in the world, our economy is the hottest in the world our numbers are the best ever. african-american, asian-american the numbers are incredible unemployment and employment, there is a difference. unemployment and employment for african-americans are the best we've ever had we just came up with a chart it was an important number to me. african-american youth, the best unemployment and the best employment numbers right now, we have almost 160 million people working in the united states. we've never even been close to that >> safe travels. thank you for meeting with us. >> thank you, joe.

and i know, we haven't gotten enough with president trump. awaiting a news conference getting ared to start this hour we don't know what the subject will be maybe he wants to talk about the interview. highlighting all of this >> we are trying here is the man bringing us that it has just been over 8 months since uber made its debut on the stock exchange shares of uber are down 15%.

we want to talk about the prospects of the company you did a deal selling off the eats business in india the first time since travis stepped off the board. >> you'd have to talk to travis. he is one of the founders of the company. he made a personal decision that i respect. the board respected. his stepping off the board was of his own accord. >> did you know it was coming? >> we talked about it. i'm focused on running the business share holders are going to buy they are going to sell i can't control that >> how much of a strategic miss

alignment is there between your vision and his vision. >> you'd have to ask him >> you know. you've had conversations with him. travis has been supportive as a board member his investment decisions are his own. >> you said it is his own decision he's saying i want to get off the board and sell my shares >> we didn't have that specific conversation he sold his shares. >> he brought it up. i agreed >> he set up a plan and went forward with his plan. >> we'll move on help us with this. you decide to sell this business you've been getting out of other businesses where you've been

losing money this travis vision of big growth where the market isn't up for it they may be up for it today. talk about that balance. >> the vision for growth is absolutely there there is growth in some sense. we've been sellers and we've been buyers as well. at some point, the growth consolidates you've got two or three players we know the other players. this is a great company. great management

instead of competing, we'll take a stake in zumato. we'll grow through them in a way that makes sense that allows us to spend more we'll be number one or two in every market >> india is a huge market. travis made the decision to get out of china that's a huge market >> a lot of the conversation was around uber. it was going to change the face of how things would be transported. >> we are still in over 65 countries. we are by far the global leader in ride sharing. in the middle east we were a buyer. we are consolidating the market as well. we'll buy and sell

we are in 65 markets where the largest food delivery player in china. by far, the food delivery business grows over 50%. you want to have profitability with growth. >> how much of that is acknowledgment they just said, look, the investor has changed their mind you've got to show me profit >> this is how markets mature. we are public now. we are the biggest player now. we are the largest player in most of the markets we compete with this consolidation, we are structurally set up more efficiently than anyone else to move to profitability.

this environment is perfect for us >> you can only have these markets where you are number one and number two >> if you want to be number three and four and lose money forever, be our guest. that's not our plan. certainly in rides, we are number one we have the best brand travelers all use uber we have high-end service, base service, pool, et cetera with the eats business, we are going to be console i hidating. looking at the charts of where we are if we can't get to one or two, we are going to make more money for share holders. >> 65 markets with eats. >> with eats and rides >> with eats, how many are you not in number one or two

>> we are number one or two in the vast majority. i'll call it well over 80% in gross bookings that number will increase. >> in terms of acquisitions. there is a whole number of them out there. should we expect to have more from you on this >> we are always looking at acquisitions in the u.s. and broader. i can't predict the timing the stars have to align, the value has to be there. the management has to have the common vision. so i don't know. >> when you think of lyft, seems to be getting a higher premium or multiple for that business. >> my competition isn't lyft my competition is car ownership.

i hope that they go high multiple it is a category growing at healthy rates. both lyft and ourselves are improving margins. both of us have a very, very good you have of what a profitable business looks like >> lyft is the one you are competing with if there are two of you in any market, do you think you will no longer be beating yourselves up. >> on the market basis, we compete with lyft on the ground. from a business standpoint, we compete aggressively i think both companies are moving to a mode of rational competition both of us understand that the investor base and global markets with global profitability

we are getting through changes taking out payment, messaging and pulling back on marketing spin that doesn't have great life-time returns. they are running the play. i think the future is bright for both companies >> the issue in davos is multiple stake holder approach employees and drivers. huge debate within the uber and the whole ride sharing world about whether the people driving these vehicles should be considered employees, get paid more, get benefits all of these things. you've fought back against these things especially in california where they are trying to do that when you hear all these investors saying you need to figure out how to treat employees better not just uber but more broadly, does that change your view of

how to operate the company at all? >> i think we have had the philosophy that our drivers are incredibly important in the process. we wouldn't be here without them they do deserve protections. minimum earnings health care. the answer isn't employment. >> we have to press pause. the president has started speaking >> davos has treated us tremendously everyone is talking about america's unprecedented economic success. since my religion, america has gained over 7 million new jobs unemployment rate is now the lowest in over half a century. the average unemployment rate from my administration is the lowest from any history. we have some bad ones.

unemployment rates among african-american, hispanic-american, asian-american has reached a record low in the history of our country. the lowest african-american youth unemployment has hit the lowest rate in our country. so proud of that african-american poverty numbers have plummeted to the lowest rate ever recorded unemployment rate for women is the lowest in almost 70 years. veteran's unemployment rates is incredibly low unemployment for disabled people is the lowest. workers without a high school diploma have achieved the lowest unemployment rate in history so important

without a high school diploma. we have a record low unemployment a record number of young americans are now employed we have the highest number of people working in our country than ever before we are almost up to 160 million. we've lifted 10 million people off of welfare you know about food stamps we talk about it millions of people don't need it anymore. not that we have lifted them off, which we have they don't need it anymore they have jobs there they are doing really well u.s. stock markets have soared and hit the highest point. they've had at least $19 trillion in terms of wealth creation in terms of stock markets. we are now by far the biggest

economy in the world china would have caught us it was anticipated in 2019, that by 2019 china would become the biggest economy in the world we are much larger we have a great deal with china. i would say the best relationship we've ever had with china on top of everything else. we are starting with phase two phase one turned out to be bigger than anticipated because of intellectual propts, provisions, aspects of the financial deal that we got done. other things in addition to the farmers. we have total complete package for the farmers. we estimate that will be between $40 billion and $50 billion. that will be close to $50 billion. the closest will be 16 they go from $40 billion to $50

billion. we are an economic power house jobs, factories, companies are pouring back in. we have had conversations with other leaders with other countries where they have tremendous deficits. they have to move factories and plants back here they took a lot of them. the companies are coming back because everybody wants to be here the countries understand we have to balance out our trade we are doing well in that way. one of the people that was important for me to meet from the world trade organization was roberto who is a highly respected man. this gentleman right here. the world trade organization, as you know, i've had a dispute running with them for quite a

while because our country hasn't been treated fairly. china is viewed as a developing nation as far as i'm concerned, we are a developing nation too. they got tremendous advantage for being considered developing. they shouldn't be. if they are, we are. we are talking about a whole new structure for the deal or we'll have to do something the world trade organization has been very unfair to the united states for many, many years. without it, china wouldn't be china. that was the vehicle they used i give them zbrgreat credit they let that all happen the vehicle was the world trade organization roberto and i have a tremendous relationship

we'll do something i think will be very dramatic he'll be coming with representatives to washington or maybe the week after we'll start working on it. i'd like to introduce roberto who will say a few words on behalf of the wto and then larry kudlow will say some things about our economy. we've had tremendous numbers over the recent past so, please, roberto. >> thank you, mr. president. i think it is fair to say that we have been saying for quite some time if the multilateral system, the wto is to deliver and perform its role in today's global economy, it has to be updated, changed, reformed this is an agenda squarely before they don't miss the point.

they understand the system has not been functioning properly in many areas that is something we are trying to address i'm very happy that he agreed that this is something that has to happen. we are committed to effect those changes. this is something we are serious about. i am going to be together with president trump as soon as possible discussing what needs to change or be effected in the wto. we'll talk to all the other wto members. this is serious. the path we want to be on together to make this relevant and performing to today's environment. thank you, mr. president it is an honor to be with you and everybody else thank you. >> larry, please >> thank you, sir.

so i think we are coming into the new year with a lot of positive momentum in the economy. i want to refer to the president's speech yesterday the policies, lower tax rates across the board, lower dependence and breaking down trade barriers just recently, we've seen all the confidence that is strong. the huge stock market rally which is a sign of business and consumer confidence. predicting an even stronger economy in 2020. also lately, housing markets have been very strong. we've seen huge numbers. a leading indicator. even with softness in

manufacturing now, the market surveys from manufacturing >> we've been listening in with larry kudlow before that, we heard from president trump talking about how the wto has been unfair to the united states. let's get more reaction from president trump. joining us is ian braver a lot of what president trump said yesterday is being commented now. the wto comments are interesting. turning his focus not only to europe but the wto >> he made that clear. he had a dinner last night going particularly after macron and merkel and that the eu is not treating us fairly we need to focus more on trade

where he feels like he has wood to chop. this is largely a victory lap for trump. he had eight sort of victory points some of it is economic, some is iran and some is trade deals you know trump exaggerates a lot. people were circulating and fact checking him yesterday the reality is, that reality is more than a lot of alternatives do with those running against him back in the states >> just this concept when president trump was here two or three years ago, they called him the anti-davos man. he's become in his own way the

new davos man. mostly here, american ce o's they are very pleased. surprisingly pleased twitter and everything else, they are not happy with that when they look at the results, they are happy for 50 years, basically, they've been moving forward without a lot of push back that push back is not trump. two different groups of people coming from greta and other people who think democracy is broken and from the chinese building alternatives. trump, you may not like his character but his agenda is a hell of a lot closer to others here at davos. are they going to want to hang out with him or have their kids be like him, no.

most of the delegates i've talked to told me, yes when he first became president, there was a lot more fear and suspicion. that has changed in this group >> 100%. >> you can view that cynically. he was a rock star two years ago. mobbed this time, it is different >> they are playing the music out. what do you make of the hypocrisy of the ceo's that come here and talk about this policy and then they talk about love being trump. >> there is no question that for most of the ceo's here, sustainability is still more of a box check exercise

this year, when i see larry fink and satya nadella. i see money being moved in a way that will matter for their industry the world is schanging not that they've become al truists overnight. if you compare greta with trump and ask of the delegates here, who is their agenda more aligned with, it is not close. >> great to see you. still to come this morning, ibm reporting better than expected earnings their ceo will join us to talk about big blue's big quarter another dow component ceojp morgan jamie dimon you can listen to us live on cnbc or on the app we'll be right back. apps are used everywhere...

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welcome back cyber security is a growing concern for ceos they're working to reduce the threat of cyberattacks and the ceo joins us to talk about what he is seeing in the business it's great to see you today. >> thank you for having me. >> obviously it's a pretty good

time to be in the business of protecting networks as we hear about more and more threats. i think lately it's been iran in the headlines as a potential problem for this but what do you see in terms of cyber security threats and what that means to ceos when they're serious about protecting their businesses. >> the fun part is as we see everybody is doing this digittization thing. every company wants their consumers connected directly to them there's a huge technology transformation going on. not just people going to the cloud but every company wants a live interaction with their consumers in some way, shape or form in the industry we call it the attack surface is magnifying in the next ten years because everybody wants to be directly conne connected and next global

engagements can happen when people are sitting somewhere else than having to launch a physical attack. it could take you years to figure out who was responsible and there's no solution in sight. >> having said that, the last that you dealt with wall street on this was november when you lowered guidance for the year. it was uncertainty on the global scale and some ceos reluctant to spend money. i realize that you are reporting very soon. they said the same thing in november i guess my question would be do you think ceos and that sense of uncertainty, is that clearing up at all >> so just to clarify what chuck's guidance is different from ours, what we did in november is we increased a long-term sustained growth rate guidance for our business and we said that we were going to invest more and took down the

earnings per share guidance for years and it is a huge growing market. >> that's the type of thing that investors actually want to hear. >> yes and i think our stock has shown people are more interested in a long-term sustainable growth rate. >> we have talked about this before but i wonder whether you're view of this has changed in the last 12 months. as your trying to build more functionality security components into the quote unquote stack, how do you think about that there's big questions about antitrust and whether some of these functions and software are putting people out of business, what that means to your business. >> so we had a cloud security business now we have a more robust cloud security business. we think we're number one in cloud security and i was petrified of the idea of building security in the stack

funny enough customers said we're going to the cloud now you have customers that say we're going to more than one cloud. they need a solution that can work across clouds so specific security stacks, google, azure are great and very relevant to people going to just that particular cloud base but we see a multicloud world where you'll have to be able to work with either something on premise in a hybrid data center, aws, azure so we are very cloud. >> do you think it's a problem from a regular perspective given the types of products and functionality that these big giants are adding to their services >> if the department of justice called you, what would you tell them >> look. it's impossible for them to sell you a cloud platform without taking care of security. it cannot be your responsibility only they operate in a shared responsibility model and then

you have to figure out how to secure applications. >> before we let you go, i want to ask you about softbank and we work, i know that was a transaction you were not a fan of what do you think is happening are we going to look back at the vision fund as a great success or one of the great failures of our time. >> it's a phenomenal question to ask. >> do you think he's in davos? >> i think so. >> i heard he was cancelling his plans to be here you may know better than i do. >> thank you for your time today. it's good to see you. >> anyway, coming up, more of my interview with president trump as he comments on many things from the coronovirus and boeing.

james gorman will be here in the next hour to discuss the economy and fed and more this is a special edition of squawk box live in davos it's four urhos so we got that going for us. >> two down. imagine traveling hassle-free with your golf clubs. now you can, with shipsticks.com! no more lugging your clubs through the airport or risk having your clubs lost or damaged by the airlines. sending your own clubs ahead with shipsticks.com makes it fast & easy to get to your golf destination. with just a few clicks or a phone call, we'll pick up and deliver

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>> right here on cnbc, we are here in davos switzerland this morning. take a quick look at u.s. equity futures at this hour ahead of the market open dow looks like it would open up higher nasdaq up about 54 points and the s&p 500 looking to open about 12 points higher >> a news conference here in davos, here's what he had to say about the stock market's rise during his presidency. >> the u.s. stock markets have soared and they have reached the highest point that they have ever had we made at least $19 trillion in terms of wealth, in terms of growth creation for our country beyond the stock markets and we are now by far the

biggest economy in the world. >> more reaction to the president's comments the state of the economy and the markets and much more. we're joined by jamie dimon. it's great to see you today. >> happy to be here. one of the stocks that helped fuel that rally has been jp morgan you're just coming off your most profitable year ever you talk about the strength of consumer what you're seeing in the united states what's happening in the beginning of 2020. >> welcome, everybody. welcome viewers. so the economy is doing fine 2020 just began but the consumer is strong. and the balance sheet is in great shape. things are going to come back to work things are working on the corporate side and did have a reduction in confidence and capex. that may have leveled off this trade because i have positive

trade news about the trade deal. >> he asked him about that when he sat down with him do you expect to see the return of capex you do expect to see a rise in capital expenditures this year. >> a lot of of companies do capex when they need to. receivables go up. they build that plan when there's demand for the product you have already seen more consumer side and you may see the manufacturing side global growth is 3.3%. terrible so you can see continued growth. >> part of the reason that you had such strong revenue last year in part was because of what happened with trading revenue. it rebounded pretty sharply in 2019 how are markets feeling to you right now? how do things look they're fine they're not that big of a part of it. up across the board. we look at number of customer satisfaction number of market shares which we try to drive all the time but the markets right now are fine >> i was going to say fine

sounds like it's almost underselling when you look at new records being set every day. do you have any trepidation about anything that you see here >> the only thing is negative interest rates, qe and then diversion between stock prices and bond prices and yield and stuff like that. it's one of the great experiments of all time and we don't know what the outcome is. >> are you in favor of the way powell has approached this >> yeah. >> do you think he's in responsible for this do you think it's fiscal policy or monetary policy that created this goldilocks period >> i think it's a little bit of both but we have to have coordinated fiscal monetary policy and regulatory policy. you see china do that. in the united states you don't see it so much if you want the grow faster and not cause some of the problems that could be caused by rapidly rising rates or something like that, you can do it globally. >> that sounds like you don't think that the federal reserve should operate independently

from the white house and the president. >> no, they can can be completely independent that doesn't mean they can't be coordinated. if they will be very comfortable doing y. that's not lack of independence. you both said that's a good course for the country let's go do it. but you go to china, they do it all the time. >> obviously but china also tells what they do. >> they can manage their economy better and we failed we need to have more coordinated policy. >> who runs the ship in that situation? is congress supposed to listen to the fed in terms of what to do is the fed supposed to listen to congress it sounds like you're right. i could see how we could better manage our economy doing that but it does sound counter to how we operated to this point. >> i'm not sure that it's true if you read history books about the fed and the government usually through the administration they sat down and had coordinated ones and did it through world war ii. >> those were in times of

crisis. >> but even in 2008 they didn't do it. yes they had a stimulus plan but clearly the retrospective was big enough everyone is saying he lowered interest rates in large part because he couldn't get congress to move. >> i think it's very hard for central banks to forever make up for bad policy elsewhere pinc. s >> it's around the world that's where they have gotten themselves into that ride. >> do you know if anyone has actually bought a bond. >> no, that's what president trump said this morning. >> because the buyers of central banks and certain banks, insurance companies didn't have to or index mutual funds, i would never buy a negative rate bond. >> why would you

>> not unless i was forced whenever you have seen something like that in history it doesn't end well. >> i know that we have been talking ability this for a long time, what do you think the potential end looks like when it comes? are there any signs to say we're getting closer to a point where this plays out. >> i don't know. >> what would you watch for? >> the biggest surprise would be inflation. any kind of inflation in the united states and right now people think central banks around the world can do whatever they want. they can't they have to be reactors as opposed to just actors so look, they're intelligent look at all the facts. but that would be the big negative. >> do you see bubbles. >> only in sovereign debt. >> sovereign debt is where you see the bubble >> yeah. >> you don't see the bubble, even a lot of these privacy companies. is that a bubble in total not that overpriced

we always had overpriced companies in life. >> try to really be half full and optimistic it's true, here we are at rates that seem like they're not normalized and they don't seem appropriate. >> they don't seem appropriate for where unemployment is right now. the rates where we are but if inflation is really because of technology and innovation, why not, in an expansion, leave rates low, let corporate earnings catch up with where stock prices are maybe this isn't -- maybe the stock prices aren't just following the fed and central banks up maybe it's more than that. maybe it's justified maybe it's not just cheap money. >> the other reason i think it's been so slow is my point to you all before is 11 years and 23%

growth it should have been 40 plus. it would have been normal. it was our own bad infrastructure problem i can go on and on and what we did to ourselves is slow down growth slow growth means less need for capital. lower rates, lower growth, lower wages. we need a growth strategy which is why you say fiscals it's not just spending more money. do the things that create more growth and then acknowledge. >> what do you do in a country that's clearly politically so polarized that virtually nothing gets done? that's the fundamental question. >> they have gotten some things done recently. >> if it were up to me that i'd make a compromise. >> your starting point is

compromise the davos community in large part has been a surprise, two years later, three years later now because when he first came into office there was such trepidation and anxiety and worry that the economy wasn't going to go up, it was going to go down. >> right. >> it says unless we change capitalism we might lose it forever. that's the headline. >> no, the headline is always not the accurate thing >> what did we get wrong >> yeah. >> that good policy matters. good government matters. we don't build infrastructure -- it takes us ten years to get the permit to build a bridge half the kids in inner city schools don't graduate litigation costs 1% more in our country. health care is 19% of gdp.

our competitor comes at 9% and similar things in europe by the way you need positive capital and you need all of these things to have a vibrant economy. in addition to who is left behind you have more wealth to take care of everybody. >> you said you were barely a democrat i think you said that many, many years ago. you look at this election. is there a democrat that you like people that haven't read history books really should. educating younger kids

freedom and free enterprise are linked they're not ifferent not to give you great products and services does that mean they're perfect, no. >> is it trump and bernie or elizabeth warren i think wages need to go up. a lot of the business round table is in favor of increasing the tax credit give more money to people making living wage. properly done. you could design these things badly or well and we have just gotten really bad. >> jamie you just listed a laundry list of things that even

government should be doing but waiting for them to fix it and do it better you have gotten impatient and as a ceo you have taken matters into your own hands. i'm thinking of haven, the health care initiative that you have been working on do you have any updates there? >> i really don't because but i think it's attacking the issues head on. work skills. like how you get kids more trained for jobs either out of high school or community college infrastructure and giving them opportunity like through schools, education and those things work. they are known to work.

>> you have to match skills and we have a lot whole more stuff coming out and things like that. >> 3.5% unemployment and then you get organic wage growth which we're already starting to see. >> i think the bottom quintile or bottom 10% is up 8% for two years in a row or something. we would typically see in a long time that's a very slow recovery. >> what you don't see is it exacerbates it. >> there's lots of reasons for this becky mentioned this piece that you wrote in time magazine and we wanted to ask you about it, it refers specifically to what seems like the word capitalism and they may be on the socialist side >> socialism is when the

government controls companies. they do well and they don't start to use it for votes satisfying people. why have competition they do it for jobs. they have bad allocation of capital. most don't do a good job they become corrupt overtime. >> does that mean that every public company is perfect? no, they're flaws. >> do you think that bernie sanders or elizabeth warren are socialists in the concept that you talked about it? it is something that may feel more european in some ways. >> i don't want to talk about any particular people but if you're talking about governments controlling corporations that's socialism. you can do it in a small way or a big way. remember it could sit in the room or do it through regulatory or stuff like that

look at all the other countries and they start to take over the oil companies and utility companies. and the banks. >> the banks start making loans not to good company but to keep that factory open. and things need to be fixed. >> what did you make of lar larry fink's letter last week? >> i read it it's fine. climate is a real issue. i think most people want to be part of the solution we are going to be 100% green this year. we only do responsible and we

aren't doing it and you need a transition you need government policy government policy. it's the only thing that will globally solve this problem and at the end of the day you need carbon tax and the great thing called the carbon dividend where it doesn't get sent back to washington it gets sent back to the people and you start buying things or doing things that make more sense. >> does it make sense for companies like microsoft to announce their own plans or try to be carbon negative or try to run expensing around carbon? >> it makes sense to show their intent and to want to do a better job and say it's important. >> is that real? >> it's not going to solve the global problem okay you have two countries that are growing dramatically i'm not against them america is already coming down

20% the last 15 years or something. you will not solve the problem stop doing this. stop doing that and all that happens, someone else will make a lot more money than you because the world needs the energy you need policy. it's going to have some sacrifice. >> you would advocate for a carbon tax to be 100% clear. >> absolutely. >> with the dividend. >> co2 this means based on some -- >> you mean the smoky stuff. >> it's odorless colorless gas. >> yeah. >> but it could be -- >> what about clean water? what about chemical waste? what about what we have done

with strip mining? all of those things are okay too? >> most of us need to be cleaned up. >> not really, we're a little bit focused on all of this you were just telling me about i don't know. >> i look at carbon a different way. >> there's a risk that something is going terribly wrong here we could handle that risk today and do it right. >> we need to decide what the problem is whether it's causing slight warming or whether it's causing every single adverse weather event that's been occurring on its own for 4 billion years. more snow less snow, more flooding less flooding. >> forget all of that. >> but that's what they equate it to now. >> that's so people can get noise about it but if we have a co2 problem in the air which is hurting the world and most of the scientists say that, my view is if the chance is bad. >> not if it cost $30 trillion. >> you can do it cost free that's what i'm trying to tell

you. it goes to a bank and you get it back. >> i understand but there is a certain amount of carbon, carbon dioxide that's going to be released for years whether you balance it out and do your carbon offset and feel better about your whatever you came over and fine. >> can i just tie it back to where we started this conversation you mention risk mitigation. that's what you do very well when you look out there, what are the big risk factors since we had a trade one phase deal signed with china and since we know where brexit is headed at this point what are the things that you're watching. >> cyber is a big one.

it's a situation and we don't completely understand why other effects and we may not know for other ten years on this particular one and good policy i mean, i get frustrated that we don't have better policy around the world and i applaud the politicians that are strong enough to get up and fight the good policy which doesn't always sound like it's good for the citizens but it is so i think he's fighting the fight to get france going better. >> i want to thank you for your time it's always a pleasure seeing you. we love this interview at davos so thank you. >> good to see you. >> when we come back, president trump's comments on the coronovirus. the threat and how it's been handled at the federal level plus morgan stanley chairman and ceo will join us to talk about the market record run. squawk box will be right back. >> time now for today's aflac trivia question. in 2009, which company beat general motors as the world's largest auto maker aner wn cnbc squawk box

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now the answer to today's after lack trivia question in 2009, which company beat general motors as the world's largest auto maker the answer, toyota the parade of ceos continues live here in davos switzerland we're back in just a moment. i consulted with your grandmother's doctor.

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we're back. >> president trump speaking to the press here in davos just moments ago. i'm here in my interview room the other day i spoke to president trump about the virus and asked him if there were worries about a

pandemic at this point. >> it's great to see thank you for joining us again in davos we have done this before. >> that's right. >> before we get started with -- we're going to talk about the economy and a lot of other things, the cdc has identified a case of coronovirus in washington state if you remember sars, that effected gdp, have you been briefed by the cdc are there words about a pandemic at this point? >> no, not at all. we have it totally under control. it's one person coming in from china and we have it under control. it's going to be just fine. >> okay. president xi -- there's just some talk in china that maybe the transparency isn't everything that it's going to be. do you trust that we're going to know everything that we need to know >> i do. i have a great relationship with president xi we just signed probably the

biggest deal ever made in terms of -- it certainly has the potential to be the biggest deal ever made and it was very interesting period of time i do i think the relationship is very good. >> let's talk about davos because you were here two years ago. even the new york times at this point, your favorite, acknowledges that the davos elite are accepting that your policies are working and the u.s. economy is the envy of the world. in fact, the press coverage here is very favorable. you know what's going on back at home it's all impeachment all the time did you watch any of it? >> i did what did you make of it. >> i had a busy day as you know, yesterday. we had the speech and we had lots of meetings with different leaders including pakistan and other countries in addition to business men all over the place but i did get to see some of it. it's a hoax. >> how do you think your team performed? >> i think the team was really

good the facts are all on our side. the republican party has never been this unified. you saw that 195-0 in fact we have three democrats voting for us. that was with the house. >> witnesses >> i really don't know i think if everybody tells the truth it's perfect but you have to read the transcript if you take a look at the transcript and it's really two transcripts. it's, you know, had a first call which was perfect and had a second call which was perfect, you notice they don't mention the calls though they never mention the calls though all they have to do is read the transcripts. i put it out all the time. the other thing is speak to the president of ukraine he has been great. have to tell you and his foreign minister has been great. they constantly say there was no pressure they don't even know what we are doing. they think it's crazy. they got the money they got it very early president obama gave them nothing. he gave them pillows and sheets and things like that and i gave

them tank busters. now it's a disgraceful hoax. but we do it. >> i don't even think the "i" word came up. >> you asked me the question i have to answer. >> i know. i needed to ask it i needed to ask it that's why i did but i want to talk about what we're seeing over here, we came to davos expecting to hear about this esg, environmental, social and governmental issues, we expected to hear about climate change in four hours yesterday with the ceo of bank of america, all we talked about and all they wanted to talk about was the strength of the u.s. economy. it's the envy of the world and i think if you have a strong economy, all of these issues become easier to deal with and i think even the europeans are now acknowledging that. >> well, i appreciate that very much we have an incredible economy. the consumer has never been so

rich you know, between the tax cuts and the regulation people forget about regulation and it might have been more important than the tax cuts but we have a consumer in the united states that has never done so well we are at a point where it's so well >> it's not the inauguration i want to ask you, because we're starting to see that, the reexpansion of the fed's balance sheet somehow core lates wirelah the move in the stock market do you think they have primed the pump and some of the gains are not warranted by the economy. >> the fed raised too fast they brought up the rate too fast and they didn't drop it fast enough.

that was a lot of increases and it was a lot of increase and i think it's really the opposite of what you're saying. now they have dropped it but it was very late and you look at other countries where they have negative interest rates. negative in a positive way they're actually getting paid. they make a loan and they end up getting paid. >> are you hoping that it comes to that in the united states, that we get to negative rates? a lot of people don't think it's a great thing and it hasn't worked well in other places. do you >> they don't know yet it's so new. i want to know who are the people that buy and they invest in germany and they end up getting less money so i have to find these people but, no, if germany and with the most prime in the world, with the leader in the world we have the dollar and the dollar is very strong. a lot of things are happening but, you know, we're paying higher interest than other countries because of the fed if we were paying less, i would do it and i'd pay off a lot of debt i would do a lot of things.

>> if chairman powell out of the dog house? are rates where they should be are you satisfied? >> i don't want to talk dog house. i wish he didn't raise the rates. >> are we at a good level now do you feel >> i think the rates should go down because i think the dollar is very, very strong and i think the rate should go down. we have a very strong dollar and that sounds good and it is good in many ways but it's very bad in terms of manufacturing. i have created almost 700,000 manufacturing jobs, the past administration said manufacturing is dead which i said tell me about that. you can't do that. and we have had a tremendous success but it's harder with a strong dollar and i want this dollar to be strong. i want it to be so powerful. i want it to be great but if you lower the interest rates so many good things would happen and i want to pay off debt and we're poised for tremendous growth it will really kick in toward the end of this year. >> let me ask you about that, we came close to 3% last year

this year lower. but we have had obviously the china trade war which has been -- >> we had many things. >> do you attribute the gdp at 2% to the fed being tight for too long do you acknowledge that maybe some of the tariffs or some of the uncertain from the china trade war effected gdp. >> well it will be higher than 2% a lot of people are thrilled with that. me i'm not but we had a lot of bad things happen number one the fed was not good as far as i'm concerned and that was a big blip that should not have taken place it shouldn't have happened it's one of those things we had boeing. we had the big strike with general motors we had things happen that are very unusual to happen including some unbelievably powerful storms we were hit with storms. now with all of that, had we not done the big raise on interest, i think we would have been close to 4 and i could see 5,000 to 10,000 points more on the dow.

but that was a killer when they raised the rate. it was just a big mistake and they admit to it they admit to it i was right. i don't want to be right but i was right. >> there are some that say that the uncertainty for ceos in dealing with china and making plans for the future may have hurt capital spending. do you expect it to come back now that we had a phase one agreement and let's talk about phase 2 if we get a chance. >> the biggest thing about getting to deal with china, number one it's a great deal for us it's an important deal for china and their supply chains were breaking it's been tough for them the best thing that happened is we have two countries that like each other again because it was getting pretty nasty and you know, they have taken advantage of our country for 30 years and we -- i was not going to let it happen.

and the relationship with china is probably better than it's ever been. the relationship with president xi, president for life it's not bad but the relationship that i have is extraordinary considering he's for china and i'm for us. but the deal is a phenomenal deal we will take in $250 billion they're going to be buying $250 billion and it can go higher than that. >> real ip progress made. >> oh, yeah. >> and enforcement and watching and the tariffs stay on. >> i was watching you and you were really surprised that so many of these other things, the intellectual property were part of the deal. >> i heard this was just going to be bonds. >> this was manufacturing. this is technology this is phase one is a mass i

de -- massive deal and just that alone. not even talking about the usmca which we just got past and in fact when i go back i'll be signing it and we had i believe 89 votes in the senate which is tremendous >> we'll have more of my interview with the president coming up in the next half hour. >> okay. joining us right now to talk about where wall street is, the markets and get some reaction to what president trump had to say to joe, james gorman is here he's the ceo of morgan stanley it feels and i don't know if we should think that davos is the contraindicator. people are happy and people are quite happy with president trump too. >> it's hard not to be happy with the economy we have 50 year low unemployment rates in the u.s the global growth held up. the fed instead of raising rates has been cutting rates and this is a hard crowd right because it's a big echo chamber so if

the first-person coming in is unhappy then that bleeds the pool but it's very positive and i think for a good cause. >> to the extent that you worry about anything what would it be? this is a hand ringing kind of place. >> you have to worry about long-term china's economy is slowing. it has been for sometime and that will inevitably impact global growth and china. i'm glad we got a deal that's clearly what's going on in the middle east you know, it's almost like a second arab spring coming through in lebanon and iran. i think, you know, the middle east has been in our lifetime a problem from decade to decade. listen, the markets are expensive but the economy is doing well so do i worry about that not excessively. >> you know, we had a lot of people, there's a sense of buy with both hands right now.

buy the market with both hands. >> when everybody is buying with both hands you generally want to sell. >> right. >> you're talking about mike wilson again tepper is not one of your strategists. he's not mike wilson. >> different opinion, joe. >> obviously. >> who gets the good ones and who gets the bad ones? >> the public gets to listen to everybody. >> but the point was actually in talking to him was what we had a endless parade of sell side analysts that work for firms like yours that a lot of times spend more of their time making sure they're not going to be wrong one way or the other looking at mid single digits for the next year. i would say that that was against the consensus to say after all we have seen we're expecting a lot more

that shows that everyone is buying at this point i think these two uys. >> australia has a unique advantage which is its very close to china and china buys a lot of the dirt. so it's a good situation down there. but, no, listen, i'm not -- i wouldn't be buying -- to my point, i'm not buying with both hands if that's a question >> that's the question earnings are going up by the same multiple. by definition stock pricings are going up one of the things that i said on this show is i'm always surprised by people are surprised that the market is an all time high. in a growing economy that is

growing, by definition they're growing. unless you cut the multiple the market should finish logically every single day at an all time high now it doesn't of course but if you stand back from the market 10 to 20 feet it looks like a straight line from bottom left to part right. >> those that are optimistic about the stock market right now is they point to what the fed is doing. the fed changed course so dramatically over a year ago with lower interest rates. obviously that presents it's own challenges for the banks that lived with the lower interest rates. where do you see the fed heading this year? >> i would be very surprised if there's action this year you would need for them to reverse and raise rates i think would be catastrophic in the scenario given the way sentiment is given that we're in an election year to keep cutting rates is obviously extremely unattractive so i think the fed has enormous self-interest in playing out this economic strength with rates at historically low levels qe has been feeding the economy. i mean, there's no compelling reason to keep cutting at this

point. >> what do you make of bank company valuations like your own? >> a little better than i felt two weeks ago. stocks up 10%. >> so that wasn't a function of earnings that was a function of guidance, right? >> it was a function of our annual strategic review where we layout what we think we can do in a normalized environment over the next years short-term two years and then longer term. listen, banks have been the unloved sector of the last couple of years and you know, that will turn and i think it's starting to turn historically i always thought that you sold banks at 2.5 times book and you bought them at 1.25 with the new capital ratios they dropped. we were trading at .9 a month ago and we just came off frequent earnings. how is this possible so the banks have been undervalued and you'll see a lot of movement in the bank stocks. >> you get a little frustrated

on the most recent earnings call you called them the kids in the backseat. >> i was one of ten children my dad had a huge dodge phoenix and when we went to our family's place in the outback we all sit in the backseat. there's like seven kids in the backseat my mom and dad and the older ones in the front. we keep saying are we there yet. are we there yet it's a little bit like if you reach your goals yet you reach them yeah, we kind of did so relax a little bit. >> do you imagine -- >> you have to have a little fun on these calls i have done a lot of them. >> do you imagine there will ever be consolidation again at the top where firms like yours are? >> i think that's a heavy lift and i don't see that happening certainly in this country i cannot speak some other regions of the world you could argue there's actually compelling sort of industrial logic. in the u.s. it's hard to argue, but, you know, there's very, very large banks and it's a huge

difference in size so some of those should be growing and you're seeing below that, you know, the bb&t suntrust deal is an example. there's transactions happening because it's expensive to run these businesses the technology, the cyber prevention, managing data, data proo privacy, all of these issues cost money. >> do you think that the u.s. banks are behind relative to the european banks relative to china and the platforms? and what is happening there? it's sort of spectacular success story and, you know, what is going on china in the banking world relative to what is -- its like we are like 100 years behind it feels that way. >> that's a little harsh i mean, you could argue the core banking sector, the regulated large banks in this country ahead of the chinese banks this certainly historically has been more independent of the

government >> one of the other themes here at davos is this idea of sustainability and the larry fink letter and what microsoft is doing everybody is coming out with a plan around sustainability and how that is or is not going to change business and whether it's real or virtue signaling and marketing. where do you come down >> it's a bit of both. the reality is, in my opinion, what has gone on with climate change, just being under strain and watching what is happening down there a bigger part is just burnt. i mean, animals and wildlife have been destroyed. it's pretty historic

i grew up in a country where you had bush fires every ten years but there was nothing like this. it's obviously all over the world. i'm not a scientist but i kind of hard to argue with the facts that the globe is warming right now. >> but you could argue that that was the cause of the brush fires though it's .8 in the last 100 years. you can't attribute every single adverse weather event. >> no. >> there hasn't been management of the land that was burning how much arson was involved? 200 fires set down there how many. >> but joe i started my career as a lawyer in australia working on the 1983 bush fireswhich were the most damaging. >> so you think in a 4 billion-year-old planet you know these were unprecedented >> i'm not going to debate climate change with you. >> good. >> but i think facts are suggestive and it's a good thing that we're having the conversation. >> that's a tenuous link at this

point. floods in india and -- you know. >> a brave person wouldn't make some linkage between those >> james go arman thank you for being here. >> ginni rometty on her company's strong quarter and growth in the cloud. plus the ceo of coke shares his view of the consumer in the state of the global economy and a reminder that you can always watch us live on the go on the cnbc app we'll be right back. legendary terrain in telluride,

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the first publicly listed car maker.

topped the mark in extended training last night and shares are up even more this morning. i asked president trump about elon musk earlier this morning. >> i was worried about him because he's one of our great geniuses and we have protect him. we have to protect all of these people that came up with all of these things that's very important and he has done a very good job he's going to be be building a very big plant in the united states he has to. we help him so he has to help us. >> the president talking about elon musk. so what did i ask you for yesterday? >> love. >> no, i asked you for a

question for the president. >> for the president. >> what did you do >> i gave you my column. >> you did not. >> but what i'm getting to is i asked him about boeing, facebook, and tesla, and apple what would you -- anything in hindsight that i should have any other company? what else could i have done, do you think? he was ready. >> he was ready to go. >> ready to opine and i think it's interesting to do a rapid fire about different companies. >> netflix versus apple plus i don't know. >> that might have been a little bit too -- >> by the way, one mention on tesla, by crossing the $100 billion mark, elon musk now gets paid >> right. >> he had not been paid for the last two years because part of this program which we talked about broke on this set two years ago was this idea that he

would get after a $50 billion mark and what he gets is 1% of the outstanding shares. >> does it have to stay above $100 billion or just crossing the threshold? >> he gets the shares however he's not allowed to sell them for five years. >> so he gets them no matter what. >> that's a very good question i don't think there's a fall back i think he probably gets them once they have crossed but to get the actual -- there's a five year holding period so it's an interesting situation. so think about 1% of $100 billion. he gets a nice payday. >> president trump agrees with you that musk is special. >> he's a very special guy. >> innovator or something. >> i would say betting against elon musk is betting against humanity. >> let's talk about the u.s. bio tech company working with federal health officials to develop a vaccine for the

coronavirus. the first united states based case involving that virus which originated in china and has been responsible for nine deaths so far and hundreds of illnesses. still to come this morning, president trump's first public remarks about the threat of the coronavirus in the united states that's next. plus three big interviews with the ceos of ibm and coke koca-c and we'll talk about the markets and investing. you're watching squawk box coming to you live from davos. we'll beig bk. rhtac introducing schwab intelligent income. a simple, modern way to pay yourself from your portfolio. tell us how much you have, and how long you need it to last. we'll estimate how much you could spend. then you can decide how you'll spend it. schwab manages the complexity with automated, tax-smart withdrawals. that you can start, stop or adjust at any time with no penalties. and you pay no advisory fee. schwab intelligent income.

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we are live from the world economic forum in palm springs, california it's about 100 degrees you made the mistake of swearing sweaters that you can't really wear without the jacket. so you're going to bake for the next hour. >> nar cystic. >> i'm with you. >> taken more off. i'm joe kernen along with becky quick.

that was part coronavirus and part boeing. the 100 plus point loss we saw we're getting back 100 this morning. 55 on the nasdaq and the s&p indicated up about 12. >> oh, good. >> perfect have sot hot soup. >> turn this thing off back here. >> it has been an eventful few hours here in davos. we talk about president trump talk about the strength of the u.s. economy and a news conference listen in. >> the u.s. stock markets have soared and they have reached the highest point that they have ever had we have made at least $19

trillion. >> president trump spoke about international trade saying he thinks he'll be able to make a deal with the european union before this november's election. >> earlier, before president trump's press conference, i sat down with the president for a wide ranging interview i started by getting his comments on threat posed by the new coronavirus popping up in asia. >> it's great to see you thank you for joining us again in davos we have done this before. >> that's right. >> it was a couple of years ago. before we get started we're going to talk about the economy and a lot of other things, the cdc has identified a case of coronavirus in washington state. sars effected gdp. have you been briefed by the cdc? are there words about a pandemic

at this point? >> no not at all we have it totally under control. it's one person coming in from china and we have it under control. it's going to be just fine. >> okay. president xi, there's just some talk in china that maybe the transparency isn't everything that it's going to be. do you trust that we're going to know everything that we need to know from china? >> i do have a great relationship with president xi we just signed probably the biggest deal ever made in terms of it certainly has the potential to be the biggest deal ever made and even the new york times acknowledges that the davos elite are saying that the press coverage here is very

favorable and it's all impeachment, all the time. did you watch any of it? >> i id. i did. >> what did you make of it >> i had a busy day yesterday as you know, you were there and we had the speech and lots of meetings with different leaders including pakistan and other countries in addition to business men all over the place but i did get to see some of it. it's a hoax. it's a total hoax. >> how do you think the team performed? >> the team was really good and the facts are all on our side. the republican party has never been this unified. you saw that 195-0 we have three democrats voting for us that was with the house. >> is that key witnesses mr. president? >> i really don't know i think that if everybody tells the truth it's perfect all you have to do is read the transcript if you take a look at the transcript and it's really two transcripts. it's first call which was perfect and i had a second call which was perfect.

they never mention the calls they talk about everything but the calls. all they have to do is read the transcripts. i put it out all the time so speak to the president of ukraine. he has been great. have to tell you and his foreign minister has been great. they constantly said there was no pressure. they don't even know what we're doing. they think it's crazy. so they got the money and, in fact, they got it very early president obama gave them nothing. he gave them pillows and sheets and things like that and i gave them tank busters. now it's a disgraceful hoax. >> but we do it. >> we had a four hour show yesterday. i don't even think the i word came up. >> you asked me the question. >> no, i know that i did. >> i have to answer. >> and i needed to ask it. that's why i did but i really want to talk about what we're seeing over here we came to davos expecting to hear about this esg, environmental, social and governmental issues. we expected to hear about stake holders versus shareholders and

climate change in four hours yesterday with the ceo of bank of america all we talked about and all they wanted to talk about was the strength of the u.s. economy. it's the envy of the world and i think that if you have a strong economy all of these ancillary issues become easier to deal with and i think even the europeans are now acknowledging that. >> i appreciate that very much we do. we have an incredible economy. the consumer has never been so rich you know, they're between the tax cuts and regulation cuts people forget about regulation we have a consumer in the united states that has never done so well and i think we are really poised to have -- i think we have tremendous otential

they have primed the pump and some of the gains are not warranted by the underlying economy. >> the fed raised too fast they brought up the rate too fast and they didn't drop it fast enough and that was very -- that was a lot of increases and a lot of increase now they have dropped it and he's really late and you look at other countries where they have negative interest rates. negative in a positive way they're getting paid they make a loan and end up getting paid. >> are you hoping that it comes to that in the united states that we get to negative rates? because a lot of people don't think it's a great thing and it hasn't worked well in other places do you >> well, they don't know yet it's so new. i want to know who are the people that buy? who are the people that buy and

they invest in germany and end up getting less money. so i have to find these people if germany and we're the most prime in the world we're the leader in the world. we have the color and the color is very strong, a lot of things are happening but we're paying higher interest than other countries because of the fed if we were paying less, i would do it and i'd pay off a lot of debt i'd do a lot of things. >> is chairman powell out of the dog house? are rates where they should be >> i don't want to talk dog house. i wish he didn't raise the rates. that's not what i thought. >> are we at a good level now do you feel >> i think the rates should go down because i think the dollar is very, very strong and i think the rates should go down we have a very strong dollar and that sounds good and it is good in many ways but it's very bad in terms of manufacturing. i have created almost 700,000 manufacturing jobs the past administration said manufacturing is dead which i said tell me about that.

how do you -- you can't do that. and we have had a tremendous success but it's harder with the strong dollar. i want this dollar to be strong. i want it to be so powerfulment i want it to be great but if you lower the interest rates, so many good things would happen. and one thing that i want to do is pay off debt. >> let me ask you about that, we came close to 3% last year this year, lower, but we have had obviously the china trade war which has been -- >> we had many things. >> we did. >> do you attribute the gdp at 2% to the fed being tight for too long do you acknowledge that maybe some of the tariffs or some of the uncertainty from the china trade war effected gdp. >> it will be higher than 2% a lot of people are thrilled with that. me i'm not but we had a lot of bad things happen.

the fed was not good as far as i'm concerned. that was a big blip that should not have taken place it shouldn't have happened it's one of those things but we had boeing we had the big strike with general motors we had things happen that are very unusual to happen including powerful storms. now had we not done the big raise on interest we would have been close to four but that was a killer. they admit to it i was right. i don't want to be right but i was right. >> there's some is a they the uncertainty for ceos in dealing with china and making plans for the future may have hurt capital spending do you expect it to come back now that we have a phase one agreement? >> it's a great deal for us. it's an important deal for china

because their supply chains were breaking it has been tough for them >> the best thing that happened is we have two countries that like each other again. and i was not going to let it happen we have taken in billions of billions of dollars. i still have the negotiating chip i have 25% tariffs on and that's a great negotiating chip and we're starting phase two very soon but the relationship that we have now with china is probably better than it's ever been the relationship that i have with president xi, president for life, okay it's not bad but it's extraordinary he's for china and i'm for us.

and tariffs stay on. and so many of these other things >> and this is technology. this phase one is a massive deal it's probably $250 billion but it could go higher than that just that alone, not even talking about the usmca which we just got past, in fact, when i go back i'll be signing it and we had 89 votes in the senate. >> he wants to make a deal and that's okay with me. >> so that could start soon. >> we started negotiating and frankly we're starting with europe too europe is to be honest with you, europe has been very, very tough to deal with they have taken advantage of our country, the european union for

many, many years and we can't do it anymore i always like to be very transparent. i wanted to wait until i finished china i want want to go with china and europe at the same time and i met with the new head of the european commission who is terrific and we had a great talk but i said look if we don't get something i'm going to have to take action and the action will be a very high tariffs on their cars and other things that come into our country now saying that, i don't want your audience to get nervous, they're going to make a deal because they have to they have to they have no choice. but we had a tremendous deficit for many, many years, over $150 billion with europe. he was a friend of mine and he was impossible to deal with. it's going to be a lot better for boris now too. you couldn't make a deal it was very hard to make a deal. i never played my cards because i didn't want to do that again

while i was doing china. i wanted to do china first and mexico and canada first and now they're all done and now what we do is we're going to do europe i had a very big conversation and i would be very surprised if i had to implemented the tariffs. >> we had one of your guys, the nec director and yesterday we asked him about deficits and we asked him, i mean, we acknowledged that you wanted to rebuild the defense industry and you had to agree in the second term, will you look at it and do you need to raise taxes or do you need to cut spending >> we have taken in more revenue substantially than we did when the taxes were high. nobody could even believe it but we take in more revenue with the big tax cut. you are paying really 41% and it's sort of lower than that. >> that will be a priority. >> oh, absolutely. >> one of the reasons that i'd

like to see the interest rates lowered is because i'd like to refinance the debt and pay off the debt we're going to have tremendous growth when you have all of these trade deals, don't forget i made a $40 billion deal with japan. i made a massive deal with south korea. nobody even knows what the number is and it's a great deal and then you add mexico. you add china. you add canada, you add all of these other countries and we have about 10 countries that we're dealing with these deals were horrible. in many cases we didn't even have a deal. they just came in here and took advantage of our country so we have massive potential, massive growth and you'll see that toward the middle to the end of next year. >> i'm going to go through like ten things if there is a second term, do you have a preference for an -- i came up with the three bs, biden, bernie and bloomberg. >> all very different. mike is spending a lot of money and has no chance but he has a tremendous, you know, he used to be a friend of mine until i ran for politics and then he went a

little off you should see some of the nice things he said before me before i ran. but he had to deal with hillary clinton. it was very simple people know that and it wasn't going toperiod hah. it was going to go to terry mcauliffe so they were playing with michael and it's too bad but he's spending a fortune. he's making a lot of broadcasters wealthy and getting nowhere. his ratings are terrible you look at his numbers. i don't know if joe is going to limp across the line, but i watched him, i with him speaking, he can't put together a sentence but it could be him and it could be crazy bernie i don't know who it's going to be whoever it is, i'm ready. >> i just want to ask you some rapid fire questions just to get your comments. so boeing, yesterday in the news and it hit the dow yesterday and the news is the summer perhaps. >> very disappointing company. this is one of the great companies of the world, let's say as of a year ago and then all of a sudden things happened.

i'm so disappointed in boeing. had a tremendous impact. when you talk about growth it's so big. people say it's more than .5 of gdp. so a big, big disappointment to me big disappointment. >> apple, what do you think? >> i like them a lot i think we should do some encryption i think we should start finding some of the bad people out there that we can do with apple. i think it's very important. frankly i have helped them a lot. i have given them waivers because it's a great company but it made a big difference and they compete against samsung; mostly samsung that would be their number one competitor from south korea. we have a trade deal from south korea so samsung would get the no waiver and they would have to pay tariffs. so i did waivers but i want them to help us a little bit. you know, apple has to help us and i'm very strong on it. they have the keys to so many criminals and criminal minds and

we can do things when they the problem with the recently in florida i won't go into it because it's so horrible but they could have given us that information and it would have been very helpful. >> but we don't need a back doorway in getting into the wrong hands either >> no, no. i understand i understand both sides of the argument but if you're dealing with drug lords, if you're dealing with terrorists and if you're dealing with murders, i don't care, we have to find out what's going on. >> facebook. zuckerberg. >> well, he told me that i'm number one in the world in facebook he sat down and he said congratulations, you're number one. >> should he stick to his guns with the political ads >> i'd rather have him do whatever he is going to do he's done a hell of a job when you think about it i hard he was going to run for president. that wouldn't be too frightening i don't think. but he does have that monster behind him but he said you're number one and i said that's very nice.

it's always nice to be number one. you know who number two is modi of india but he has $1.5 billion people. i have 350 and we're going there very soon. >> last but not least -- >> by the way, our relationship with india and with china and with japan and with so many countries is better than it's ever been. literally better than it's ever been. >> tesla is now worth more than gm and ford. do you have comments on elon musk >> you have to give him credit he's also doing the rockets. he likes rockets he does good at rockets too by the way. no wings and no anything and they're landing i said i have never seen that before and i was worried about him because he's one of our great geniuses and we have to protect our genius we have to protect tom edison and we have to protect all of these people that came up with the originally the light bulb and the wheel and all of these things and he's one of very smart people and we want to

cherish those people that's very important. but he has done a very good job. shocking howe well, how it's coe so fast. you go back a year and they were talking about the end of the company and now all of a sudden they're talking about these great things he's going to be building a very big plant in the united states he has to because we help him so he has to help us. >> do i dare -- one last question, entitlements ever be on your plate. >> at some point they will be. we have tremendous growth. it will be toward the end of the year the growth is going to be incredible and at right time we will take a look at that that's actually the easiest of all things if you look. >> if you're willing to do some of the things that you said you wouldn't do in the past in terms of medicare. >> we also have assets that we never had. we never had growth like this. we never had a consumer that was taken in through different means over $10,000 a family. we never had the kind of things

that we had. our country is the hottest in the world. we have the hottest economy in the world. we have the best unemployment numbers we have ever had african american, asian american, hispanics are doing incredibly the best they have ever done black, best they have ever done. african american, the numbers are incredible, the poverty numbers, the unemployment and the employment there is a difference, actually. but the unemployment and employment numbers for african americans are the best we have ever had we just came up with a chart and it was a very important number to me, african american youth has the highest by far unemployment, the best unemployment numbers they ever and the best employment numbers. right now we have almost 160 million people working in the united states. we've never been close to that. >> safe travels. thank you for meeting with us. >> appreciate it great job. >> joining us now to talk about

president trump's comments, neal ferguson, senior fellow at the hoover institution we talked a lot. a recurring theme that we had here, i don't know if you had a chance to watch but trump at least in part has won over the davos crowd to some extent and i would say that above all else, economic growth is about all that you could really do to endear yourself to this crowd. if even donald trump can become endeared to this crowd it has to be something very powerful and that's economic growth. >> i don't know how much they really have warmed to him. i didn't see a standing ovation yesterday because remember there's a cognitive disnance at the heart of davos publicly you have to agree with greta and be part of the virtue signaling community on climate change and esg but privately, you are quitely agreeing with trump so you can't be outwardly

too supportive but the reality is if europe can't get some sustained economic growth the green deal is going to amend to another drag on german manufacturing and on the euro zone as a whole. so privately a lot of people were listening to trump and saying, you know what, he's doing the stuff we have been doing for school stimulus. everybody says the germans should do that the u.s. has done it you don't get public praise for that privately people are looking at the u.s. numbers i don't think he exaggerated u.s. economic performance and they're thinking maybe we should have some of that. >> we even said if you were larry fink and half of your investors were millennials or liberals, you'd write the same letter but might not mean a word of it, right >> i think what we're seeing here is it reflects the way a networked world operates reputational capital is hugely important. and it can be destroyed in a day. it can be destroyed by one small

slip. >> it's really to see that the climate issue has not been dealt with in a countered way because if it were there would be some acknowledgment that 60% of the increase in co2 emissions since greta was born is attributable to china but nobody talks about that they talk as if it's somehow europeans and americans that are going to fix this problem because i find that frustrating because that means that we're not really getting to the heart of the matter. >> but when you look at microsoft, that's going to cost them real money. >> they got a lot of money. >> they got a lot of money >> i'm not sitting here telling you that there isn't a climate change problem is there we don't have australian level wildfires but we have wildfires. this is an issue that is no longer really worth debating is it happening? it clearly is and ordinary

people know it's happening the point is what are we going to do about it when she says you have to stop co2 emissions tomorrow, that means shutting down factories all over asia. nobody here is seriously talking about doing that. >> it's not a good look for developed nationing to be delling developing nations you can't have what we have. >> right but if you're serious about slowing co2 emissions and avoiding average temperatures rising it has to be china and india india is responsible for 18% but she goes to new york and comes to davos i don't see her in beijing and delhi and that's the missing link in this discussion. >> it's always good to see you when we come back right here on squawk box live from davos it's a lot more we have the ceo of ibm and coca-cola and glenn hutchen. a huge line-up ahead we're back in a moment

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we are live from the world economic forum in dav davos switzerland this morning better than expected fourth quarter results and 2020 profit guidance above analyst expectations officially launching the policy lab here at davos. it's a global artificial intelligence initiative intended to raise trust in ai systems a number of other ceos met with the president. what is your reaction to how the davos community is reacting to the president. >> a good half of the breakfast we talked about not just the economy but we talked about skills and how to create an

economy that is good for all americans and give everybody an opportunity in this new digital age. >> my understanding was he did make a comment about technology and the good and the bad that comes with it. he made a mention about boeing during that breakfast. >> you and i, we have all been together on this program before and these are the greatest technologies that are the opportunity, the challenge, you just mentioned that we launched a policy lab i just had a round table and it is on a tightrope and it is about balance on these technologies because they can do great things and then there are things that it's not a technology question, andrew. you kind of make these decisions within your values of what you think should and shouldn't be done. >> you want everybody on the same page because if somebody else is willing to do something that you're not that puts you at a distinct disadvantage. how do you do that not just across the united states but across countries. >> particularly the topic comes up when you talk about privacy as an example. to me this is not a technology discussion this is a values based discussion that the country has

to talk about and we need to decide who can draw the line where and as congress makes laws you draw the line where? we already have a conventional rule such as what a priest knows is protected what your doctor knows is protected. we need to do it for the digital age and of course uphold that. >> let me ask you, runs google and alphabet publicly came out about 48 hours ago and said he wants regulation around ai specifically. >> yes i think four years ago when i came here our platform was all about trust and transparency in this era and i think even on the show a couple of years ago precision regulation is what i think is needed because on the other hand, you often talk about we have to compete in this world against every country so you want to have innovation flourish and you want to balance that with security. so if you said completely regulate a.i., that's not the answer the answer is to say precision regulation means such as things like regulate the use of a.i. in certain cases versus the

technology itself. facial recognition. they have a completely different value system you picked the right word. it's based on values these two things the first order of business is for us to get our own view as a country settled on this and then work with our allies like we do with many other things and i think then you work with, china does need to interoperate. this is one of the topics that i want and we need to talk more about for china. the issue that people talk about is decoupling but they say the financial market is opening. you can't have a global financial market with a decoupled technology industry. you cannot so we need to work on how you get innovation as well as how you get --

>> how do you think about a government sponsored efforts at facial recognition by the way, they're using that -- >> of course. >> to then decide how they're going to give you credit or give you a mortgage. >> of course we don't -- we would of course never agree with that, right? so these are to me things that you have to both decide for yourself, decide with your allies and then how are you going to interoperate with those systems. >> joe talked to the president this morning and i ask you to weigh in on it this debate over even the apple phone it's potentially a terrorism. >> i hope i'm going to get to talk about ibm >> i promise. >> i promise. >> apple. >> we had a great close here of the year i hope you saw that, right >> we're going to get there in just a second. >> but given that we talk about big policy issue. >> how i feel on a case like that on privacy is this is not a technology question. it's a values uestion. who should draw the line where we need to debate it in this country. congress and regulation needs to go in and we need to uphold it

we haven't finished that yet we need to do that. >> what do you do in these sort of -- i don't know if they're special circumstances because we're going to have more and more of them over time. >> that's why we need to get that done now. i know what i would do as a company if someone came to us, we'd say we have to deal with the client the client would either make a decision or i was asked to do something that i didn't agree with i would challenge it with appropriate law. >> let's talk about ibm. >> yeah. >> you are correct in that you have reported great results however there are some analysts out there just this weekend i don't know if you saw morgan stanley downgrading the stock saying they think it's going to get harder and harder to produce those kind of earnings. >> yeah. to the way the quarter ended here, we did we returned the company to growth under any metric you looked at, you asked me about it before this demonstrated the acquisition that we closed ibm and red hat are better together. record growth. hit it's first billion dollar quarter. ibm lifted with it and ibm with

what we have done in change with our portfolio and the cloud accelerated through the whole year 23% growth and this to me is what is now, what you just said, that has put us now in a position of growth for sustained growth, 2020 we vefd knew, we said eps, free cash flow and margin expansion people keep missing that margin expansion point. we're high value tech. margins were up 230 basis points >> are we going to see you pursue another big deal? >> you're going to see us continue we absolutely said we are going to lead in enterprise cloud. this is why bank of america, there is a big difference with what we do within a financial systems cloud. we have spent almost two years with them on 500 different regulatory controls. so you're going to see us continue to focus on being the enterprise cloud for business as well, everything our clients are doing in a.i. and data >> we got rid of a lot. >> it's working. >> you see that actually yeah 2 billion of divestitures.

they still run out through the first half here but we did actually over this tenure of really replatforming ibm, it's been over 10 billion of divestitures that we have done and a number of acquisitions and the culmination here and that's given us quantum and a.i. and the hybrid cloud. >> what do you expect with margins this year? >> gross margin expansion. still. you can see the whole portfolio move forward. >> i hope you got everything in. >> thank you it's great to see you. absolutely. >> all right coming up from one dow component to another, coca-cola ceo james quincey is going to share his view everything stands for coke the global economy to the global consumer and sustainable strategies a reminder, you can always watch or listen to us live on the go on the cnbc app. squawk box is coming to you live from davos switzerland

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while our competition continues to talk. good morning guys. usually i go by the name soso. i am a chief... solutions engineer. the more you push yourself, the more confident you're going to get. and the more confidence you have, the more people are going to listen to you. especially as a woman in the industry. you need to actually just make sure that you push it. ♪ ♪ cisco. the bridge to possible.

the world economic forum in davos switzerland, global beverage giant coca-cola is focussing on growth in it's portfolio. in a world of changing consumer taste and increased emphasis on health and wellness.

coke is also making key investments. the company announced its going to be investing more than a billion dollars in france over the next five years. joining us right now is james quincy he's the coca-cola ceo it's great to see you. >> thank you great to see you again. >> we had conversation this morning about the changes that macron is making in france that it's more business friendly is that? why or is there other things in terms of what you want to do globally >> it's both the environment is getting more business friendly in france and we're seeing our portfolio grow as we brought new brands in and new categories we have seen more growth in the french marketplace but we're also combining with that our strategy on sustainability and reducing our use of --

>> when you started out as a public company 100 years ago it was just coca-cola now you are talking about 500 different brands and 4,300 different drinks and more coming all the time is the goal you just have to get bigger and bigger to be able to accommodate every change in consumer taste along the way what is that >> certainly it's about satisfying consumer demands and consumer tastes and when we started 100 years ago when we went on the stock market we were in one country with one product in one package size. so it was the beginning of a love affair with the world but consumers are not going to drink the same thing all day long or watch the same program all day long they want variety. we want a great global franchise. we need to have a broad spectrum of drinks. that's what we're trying to create. >> what do you see happening in consumer tastes right now and as a result what can you tell us about the strength of the consumer around the globe and in the united states? >> i think the consumer is

pretty robust at the moment. you walk around davos and there's some sectors which are feeling the pressure coming out of 2019 and into 2020 more on the manufacturing side some of the big trade sectors but the consumer seems to be robust around the world. yes, ups and downs but they're doing pretty well and so we're confident about what happened in 2019 and we see the momentum continuing into 2020 it looks pretty good from a consumer point of view. >> i know that you're continuing to play with your portfolio and different things coke zero sugar has just been revamped why was it revamped? how has it changed >> well, we're always trying to make things better we're never satisfied. many, many, many years ago the great creator of the coke system said the future belongs to the discontented and that's as true today as it was then you always have to be thinking where the consumer is going. so we have tweaked coke zero sugar. we made it as close as we can to

the coke flavor. that's the journey we have been on we changed the look of the packaging. we were heavily into black packaging and people want to stay to the brand they love. which is red coke and we brought it closer to the original and that allowed us to have multiple years of double digit growth. >> that would be like, i think mcdonald's has done it with the fries. they got rid of the trans fats and got close. i would drink six of those i day if i wouldn't be really fat. so that would be like almost the holy grail that would be like noble prize worthy can you do it? >> we're definitely on a journey. i mean, coke is growing. >> you have an upset stomach diet coke doesn't work like regular coke. >> does coke zero work for an upset stomach too? long-term right now between coke, diet coke, coke zero, what

is the percentage base of sales? what do you think it turns into? >> if you look around the world, you have countries where red coke, classic coke is the vast majority of the sales. you go to parts of the world where it's a more developed business take the further ahead which is probably the u.k., more than half the sales are zero sugar. >> when you say zero sugar, that's coke zero and diet coke. >> yeah. that's even more than the us. which is still a little more than 50% classic coke. so the direction of travel, the franchise can grow then zero sugar elements can be a bigger part of the mix. people can still love coke classic in proportion and moderation and the total business will grow that's why it was growing at its fastest rate in ten years. >> you've noticed that you need the regular. >> i'm aware of that but i grew up on diet coke in my family it's a taste i actually like the taste of diet coke. >> which is why you keep diet coke and coke zero. >> absolutely. because diet coke in the end

tastes quite different to coke. >> it was the first diet drink 40 plus years ago. >> you're smart with the little cans and i wish -- believe me i'm with you on that sustainability i wish there was no plastic. but the little ones, i indulge this won't hurt. instead of that 12 ounce the little ones it's like this is okay. what is that 80 calories or something it's so good. >> can we talk about sparkling water. >> of course. >> that's the piece of this business that's blowing up. >> put some alcohol in it. >> no. >> hard seltzer. >> or cbd. >> i wasn't thinking about it. >> so you got it >> it's one of the fastest growing sparkling waters. >> you never heard of it you have to get your friend, competitor, mr. cramer on. he's a fanatic in the u.s. sparkling water is exploding. in other parts of the world it's a different dynamic. >> my dentist thinks i should use a straw even if you're drinking sparkling water. >> bad for the environment.

>> well, no, because the carbonation may not be good for the he anonymoenamel on your te >> i think you should take a selection of views from different dentists and make your own decision but the mouth is there, the saliva is there to protect you. as long as you don't hold it against your teeth which would be weird anyway. there's definitely some growth in categories like sparkling water but i want to come back on your no plastics the objective with plastics is no not plastics. it's zero waste. our objective is zero waste and a lower carbon footprint. >> you had me at the low plastics. >> get the bottles back and make new ones we already identified in the coming months and a year we'll have the first market in the world sweden where all the markets we made from 100% recycled. >> do you incent the consumer to give them back it used to be you would get 5 cents back. >> it depends on where you are

in the world as to what system works to collect it back in the advanced economies it tends to be an economy in the he meremerging markets t have so much value that people can be employed just to collect them to collect them >> how much does it cost you to do it? do you think it will ever get truly costless >> no. i think it will become the price of entry of business >> because customers are going to demand it because regulators which constituent part >> i don't know whether the consumeler get there first, the government or anyone else you can you can see that's where they end up. the climate crisis is out there, the carbon emissions are going up if we want to imagine a world everyone is poor, 80% of the world can have the same lifestyle the advanced economies do, we need to rad dally reduce the carbon intensity we can see where the game is going and want to get ahead. if we do it, start now and get going, we can get there, because

they're already places in the world over 90% collection of bottles and using them to recycle. it's doable. >> good. clean water, i'm with you on that thank you, appreciate it north island's glenn hutc n hutchins will think if the market rolls on and what he sees next in the u.s. economy we'll be right back. >> thank you

the diversion between stock prices and bond prices is the greatest of all-time and we don't know what the ultimate outcome is >> that was jpmorgan's ceo jamie dim dimon on "squawk box" earlier. joining us to talk about the markets, economy is glenn hutchins, chairman of north island, director at the federal reserve bank of new york and vice chairman of brookings and the economic club.

>> lots of things. put the sunglasses back on >> they took them from me. >> you had the miami vice goes to davos look rocking. put them on. >> becky will do it. >> that looks better >> they didn't steal mine yet. >> the audrey hepburn. >> every year we sit with you and get sort of your sense of where things are there's a lot of mojo in davos sometimes counter intuitive. >> the davos consensus is always wrong. 1 shu 100% of the time the trick is figure out why and what to do about it. i ran in on the way here one of the greatest economists in the world in my estimation and he said he was concerned about how, i'm not going to quote him can he speak for himself he said he's very concerned about how placid and how the world is optimistic, everybody is right now not a time period when there's a huge amount of risk to point to, but the sense of there's no

risk, nothing to be concerned about is ominous for me. an example, you've been talking about boeing on your show today. looks to me my instinct tells me boeing year is going to be worse than last year, given all the things they faced. i understand from traders at the credit default swaps are selling at 50 basis points as an example and the mismatch between the potential risk and the way the markets are pricing, markets are generally placid, very little volatility and seems like a goldilocks time period which viscerally for me puts me on edge >> do you remember the victory lap the sugar high was coming home to roost and you had been right about everything with the trump economy being transitory and coming to an end one year ago. we were at dinner, we were here, everywhere else. that clearly has not happened. can you concede the sugar high was the wrong call from you and larry summers? >> was larry summers with us at

dinner last year >> no. >> by the way, joe, nice to see you, too >> you're saying you don't feel -- >> joe, can i speak for myself >> okay, let's hear it >> what i said, the argument that i made was when the trump tax cuts were touted to generate 3% to 4% economic growth, above 3%, the bets i made around the dinner table were over/under for 3% the number is now about 2.5% for that year. so it way underperformed the expectations of the bulls for it two is my main concern which you didn't articulate i didn't think adding $1 trillion of debt to our u.s. economy at a time period in which we were in recovery and should be reducing the debt load on our economy for the benefit of future generations was correct. there's a presentation that was made to a group of investors today about how countries lose

their sovereign credit rating and one of them is when they take on immense amounts of debt at this part of the cycle of their period as a reserve country. so i don't, i still have a great deal of concern about the fiscal policy of the administration great deal of concern. >> it doesn't seem either party is all that concerned at all about it at this point >> exactly right >> joe talked about president trump he'd be interested in lowering taxes once again if he's reelected any of the democrats all have incredibly increased spending plans they're talking about. >> no doubt about it both sides are losing track of the vital importance at this time of our country's history and the moment this current economic cycle of getting our fiscal house in order down to our great advantage. >> given your role with the federal reserve, what do you make of what jay powell has done and how much responsibility or credit do you give him for where we are in this expansion if that's what we're going to

describe it as >> jay powell has done precisely what he said he was going to do, react to the data. >> interest rates tried to go up, the markets and the economy couldn't digest it the important question is why, why are we in a situation where we understand real interest rates to be roughly around zero, and i think that's possibly because we don't understand the economy we're living in and not measuring it correctly >> could be inflation because of innovation and technology isn't what it used to be >> precisely >> it could be a good thing. not a bad thing. >> i couldn't agree with you more i think if you think about an alternative reality, where let's say that productivity is growing rapidly like our friends in silicon valley think, deflationary committee real interest rates deflation 2%

would be about 3.5%, 3.7%, the historic norm and that means that the equity markets and rate environment is about right >> we got to go. >> thank you >> glenn, thank you. this is the only time i see you now, not sure why that is, but that's a different subject anyway, we have another big line-up here in davos tomorrow on "squawk box," including treasury secretary steven mnuchin. see you tomorrow >> glenn, thank you. ♪ because i'm on top of the world, hey, i'm on top of the world ♪ good morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new york stock exchange looking to recapture tuesday's losses and set new records. the president speaks to cnbc in davos, chinese give an update on the coronavirus, earnings from netflix, i about,