good morning, everyone. welcome to "squawk box" here on cnbc. i'm becky quick live from washington, d.c. and andrew ross sorkin is live from the world economic forum in davos. andrew, this is a big show. i don't know about there, but it's pretty cold here. what's happening in the swiss alps? >> not as cold here. we were watching from davos throughout the day during what was some pretty incredible coverage of the inauguration. of course, that by the way is the topic at the world economic forum. you can't go anywhere without anybody talking with it. we are here in davos. nearly 3,000 business titans, politicians and heads of state

gathering from all over the globe. as we mentioned, president trump's speech was closely watched here. becky, with some trepidation from those outside of the united states. the more american ceos that i spoke with last night, i would put in an accommodation of hopeful with a little bit of anxiety and skittishness talking about let's hope for the best and plan for the worst. what will the worst be? questions about what the red line might be. if you are outside of the united states, there is -- dare i say, a palpable fear. the tariff piece is part of it. i actually sat next to somebody at dinner from outside of the united states who made a fascinating comment who said we love the united states being the leader of the world. it's different if america has to be the winner because for america to be the winner, that

means there has to be losers. >> right. >> it was interesting articulation at the table of what the issues are in terms of how folks outside the u.s. are looking at this whole situation. i know we'll be talking a lot more about it throughout the next three days here in davos, of course, and just to give you a glimpse of what we have coming up. it's an all-star lineup. in a couple of minutes, the ceo of coinbase. they just had a big crypto ball that took place over the weekend. the trump and melania coins and the revolution in crypto. the ceos of nasdaq and ray dalio. we have satya nadella here. we have marc benioff. we have jamie dimon.

david solomon. david who was with you in washington yesterday making his way over here. we will get a lot of perspective on all of it. >> andrew, there's a huge number of people who were leaving last night or this morning on their way from here straight to davos. i think you're right to point out that the perspective from outside the united states may be sharply different from here in washington, d.c., particularly, the mood and atmosphere that has been here for last several days. we had albert bourla yesterday. he pointed out radical change. the idea of radical change is one lots of people are trying to adjust to. his perspective was there was most potential upside than downside. everyone you talked to is trying to figure out what that change is going to mean and trying to figure out how to adjust to that because that is the one thing that is certain as there is going to be massive change that

comes. that's the stated intent of donald trump. he wants to change things. he wants to shake things up. even reading today in the "wall street journal" how he may have the gsa, the government's landlord basically selloff 2/3 of the portfolio of real estate they hold. if you think of that in one small area, one sector, that kind of change being dropped across the entire universe, there's a lot of adjustment and certainly some uncomfortable feelings that people particularly in power today may have with that. you have to figure out where the winds are blowing and how that's going to shake out and what that means. that's the same conversations that are happening here last night. by the way, we have high profile guests here in washington, d.c. to run through all. including president trump's senior trade and manufacturing adviser peter navarro. he is somebody on the front lines line

lines wanting massive trade change. we have former house speaker kevin mccarthy and richard neal and republican senator tim scott. you are right, andrew. trying to igure out how that change is going to be implemented and who the winners and losers are going to be. that is everyone from government leaders to ceos are all going to figure out. >> we heard from her, the president of the european commission who was here talked about warning about quote harsh geo strategic competition and the he expectations of tariffs. when you talk about harsh geo strategic competition, that is something you would never hear from the united states. >> that is something that is

anticipated. tariffs of 25%, this is what donald trump, that president trump said that tariffs of 25% on mexico and canada, our allies, are going to kick in on february 1st. i don't know why it is not immediately like other executive orders, we will talk about that coming up. let's get to the first orders that president trump signed after taking office. he issued full pardon to 1,500 charged in the riot on january 6th of 2021. he signed an order that halted the ban of tiktok for at least 75 days. he ordered the creation of department of government efficiency. the elon musk group targeted with slashing government waste. vivek ramaswamy confirmed he is leaving the group. the word is he will be running for governor of ohio. president trump signed an order seeking to end automatic

birthright citizenship for people not in the country legally. and withdrawing from the paris climate agreement. he declared a national emergency for energy. he directed the federal agencies over production including on federal lands. he repealed auto emissions targets issued by the biden administration and ordered an end to dei initiatives in the government, including any programs that hire or promote people on race or disability status. another ordered over gender identity and recognized biological sex defined by reproductive organs at birth. president trump did not implement tariffs, but plans to implement tariffs of 25% on canada and mexico on february 1st. separately, the senate confirmed marco rubio as secretary of state making him the first member of trump's cabinet to be appointed. the vote was 99-0.

obviously, andrew, things moving quickly. a lot of activity as we anticipated. they warned early yesterday there would be more than 100 executive orders and actions that were given just in the first 24 hours. we already have seen a huge amount of movement and we're not 24 hours in since the inauguration yesterday. >> one thing you will find interesting because we sat here together for years in davos where the conversation is about esg and dei. you mentioned dei in the first round of executive orders. that phrase esg is effectively off the table. it is not in the names of the panels, it is not really mentioned except in the context of it being rebuked, at least in the united states. in europe, it's a little bit of a different story, but still, an anxiousness. it is interesting how quickly things are shifting. >> andrew, i was reading this morning in semafor and davos is

an endangered species. the mod od and context is chang. >> davos man. ben smith interviewed me. we obviousl usually interview b. >> they used it. it's their opening story. very well done. davos man endangered species ice in their newsletter today. >> he is. he is. we have more coming up, we will talk to davos men or not. we will talk crypto in just a minute. bitcoin surged to a record yesterday and pulled back after crypto wasn't included in the first round of executive orders. we will talk about that because coinbase ceo brian armstrong who made the trip. he is here now. this is a special edition of "squawk box" from davos, switzerland and washington, d.c. the day after the inauguration. we will continue it afr e eak.teth

welcome back to "squawk box." we're in davos, switzerland at the world economic forum. take a look at bitcoin. it soared to a high yesterday and pulled back after the first round of executive orders did not include crypto. we are joined by the ceo of the largest crypto change in the u.s. the first time here at davos. coinbase founder brian armstrong. you were in washington over the weekend. >> good morning. >> take us inside the room. what was the feeling? we watched the crypto ball and everything also. there seems to be a full on sea change in washington about your world. >> it's the dawn of the new day for crypto. the energy was palpable

throughout the room. you have to remember the last four years we felt we were being attacked by the administration and they tried to weaponize the lack of clarity and the rules and push back on the good actors. there were bad actors, to be fair, but they were going after the good actors. we are ready for new rules. that is the legislation to get passed. >> did you expect an executive order yesterday? to the extent of bitcoin prices is a signal of something. >> it's been one day. i'm not too worried. >> what is the executive order you are looking for? >> directing the agency of the u.s. government to collaborate and look to clear rules the un startups to be built there. rearticulating the bill of rights with the self custodial

wallets. that was a big issue in the past four years as well. operation 2.0. those were some of the things that can be done with executive orders, it will really take congress. >> can i ask about the choke point 2.0? the question is do you believe people were being quote/unquote debanked because they owned crypto at all or debanked because they were seen at those banks as a risk of some sort to the bank? >> i think what happened is that the regulators likely cajoled by people like elizabeth warren applied a soft pressure to the banks and said we have concerns about crypto. vague statements. risk based statements. if you are a bank ceo, that is hard to do if the regulator comes in and says we're uncomfortable with this. you say is it illegal?

no, we're unfornl.comfortable. that soft pressure was unlawful in my view was happening. >> i want to bring in becky in a second. this became a commotion in the last 48 hours about crypto. what is your feeling about the trump family involvement in crypto and president trump put out a meme coin that was at some point worth tens of billions of dollars. melania doing the same. there are some people inside crypto who are very critical of those decisions because they look like an enrichment of the president. >> look, i think anybody should be able to create a collectible or piece of art work. there are lots of crypto. commodities and hopefully securities in the future. these meme coins are something anybody should put out there. we don't recommend one asset. we look at the standards and let

the market decide. >> the two components. the concept of a meme coin. is that good or bad for crypto? if enough people participate and lose, because more people lose than win, and president fact that the president of the united states and his family involved in the project, does that concern you? >> think about meme coins. a lot of technology looks like a toy. think about the early internet and people were putting animated gifs and things with cats. it turned out to be much more important than that. you have to be cautious. with meme coins, it is not something i'm trading all the time. i'm not particularly interested in it. it could evolve into something powerful. you have to keep an open mind. >> the family isn't that part? >> i think everybody should have

the right. >> becky. >> brian, i was wondering, andrew touched on this. the disappointment that's being read into the price of crypto today. it's not down all that much. people are saying there's disappointment because he didn't enact on day one. if you look at crypto's price since his election, bitcoin's price since his election, it's up almost 50%. i wonder how much of the positive news is baked into what you are seeing in the price of bitcoin? what you are seeing from here in terms of bitcoin's growth or volatility that could come with that? a lot of the positive news is already recognized from the moment he was elected? >> we have seen an incredible growth and it hit an all-time high yesterday. we feel very good about that. i nk over time, bitcoin will get in the millions price range. it is adopted by more and more customers.

etf with the inflow. if we get clear legislation in the u.s. strategic bitcoin reserve. if the u.s. started, the rest of the g20 would ollow. i discussed with leaders from different countries around the world, they are getting more interested in it because the u.s. is looking into it. i think crypto is igger than that. it is about payments, it's been economic freedom and other things. >> let me ask two other questions. one relates to the bitcoin strategic reserve. the same idea of america first idea. do you believe bitcoin is a threat to the u.s. dollar? scott bessent cares deeply with the u.s. dollar. i wonder in success if bitcoin is successful as you want it to be, talking about winners and losers, that the u.s. dollar is on the other end of that trade. >> this is a great question.

i don't think it's a threat. here's why. you have to stay stablecoins and then bitcoins. stablecoins are important. that part is clear. china has a digital. then the u.s. is not going to keep the reserve currency status. that's point number one. bitcoin is also critical to the u.s. dollar because i think bitcoin is a check and balance on deficit spending and high inflation. the way the dollar is going to preserve its reserve status is not floated away from the disconnect with the hard commodities. if people flee to bitcoin in times of high uncertainty, it will extend the check and balance. >> i ran into adena last night. i raised the two companies, visa and nasdaq at the same time that

you are talking about wanting clearer rules. i wonder to myself, if you are successful, do you ultimately think there will be -- we will bring back the idea of the initial coin offerings and things like that and what happens to the payment rails of companies like visa? >> crypto will get integrated into every part of the financial system. every bank, every fintech, every exchange. capital formation, icos were an early experiment with that. a lot of bad activity. the idea behind it showed high demand. i think if we get clear rules a pat to register securities, it could make capital formation more efficient. there is a pilot with hundreds of millions of dollars on stablecoins. they realize this is a more efficient rail they have to move to. it is the innovators dilemma. >> brian armstrong, great to see

you. i'm sure i'll see you in new york. >> thank you. >> becky, i'm going to send it back to you eventually. in the meantime, i'm going to tease the ceo of ubs is going to join us. then back to you. >> we are not used to the split teases. still to come this morning, president trump's senior trade adviser peter navarro will us in washington, d.c. to talk about tariffs in the next month. there is a lot of confusion and consternation about what the u.s. will do next. peter navarro will give us clear guidelines and what we can expect. as we head to break, let's look at the u.s. equity futures. in the green across the board. dow up triple digits.

nasdaq indicated up 95 points. the s&p 500 indicated up by 20. "squawk box" will be right back.

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ey helps business and government leaders navigate the geopolitical and economic landscape with confidence. welcome back to "squawk box." we are here in davos, switzerland and discussing the global banking industry and the economy. sergio ermotti is the ceo of ubs. good morning. >> nice to see you. >> we have so much to talk about. i want to start with this. i was talking with brian armstrong. what is your perspective from outside the u.s. given you have

huge business in the u.s. in the next four years in the united states and how it all plays out? >> i do hope and believe that this new administration can help address some geopolitical issues that we have out there. that's the promise that we have been hearing. so, i have to say that would be a welcome movement because be it ukraine or the middle east, way too many tensions. also with china, hopefully we can see a solution. on the other end, the tariffs that may create a macroeconomics consequence that may create geopolitical tensions. >> does it feel like a different davos to you? the reason i mentioned that and i talked to becky about it earlier. for so many years, you come here and talk about esg and climate change and all other kinds of issues. we talk about competition to so

degree, but it seems like the trump win and the shift politically around the globe has pushed out a lot of the issues that used to be represented here. >> i could say that probably the election of president trump has accelerated an ongoing trend of trying to re-balance the debate around some of those topics. you look at climate, you look at other topics where eventually it was an ongoing debate. in my point of view, it feels different, but, you know, we all know that whatever is the consensus, that was one play to be the reality. >> it's always the opposite. it's opposite day. what is your sense of regulation in the u.s. as it relates to banks? one of the things i know a lot of folks in the united states are looking at and i wonder if you will ultimately look as well is making acquisitions in the financial space? that is a space you have not had a lot of deals.

you obviously had a major one in switzerland with credit suisse. thinking further out. >> i don't think we will see a lot of deregulation. >> you don't think? >> not. we want to see more regulation and probably overlapping new regulation that is in conflict with existing regulation. we will probably see more rationalization of existing regulation. at least for the big banks, i think it is appropriate. i don't think that banks should be massively deregulated. what it will be allowed, probably is consolidation in the u.s., first of all, among second tier banks. that, in turn, will create opportunities. you know, i don't think for us it's very important we don't get new unnecessary regulation. >> what is the next step for you? the reason i ask is you have been working on the massive integration project with ubs and

credit suisse. is there another deal to be done next? >> first of all, we have to digest and execute on the current one. we are focused on serving clients. we are migrating 110 bit bites of data. it is a huge exercise. we are going through. we have to first of all do that and we are also preparing for the future in what it means for artificial intelligence and digital capabilities and he investigationally, we need all, we need to assess what we need to do. it is premature to talk about our position. >> when you sit with your team and talk about inflation both in europe and the united states and talk about the federal reserve or the ecb, what are you saying right now? >> something i have been saying for a while. inflation is much more sticky than we have been saying. i think it's fortunate or unfortunate on that point we

have been somehow right. the truth of the matter is we need to see also how tariff will play a role in inflation. >> what is the betting line on what the tariffs ultimately look like? when you're clients call you and say sergio, give me advice here. something is happening here. what do you say? >> i think tariff -- any kind of tariff. there is a bigger spread on tariff. tariff will probably not help inflation to come down. therefore, i don't see rates coming down as fast as people believe. when you look at the current environment, the market seems to believe that way. >> i have a final one for you because you deal with so many wealthy clients in the united states and world. a look at taxes in the united states this year. >> the wealthy clients don't mind to pay taxes if they are

proportionate and fair. of course, we have to do things in a balanced way, but, you know, honestly, i see more and more clients willing to do the right thing. if they see the money is well spent. the real question people raise is not the fact they pay taxes, but how the taxes are utilized. >> sergio, i want to thank you for coming in. thank you. becky, back to you. andrew, thank you. when we return, rundown of the orders of president trump signed yesterday shortly after taking office. later, we will talk about the president's trade priorities with senior adviser peter navarro. the special edition of "squawk box" live from washington, d.c. and davos, switzerland continues after a quick break.

good morning. welcome back to the special edition of "squawk box." we are coming to you live from washington, d.c. and davos, switzerland. i'm becky quick along with andrew ross sorkin. joe is out today. let's look at the first day of the trump presidency. futures are up 128 points. s&p futures up 20. nasdaq indicated up 95. andrew, there's a story in the wall street journal that points out when you look at the

markets, they're very expensive right now if you are looking from the cyclically adjusted pe ratio developed by uller. four times as expensive as reagan's starting point on all this. we kicked this around at the table coming in how highly the stock market is valued. i had not realized until the journal laid it out with these numbers numbers. >> you are right. joe has made the point. >> he has. >> it is hard to do because an when you price to perfection, timing does matter from where you start and where you end. no question. it will be harder. we have brian -- excuse me. the ceo of bank of america. that is a great question for

him. we'll talk to him about it in a minute. >> looking at the valuation. we knew it was expensive. again, that cyclically adjusted number looks back a decade and adjusts for inflation. when you look at it from those perspectives, something to keep track of. since election day, that should be counted in on any of these things, too. anyway, worth looking into. we will dig into that a little deeper in a moment. in the meantime, 3m just reporting. it came in with earnings of $1.68 a share. that was two cents better than the street expecting. revenue of $5.81 billion beating expectations. 3m sees earnings in the range of $7.90 on adjusted basis. that compares $7.77. the revenue and they see coming in the range of .50% to up 1.5%.

that is below expectations of 1.7%. stock is not budging at the moment. down by one cent. president trump signing dozens and dozens of executive orders. megan cassella is joining us with more. we knew there would be a flurry and there sure was. >> 46 by my count at capital one and at the white house. more than one on the first day in office targeting obamacare. i would break these in two buckets. on the global side, are you are talking about tariffs. he is targeting howard lutnick to have a review done by april 1st. he is also talking about ad libbing saying tariffs on canada and mexico on february 1st. something to watch there. on tiktok, he extended the ban.

tariffs up to 100% on china if they didn't sell tiktok. unclear how serious that was. there were things like freezing all foreign aid for 90 days. directing marco rubio to talk about the america first policy. all of these allies back on these heels and reassert and saying he is doing the same thing domestically. i'm thinking all of the federal work force. he reestablished doge or formally established doge. hiring freeze and regulatory freeze and saying we're back. he said in the speech, now he is saying nothing will stand in his way. >> a lot of this is undoing things the biden administration has put in place domestically. if you are looking at the federal work force. i was shocked to see 6% of the federal work force is showing up at the office. >> there are different numbers. the union would tell you

something different and doge would tell you something different. i'm unclear. most of the work force can't telework. if you look at it that way, it is a smaller number. the social security and epa had just finalized agreements. trump is going at the union and saying we don't care about your collective bargaining agreement. you have to come back to office. >> that was something we watched in the final days of the biden administration. he was cutting deals that they thought were going to make them safe from many things. how does that play out? >> you heard schedule f that strips protections from career employees. reestablishes them and political appointees. one thing trump said on social media at 12:30 in the morning, he said my first day is not over yet. we are examining thousands of

presidential appointees. he fired jose andres from the president's council. few items. few names he said you're fired. that's what is going to happen. they will reexam this and see who they can shift from the career position to political. that gives them fewer protections. it's a big fight. >> we're not even 19 hours into the presidency yet. megan, thank you. let's get back to andrew in davos. thank you, becky. wall street watching the changing of the guard in washington. the fed and economy and so much more. we are joined by brian moynihan, the ceo of bank of america. becky was quoting from the wall street journal that was looking at the stock market was on the pe basis over the years that various presidents have come into office nd by almost any historical standard, we are at the tippy top, priced for perfection. do you look where we are now,

wow, that's high or wow, there's so much more to go? >> our research team predicts the market to go up. not as much as last ear. the unusual thing, a couple of years of strong growth. that is off a couple of years of unusual teams. you look at it and if you think about the presidential measurement when you take office, that is always unfair to presidents. stuff intervenes. the question is fundamental policies that set up often times the next administration because it takes a while for the stuff to get through. i really don't think that's the way to measure success of the administration. >> what are the top two or three things you are looking at in terms of what this administration is going to do over the next couple weeks that impact you and your clients? >> i believe that if you look at the key thing for businesses generally, including the financial services and banking business, it's the regulation question. if you look at our small business survey we just came out

with, if you go back a month or two, it was all about inflation. now that's come down and regulation is close to that in terms of concerns of business and getting employees. it's interesting. it surfaced again. >> in terms of immigration? >> in terms of immigration and in terms of availability. the real question is at the end of the day, this is a vote of let me conduct my life and business. human, people, consumerand businesses. >> you can quantify business and taxes. regulation is a harder one to put real numbers around in terms of small business. by the way, where the banking business, we were talking to sergio from ubs and the possibility of real consolidation of banking business. i don't know if you participate with the bank of your size. >> number one, it is illegal for a bank our size to participate.

if you have more than 10%, you can grow organically. it will cause consolidation. as a person who spent life in this industry, the largest middle market. they have to consolidate. they are all looking to do it. the last administration, it was very hard to get a deal done not only in the banking system, but beyond. anything over $3 billion drew scrutiny. not everybody has the staying power to wait two years to get a deal done. from the investment banking teams, excited about it. >> how sacreligious is it to merge up some of the smaller community banks? two issues. one, people feeling like a small community bank matters to the community. there have been studies about whether you can actually get the kinds of loans and money to the communities when they're part of larger institutions? >> interestingly enough, andrew, over the course of what we've

done at bank of america and all of the parts coming together from the northeast to the west and from the southeast and we put it all together. one of the principles we have is out local the locals and out national the nationals. we make more small business loans than anybody. we are the biggest lender in the country. it is compelling to make sure the community is served well. there will always be, just like a local apothecary or cvs or diner. >> sometimes the local apothecary goes out of business. >> i go to the local hardware store. a home depot down the road. the business model. the purpose of this administration's viewpoint is let the business model. let the things. service levels of the community banking system will still be there. there are still 4,000 banks.

not like -- >> let me ask you a separate question. becky has one in washington. crypto. brian armstrong was here. there is a lot of excitement in crypto. the banking industry has stayed away from crypto. given president trump's full-throated support for crypto, do you imagine bank of america is going to be full-on in the crypto business if we have this conversation 12 months or 24 months from now? >> i would separate out this sort of crypto versus stable assets and digital movement of money. we already move the vast majority of money digitally. our consumers. the practice you have to have to move another type of currency. if the rules come in and make it a real thing that you can actually do business with, you will find the banking system will come in hard on the transactional side of it because

we have to because it is just another way our -- >> the other thing is bitcoin and cryptocurrency is a threat to the u.s. dollar. scott bessent is talking about the u.s. dollar needing to be super powerful. is it a threat? >> there is a consumption of the consumer and all stuff that goes on. we need a strong u.s. dollar. it is good for our country. what i'm saying if you go down the street and buy lunch, if you can pay with visa, mastercard, debit card, apple pay, et cetera, this is another form of payment in the cash transfer. i think if it becomes regulatory, okay, which it wasn't before. that's the issue. you will see the banking system enter. we have hundreds of patents on blockchain. when you get to the bitcoin, that's a separate question. that is investment side. from the transaction side, the

banks will make moves. >> becky, jump in. >> brian, ndrew brought this point up earlier. it is really interesting. this idea that everyone in davos is kind of buzzing about the international reaction of what is happens in washington, d.c. right now. you have been going to davos for how many years? >> i think this is my 17th year. >> you have been there a while. you know the routine here. is there a different feeling from ceos and people you talked to about what is coming out of washington? what do you think? >> i think two or three things. i remember standing on the rooftop as a competitor as the first administration with the plane flew into washington with president trump on it and a big concern or worry about what was going to go on. there is more known about the president and he'll be here on thursday. there is most known about the president.

i think the difference is the feeling is they are off to a faster start this time. they have been through it before. they have their executive orders lined up. i think there's a more immediately reaction to the international community instead of this is coming at us right away. we have the people looking at executive orders. they are all thinking there is a lot of stuff coming out. what is actually going to cause things to happen and what is happening in the future. i think it is a feeling there will be more activity. pluses, people have the views of pluses and minuses. more that will happen as opposed to discussion because they are off and running and ready to go. >> what do you make of the conversation we had here historically over the years? you and joe had debates about climate change and about esg. >> what did you do? >> all of those things which have been rebuked to some degree by the trump administration. does it feel -- we were talking about the davos man being under

attack. do you feel under attack? >> no, at the end of the day, if you think about what capitalism and stakeholders, it is about doing great jobs for your clients and teammates and communities. i don't think that is what people are after. what people are after is the question of creating opportunity. opportunity of outcome or opportunity of opportunity. >> do you think that went off the rails? do you think things went too far in terms of esg or dei or all of the other programs you watch major american companies roll back the policies and some from robbie starbucks of the world? >> the consistent opinion i had since i talked about this years ago and listened to people, the private sector will drive changes. they produce profit. when you produce profit for an activity, it sustains.

what is this giving away? governments don't have money to do it. they set policy. the private sector will drive it. the dialogue got wrapped one way and the other way and back. the big companies are going out and doing what they need to do to make their companies better and appeal to consumers and businesses. i don't think that changes a lot. the discussion might change. the second thing is we are sitting with a group of ceos. the idea unbalanced with one way. people have to understand differences and how to be successful and how it works. this is how it will go on. people are feeling we have to drive our companies and doing the right things for our teammates and customers and shareholders. >> at the dinner, what was the sentiment? >> the sentiment is we have to keep doing the right things. we have to be aware of the serious of conversations to make sure it stays in the middle.

you don't go back and forpth th policies. >> brian moynihan, thank you. i appreciate it. becky, back to you. andrew, thank you. when we come back, president trump's trade adviser peter navarro will join us live from washington, d.c. later, former house speaker kevin mccarthy. "squawk box" will be right back.

president trump considering 25% tariffs on mexico and canada starting on february 1st. for more on the administration's tariff policies, we are joined by navarro peter navarro. senior trade advisor. >> good morning, becky. sorry joe's not here. we miss him. >> we do. >> get better soon. >> i'm sure he is hoping to be here. peter, let's talk about what's going on with trade. >> sure. >> this is something our audience is tuned into trying to find out what's going on.

>> look, i was watching the show this morning and some guy gets on and goes tariffs will cause inflation. the fed's not going to lower rates. what? what is that spin all about? we had the most aggressive tariff agenda in the first term and there was zero inflation. we had absolute price stability and tariffs don't cause inflation. the president is launching the most aggressive strategic energy dominance price. what they should be talking about is what $50 a barrel oil is going to do plus doge and deregulation and tax cuts are going to do to bring down inflation and what's interesting to me, becky, is there is never any discussion about why the president wants to do tariffs. this is davos. how about davos man talking about and confronting reality as president trump said often the world cheats america. we have the lowest tariffs in the world. lowest non trade barriers.

hey, tariffs just level the playing field and bury the lead. this is important discussion to have, becky. tariffs are going to be a really important part of the tax cut discussion. >> because it will raise revenue? >> now we have the external revenue service coming. one of the best charts that president trump loves to put up is one that shows where you have a 1913 after they passed the income tax revenues go as a flat line as a percentage of tariffs, but prior to that, this was a country that that prospered and grew on tariffs. have the discussion about why we want to put tariffs on china and mexico and canada. >> you want fair trade. >> not those ariffs. those tariffs are stopping con

dra band from killing americans. why don't have those discussions. if you don't understand the logic, you can't answer the question. >> you are answering part of the question. is this a negotiation at this point? we have seen the flurry of executive orders signed day one. this is not signed day one. this is threatened to come down the road. >> those tariffs, it's the president's choice. not mine. not the trade team. he will make the best choice for america. he always does. the reason why he's considering 25, 25, 10 or whatever it's going to be on canada, mexico and china, is because 300 americans die every day, becky. this is a great experience yesterday. i had the privilege of speaking at capitol one al one arena. that is place was well. in a year, everybody in there

would be dead. that's how many people would die from chinese fentanyl coming from mexico and through canada. that's that discussion. davos, when you talk about those tariffs, the last discussion and the second to last executive order he signed last night was this beautiful presidential memorandum on how he's going to approach the whole trade issue. 15 different parameters setting up foundational studies that are going to lead to investigations and decisions. >> from the ustr. >> from the treasury. howard lutnick is just a revelation in terms of how he thinks about all this. he's going to do a great job. so, you've got the two new guys in the block bringing in energy and creativity and brilliance in

howard tnick and scott bessent. you have robert lighthizer's expect in command. you have hastert with the key role with the tariff tax bill. you had him on many times. the president has a great trade team. >> let me ask in terms of tariffs because there's a lot of discussion around this the president's got a great trade team. >> let me ask, just in terms of tariffs, there's been a lot of discussion around this. and yesterday we had stan druckenmiller on the show. he said he didn't want to come off as being a big fan of tariffs, but he did say, if he's looking from his perspective, if you're looking at tariffs to about 10% or so, he thinks that that is the lesser of two evils, rather than raising taxes on americans by doing a 10% tariffs, that raises money from foreign countries and from companies that are operating overseas, he thinks a lot of that will get absorbed. he thinks if you go a lot beyond 10%, you're talking potentially about a different game. then you are going to see more retaliatory pressures coming from other countries.

maybe more retaliatory countertariffs coming back at it. and he does worry that that will raise inflation. what do you say to that? >> well, statistically, a beautiful thing is that if the trump tax cuts expire, that's going to be a $400 billion tax hike, right? which would be a shock to this system and be recessionary. if you had druckenmiller's 10% tariff, that's about 350 to $400 billion in revenue. so you see the beauty of that in the negotiations? but that's the kind of discussion that's great to have on "squawk," but also about why the president's considering this to begin with. i mean, we are the biggest market in the world. and as i said earlier, but i'm going to say it a hundred times, it's like, we have the lowest tariffs in the world, the lowest

non-tariff barriers, and as president trump says, the world just takes advantage of us. and that reality needs to be confronted. because on behalf of american workers, manufacturers, ranchers, farmers, entrepreneurs, as the presidential memorandum said yesterday, he's going to stand up for them, and this -- the markets are going to be bullish, the economy is going to be strong. inflation is going to be vanquished. and remember when i came on the day after elections in 2016. heads were exploding, futures were dead red down. what'd i tell you? i said, we were going to have a bull market. we were going to hit 25,000 on the dow, because we were going to have deregulation, tax cuts, strategic energy dominance, low energy prices, and a fair trade policy. what happened? we had a beautiful economy. >> a couple of points. first of all, anybody who thinks these tariffs are simply negotiating tactics should probably think again, because what you are laying out is the

idea that this is something that we need to have to raise revenues so we can keep the tax cuts. that has to be a pay-for for some of the other things we're looking for. anyone who thinks that tariffs are simply negotiating, maybe the 25% ones on mexico and canada right now are negotiating to try to stop the flow of fentanyl. >> but to your point, the reason why the president has the moral authority -- to do this is because the world's screwing us. let me be blunt here. it's not just china with all of its unfair trade practices. you just go around the world. i mean, india has the highest tariffs in the world. world has the vat tax that sticks it to us. and higher tariffs. i mean, there's a reason why we don't sell any cars to europe or japan to speak of. the numbers, the flow of trade is so crazy. >> for a long time, we've been maybe like the big brother to a lot of the world, to say yes --

>> piggyback. >> but also offer protections and securities. >> guys the davos man big brother. >> but we've also offered protections and securities. is it fair to think that it is now fair game that we are not going to protect you in the same way, if you don't meet us fairly on the trading front? >> key point here, becky. economic security is national security. that's a foundational element of the first trump term. and the president recognizes that if we want to help our allies, we cannot do that if we have a weak manufacturing and defense and industrial base. and over time, what happens when we are the piggy bank for the world, and we run these enormous trade deficits, is we get weak. and when we're weak, we get war. the president doesn't want that. so that's the -- we've come such a long way. i mean, back in 2016, when we had these discussions, it was like, heads exploded when he

even mentioned the word "tariff" or "changing trade," right. but now people understand what president trump wants to do. and it's a beautiful thing. >> you mentioned that the president has the moral authority to do this. does he have the constitutional authority? what does he need from congress on this front? the constitution does give tariff power to the congress. >> i think the homework i'm going to give all the analysts here is go read the presidential memorandum. it's very textured. it will describe to you all the different areas, export controls and unfair trade practices, all of that. and every executive order is phrased with the statutory authorities that give you the power to do what you want to do, as president. so there's all sorts of things that we used last time around, 232, 301, what's called iepa, which is the international emergency powers act. and there's others, as well.

so i can assure you that everything the president does, he will have the legal authority to do. and it will not usurp anything the legislative branch does. >> peter navarro, good to see you. >> good to see you. say hi to andrew, sorry we missed you there. but stay warm, brother. talk to davos man on tariffs. >> i think he hears you right here, too. >> i can hear you, peter. thank you for that. appreciate you very, very much. >> nice to see you. >> take care. >> you bet. meantime, it is now just after 7:00 p.m. on a.m. on the coast. it's 1:00 p.m. in swirtland. we're here at the world economic forum. i'm andrew ross sorkin, becky in d.c. we have a big lineup still to come, including nasdaq ceo adena friedman, she'll join us in a couple of minutes. later we'll speak to bridgewater founder ray dalio on the global markets and the election, satya nadella coming up tomorrow, marc

benioff, so many others. but right now, we are excited, psyched, even, to talk to artificial -- chuck some artificial intelligence, key them here in davos. and first right here on cnbc is anthropics cofounder and ceo, dario mody. great to see you, sir. >> thanks for having me, andrew. >> you're a first-timer here in davos. >> my first time here, yes. >> before we get into it, what do you think about this craziness? >> it's pretty crazy. >> it's about as crazy as you think. let's talk ai. there's trump and there's ai. it seems like those are the two topics here in davos. and i would start with this. the big question in ai land is are we hitting a wall? right? i still think that that topic is up for debate. we've heard sam altman say, there is no wall. we've heard from google saying, we might be getting closer to one. you've sort of hinted around the edges that we might have something, we might be hitting something, but i don't know. >> so i've been in this field for ten years. i've worked at all the major companies, including google, include open ai. you know, me and some of my

ors were the first ones to documents what are called scaling laws. which is the observation, you pour more computing into ai systems, they get generally better and better. and throughout those ten years, there have been maybe five or six times in those ten years where we thought that we were hitting a wall, where we thought that something didn't work, and you know, within a few months, something slightly different was invented. either we didn't actually hit a block, or something slightly different was invented that let us get around it. the scaling of ai, it feels like this river that -- you know, every once in a while, it runs into a stone. >> does it look like it's hitting a stone right now? >> it absolutely does not. in fact, right now i'm more confident than i have ever been at any previous time that we are very close to powerful capabilities. throughout the ten years i've been working in this field, i've always said, you know, i don't know for sure, this is the direction it seems like it's going in. we could be getting to very powerful or human-level systems.

i still think there's uncertainty. i think it's important to be humble. but over the last six months, i would say that uncertainty, for me, has decreased a great deal. >> and gets to where? gets to agi or something else? and that's artificial general intelligence. >> agi has never been a well-defined term for me, i've always thought of it as a marketing term. but the way i think about it is at some point we're going to get to ai systems that are better than almost all humans at almost all tasks. the term i've used for it is a country of geniuses in a data center. it's a sort of evocative phrase for all the power and all the positive things. and you know, all of the potential negative things. that's the thing that i think that we are quite likely to get in the next two or three years. i don't know exactly when, but the things that i've seen inside anthropic and out of it, over the last few months, lead me to believe that we are on the trajectory for that. >> one of the things that you've done that i think is remarkable, you have effectively taught or maybe it's taught itself,

effectively how to use a computer. rather than having apis and have to go directly into things, that effectively, it can go and use a mouse and find the things it needs to go off and do. how game-ing is that? >> yeah, the way i think of computer use, which is what we call that capability, is i think of it as the first step towards a broader vision. so our picture of the broader vision is, we are planning this year in 2025, to build something called -- that we call the virtual collaborator. and the idea is that that would be an agent that operates on -- operates on your computer, on a computer. might operate at work, and you can give it tasks. you can say, you know, write this future for this app. and you know, it will write some code, compile the code, check the code, it will talk to its coworkers on slack or on google docs or on some other platform. it will check in with you, to see how the task is progressing.

so over the next year, we're going to be gradually putting out the pieces of this vision. and along with that, with you know, making sure it's safe and controllable and all of those things. and i think if computer use is the first piece of that vision. we initially released it a few months ago. it was an early prototype. you know, it was good for its time, but we were quickly going to be it ing on that, but also on other pieces of the grand virtual collaborate. >> let me ask you a question about processing power. the example i is use is what elon has done with x ai. it is remarkable to me that x ai -- i don't want to say has caught up to what you're doing or what open ai is doing, but he's gotten pretty close, pretty quickly. and it raises a question whether these large language models ultimately get commoditized. there's a special software that you have is if you have enough nvidia chips, you, too can build a large-language model.

>> yes. so first of all, i think not a lot of people are going to have enough chips. so i believe elon has built, what is it, 100,000 chips. we're using amazon's trainium chips and google's tpu chips, but this year, we plan to have wing it was announced at amazon's conference, we plan to have several hundred thousand of these chips ready by a few months from now. so i think that will already limit it to a relatively small number of players. within that, i think there are a lot of sources of differentiation. every model is different. so one of the things we hear abdomen claude is that people really like its character. people like interacting with claude. people ask claude for relationship advice, for help dealing with their problems, much more so than the other models. >> and can i attest to that, by the way. i've played with it, and it is a much more sort of personalized and friendly service for some reason. >> one of the things that struck me most about this, there was a

blog post from stanford medical school about a week ago. and they looked into, i believe it was radiologists they studied who they showed the radio logical images to the models and they said, what do you, you know, can this help with diagnosis? there were two separate kind of axes on which they measured them. how accurate is the diagnosis? and many of the models had accurate diagnoses, but how likely was the radiologist to follow the model's recommendation. and in that area, claude won head and shoulders above the others. something about the way that claude was interacting with the radiologists made the radiologists more willing to listen to claude. >> two final quick questions for you. one is actually a regulatory question. you have this very close partnership with amazon. and there's a view that over the last four years, in a lina khan world, that if one of these big guys wanted to buy you or open ai or whatever, they couldn't do it, so everyone's done these partnerships. do you imagine over the next four years, given the regulatory

climate and what trump is promising that you will ultimately, not just be a partner of, but be part of a company like amazon? >> so our -- you know, our mission is set up in a way that i think now and certainly for any future that i can foresee, it is best achieved by anthropic being independent, right? we have -- as you mentioned, partnerships with these cloud partners. we work with aws, we work with -- >> google as well. >> -- we work with gpc. but every time we make a partnership with these companies, we make sure that the terms of the contract that we sign respect a lot of our safety and security commitments, right? our measurements for national security risk, cybersecurity of the models. and so, we value our independence highly. that's why we're partnering with more than one, ith more than one cloud partner. our view is that our mission is best achieved by being independent. it has nothing to do with antitrust does or doesn't allow. >> final question that relates

to china. ai in china versus ai in the united states. one of the things that's interesting is the folks in china don't have access or are not supposed to have access to the same kind of chips. but i am told, because i was with some ai folks in china last night. they think that their models are like 97% of what they are in the u.s. and they're doing with chips that are ten years behind what they're making. is that true? >> they actually have managed to procure a significant number of -- a significant number of gpus before the export controls went into place. for example, deep seek, one of the companies within china, it's been reported at least that they have a cluster of 50,000 nvidia gpus, which is half of what elon had. so, they may portray themselves as, you know, scrappy and operating on hardware that's behind, but actually, they've managed to either smuggle or get before the export controls, a large number of these chips, which is one reason i've been an advocate of preventing more of

these chips from being shipped to china. they may be able to get to the 50,000 mark, but i want to make sure we can prevent them from getting to the million mark. i think if the united states can't lead in the technology, we're going to be in a very bad place geopolitically. >> dario, i want to thank you for coming in. nice to see you here in davos. hope thefully we get an opportunity to do it very soon again back stateside. >> great to see you, andrew. >> becky, back to you. >> okay, andrew, it is, what, 1:15 there? and you're already taking off the coat. it's getting hot, huh? >> it is hot. ly i will admit, it is hot -- dario is in a coat. >> i am actually somewhat warm in this coat. i did not expect to be. >> this is that phenomenon, when there's no wind there and the sun is on your back, because it's noon to 3:00 for our show there, it does get pretty hot. i saw with the coat off. this is one of those toasty days. >> it's one of those -- i'm hoping for it to be toasty all week. but we don't know how toasty it will be. we'll get some news on that in just a little bit.

>> looks good. i know exactly what the feeling is there. andrew, thank you. we'll be back in just a moment. in ft, wn achewe come back, former house speaker kevin mccarthy will join us to talk about president trump's economic agenda, the tariffs, much more. that interview is next. stay right there. dexcom g7 sends your glucose numbers to your phone and watch, so you can always see where you're heading without fingersticks. dexcom g7 is the most accurate cgm, so you can manage your diabetes with confidence. ♪♪ help us retire. it's a simple ask of our elected leaders. but the tax treatment we rely on to grow our 401(k)s, iras, and other retirement plans could be on the chopping block in congress. any policymaker who makes it harder to save for retirement is standing against the financial well-being of 120 million americans. it's time to prioritize our retirement savings. learn more at help us retire dot org.

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launching a barrage of executive orders. joining us right now on what to expect is former house speaker, kevin mccarthy. he is the chairman of the alpha institute. and kevin, we already had brian moynihan on this morning from bank of america and davos. he said the difference this time, you know, he was in davos eight years ago when president trump was sworn in for his first term. at that point, the international community was kind of freaking out, not knowing what to expect. he says, now we kind of know who donald trump is, but the one thing everybody is saying is, wow, they're ready to go, they're already signing things and putting things into action. and maybe that is what the world is kind of reacting to this morning. >> i think the world, and even the country. i mean, if you sit back, it doesn't matter whether you support the president or not, he is best prepared to do this job right now. even the way the world looks. because he's already done the job once, he knows what to expect. and then he departed. so he watched the world. you have time to reflect and see

where should i have moved faster. he is going to move faster than the house and the senate. he is going to push them. he's going to be the leader of both of those houses. thank for what he just did on executive order, that's going to move the economy right now. repealing the regulation. the people that he'd put in, howard lutnick and others. people who know this economy, just that decision-making process. and the stability there. and he's already bringing the leaders. he's bringing the bicameral in. he has a strategy of what he wants to get done. and he knows he only has four years. and really, if you study presidential history, you get about a nine-month honeymoon. with president trump, they always try to work against him. but he's more popular today than he has been at any time in his political career. if you just watched the swearing in, the people around him, this is the -- these are the titans of the economy of the american. every world -- every world leader would want one of them in his country. he's going to use the synergy of that to make the economy

stronger here. >> how do you think that relationship is going to work? we saw all the ceos who were there yesterday, innovators, leaders on these points. how will that synergy work? how will the economy change as a result? that relationship. >> i think whoever captures ai on quantum has advantage and every country is fighting for it. but if you want to capture that, you first have to have energy. you can't have ai without having the energy policy right. but energy plays more than just into that. when you let unshackle america, what we have in our energy, it helps our allies. but it also hurts the russian economy, too. so it makes us stronger, makes our enemies a little weaker, and gives us a very stronger point and puts us further ahead when it comes to the ai policy. >> to unlock energy and make it work for ai, it's a lot more than drill, baby, drill. >> you have to look at our entire grid. it can't be one form of energy. it can't be one or the other. you have to have permitting reform. >> right. >> you have to have pipelines. you have to take the entire grid

and double it. and that's a major accomplishment to try to happen. and if you do that, you're really setting up for the next 20, 30 years, but you're propelling the ability to have ai here. look, those data centers are only going to go to the places that energy is less expensive and the capability of providing it. >> ken, one of the things i wanted to talk to you about, because you know congress so well, because you understand how this all operates is the legality of what he signed into place with the 75-day extension for tiktok, i thought you were allowed to have a 90-day extension at the president's reasoning for doing that if there was a bid in place, a true bidder. do we know how this works? >> well, think about this. this again shows the difference between biden and a trump presidency. here's biden, the president of the united states, has a bill, and just lets it go. doesn't make a decision on that. you know, if you're playing a basketball game and a few seconds to go, biden's the person who doesn't want the ball. trump's the individual who is,

give me the ball -- >> well, although, i think people would have been furious if he tried to do something and make his decision on it that was counter to something esident trump wanted to do a day later. >> if you're president of the united states and -- >> but trump just came in and changed everything -- i think president trump came in and would do what he wanted to do. >> he had the time before to make a decision. trump is giving himself time. >> but can he? i don't understand if he can. >> because this factor. trump dealt with this in the first, and looked at, where can we store it? tiktok can continue, worried about the data, where can i store it? he has a better knowledge of it. i think there's enough people out there, too, he could put it together in the time period. and worst-case scenario, if he's about to put something together and he's coming along the 75 days, he has the power to make the house and the senate would react and give him a little longer. >> you think this is having congress go along with what he wants to do. >> look, the president is so

powerful at this moment in time, he could get congress to do what he wants to have happen. >> i think andrew has a question too. >> kevin, we have billboard, who is on the board of bytedance, parent company of tiktok, who is going to be joining us actually in just a little bit. and i'm just -- i want to go back to this point that you were making with becky, which is, and i'm just so -- i'm confused, to be honest with you, about it. because clearly congress has a view that this company is a national security threat, given its ties to china. do you think there's a possibility, even over the next 90 days, and there's questions about the legality of those 90 days, to begin with, that a deal will be struck that effectively allows the chinese in any way to continue to control the algorithm? and the reason i ask is because it appears that almost under any circumstance, that president trump would like to find a solution. and the question is, he may be willing to find a solution that allows it to continue to operate the way it's operated before, no?

>> i think it's hard to allow that to continue that way. i think what you're going to see, could the chinese investors still be a part of it? yes. but is there a majority owned by america? is there a database kept in america? a lot of that was discussed prior. i think it would be very hard to allow it to continue exactly the way it is today with this congress. this congress has already taken a vote about this and going forward. so there has to be some modest -- >> and the supreme court has upheld the law. >> yes, the supreme court. so not only do you have it legislatively, you have judiciary, now you're just dealing with the executive branch that has the ability to contain it, but they can't do it forever. >> vin, how would you feel if somehow, elon musk becomes either majority owner or even a minority owner of it given his close ties to the president and his ownership of "x"? >> look, i would not be opposed at all if elon wanted to do part of that, because elon stands up for the fist rst amendment.

i like that idea. i would like to see america have that data kept inside. i would like to know how that algorithm works. you know, tiktok performs differently in china than it does in america. why do they limit and what -- they educate in china with it, and what do they do in america with it? there's a reason why that bill passed. there's a reason why there's a concern here about tiktok. and it won't sustain itself exactly the way it is today, because the courts and the house have made a decision. >> but is this now a negotiation chip in a broader conversation with china about things we want from them and beyond? that's certainly what it feels. >> the great thing about president trump, he thinks as a businessperson, everything is a negotiation. it's not on a single subject when he goes in to negotiate. that's why he uses tariffs to secure our border and getting fentanyl away. he is good at this and utilizing it for a stronger base. >> we had peter navarro, who was just here, and we were talking trade and tariffs with him. my understanding from that conversation with peter is that basically, this 25% tariff being

threatened against mexico and canada on february 1st is a negotiation, on the fentanyl front, to try to get something done on that. >> i would say fentanyl and border. >> okay, so it's a negotiation tool. >> but you cannot have a fentanyl discussion without bringing china into it. fentanyl comes from china. >> exactly. it goes through mexico to come through this other side of things. everything is this one big piece that has to be mended on all of these different levels. >> but have you ever really discussed? fentanyl is the number one killer of americans between the ages of 18 and 45. think for one moment. the ages between 18 and 45 are your most productive years. the years you reproduce. the years you serve in the military. >> i don't think is going to be to say -- >> it's a direct assault on our country. >> and i think china looks at it as such. and it is something they have no interest in stopping at this point. if you can tile that together, that's a negotiation tool. that may not exist. you may not actually see tariffs

of 25% coming through. but peter also made the point, you have got to have some tariffs that come through, because it is being counted on as a pay-for. the revenue that it raises as a pay-for to extend the tax cuts. and all of this has to come together. >> it could be a pay-for. they haven't decided yet what the pay-for is. you have doge out there. if you move it up 10% -- >> a 10% tariff, you mean? >> yeah, i'm not going to pick and choose. it could be. you have doge coming out there. you have government that is bloated. there's a lot of places to find some savings. but it depends, what is your tax bill? how big are you doing salt? are you totally wiping it away or going up to 20,000? >> what do you think will happen with salt? >> i don't think it's totally wiped away. i think it gets moved up. no tax on tips, but how do you write it? is a bonus now a tip? i think you would want a big bonus at the end of the day. so how do you deal with that? and then from a perspective, you

don't have any leeway on the votes. you've got to get this done right and off time basis to make it happen. >> okay. >> and remember, you still have government funding from last year to get done by march. >> right. >> so they've really got to focus and get that done first. >> a lot to come. kevin, thank you so much for coming in today. >> hey, thanks for coming to d.c.! >> it's really a pleasure. kevin mccarthy, great to see you. >> andrew? >> thanks, becky, great interview. when we come back, a lot more on "squawk box," this time from davos. nasdaq ceo adena friedman will join us here at the world economic forum. and later, bridgewater associates founder and cio mentor ray dalio will be with us. he's going to talk markets, the president's economic agenda and souc mh more. a transatlantic version of "squawk box" from washington, d.c. and davos this morning. we're returning right after a short break. so an ai agent didt tip off the stylist as to what i might actually wear. - yes. - oh. that's a commitment. [glass knocked] hey bud! whaddaya think?

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good morning. a market flash on apple this morning. take a look. jeffries downgrading that stock to underperform. it's also cutting its price target to just under $200. jeffries is warning of a potentially weak revenue number from the technology giant when

it reports earnings later this month. that stock was down pretty sharply on friday. this morning, it's off by about 1.8%. let's get a check on the futures this morning as well. the dow and the s&p coming off their best week since the beginning of november. you are looking at some pretty sharp advances once again this morning. the dow futures indicated up at this point, almost 200 points. nasdaq is up by about 114. s&p futures up by 25. then in the bond market, the ten-year yield holding well above that 4.5%, ahead of a busy week of economic data. but we are talking about yields that are pretty significantly lower than they had been, just a week ago. ten-year is at 457. the two-year is at 426. let's take a look at oil prices this morning, too. oil prices off sharply in the united states. down by 2.25%, back to 76.13. a lot of that coming as president trump declared an energy emergency in this country. you did see prices sell off. brent crude is down by about 1.5%. and crypto prices after touching

a new high yesterday are 0400cated up about $620 to $1,0. no direct mention of crypto policy from president trump on day one, but the expectation is he will be quite a bit more friendly to crypto than his predecessor. "squawk box" will be back after a quick break. dexcom g7 sends your glucose numbers to your phone and watch, so you can always see where you're heading without fingersticks.

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we've got lots to come this morning from the world economic forum in davos, include adena

friedman, ray dalio and general atlantic ceo bill ford what happens to be on the board of bytedance, which controls tiktok. and then later, check out this, because we've got a huge lineup tomorrow. salesforce ceo mark benioff will be us, jpmorgan's jamie dimon will be here. uber's ceo, dara khosrowshahi, coca-cola ceo, james quincey and so, so many more. becky, it's going to be quite the day. and then we've got a whole other list for thursday as well. >> it is the lineup to kill for. we can't wait for all of this, andrew. and again, this is just day one of davos. got many more to come. we're also here in washington, d.c. today. president trump touting many day one executive actions, setting up an agenda for republicans to match legislatively. joining us right now is west virginia republican, senator shelly moore capito. she is republican policy committee chair. she also chairs the environment of public works committee and

you're on appropriations, too. >> i am, yes. senator, let's talk a little bit about what you do with all of this. because this was ready to go right out of the box. we're not even 24 hours into his fist decision, and he's already done things like declared an energy emergency. let's start with that. coming from west virginia, that could mean a lot of things for your state. >> the president made very clear yesterday in his speech that we'll use american energy to have our dominance and to be able to manufacture our goods and get people working. it's a win-win all around the country. i know he unleashed a lot in his executive orders yesterday in alaska. alaska has been in this last administration really pushed down and proibtd really from all of the oil and gas in west virginia. we have a lot of oil and gas. and we have a lot of coal. and i think -- and we have renewables, as well. it's all about scraping out this regulatory burden we've seen over the last four years where you can't build, you can't drill, you can't transit mitt, and you can't even -- the

pipeline situation came to the point where we had to get a presidential signature to get the last pipeline in west virginia completed. we welcome this. this will be one of the keystones of the president's early presidency. >> you talked to business leaders nationally and in their state. it's their money that will be put to work to do some of these energy initiatives at this point? >> absolutely. and i think a lot of it, a lot of it will be for our own use. much of it will be lng exports. our coal is exporting now and i think that, again, will lift our economy in a very excellent way. we have to capitalize on what we have. and we have energy resources that are vast and untapped. and that's -- with president trump, he's ready to go. and so are we. >> the president also withdrawing from the paris climate change accords at the same time. what does that mean? just in terms, realistically, what it changes, where do you

see that playing out? >> you know, i think we have to remember. we never pat ourselves on the back here. our emissions in this country have been going down steadily since 2004. we are cleaning up, capturing, and doing all the things we need to do to be the good player in the world that we want to be environmentally. but the paris accord kind of gives everybody a pass and just drills down on us as a nation in terms of where the sacrifices that we would have to make, how much more expensive our own energy would become. and so i think the president says, no more. we want an even playing field, on a lot of bases, he says that. but particularly in the environmental area, and also with our energy. so you know, honestly, at the end of the day, i don't think it really means a whole lot, because i don't think it meant a whole lot to begin with, because nobody was really following it, except we were made to feel like we were the bad guy, and actually we're the ones that has the technology that can lead to cleaner and greener. >> there have been a lot of

markets that have been built up over the last 12 years, probably. we had exxonmobil's ceo, darren woods on with us on friday. and he was just making the point that he doesn't want to see huge swings in things like carbon capture. that's a market that they've spent billions of dollars trying to build up that market. and i wonder, does this signal that those incentives will go away for any of those people? >> oh, no. no. those incentives are built into our tax code now. i don't think we have any desire, like 45q, 45v, that's hydrogen. all of these things are built in, because these are billions of dollars of investments. >> companies spend lots of money. >> you can't swing two, three years. and they're great employers. if you look at the nuclear sector, for instance, which has been very dormant over the last 30 to 40 years. we just passed a bill last year to incentivize that, to get our smrs going. that's a great employer. that's a great investment in every community, construction

jobs, et cetera. so this is unleashing. unleashing is the term, i think. and that includes carbon capture and sequestration. we'll move forward with that. we just through the biden epa got the right for our state of west virginia to have primacy to be able to license wells for carbon sequestration. that's a great move across the country, in terms of the dual track of cleaning up, but also unleashing our energy. >> very quickly, you chair the policy committee. and you have invited president trump to come in from the beginning and be involved with that. he took you up on that. >> he did. he came in a week ago, and we had a very frank and substantiative discussion, much of what we heard yesterday, too. and he invited to us blair house for breakfast, what day was that? sunday. we went over and i reinvited him to make this a regular thing. and certainly vice president vance comes right out of our caucus. we know him very well. we're excited. >> senator, thank you very much for joining us. >> good to see you in washington. >> thank you. andrew?

>> thanks, becky. great conversation. when we come back, i should say, and we're going to come up, back on the broadcast, the world economic forum, nasdaq ceo adena frdmiean talking markets, investments, the environment, tech, companies pushed into fighting financial crime and so much more, right after this. as your host, i have some rules. first, no showers longer than 5 minutes. this isn't a spa. no games. no fun. yes, coach. (♪♪) meanwhile, at a vrbo... when other vacation rentals make you share your turf with a host, try one you have all to yourself.

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(gentle breeze) - [announcer] eyes forward. don't drive distracted. welcome back to "squawk box." we are here in davos, switzerland, at the world economic forum. here to discuss the market, investment landscape, and so much more, i want to welcome someone who we know well at our nasdaq home, adena friedman is the nasdaq ceo and chair. and we're here in a different home. >> we are, we are. >> another beautiful day. >> a beautiful day. >> i have so many questions for you, just because i think you've been coming to this event for a very, very long time. and you can always get a sense of sort of the mood. sometimes it's a contrarian mood, which is to say, you look back and you go, maybe it wasn't right. >> right, right. >> but what do you think -- we're all talking about what's

happening back home in washington. but how do you think it's being perceived here? >> well, i think, first of all, there's an enormous amount of focus on the economy. and the comparison of different economies are coming out in terms of what it's going to mean driving growth in the u.s. versus europe. are the governments ready for that? are they prepared for thinking about the changes in the way they want to operate in order to drive growth and compete with each other? that's been very much the talk of the town. >> here's a question related to the talk of the town. economies that the eu commissioner was speaking today and talking about what she thought was a harsh strategic geopolitical universe. and the reason she said it's harsh, i'm curious from your perspective, you do a lot of international business. and i imagine you want a lot of international of companies to be on the nasdaq exchange and to work with you. is there any fear that you have about retaliation, if, in fact, tariffs go into place? what other countries ultimately do in terms of where they ultimately decide to list. what companies they decide to

work with? >> i think, first of all, the economy is global, and the capital markets are global. and money flows are global. and risks are global. so as we think about the solutions that we provide to other exchanges around the world, we provide technology to 130 exchanges. we now have 20 central banks that work with us on risk management, and risk management, anti-financial crime. all of those are universal challenges. and frankly, require global solutions. if you had a different solution for every country, it would honestly make the complicatedness of the financial system even worse. so i actually think that we sit in a place where we can be very global in the way that we deliver solutions, because of the fact that money flow continues to be global. now, in listings, we continue to believe that the united states has the deepest pool of liquidity, the most diverse investor base in the world, and that is a natural attractor of companies, and i think that will continue. >> it's a question , i've asked many of our guests this next

question. it relates to d/i, which were topics that emanated in many way from davos over the years. i remember sitting with you when you announced your plans to require disclosure of board members and gender diversity, and where people came from, and things like that. in retrospect now, given the entire push almost away from that, at least in the united states, and you feel it a little bit from other countries in europe and elsewhere, was that the right decision back then, the wrong decision? how has your whole world view about those issues inside corporate america changed, given even the changes we've seen in the last two weeks by corporate america, on topics like this? >> first of all, we are -- we are very proud of the fact that we introduced a rule that allowed for disclosure. but if you think about what we were trying to achieve. first of all, it was very demand driven, by the investor universe. investors have been honestly asking us for years to give them better disclosure and more consistent disclosure onboard composition. that was a big driver. and the second thing is that i feel that as we think about

modern governance, i do believe that the world did evaluate the conversation as to modern governance looks at diversity of expertise and experience and backgrounds so that you reflect the community that you operate in and the clients you serve. so that really did elevate the conversation. we certainly accept the decision on the rule. but i feel like it has evaluated the conversations. inside of nasdaq, we continue to be extremely focused on building the right culture that allows us also to have a very diverse and inclusive, you know, community of teammates, so that we can continue to serve a very diverse investor base. so me, i feel like these things are going to continue to operate, just maybe not in the same spotlight -- >> i don't know if you saw, one of the executive orders yesterday that trump put into place relates to dei, effectively getting rid of it by government standards. it's a very interesting topic, and i'm sort of curious, as you watch companies, some doing it under pressure from sort of the raabe starbucks of the world, and others doing it maybe under pressure from the president, or maybe because you think the

whole country has just sort of shifted its view, but what you make of what's happening. just in the broadest context. >> first of all, i do talk to a lot of ceos, but i can't reflect on the entire world of corporate america. i can say for nasdaq, we really continue to look at everything that we do in building the right culture, and we do believe that a place where we feel that people can be themselves and operate at their highest potential and have diversity of views makes us perform better. we'll continue to operate that. and at the end of the day, these things come and go with different political cycles, but at the same time, i believe there's an undercurrent that continues to be supportive. >> brian arnold from coinbase was here and we were talking about crypto. and boy is this president about crypto, right? how does that change things for nasdaq? do you say to yourself, we need to be in the crypto business in a big, big way? >> first of all, we already are supporting the crypto ecosystem.

we provide technology to crypto exchanges, both trading technology, clearing settlement and surveillance technology to crypto exchanges around the world. we are a very scaled technology provider to that ecosystem. and we're seeing a lot of demand for our technology, as the ecosystem starts -- continues to mature. we also list crypto etfs and others, both in the u.s. and europe on our exchanges. as we think about the regulatory landscape that could come, what is actually quite encouraging is the idea of going from an enforcement regime around crypto to a regulatory, let's actually write proactive rules. it gives everyone an understanding of the rules of the road. if there is clarity in regulation, it allows regulated markets like ours. if there is clarity in regulation, it allows us to assess what that means for us as an operator of markets, as well. but let's see how the regulation comes out. >> you spend a lot of time. people don't appreciate that nasdaq has a big financial crimes business, effectively tracking. how do you think about the context of that?

>> well, first of all, it's actually interesting, the technology that we have to support banks, we have 2500 banks, where we do fraud detection and investigative work, as well as aml detection and investigative and reporting work. it's a very scaled solution. but what we did do, also, is build out capabilities for to us say, if a bank wants to have both a digital wallet and a fiat wallet, we can provide comprehensive crime to support them in digital wallets and fiat wallets. we do think as the crypto ecosystem continues to mature, there's already been a lot more emphasis on aml and fraud detection and systems -- >> by the way, brian will tell you that people have been de-banked. the crypto world looks and says, oh, my goodness, all of these people were debanked because of this, because they were in the crypto business. do you think they were debanked for that reason or because there was too much risk involved? >> i think it's both. i actually do think it's both. i think that banks take anti-financial crime extremely seriously. however, the one thing i would say is in the next iteration of crypto, which is, obviously, we're on the dawn of that, what

does that look like? number one, i think a lot of enforcement decisions have changed the nature of the markets. number two, i do think there's an an enormous amount of focus on aml and fraud detection. the technology itself actually can support that quite well. it's a matter of how you implement it. and the third thing i would say is, if there's regulatory clarity, there will be more of the traditional financial ecosystem that's -- >> but there are going to be companies that try to go public through these -- through crypto. >> well, that's a different thing. so i think that's what i mean by regulatory clarity. the couple of things that i would focus on in the regulatory landscape are, number one, let's stay focused on investor protection. because at the end of the day, that is, you know, a critical component of financial regulation. and number two, let's also make sure that we have clarity on how we test and other things, what is social security, and what's not? >> not to be a prognosticator, and i know we have to go, but becky made a really smart point. she was talking about this article in the "wall street journal" this morning, that was showing "p" ratios at the beginning of different presidential terms.

>> mm-hmm. >> and we're at like the highest ever. do you think if we sit together a year from now that we are at even higher highs? >> well -- >> do you look at this market and say, it's great, it's priced for rfection, do you look at meme currents and i -- >> let's understand the current valuations. they're coming from the technology sector. they're coming from the dawn of ai. it is a dawn of a new, i would say, industrial revolution, but it's an ai revolution. that will continue to -- if we can unleash that and unlock that and drive growth across the country economy, i think you could see continued growth across the markets as well. >> the one and only adena friedman, appreciate it. good to see you. when we come back, bridgewater founder ray dalio will join us right here in davos. becky? >> that's right. we also have the house ways and means committee ranking member richard neal joining us here in washington to talk about the president's tax policy and much more. this is a special edition of

"squawk box" live in davos, switzerland, and washington, d.c., and we'll be right back.

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it is 8:00 a.m. on the east coast and you're watching "squawk box" on cnbc. i'm becky quick with andrew ross sorkin at the davos world economic forum. fourth quarter earnings out fro revenue expectations. d.r. horton on the rise. for the full year the company is affirming revenue guidens and expects to close between 90 to 92,000 homes and president trump getting his cabinet in place confirming marco rubio to be secretary of state, the vote, 99-0. i guess rubio is the only -- well, someone didn't vote. maybe rubio. andrew. >> thanks, becky. the market is back in action. let's show you futures. green on the screen, dow up 190.

nasdaq looking to open about 100 points higher and treasuries, we've been having lots of conversations about inflation in europe as well. the two-year at 4.261 and bitcoin and spoke to brian armstrong earlier in the day from coinbase and a lot excited about where crypto will go in a trump world. the trump family engaged in crypto itself with its meme coins and bitcoin right now at $104,000 a bitcoin. becky. >> andrew, thanks. joining us right now to discuss working with the tropical depression is richard neal of massachusetts. the lead democrat on the ways and means committee and, sir, thank you for coming in today.

>> delighted to be with you. >> let's talk about the house ways and means committee. such an important committee because it shapes the tax code and there's a lot you can do with that. mentioned in the constitution as the term implies to administer the government, all revenue measures have to originate in the house of representatives and within the house they have to originate in the ways and means committee, tax, trade, social security, tax side of medicaid, pensions, welfare of public debt, not bad. >> president trump has come out has already put a slew of executive actions in place. they have an agenda that they have really thought through, because he knows how washington works now. he's had four years to sit out and kind of think about how the world has changed and evolved. he has a thin majority in the house, though, and i just wonder what happens. will the democrats work with him when it comes to the tax cuts? are there going to be big battles that take place or do it

entirely within the conference? how are things shaping up. >> hard for them to make the argument that they're concerned about the national debt then propose adding $4 trillion to the national debt through a tax cut. now, yesterday a moment that should have been one i think of civic engagement, acknowledge the challenges the country faces, at the same time acknowledge that bipartisanship with small majorities really is going to be important. but then also to point out to everybody that if you're serious about the national debt, you can't say that the people that are sitting on the dais yesterday need a tax cut. and i think we would adhere to the position that a tax cut for middle income people makes a good deal of sense and sticking with that ought to be the posture of the administration. these proposals will come to capitol hill. there is a complicated process that they're going to have to go through and that's what committee structure is for. >> to be fair, neither party from the leaders of the party have really talked about fiscal

responsibility. that was not something we heard in the election. >> i'm glad you raised it. i can take you back to the bush tax cuts in '01 -- he last they borrowed the money for it. look at the distribution tables overwhelmingly it went to people in the higher income brackets. tax relief if it's to happen should go to people in the middle as we demonstrated with pandemic relief. how did we get there? worthy of a doctoral dissertation but they've contributed mightily to the national debt. >> the issue is, though, elections have consequences. the republicans won and will be driving the debate on this. we had a cnbc all american survey that surveyed a thousand americans, 59% put tax cuts for individuals as their top priority for 2025. if the tcga is not repassed it

will mean a tax increase for americans across the board. >> well, as you noted earlier that's what the committee structure is for and what negotiation is about. there wasn't anybody expecting to see the corporate tax rate in america go from 35 1/2% to 21%. the ways and means committee put it out at 26 1/2 and nobody was squawking. it was a pretty interesting moment. cap gains at 28%. i do think that the top rate for individuals ought to go back to 39.6. those are clinton rates, obama rates. those are recent rates. >> the individual deduction. i know you've made the point that the tax cuts of 2017 were really skewed to wealthier americans and getting the biggest benefit of that but the standard deduction increased pretty mightily and went from $6500 to 12,000 immediately and for 2025 it's $15,000. that is something that every american would notice pretty quickly if that reverted to the

pre-2017 numbers. >> you can make the argument projectically it extends simplification. that's another important consideration. there's room in the national conversation to talk about these issues and not to universally condemn what was done but to say, look, when you look at who got what that's a different argument. >> how will things look in committee? how do they work together? do you expect it to be a little more give and take or is this -- >> we tend not to have bomb throwers on that. there's one job of the leadership. to have people that are within the mainstream of economic thinking. tax policy has consequences. i think that the argument that was fostered on this country many years ago that tax cuts paid for themselves is nonsense. you can't find an economist who will say that, a mainstream economist who will say that. back to the argument offered earlier, how do you keep talking about the national debt, which the bond market is starting to pay some attention to?

>> yes, we have seen higher yields that have come through. >> and say the best way to cut the national debt is to borrow $4 trillion for more tax cuts? i don't understand the logic? >> do you think in the end there will be cooperation with democrats, at least in the committee level, or do you think this is a my way or the highway question. >> the last tax bill put out, i actually supported it and i supported it because i thought you could make the argument that it actually enhanced the child credit. >> it did. >> now, where democrats would be on it, no, but did it enhance it? the answer is yes but also enhanced the low income housing tax credit, an important consideration. when you look at the different credits in that package that made sense. it passed the house. and democrats voted for it. >> you could see something along those lines. >> the problem was that the senate rejected it out of hand and the new argument that the senators are making which is, by the way, pretty strange to me, they're saying that the baseline

no longer counts. that you can ignore the baseline for tax cuts. that's essentially saying that, okay, well, just forget about the $3.5 trillion that was borrowed. we'll just put it in a place where nobody is going to find it? try running your household like that. >> sounds like it's going to be a busy several months. >> looking forward to it. >> and congressman neal, we appreciate your time today. >> this was terrific. thank you. andrew, we will send it back to you in davos. >> thanks, becky. we are at the world economic forum and have big guests coming up. bridgewater founder ray dalio and general atlantic ceo and, mb, also a bytedance board meerbill ford is going to be here. we've got two big conversations coming up right after this. "squawk box" returning in just a moment. locked us out?!

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welcome back. we are in davos, switzerland, this morning and have another bring guest, bridgewater founder ray dalio has a new book, i don't know if it's a book or really an essay or a treatise, really. >> it's a thing. >> and it's called "how countries go broke." it's available online soon. >> it's available now.

i'm putting it out part by part, it's got four parts, and then in about two weeks it will be all out and it's free on a pdf because people don't know the mechanics and government officials don't know the mechanics, and so this went back with 35 countries, what is the mechanics? what is too much debt? how does it work? how does it end? so i wanted to convey that because it's the most important political issue that's going to be in front of us. >> let's break it down. it is very true. we are going to have taxes on the table this year in the united states, and we are going to have deficits on the table, and they are interconnected. how the deficits get dealt with is the fundamental question you've been dealing with. >> yes, and it's not just an american issue. it's a chinese issue, a japanese issue. there is a supply/demand issue, and there's mechanics of it that i hope we can touch on, but

there is a path forward, and whether you take that path forward or not is going to be critical for the modern market. >> let's talk about it. what is that path and you're right. i've been arguing, i don't noah if you agree the bond market more than anything else is the governor -- about there is a governor on the politics of our moment right now. >> that's right. >> give everybody that you have a red, you know, congress, senate, and the white house, the only governor, if you will, politically in a weird way may be the bond market. >> of course, because interest rates, the government interest rate is the backbone of all markets, right? stock market, bond market, all borrowing, all lending, everything. right? so, in answer to your question of what is the solution or what needs to be done and it's almost a black and white situation, think of the number 3%. >> 3%.

>> 3% of gdp. >> yes. >> we have a projected deficit of 7 1/2% of gdp. that means all those bonds have to be sold and then because of the supply/demand imbalance, when you sell bonds, when i calculate who are the buyers of the bonds, there will not be enough buyers and then where it could be worse in this dynamic is those who own bonds also sell the bonds, and when that happens there's a tremendous supply/demand and then we have problems. we can get into what it looks like but it's happened many times before so we have to stabilize that and we can do it. that's what i call the 3% solution. >> okay. >> 3% solution is that you can cut it down from 7.5% to 3%. now, what people don't realize is there are three ways of doing that. they understand that there are taxes. there is spending.

>> yep. >> but what happens is like in 1991 to 1997, there was a comparable decrease in the budget deficit because if you do it when the economy is good, you will get a lower interest rate, and the lower interest rate means less money money -- less cost of the debt because we have so much debt that the interest cost on the debt is far important than spending and taxes, and so you can get there and if you get here you'll get a bond market rally. >> how do you get there because there's going to be a big question come this summer about whether you ex-fend the tax cuts as they are, whether you make them even lower, does that help on the growth side? will you ever make it up on the other side? how do the tariffs relate to all of this? >> you know, the biggest problem i think is everybody has their particular way. >> okay. >> so, i think it's, first of all, all the members of congress, all the president

should basically say 3% of gdp. now, because they have all their particular ways. >> then it's how do you get there. >> okay, first if you make the pledge, second, if you can't agree, you would start out and say, i'll do everything proportionately. if you did everything as your backup then you work from there. if you can deliver any form, so, yes, if you can deliver cost cuts, but you have to pledge to deliver those cost cuts, now, there's smart ways and there's stupid ways, okay, of doing that. but and everybody will argue over that. but you must achieve the three, so i think the 3% pledge, 3% we will do 3%. if we can't even agree on how we do it, we do it proportionately but let's work together because our problem isn't the deficit, our problem is the politics, the fragmented politics. >> let me ask you a separate

question, which is, and we talked about it multiple times during the last three hours, becky raised it at the beginning discussing a "wall street journal" argument talking about p ratios in a presidential term and how they are now. at historic highs, even relative to where they were before reagan, before everybody. if we are here together a year or two from now do you look and say these equity markets are going to be higher than they are today, lower? do you look at this as a great investing environment given the backdrop of deregulation, all the things the president plans to do or say, wow, we've gone pretty far already. >> we've gone pretty far already and particularly in certain sectors and so on, but the biggest influence is going to be what i'm talking about, because if you have those multiples, and you have a rise in interest rates, okay, you will have a

pop. so, as we focus on that deficit question, but, yes, of course, it's fragmented, i think that -- it's of course led by the sectors that are great sectors, the disrupt ers, the ai and so on. i don't think it's been carried down to the applications of ai. in other words, the uses of ai, so if you're watching as i'm watching around the world, and, by the way, what's interesting, what's going on in china in terms of ai and applications, the applications of ai are underdiscounted, i think, and then, of course, what is the multiple? the multiple is an extension of the interest rate. >> that means you would be long this market right now? >> i'd have to be diversified. i don't want any particular -- i don't want to be overextended on an alpha and would say one thing is, i don't think we think enough about what's alternative

money? we only think -- everybody -- when you think about -- >> give me alternatives to what is alternative money. >> gold is an alternative money and it's a very effective diversifier so we're dealing with some bitcoin. debt is money. >> right. >> in other words, when you're holding debt you're owning a promise to get money. >> right. >> when you own money, essentially you're holding it in debt. >> you've held it -- >> and i think that is our biggest risk. >> our biggest risk. >> that's our biggest risk. the money part of the risk. there are great things that are going on in innovation and change but people don't pay enough attention to the interest rate, the p/e but also the cost of it. people have a tendency to think a great company is a great investment. >> right. >> without looking at the price. >> i remember when you sat here with us, this is years ago now, and you said cash is trash. do you remember that. >> yes, because cash was trash.

>> cash was trash. is cash trash now. >> cash is about right. they shouldn't ease it, any monetary policy from here. >> they should not -- jay powell -- >> then what will happen it's not so much the guide of inflation but the supply and demand of debt, okay. that will be the driver, because what happens is as they -- if you have a supply/demand problem, if you do and you you will, then you have -- what does the government do about that? if they don't fill that supply/demand and provide the buying, then interest rates go up. >> right. >> okay, and that has a bad effect on everything, so that is really, i think, that's the topic of today. that's the topic of the next six months. >> bitcoin. >> yeah. >> you have been a holder for quite a while now. i don't know how big a portion -- >> little. >> little, like 1% little.

>> little like that. >> you've done more than well with it. what do you think happens now? >> i think the important thing is what is your alternative money? and do you have an alternative money? not a lot. i have, by the way, i won't talk about myself but i think an investor, if you look, you will reduce the risk of your portfolio. if you have 10 to 12 or 15% in gold, because it has a negative correlation. >> that's in gold. >> but i'm saying or, let's call it anti-money. >> would you do 10% in bitcoin today at $104,000 a bitcoin. >> no, again, what i do is another thing, but for me personally, bitcoin is not a central bank reserve. it's not going to be bought by alternative governments. >> it might with this strategic bitcoin reserve if it happens. >> but unlikely only because it's so easy to control and follow. you know, but i'm not saying,

yes or no, you know, i'm just saying think about the value of debt and money. >> right. >> think about the value of debt and money when debt is money, of course, throughout history, there's always the interest rate that you get that's the temptation and is it enough to deal with that supply/demand problem. >> let me ask you a different question. you have long been -- i don't know if i describe you as a china hand, understand the dynamics. how you think things will change over the next four years as the relationship between the u.s. and china, obviously tiktok is now a chess piece perhaps in some of this debate. what do you think it looks like? >> i think that we're going from the world order in which there were multinational organizations, multilateral to an environment that is more

unilateral, in other words, america first and more confrontational, more fighting and that there was a demonstration of fighting of power so we had war, we had a war in the middle east and a war with china in its form and so on. i think that that hurt people, had some hurting and i think it's maybe enough to demonstrate power. we're now in a world in which might is right and there's a power and now i think there's a cautiousness, so i'm hopeful, but it's right at the brink. >> right. >> i'm hopeful that we will have a contained, safe -- now, that doesn't mean we're going to get along. in both cases and in all cases there's always the risk that the other will do harm. it's in history, you know, it's

the -- >> is there a bigger chance that trump is in office that china says, we actually want to work with you and there's some kind of transaction to be done or less of a chance because they're worried about him and say we're going for taiwan now? how does your -- >> i don't think there's any going for taiwan now. i think china has its problems. we have our problems, and both countries will benefit if there's not worse problems, you know, it's good if we don't have a war. it's good if we take care of our debt problems. you know, there are these five major forces that i look at and just want to say that and i'll say it quickly. there's the debt money force. you have to understand that in the economy and markets. there's the internal conflict force. there is a war going on internally. >> internally inside the united states. >> and in many countries, and that's a war between the left and the right and what the maga and woke and so social values

and so on. there is a war to win, okay. because -- quickly, because in two years we'll have midterm elections. >> we are. >> and so, number three, is the great geopolitical war, the change of the world order. number four, acts of nature, droughts, floods and pandemics. >> it's a real thing. >> have killed more people than wars and have had -- we're watching it. wow, it's amazing, l.a. on fire. and then, number five, is technology. and this technology change is more impactful than anything and how they work together. so this is -- if. >> it's a moment. >> i'm focusing today on the next thing that's going to be up and so it's free. read it. >> how countries go broke, ray dalio, thanks for joining us in davos, appreciate it. always an education. beck question quick back in washington. >> that was fascinating, andrew, thank you and our thanks to ray dalio too. when we come back, we are

going to continue the split show from davos and washington, d.c. south carolina senator tim scott will join us here in d.c. on president trump's first day in office and the regulatory rollback agenda anticipated by u.s. businesses. we'll drill down with him on the banking committee because he is the chairman of the banking committee, there's a lot that they have influence over and we'll talk about what his agenda looks like for this new congress. stay tuned. much more "squawk box" on the way after this. (vo) ding dong! homes-dot-com. we've done your home work.

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getting rid of all the regulations. >> i will very simply put america first. welcome back to "squawk box," everyone. it is the first trading day of the week and we're watching the futures in the green this morning. been there all morning long, at least since our show started. dow up by 155. nasdaq up triple digits and s&p up by 23 points.

treasury yields are tamer than they have been in recent weeks. ten-year sitting at 4.57. two-year, 4.26. andrew. >> thanks, becky. more coming up from the world economic forum here in davos, switzerland. bill ford is going to join us from general atlantic on the board of bytedance which controls tiktok, the subject du rour but next we'll hear fm south carolina senator tim scott in washington on the second trump term off and running. don't go anywhere. "squawk box" will be right back after this. the places we cheer. trust. hang out. and check in. they all choose the advanced network solutions and round the clock partnership from comcast business. powering more businesses than anyone. powering possibilities.

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rolling back regulations will be a top pie or the for the trump administration. the senate banking committee is getting set to work on it right away. joining us is republican senator tim scott, chairman of the banking committee. thanks for being with us. >> yes, ma'am. >> there's so many times we get to talk to you and really get to drill down on what you're planning to do with the banking committee. you have big plans for the 119th congress. what are the top couple of things on your agenda? >> for me it's making america's economy work for the working class people. becky, i'm thinking about folks

working class folks who struggle to make ends meet. it's like they have too much month for their money. number one, i think the regulatory rollback we're talking about, the reset, we want a responsible level of regulations, not an oppressive level of regulations. you think about basel 3. capital on the sidelines, more capital harder to get a mortgage, harder to start a small business because you need capital. second area is capital formation. i'm putting together a working group hopefully led by dave mccormick who understands capital formation. my theory, it changed my life and my mother's life and allowed me to live the american dream beyond home ownership, having a place where you ask for the money you need in your hometown and need to reset the capital requirements from an s.e.c. environment. number three is home ownership.

interest rates spiking because inflation was so high and making home ownership outside so many americans' reach. most of the homeowner question is a local question. i think we can provide some incentives, whether we use our cdbg grants as a way -- >> cdb 2k3w6789. >> community development block grants that allow us to provide some incentives for states and localities to create more space for homeowners. >> okay, those are all pretty worthy issues. basi basil 3, it's not the big companies that haven't been able to get access but the small ones. >> if you think about the trickle down effect. any time you have basil 3 as a proposal, it's not going to just affect the gspss of the largest

banks they have 10 billion or 25 billion. small community banks can't meet the requirements to grow so what they're looking at is consolidating. the more consolidation we see in the smaller banks, the fewer community banks there will be around the country. that stymies the actual activity that leads to small business growth. the independent banks say the level of regulatory oppression has never been higher. >> the idea of mergers and activity -- m&a activity, that's been brought up with regards to the small banks, the community banks too. do you think there will be an increase of them being sucked up by other banks. >> first thing you do is set the regulatory environment. the number one reason we're looking to hear them consolidating is because they -- their business plan doesn't work without consolidation. think about the fact that in the '80s, early '90s, we had

14,000 banks. we're down to 4,000 and it's consolidating. puts more pressure on the nonbank opportunities or more opportunities in that, fintech and nonbank and perhaps unregulated areas of our economy will be looking for loans in that space, so giving banks an easier path forward from a regulatory standpoint and holding their feet to the fire when necessary but making it easier to have character loans to lean into communities based on their relationships is something that changed my life. we wanted to change more lives and to do it in a responsible fashion. >> let's talk about insurance companies too. we've been watching insurance companies, what's happening in california, right now with the wildfires, what's happened in places like florida with flooding that's come in. are there reforms you think can and should be put into place, or how do you think the industry will evolve too? you can look at 15 different reasons there are huge problems in the insurance industry. >> 100%. two thing, number one, the state

regulated insurance framework we have, it's fantastic. the best in the world. number two, california and florida, two very different markets, in florida the average homeowner rates, $6,300. that is just unaffordable for the average flor riddian. >> yet there are insurance companies who won't do business because they can't cover the risk. >> you talk about the risk you're talking about the plms back in the insurance day, probably maximum loss. the events of natural disasters in our states today makes it very hard for an insurance company to find that actual rate from an actuarial perspective. in california a bit of a different mix there. the catastrophic occurrences from fire that happened in california that we are still seeing the devastation in los angeles, we certainly should stop and pay for those families, think about the loss of homes. but we have to think about the absolute dereliction of duty from the governor to the local community where they did not follow the pit situation

strategies that they put in place for themselves making it almost impossible to find an actuary that says we can do business there. the end of the day there they need to follow their own mitigation strategies, number two, you need to have a comprehensive conversation about insurance state-to-state and talk about the natural occurrence -- the natural disasters occurring across our country and have a serious conversation about that. on the coast we think about hurricanes, midwest and west. >> high winds. >> in the middle. >> and rain. >> think about tornadoes. >> yeah. >> so we need to have a comprehensive conversation without eliminating the state regulated insurance framework. >> let me ask you this. there was a great piece in "the wall street journal" that said the insurance industry is facing this huge crisis event where you have to figure out are these losses? are there situations where the state regulators will allow insurers to raise prices to get the risks they're taking or are

we going to basically take over and say the public is going to -- tax dollars will step up and pay for loss. >> becky, we have to figure out how to make sure the insurance companies remain the first line of defense. it cannot be the taxpayers. you just made a very important point, though, becky. in california, they did not allow the insurance companies to increase the rates for the last -- >> same thing in florida and the fair plan you have in california and the state plan in florida are both on the verge of bankruptcy. >> and so is nfip. we bailed them out first, national flood insurance program. these are the acronyms. losing billions of dollars, that's why we have to figure this out. if you think about the flood insurance program specifically, three states account for more than 40% of the premiums that come into the national flood insurance program. south carolina, florida, louisiana. >> okay. >> so the bottom line, unfortunately, though, is flood occurrences are happening in new york, new jersey and beyond and so having more folks involved in that process will be really

helpful from a rate sufficiency perspective. until we understand and appreciate the occurrences around the country we won't be able to figure out the probable maximum loss as if relates to natural disasters versus your normal parallels of fire, theft, and other. >> is the federal government going to play a bigger role? you said changing all of this with keeping the state regulatory framework there but do you think the federal government will play a bigger role? >> we should engage the insurance industry to understand what it takes to be rate sufficient. that is something that the american people deserve to understand and we need to have a conversation with our states about making sure that they're following their own rules and laws to make sure that we reduce the threat of fires in california. when you can go to a fire hydrant and not find water, have sprinklers that don't work, these are massive problems that can prevent the actual devastation that we're seeing in california. not completely, but a lot of it.

>> senator scott, thank you very much for your time. we hope to talk to you a lot more as we get a little deeper into this congress too. >> thank you very much. look forward to coming back. >> appreciate it. >> andrew. >> thanks, becky. coming up next a can't miss interview. general atlantic's ceo and, yes, he ials so a bytedance board member. bill ford is going to be here in just a moment. do not go anywhere. we're coming back from davos, switzerland, right after this. (grandpa) i'm the richest guy in the world. (man 1) i have time to give. (man 2) i have people i can count on. (grandma) and a million stories to share. (vo) the key to being rich is knowing what counts. (♪♪) i don't play for money. before my mom passed, she told me to play big— play for something bigger than myself. now, my ambition is to play so i can help and inspire others.

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welcome back to "squawk box." we are live in davos, switzerland, this morning. want to bring in our next guest, general atlantic ceo, bill ford is here, and there is so much to talk to you about, the private equity landscape is potentially transformative and will see over the next four years in a post-election world, what that looks like, obviously want to talk about tiktok as well and so

much else on the board of bytedance but just speak to the private equity piece of all of this. i think there is a question mark for many, for the last couple of years it's been a lot of stuff that's been bought, not a lot of stuff that's been sold in terms of fund-raising and the like which made it difficult for u.s. pension funds and there's been sort of a very difficult transaction environment. >> right. >> yet we do have these -- we were talking about the public stock market, p/es are at record number. >> yeah, woo i've had the toughest exit environment we've seen over the last three years for both the ip market and m&a market and i think it's really -- the regulatory overhang we had from the last administration really caused companies to hesitate about going public despite a strong equity market and pretty good economy but held back and the same was true for the m&a market. that's made exit conditions tough and for the p industry in terms of getting capital back it's been challenging. i'm expecting a real renaissance in the ip market and a lot of

companies line up to go public. 28 companies actually in our pipeline ready to go and now really -- >> ready to go. >> ready and excited to go public and will give great opportunities for public investors and it's sort of a triple win. it's a win for private equity investors to have a chance to get liquidity and a chance for companies to raise capital and win for the public investors because i think without ipos the public investor doesn't have a chance to participate in some of the most exciting growth companies. >> on the buying side and ask because for a long time it's felt the strategics can't buy anything because of the regulatory environment. if that opens up, all of a sudden -- there's a period of time where private equity was competing for itself because the strategic guys couldn't do it. >> couldn't play. >> does that make it harder for you. >> i don't think so. i think over 40 years, about 50% has been through the public market and 50% through the m&a market and i think we'll go back to that kind of situation where you have a lot of companies will choose to sell the strategic

buyers because that market will open back up and i think people will be accessed to public markets as well. >> what's the fund-raising environment look like? you have about $103 billion under management. >> and the reason is this exit piece is an interesting one because of the u.s. pension funds which are sort of tapped out at the moment. middle east seems like is better. you tell me. >> i think it's improving. i do think investors are waiting to see some return of capital that's been held back by this difficult exit environment. as exits start to loosen up you'll see new commitments and i think people recognize the private market asset class is where it can deliver attractive returns but waiting to see for things to improve. >> you guys have spent a lot of time buying technology companies and i want to talk about ai because there's a big question about sort of, you know, hey, where we are in this cycle and, b, what the defensive mode is around any of these businesses if, in fact, ai actually is or gets to the promised land of where it claims it's going to

be. >> yeah, i think you have to sort of step back and look at ai as a major tech cycle and this is sort of the fifth major tech cycle of my career. there was the internet cycle of the '90s and of the 2000s, the cloud cycle of the 2010s and here we have ai and every time this happens, you see companies get disrupted. you see new opportunities created but the opportunities have placed out over decades, not years and i think we have to recognize we're still in the relative early innings of ai but i think this will have a profound impact. >> are you thinking of playing it from a software side or from an infrastructure side, an energy side? what's the -- >> i think it's the whole stack. they're going to benefit from the demand for data center capacity and look at the infrastructure layer getting laid down right now, software infrastructure and hardware infrastructure, that's happening too. that's a good opportunity but as we go up the stack we will see

applications we can't even imagine right now in ai. >> you do a lot of international business. obviously a big question about tariffs and the tariff question creates this separate question about retribution from other countries that say actually we don't want u.s. money necessarily. how do you think about that? i want to read i, this is the -- we'll talk about tiktok in a second. the vice premier of china said effectively protectionism leads nowhere. there are no winners in a trade war. >> i think you have to sigh tariffs if we get them and when we get them as really frying tr drive investment in the united states and ink creation purchases of u.s. product and services. i think that's what they're designed to do as opposed to being a revenue-raising device and so we have not felt yet our capital has been impeded going around the world. we'll see what happens. >> do you think it changes the dynamic in where you would invest already? do you say there's going to be certain countries that are off limits that might have been

different before? >> not really. i mean, 50% of our investing activity is still outside the u.s. and still see lots of opportunity. the thing that gets us so excited is innovation is alive and well, not just in the u.s. but find entrepreneurs everywhere and opened our offices in the middle east last year and opened up an office in abu dhabi, riyadh and we're seeing entrepreneurs in that region of the world for the first time and that's exciting for us. >> we're now at the point of the interview where it gets a little complicated. let's talk about the issue du jour which is tiktok. i'm on it. my kids are on it. they still want to be on it. you're on the board of bytedance. you've been watching this play out. >> for awhile. >> what can you tell us about where things stand? >> well, we're first of all grateful the president intervened to keep it over the weekend so that was great news and now he's issued an executive order as of yesterday that you

know about that gives us 75 days to work a solution that meets the national security of the united states but allows tiktok to keep operating and i can say this, that the company is prepared and ready to engage with the trump administration, has been looking forward to the opportunity to basically find a solution that complies with the law and meets the security of the united states and at the same time keeps tiktok available. >> do you believe there's a way to do that and not just comply with u.s. law but comply with china? because it sounds like the chinese government has been the one saying, you know what, we're not letting this algorithm out of the country? >> the thing, let's go back a step to what we do with project texas, i know you've talked about it before, data security, software security, algorithmic security, we've been working on that for a number of years an had our data and software in the clean cloud solution that's protected that data and the american user so we've already taken steps and some initiated under the trump administration

the first time so i think we're very confident we can -- with a real engagement with the administration demonstrate. >> how much of that is about then persuading -- i mean this becomes a real issue between congress already putting the law into effect and supreme court upholding it. it's less clear to me that tiktok just can say, you know what, we're doing it right, let's just per situate you that what we've been doing the whole time is right because effectively the government already said that that's not enough. >> well, we've got to find a solution and confident we can with the trump administration that deals with the ownership issue, but also deals with the data and software security issue and it's too soon to say exactly what that will be. we're waiting for the secretary to be confirmed and them to work with this project. >> i know becky has a question in washington but do want to ask, there have been reports that potentially this could be sold to elon musk. that the chinese government or at least officials inside the chinese government were talking

about potentially selling it to him given his relationship with the chinese and a comfort level and trust. have you been engaged in any of those kind of conversations? >> we have not. our focus is finding a solution that allows tiktok to operate as a stand-alone business it has already and we think there is a solution. >> how much, though -- how much sway do you have over that versus the chinese government, if you will? if they were to say i want to sell it to elon musk? that could be a conversation that's happening separate from you? >> i think what they've also said and in that statement from the chinese leadership is that, you know, the private secretary company matters are company matters decided by the board. yes, we have to engage with chinese leaders and chinese government and chinese regulators just like we have to engage with u.s. regulators and the u.s. government to make sure the solution is workable. at the end of the day the board has to decide what's the right answer for tiktok, u.s., what's the right answer for tiktok global and bytedance? >> you're not keeping it from -- the understanding in the public is that effectively the chinese

government says, it can't be sold into the united states. and that's the government position. you're saying the board's position is not that? >> no, no, i'm saying we think we can find a workable solution. >> right. >> that keeps the chinese leadership, chinese regulators and american regulators satisfied. that's our job over the next 75 days to engage with the trump administration in a way we have not been engaged to find in workable solution to get the chinese comfortable but also the u.s. government comfortable. >> becky has been covering the inauguration. >> hey, bill, just to follow up on this, i'm actually looking at the law, the tiktok law right now, tiktok versus merrick garland. it says the act exempts a foreign adversary from the prohibitions if it undergoes a qualified divestiture. a qualified divestiture is one the president determines in the application no longer being controlled by a foreign adversary and preclude the establishment of any operational

relationship wean the united states operations of the application and any formerly affiliated entities that are controlled by a foreign adversary. in the law it doesn't sound like there's a whole lot of room for negotiation for tiktok to not be majority owned by a u.s. entity at this point, to keep the situation the way it is, do you anticipate that these negotiations with the trump administration will include congress revoking that law that has not only been signed into law but upheld by the supreme court. >> let's go up to the top. 06% of bytedance is controlled by non-chinese shareholders or invested in by non-chinese shareholders so global investor, many brand name investors are major share holers of bytedance and in effect shareholders of tiktok, so the starting point is that there's ways to effect control and ownership that

doesn't necessarily involve a sale of the company. and i think we understand we've got to come up with a solution. >> right. >> that complies with the law as becky just, you know, read it back to us. we understand that. but that i don't think that necessarily has to mean a divestiture. it does probably mean a change of control. >> i think what we're all trying to understand who is the prime mover in this? is it the board, and if it's the board, what is different today than necessarily -- i mean i know what's different today compared to two weeks ago, which is there is a new president, but what the efforts were then versus now, what is the distinction and if it's not the board, how much of it really is the chinese government saying, you guys can't do this? >> well, speaking directly, andrew, the problem is we haven't had a negotiating partner in the u.s. government. we now do with president trump and hopefully secretary bessent. we haven't been able to do that for awhile so that's a significant change and so as i said, the board and management is ready to engage with the u.s.

government. you know, as soon as they're ready with their confirmed leaders and the chinese i think are ready to engage but see bytedance as a private sector company where decisions should be controlled by the board and shareholders. >> right. one of the questions i talk about is actually whether the company is a national security threat at all. i've made the argument we have not seen actual evidence of that yet. maybe prospectively it is in some way i haven't thought through. what do you make of what the u.s. government clearly has told senators, congresspeople and everything else? >> i think we've been on order as saying and i personally -- >> you're in it. i know people say you're talking your book. we happen to be in agreement. >> i strongly disagree that there is a national security threat from tiktok. i don't think there is. i believe that the data is kept safe. the data has never left the u.s. for any reason. the algorithm and the software

is kept in the oracle clean cloud certified to be safe that it's not been manipulated in any way and we would -- we take great comfort that that's the case that there isn't a security problem. i would have a phlegm if there was a security risk. >> if it stays in the u.s., will you do a dance on tiktok. >> you and i, we'll do it together. >> dance on tiktok, bill ford, thank you for engaging with us on these topics around ai, kwieft equity, and, of course, tiktok. really appreciate it. >> guy, we have another huge day ahead of guests tomorrow right here in davos. just want to tell you what's on tap. salesforce c benioff will be here and cisco's chief chuck robbins. jpmorgan, jamie dimon who has been on the show. goldman sachs' ceo and coca-cola's ceo, james quincey

and satya nadella of microsoft, it's happening tomorrow on "squawk," becky. >> you cannot set up a tease like that and not deliver. do your dance. >> oh, the dance. >> well, in 75 days we may do the dance. >> 2340, give us a preview, you and bill both, i want you and b. >> we'll start practicing the dance. >> practice up. our thanks to bill. it has been a lot of fun. we'll do this again tomorrow. andrew will be right back there. i'll be back in new york. "squawk on the street" begins right now. we will stand bravely, we will live proudly, we will dream boldly, and nothing will stand in our way because we are americans. the future is ours. and our golden age has just begun. thank you. >> president trump back in the white house for a second presidential term as the