tv Squawk on the Street CNBC January 18, 2018 9:00am-11:00am EST
>> i keep coming back to the one, the only one worth reading i think. >> walter isaacson's book. >> no. >> thank you for that. on that note. >> that's a great note to end on make sure you join us -- who wrote that >> andrew ross sorkin. "squawk on the street" is next ♪ >> good thursday morning, i'm carl quintanilla with jim cramer and david faber. stocks are poised to take a pause from the surge, best day since november 4th 200 point plus day we're watching the looming government shutdown. europe with gains, 10-year above 2.6s, that's on the cusp of a three-year high. futures largely flat ahead of the open
investors closely watching the d.c. tea leaves for signs of a shutdown. >> apple does appear to be poised to repatriate billions in overseas cash and flepledges to create $20,000 over the next five years and over a new campus. >> morgan stanley beats the investment bank reporting growth across the board first up stocks are coming off best day since november. the dow closing above 26 k for first time the s&p and nasdaq seeing fresh record closes. the tech sector led the way posting its best one-day performance. got to go back to october, jim, for tech having a better day than wednesday. >> there were two tech rallies yesterday. there was one stimulated by asnl it's a european company, they make gigantic, the size of city buses, capital equipment, machinery and they say listen, the demand for semiconductors is off the chart. that then triggered a big rally in the texas instruments of the world. micron and the second rally was kind of confused it started with apple saying
these things but apple had been going down because of the research challenge about no super cycle of the then people started realizing, wait a second, they are putting this money to work in the economy i call it the apple marshall plan but what's left? it can be a lot for shareholders witness this new one-two punch we're seeing one, walmart raises the wages. two, goldman sachs saying now the shareholders about to benefit. it's like wages and marshall plan, shareholders that's why you keep getting a second leg and third leg to this rally. >> goldman sachs actually disappointed investors in terms of the buyback yesterday. >> that was -- that was a little counter intuitive because they were saying because regulatory concerns. >> there was an assumption it would be larger than what he guided towards on the call. >> at the same time, i went over the call because of what you said, which is that marty, he basically laid it out, we're not doing that well. we don't have enough regular capital but we got a lot of
things in the works. that's why i think -- goldman and ten times earnings becomes the biggest bargain in the group. i really absolute him. on his call, he did not dodge that there were divisions that were underperforming i did feel having worked at goldman i was in one of those divisions underperforming, i didn't have a good feel if i worked there that wasn't like al capone in the untouchables with the baseball bat, maybe more of like a fly swatter. you have news on amazon? >> still waiting. >> what was that >> i like doing this, by the way, this makes people -- >> what is that? >> it actually helps. >> like apollo 13. >> they are announcing their candidates for hq 2. >> where are they? >> as we were saying before the show began, whether or not this -- the first stage of their announcement would it be one city or collection of finalists so to speak. >> to make it more fun
but again, give us some of the finalists. atlanta, boston, chicago and dallas and denver, indy, l.a., miami montgomery county, maryland nashville. >> those are -- that's a list of teams -- >> new york city >> new york city there's -- so basically narrow down -- they narrow down -- >> they left out philly. >> philly is in, pittsburgh. raleigh. >> they went to the nfl. >> toronto and washington, d.c. >> toronto >> i didn't take that course >> how many is that, carl? >> is it 20? >> i think it might be who did they leave out that's an nfl city >> i didn't hear houston, which people because of bezos's birth play thought might have a chance. >> a lot of cities are certainly happy now after 238 communities submitted proposals here
a lot of these cities way ies c through are happy they are in the next phase of this process for which they've said there will be a $5 billion investment over time and creation of 50,000 jobs, again, over time by amazon but when we come back to amazon in the second headquarters, i'm still fascinated by the whole idea of it, having two separate headquarters and degraphic locations and how they decide to divide responsibilities and how it plays in with the overall company. >> that's a great observation. because the two companies that i don't like that have it are unilever and world dutch they both profess it's not working. it's not working. >> they have headquarters in separate countries and they have -- this is obviously -- >> toronto toronto, david did you think that's in this country? can you get a map -- can you get a north american map >> nafta, how could you with the risk of nafta, how could you consider putting your other headquarters in toronto? maybe that's the point
i don't know. >> who's bigger, bezos or trump? >> they say thanks to all 238. that submitted proposals. >> losers. >> getting from 238 to 20 was tough. we learned about many new communities across north america that we will consider as locations for future infrastructure investment and job creation so there might be some consolations prizes. >> the interesting one is montgomery county, maryland. you've got this bedroom community that's connected to washington, d.c. doesn't -- well known beautiful area and that's kind of a campus area these other ones would be i think inner city >> yeah. which is of course the case for seattle where amazon has taken over a good part of the downtown area >> it's an important story. >> i mean -- >> it is an important story. >> the journal did a piece about cities that are finally trying
to invest in their own cities on the hope of one day attracting if not this -- >> to address some of the concerns because you need a good transportation network -- >> nashville. >> strong airport, you need access to a lot of different international roots and things of that nature. >> how great would it be for newark, speaking as a hometown guy. newark is on the cusp of a major renaissance. >> you need cheap real estate. >> newark could give you that. >> right over from being the cusp to being a city where you can imagine a police force teachers, god, they could do so good. >> speaking about investment though, back to apple, i mean, given yesterday's news and new campuses, what's your take, jim, overall? we got the announcement yesterday of course about apple. and its investment plan. we should make this point because i think it's worth making again the $38 billion in taxes that are going to pay, that's because all of the money that every corporation has outside the u.s. has been deemed
repatriated. you have eight years to pay it -- >> thank you for using that w m word, deemed. >> then you can decide what to do with the money. in this case i believe mr. cook, i believe you spoke to him, what did he indicate? are they going to bring most of the money back now that they paid the taxes on it or not? >> not enough -- not enough info on that yet. you're boosting 1 billion manufacturing to 5 billion in funds. you're trying to get teach people coding and you're obviously adding this to the campus but i come back to, if you do inflation dollars, inflation adjusted dollars, it is bigger than the marshall plan and if you go back to general marshall --'s. >> what's bigger than the marshall plan? >> the cook plan. >> are we talking 350 meaning contributions. >> over five years the marshall plan was less than -- >> we're talking apple and still looking at amazon's headquarters map here. >> can you give over the commencement speech in 1947,
he's talking about the need to redo the country the country -- the continent of europe a lot of what they want to do is redo the country they want to teach people code they want to teach them in 50 states they are very big thinking and it's funny because there was a time in this country where you would only think that the u.s. government is big enough to take on this kind of challenge. now you think that only an amazon or apple or facebook is big enough to be -- the u.s. government so much in social security and -- >> is that part of the money they are increasing the investment as well >> over five years i mean, remember this is a fluid situation and next year they'll have even more. >> 20,000 jobs over five years, people have said they added that number of jobs at that current rate is it any more than the current rate of additions in terms of what they are expecting to do? >> i think that's the direct -- 2018 they are saying is north of 50, which is more than they would have spent and i think the other thing, you wouldn't necessarily put these places in the u.s. where we're not code -- we're
not code sufficient. >> to what, the data centers. >> that apple is talking about. >> yeah, i mean, look, i think all of these things are kind of unformed they want to do what is right for the country because they say listen, we benefited from it obviously i think in a different tax regime, it might better to put in mexico or canada. workers are five dollars now and mexico very well educated workforce. >> are we ever going to get a number of how much is repatriated? i mean people want to infoer bas on the tax payment. >> we have to look at the q. notion of the statement was basically we reaffirm that this is the tax reform -- a lot of things we had in the works is what tim told me but reaffirm the idea that this is a new regime and it certainly -- there's lots of money to go around that's good for the country. >> without a doubt i do think it's important for people to again understand, we have -- so apple and goldman sachs also, they have taken the
complete tax hit so to speak for all of the cash they have and now free to do what they want with it, whether or not they bring it all back or some of it or most of it is unclear apple did indicate most of it during that interview with abc and then from here on, any income earned over seas is not taxed by the u.s., right it's a territorial system. so apple as we pointed out many times has a lot of its intellectual property in places like ireland where it is in a tax dispute and will continue to benefit from what is still a lower rate in those jur jurisdictions than the 21% here. >> they have to borrow overseas because the new ebita concerns are not as positive. there's a different litmus test of how much interest you can deduct here versus borrow in germany or france. >> that's another provision. >> to what degree is the company being revalued today based on repatriated cash
>> i think it has to be. you look at the one-two punch, walmart only when they closed the sam's against the costco and you look at it the wage hike, i think you would say that's kind of neutral for shareholders maybethey retain more people and don't have as much retraining to do the goldman piece makes it very clear. now you're going to see what the shareholders are going to get. i think is it optics the timing optics i mean, well, i think with all of the press about how they are all going to line the pockets of rich people, it's certainly a smart way to disseminate the news the collateral damage being that people own apple stock from watching our show do well. >> they do interesting they chose restricted stock as the bonus as opposed to cash payments, which we've seen other companies do. >> tim told me on that, that his -- talk about 90,000, a lot of employees, 89,000, the no directors or executives get it they want to participate in the upside of the company and this is a longer term way, the one
time cash bonus being kind of here you go, this -- what are you looking at >> finally we have what we're talking about up there, that's all. >> focus is more on my vikings outfit. >> that's a little purple. >> and i'm obviously -- >> getting focused we've got how many hours until the game >> 48? >> it's starts at 6:38 i'm not sure exactly when the kickoff is. >> sunday night 6:38 we'll go to break and talk about apple and amazon more on the movers of the morning including morgan stanley with an earnings beat. we'll talk with sally krawcheck. best day since november and the 10-year at 2.6 has a lot of people's attention more sq"squawk on the street" fo post nine in a min u
market cap surpassed -- >> talk about that wealth management unit, the revenue at 4.4 billion. 26%. isn't that a fabulous business to be in you look at that earnings and say to yourself, really reinvented this company, a place for the wealthy to have their -- keep their assets. it's a kind of a bullet proof model. it obviously has very little regulatory issues and i really like what he's put together, remember citi sold a lot of this. >> they did. they like goldman like a lot of others had a decline in fixed income currency and commodities, $808 million to your point it's not as important and they did have what, 11% revenue growth year over year and 35% in pretax income to your point, margins going up >> which is helpful although they are -- roe is below what goldman is, 10.4%. these were 8.6 in the fourth
quarter. 9.4% return on equity. >> you see that effective tax rate >> i did 39.7 obviously that's going to come down a lot but look it's a good stock and this group has become a growth group, particularly if we continue to see the 10-year yield go higher. if you get four rate hikes and 10-year yield higher you're going to have a lot of companies that are going to be borrowing -- >> these moves in these stocks, i mean morgan stanley has been up. >> back to where it was, remember when ruth was the ceo >> it's got a larger market cap than goldman sachs >> well, i mean -- >> it had a better quarter. >> it did. this is comp time by the way i was at goldman and everybody getting -- being told what they are going to make. >> are they paying anything besides? >> they are going to give you some wine. >> that's what i wanted to know. the whining about wine over there.
>> how can you not that interesting story about david solo monday, coo and $1.2 million worth of wine stolen from him. >> gives you a sense as to how -- he's been an investor in wine for a very long time. >> how is he in crypto currency? >> he's not a cryptoid from what i understand. >> it got a nice mention in relation to blockchain, we're going to understand blockchain i had one of the great data companies of the word, we're fascinated by blockchain, we're going to figure it out we're still in infancy block chain. >> what did you think of kelly visa telling john forte they don't see it as a currency, payment currency, not one they'll accept >> very similar to bank of america. which is that guys, look, understand, bank of america went one step further they are convinced a lot of it no one will want to hear this. that a lot of it is illicit. it's illicit, it's a way to get around regulators and then you come into south korea and china.
these are countries -- >> or venezuela. >> that story in the journal about the oil production declining rapidly is frightening and sad. >> you can begin -- >> they are a big user of bitcoin. >> when schlumberger saying they are not going to be in oil anymore. really talking about them making a lot of money i think it was over at morgan today. when they say we're not dealing with you, you're not drilling because you can't drill without schl schlumberger. >> it's going to be a new high for morgan stanley could be new effort for chipotle after this piece, maybe they will get a takeover bid. >> interesting. >> we'll hear more about that after we take a break and get the mad dash and count down to the opening bell looking at futures on this thursday, we're back in a moment at fidelity, trades are now just $4.95.
a little less than seven minutes before we start trading here on a thursday time for a mad dash. always enjoy talking about netflix. we've got research on it this reference? >> a piece by ben swinburn, overweight international ads are going to be very good. why stay overweight? it's the strongest performer in the faangs, using the two "a" e it should make real money,
reaching 2 billion when? this year. >> 2 billion of ebita this year. one of the things anecdotally. let's take a movie like "bright. i looked at the reviews and -- >> very poorly review. >> and the squeequel, 11 millio people watched. >> we know that? >> yes. >> what do you think that would translate at the box office if they opened in the cinema? $100 million weekend one of the top eight grossing movies why doesn't netflix go by a movie chain? maybe one of those places where you can have a at a keel la or burger. >> that would be the worst from the paramount decision until time warner. it is an oddity. i'm not being facetious but it is interesting to think they are
developing content that 11 million people watch and that is better than most movies. >> they are spending more on content than any other company period. >> artificial intelligence tells you they -- >> billi$8 billion. >> there is no such thing hit or miss with netflix. narcos was -- scar face. >> as long as they maintain the subscription growth, if it has a certain appeal to enough people -- >> the directors love to deal with them, great intellectual freedom. >> yeah. >> you're all in, baby. >> you're loving netflix. >> i'm loving netflix. i like the punisher. i watch it when my wife was in india. they doesn't watch the show either but it was dynamite, own nly if you're into punishment. >> i'm been enjoying amazon shows myself lately. >> cities competing forehead quarters number two, we'll talk about apple and take another
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>> you're watching "squawk on the street." opting bell in just over a minute's time. a busy morning as we process apple's big investment commitment yesterday this new list of 20 finalists for amazon's second headquarters and the macro data, jim, claims 220 takes you back to 1973 the only fly in the ointment was philly, four-month low. >> that's why amazon should pick philly phil philly's economy is diversified, a lot of health care i would point out, there's this china number last night, japan machine tool numbers, better than they've been for years, for ages and ages, globalized synchronized -- >> growth, yes synchroniz synchronized. >> small business is the back bone. >> it's like everybody puts their watch, let's synchronize
now it's time to grow. >> let's get the s&p at the bottom of the screen and the opening bell here at the big board. maintenance and facility services at the nasdaq hay maker, a blank check company really quick, reflecting on yesterday, that reversal that we got on tuesday, no impact on sentiment? >> i think it actually took a lot of weak hands. it was amazing how people -- remember you talk about how the volume was big it was almost like, it's over, let's go and that one foot out the door theme is somewhat under current of what larry fink talked about. the pessimism of wall street and how little there is in faith in the stock market and i think that you saw once it started going down, they flew in out of the woodwork and you saw boeing drop 26 points. then look at boeing, it takes out its high yesterday, boeing
being the great belweather i think other than general electric, that everything recovered very sweetly texas instruments was one that i follow very closely. what an unbelievable stock just in terms of this consisting growth i wonder whether qualcomm, we haven't gotten to that latedy, can do the $7 number that would make the stock worth -- >> it seems to be somewhat aspirational, i think it is but they claim it's high confidence in that number. >> right. >> at qualcomm. >> it is experiential? >> otherwise the number would be 525, we talked about it because broadcom continues to seek qualcomm but have heard nothing new other than the ftc investigation we learned about yesterday courtesy of the journal. they say it has nothing to do with the wireless business and won't affect or impact their pursuit of qualcomm. i don't know when the ftc is investigating --
>> this is one of the things i thought hock tan should walk away it's hurting the shareholders. you don't want to see that government investigation it's becoming a little bit like the man of lamancha. >> man of la mancha? tilting at wind mills, right >> tilting at qualcomm it's time he -- i love him hock tan is the greatest great compiling of semiconductor companies, ight? but it's time for hock -- i feel like i can call him hock, it's time for hock to settle down and say,listen, this was a great attempt but now we're moving on. you know what, may i suggest that people look at united technologies and honeywell remember when honeywell -- >> yes. >> moved on. said never and everybody won. >> qualcomm, the ee quiquivalenf
qualcomm won i think he'll listen. >> news on the nxp deal. -- >> what price? they got approval? >> yes, from korea and from the korean fair trade and the european commission. so korea fair trade commission and european commission authorized qualcomm's deal to acquire nxp. they still have to wait on china. the shareholders at nxp, jim, they are saying now i'm hearing some of them say 125 was the number we would have accepted but now with nxp's peer up 6% this year with the stocks up around 6%, just a solid start to the year it's not 125 anymore, it's higher. >> the qualcomm people, they are a little cagey what they are willing to go up. >> as they should be they only can talk about it when they get china when you'll get the final negotiation on nxp but they did bring up this idea of
buying back an enormous amount of stock to equate the accretion they would get from the nxp deal. >> even though strategically buying back stock is not the eye quifl lent of buying a business that would bring them closer to the automobile, et cetera, et cetera. >> your field communications from nxp, you want the security systems they have. of course, some people would argue analog devices would be against this, they have the largest intellectual property in automobiles. so this is a deal that would immediately make qualcomm much less of a phone company. one of the reason my charitable trust held it. it seems like they got lucky in that the market came back. qualcomm is very smart when they did buy. and i think david, one of the things that happened, we have to stay close to this, this new delayed closings, it becomes harder and harder to do because of the company may be doing better and better monsanto. >> a delayed closer where the buyer of monsanto.
they put up stronger numbers i had a conversation about that this very morning. >> i don't listen to what you're doing. >> the implied multiple of that transaction is lower than it otherwise would have been at the beginning because montsanto has done well. it could go the other way. they are talking about closing the deal the end of this first quarter. >> say stocky like very much, cvs because of the acquisition coming is there any reason why that deal could be scotched cvs upset, walgreen not doing nothing since the deal was announced. >> to buy eigaetna. >> you're at the mercy of the death star decent forget about at&t time warner versus doj. we'll hear arguments in march and that's obviously very important for media but could have an impact on some of these others deals because of del
rahim's aversion to multiple deals and aversion that comes along with them. >> the people i talk to in the justice department are adamant they have a very good case and i'm looking at it way too broadly. when facebook is making movies and amazon is doing and look at the google youtube channels the athletes are doing, did you see that kv has a youtube channel i should have mentioned earlier on google. they reintroduced google maps in china after ten years and building a second center where would alphabet go if they somehow reached -- with china? >> i don't know. you mean would it go up a lot because of their ability to start doing business >> 25%. >> a big bullish argument right now on facebook, if they really pull away from news, that makes china a lot easier and makes it a lot easier. >> i hadn't thought about that at all. >> i know a lot of people do feel facebook fatigue and
instagram ads doing really well. facebook has been a terrible stock since the year began short year >> walmart almost 105 as goldman goes from neutral to conviction buy and citi went to the focus list as goldman says company very much in control of its own destiny despite all of the hand wringing we've done. >> isn't it amazing? i had this -- one of the things people don't realize, the retailers did not have amazon -- the amazon-like intelligence for so long. now you can take a package and go to walmart and they have really sophisticated artificial intelligence now which makes it so they can compete even on price check.com. they are in control of their own destiny. when they announced their buyback, it could be the buyback to end all buybacks. >> but say at gold map thman thy expect a meaningful dividend
hike. >> stock is getting expensive but i like it. >> it's getting expensive but you still like it? >> yes, because of the control destiny buyback stock tremendous, denominator shrinks and earnings increase. it's a great american retailer doug mcmillan, a little camera show, doing a lot of good stuff. >> yep, the other big call today our own parent, comcast as nomura goes to neutral there's limited upside to 45 on ott's impact onlinear video and they say broadband growth down the road. >> there's a duel here, it was actually very thoughtful downgrade. they come out and say you must buy this and buy this stock aggressively because of the -- >> beneficiary of tax reform, biggest beneficiary of tax reform we'll see. >> why do i have to talk about it you know about it. >> i try to know about this
area. >> broadband question is a key one, of course, the bulls will tell you, broadband is the key product and margins will go up the slow dismember of the video business would not have the impact many would anticipate and these are still key providers. the larger argument is what will 5g represent down the road as a real competitor in the home and wireless basis to the likes of comcast and charter and cox and others providing broadband. >> makers of 5 it is g, so bullish on comcast i hear it's because of xfinity they love xfinity and think it's going to be integrated to 5g i do know moffett nathanson is the axe and nomura is not. i would rather go with the axe moffett -- >> took place in mexico, did it not? >> they found them stalin was not a particularly great man, just so you know.
>> i'm glad to hear that. >> so we heard yesterday. >> jeff flake shared thoughts about stalin yesterday. >> socialist workers party when i was at college the people will never be defeated but it's really because the manufacturing should be owned by the people. like tim cook might have said -- not. >> on activist front, i did want to point out aes -- >> a second rate. >> jeff from value act goes on the board now. i mention it in part because this is another sign of social, social investing. >> really? >> yeah. in recent years, aes began a transition to become a more sustainable company by selling its coal assets and investing in wind and solar and energy storage. aes is well position to play a leading role in bringing new energy solutions to the domestic and international market it serves lowering their carbon footprint. it is interesting to note, that's a very large firm, $15
billion in asset. >> david, let's brain storm on that that's a brilliant call. let's talk about that and what's happening with jacobs, credit suisse likes them. last night had i suki on and ge is his partner on large lng infrastructure project, one of the largest projects in the country. jacobs, floor, aes, could they be part of a multiple group of buyers that is interested in the hobbled and i mean hobbled like in the movie "misery" -- what, james kahn's best work. >> i had a vision of that hobling. >> he do believe if you look at these company, they might buy the power division fz john flannery sees it's time. >> that's interesting. >> they don't have the balance sheets to do it right now. but when you look at floor, a really great company, stock got hit badly in the '80s because it was so big in south africa and
divest tour killed them. i think energy and reconstruction is coming back. maybe ge gets a tailwind there like they are with oil january fl maybe tussa will say -- imagine if he said the worst is over that would be depend on the facts which totally limits him. >> here yesterday, didn't seem to suggest that the risk was over -- >> not john lynch, you don't want to bring that guy to a dinner table until you want debbie downer. >> deutsche's analyst. >> you're not kidding, a lot of factual things to say. >> kind of a snazzy dresser. they don't like him at ge. >> no? >> carl icon, who doesn't think of him when you think of likeable >> here's a name we haven't mentioned much on the activist front, he and darwin, a very large shareholder also seem to
be of the same mind, namely that the talks with fuji reported by the wall street journal are -- should be revised or terminated and it's hard to see how any zeer ox shareholder could disagree says mr. icon with the view shared by mr. deesen yesterday and goes on to say in a long worth reading letter because they are always worth reading, that it's time to get even more serious about replacing the left vestage of the old guard at the xerox board. will not sit idly buy and see it risk extinction and not hostage about the old guard. drastic action is needed now because we fear failing to replace jeff jacobson as ceo could result in the loss of our entire investment. don't forget of course, they've had a number of directors. they have had four -- seeking
four highly qualified individuals they say to be on the board of the 18 meeting of shareholders is mr. ikahn. >> a name we don't talk about too often. >> walmart leading the charge this morning let's get to bob pisani. >> slightly weaker open, 2-1 declining to advance in stocks take a look at the sectors basically the leadership is still intact semiconductors and retail had a great year banks had a great year industrials also doing well. energy starting to look very toppy. the last three days we hit resestance and oil hovered around the 64 and $65 level. no big declines, not going up anymore. we have all of the regional banks reporting in the last few days and generally the numbers are pretty good. bbt actually had a bit of a miss but it's up and m and t bank that's a new high. they reported. they had a beat. regions also recorded as well as
wells fargo. at new highs right now then there's that group of stocks i call them perpetual new highs, it doesn't matter if the market is up or market is down they just hit new highs all the time every day, walmart, home depot, apple, 3m, they are amazing performers and nothing seems to stop them right now. it's been a very quiet month or so for ipos. i haven't said much but we'll get a big one tomorrow and before i get to that, let me tell you about the state of the markets, here's where we're at right now. the breath remains elevated for the market, much more advance in the declining stocks the volume since the beginning of the year is a little bit higher about 6% higher. the volatility is modestly elevated things are a little bit different than the close but not that much. the key thing is the state of the market, the cyclical rallies and industrials and materials and that rally has intact and not fallen apart and the rally has broadened out to include consumer staples and health
care why we're at new highs and people are amazed at the overall market the most crowded trades is the one people have been eager to break and have not been able to do that. that is short volatility, bet it's not going to be volatile and go long in the fang stocks only one day this week where they tried to do that and it failed the next day. there's been no follow through so this most crowded trade still definitely stands. now let me move onto the ipo market we'll have a very big ipo trying to price tonight, adt. big monitoring security services for homes and businesses, very famous this is a classic lbo. backed by apollo, they bought it in 2016. they are going to try to value it at $2 billion, north of $2 billion. the overall market cap, 23, $24 billion. this is going to be a real test to the market. we're at historic highs, no market conditions are bad or any of that nonsense this will be a real test about whether the market wants number one ipos but in particular a
stock that's got considerable amount of debt behind it we'll keep an eye on that. finally on bitcoin, we had a big event yesterday. the first bitcoin futures contract closed. that was on the cboe and it closed uneventfully and quietly. that's important because you need a whole series of these quiet closes around these bitcoin futures to get down the road and get more respectability for bitcoin. i don't know where it's going to go but i'll bet if this continues, three or four months, you're going to hear about bitcoin options coming up. gold and bitcoin, gold is outperforming, some people say it's digital gold. i have doubts about that dow is down 16 points. back to you. >> thanks, bob let's get to rick santelli as well at the bond pits at the cme. >> good morning, carl. another exciting day in oil markets, particularly one of night favorite, 2.61 the high yield. look at february 2017 start
because there in lies the -- 2.63 high yield close for 2017 zoom back a year to 2014 and several years and you'll see we haven't spent any time above 2.63 since the mid 2014s now let's switch gears and same maturity, different country. let's look at the bund june 2017 last time we were toying this close to 60 basis points if you zoom that back a couple of years, you can see that if we take that level out, we'd be hovering at areas we haven't seen basically since the end of 2015 so of course the time line is a little different based on history as to where european versus u.s. rates are. listen, there's a lot of talk about china and a lot of talk about trade and it's not only against china and maybe the conversation is more about how our economy loses something. believe me, the other economies lose something plus now, in lieu of that, maybe there's something going on with the move in front of you
this is the dollar versus the yuan, 6.42 is what you see the lowest level of the green back against that currency since 2015 you already know the euro is at the highest level since the end of 2014. what i'm drawing your attention to, wednesday we had one brief spike that touched 1.23 handle they are looking at that as near term resistance. pay attention to that level on a closing basis. carl, jim, david, back to you. >> we'll talk to you in a few. >> when we return, bitcoin losing more than a third of its value in the last month. we'll get a unique perspective on the risk surrounding the cryptocurrency as the dow is roughly flat after the 300 point tear back in a minute
toronto, and washington, d.c we'll talk more about th aatll morning long dow is down four [ click, keyboard clacking ] [ keyboard clacking ] [ click, keyboard clacking ] ♪ good questions lead to good answers. our advisors can help you find both. talk to one today and see why we're bullish on the future. yours.
are dr. lisa suett and jenson wong at nvidia they have to happy with the note today. bitcoin mining, bigger than ever they're calling it a problem i think that's very shortsighted this is turning out to be a very big business both of these great ceos have tried to not play it up because they don't know how long it's going to last, but boy is it going to last this quarter i think it's a great note. >> tom lee's target 1900 today versus a thousand right now. >> really? tom lee's like a serious guy >> what's on "mad" tonight >> so we have ppg, the stock up the most in the s&p, which is a terrific quarter then martin schroeter, the cfo >> that'll be interesting to hear about >> ralph lauren, by the way,
trading taking off a lot of cool stuff happening. >> you got that right. >> we didn't really cover that comcast smackdown with the cash flow >> no. other days >> who's winning the smackdown there? >> they'll win >> jim, we'll see you tonight. safe travels when we come back, more on amazon announcing its finalists for hq2 with the dow down seven. y nice girl... you never got the brakes looked at? oh yeah. no. at cognizant, we're helping today's leading manufacturers make things that think and do automatically. imagine that, a world of new digital products and services all working together for you. can i borrow the car when it's back? get ready, because we're helping leading companies see it- and see it through-with digital.
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♪ ♪ good thursday morning. welcome back to squawk on the street post nine of the new york stock exchange bit of a breather after the big run-up yesterday, watching the markets closely. big news out of apple, a lot at amazon our road map begins with narrowing the list amazon announcing 20 cities are timis ti finalists for its second headquarters >> and apple announces it will build a new campus and create thousands of jobs, and by the way, it's paying a lot of money in taxes on cash it has
overseas and bitcoin bottom cryptocurrencies are stabilizing after a massive selloff, however, the regulatory concerns still there. we discuss >> first up though, let's get straight to this big announcement from amazon came out just a few moments ago, narrowing its hq2 list to 20 finalists. >> good morning, carl. the first thing you notice when you look at a map is the list of final contenders made up of a lot of locations in the midwest, south, and east coast of the country. notably away from its current headquarters in seattle and tech-rich san francisco. in fact, los angeles was the only city from the west coast to make it. looking at some of the other names, there's austin, which has a growing tech scene, there's boston, close to m.i.t. talent for hiring, chicago, close to that major international airport, washington, d.c., that's of course home to bezos' "washington post" and where he himself has a house. there's also toronto, the only city outside of the u.s., which could bring some backlash in the
current political environment or be complicated by nafta negotiations there's also atlanta, minneapolis, and miami. the important question is what's next amazon will be working directly with the candidate cities on getting more information remember, the prize here, it's no small prize $5 billion in investment, as many as 50,000 new full-time employees over the next 10 to 15 years with an average annual total compensation exceeding $100,000 so there's a lot at stake here for these 20 cities. expect more jostling and wooing by jeff bezos. amazon says the final decision is coming in 2018, so we should know who the final cities are by the end of this year >> thank you very much diedre. as they said in the release, narrowing it down from 238 to
20 it was very tough, in their words. all the proposals showed a lot of enthusiasm. a lot of the commentary so far has been it reflects basic sampling of large metropolitan areas in america. >> urban areas there was some mexico cities that attempted to get in there not surprised not a single one made it because of security concerns toronto is interesting the one city outside the united states all of them urban centers generally. >> pretty much other than i think houston, which is not on here san francisco. obviously seattle. you're talking about the largest cities in the u.s. amongst these 20 here. i'm just always amazed at amazon's ability to create so much publicity around things like this. i mean, not that it is insignificant. of course it is significant. but we're going to be talking about it the rest of this year and these cities are going to be competing aggressively, of course i'll when curious to hear from one of the mayors in terms of what's going to be expected now from them. and obviously what the key components will be of amazon's
decision as they focus on it but importantly for amazon, i still wonder about having a second hq and how that will change the dynamic of the company, for better or for worse. >> and the city. you hear a lot of them -- we're going to ask one of the mayors on the short list, the city of austin, about people who want no part of this >> austin is a particularly interesting place within the city of texas. back to amazon and just the incredible stats and how much we talk to them i was at the university of chicago yesterday doing an event. 10% of their graduates went to amazon, and amazon is aggressive about saying we want to be the biggest hirer of your graduates from your mba program. >> it's funny. i've heard the same. they're on so many campuses, aggressively recruiting. as you point out, one of the largest single hiring -- >> used to be wall street. >> yep >> so much for that.
as carl mentioned, steve adler, the mayor of austin, coming up to talk about what it might mean for austin if they get the amazon headquarters. back to the market right now stocks are losing steam today after the dow hit a new record it's been a week of wild swings. so what should investors expect next you think it's going to 3100, tony you're very, very bullish. make the case. >> yeah, i have been it's kind of getting old now, but the global synchronized recovery is in place, and i think investors have to remember with all the political noise in the background, the tweets and all the other stuff that's come out over the last couple years, what ultimately matters to stock prices is earnings we have a much more business friendly policy backdrop we have a global growth that's playing the top line growth. now we have the tax cuts to kind of give a tail wind there. with that said, though, i think
it's really important, 2018 is going to be a little different than 2017 because with that upsietd, similu upside, similar to a 1986 or 1996, we're going to see increased volatility it's not whether we hit the target, i don't think we have to chase the next tick. i think we can wait for a pullback each time because typically there are some >> okay. and russ, we're going to get to you in a second. i want to follow up one more time with tony you yourself point out in the notes you sent over, lowest bearish readings since 1986. that's generallier cannedy consa bearish sentiment. on the air, everybody is happy it's hard to find people nervous about this market. >> it's a great point. so here's what we have it's like most things in investing. it's not what the tweet says, it's what the actual data says when you look back at the last
time that you had 12% bears and investor intelligence, you had three 5% to 7% corrections very quickly. but what's interesting is they were very quick. they were like a one-week decline followed by a rip to new highs. that's kind of what we're looking for where you get these sharp selloffs we have uncertain fed policy you have the midterm elections so you have some issues that are going to create corrections. >> tony, i think it was long view had some numbers. they looked at bull markets. 40% of gains come in the first 12 months and about 30% in the final 12 months. do you think we're in the final 12 months? >> not a chance. i think the peak of the market -- we're near a peak maybe, but the peak in the market comes well after an inversion of the yield curve that's probably not going to
happen -- typically 15 months after the inversion of the yield curve. we're still probably a year and a half to maybe two years away from quote/unquote the peak. >> so you think 2018 is mostly runway here. we're going to have a much different conversation in january of '19 >> i think we're going to have a different conversation because you'll probably have an inversion of the yield curve, which is ultimately going to shut down credit, and that's what leads to a recession almost every time, which leads to your ultimate decline in profits in a bear market. again, that's typically 15 months after that inversion. >> i'm sorry, if i can jump in for a second one of the things that i think we have to look at -- i agree with a lot of what tony said we're talking about earnings, which i agree with talking about the economy. when we get worried about a bear market, and some point it will come, one condition that you generally see, which we don't see now, is we're all talking about the ten-year 2.6%. that's true. just to remind everyone, that's 15 basis points higher than it
was 13 months ago. you've not had a very big back-up in yield you've had a contraction of credit spreads you've had a significant decline of the dollar. that means that in general, the other factor propelling stocks higher is that financial conditions have become much easier than they actually were 13 months ago. >> russ, let's finish this out we're showing people what you think here the bull market is entering the blowoff stage. what does that mean? how long does it last, russ? >> well, i think the blowoff stage means we are entering a period where you're probably going to see some very good gains. i agree with tony, they're probably likely to come accompanied by more volatility it won't be quite as quiet as we had in '17 in terms of how long it lasts, i think that is dependent on how fast prices rise at this point, i'm more interested in seeing the magnitude of the gains, and it's very possible the market could go up another 20, 30, 40, 50% from here. obviously the quicker it does that, the more you pull that
eventual top forward >> okay. now, you guys don't actually publish any official targets, which is probably pretty smart strategically. then you can never be wrong, right. but what do you think of tony's 3100 for the s&p >> look, i think it's possible as i said, you know, you're at a point in the market where you've gone from what was in many ways the most hated bull market in many decades to one where people are starting to participate. that can go on for some time again, i don't have to put out a target i think it's difficult to say here's the top what i believe is you're at a phase now where you're going to see some significant gains, albeit accompanied by more volatility and probably a broadening out one thing that happened in '17 that wasn't remarked on is it's no longer just the u.s this is becoming a global rally, in japan, europe, and emerging markets as well. >> got it, guys. thank you. russ and tony, good to have you on this morning. >> thank you all right. the countdown to the shutdown continues. congress has about 42 hours to
pass a spending bill before it's lights out in washington republicans in the house are planning to kick the can, proposing another short-term funding bill to keep the government running until february 16th. house republican leaders moving forward to a vote today, which some reports indicate may come around 7:00 p.m. eastern time. we'll watch that when we come back, investing in america apple getting ready to create a new campus, jobs, and it will pay billions in taxes on overseas cash. what that means for the stock, for the company, and the economy, next. plus, the state of women in business former merrill wealth management ceosallie krawcheck is with us "squawk on the street" continues after this sallie krawcheck is s "squawk on the street" continues after this mom and dad got a new car...
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apple announcing it is betting on the u.s the tech giant will be constructing a third campus, creating 20,000 new jobs over the next five years as part of that effort and other ones josh lipton joins us now with the details. >> david, apple ceo tim cook making a $350 billion pledge to the country. that is how much he says the iphone maker will contribute over the next five years to this economy. cook saying tax reform, in part, helped enable this hiring
spending and investing >> let me be clear there are large parts of this that are a result of the tax reform, and there's large parts of this that he would have done in any situation >> so it sounds like president trump's tax bill has been a huge windfall for apple >> there are two parts of tax bill, right. there's a corporate piece and an individual piece i believe the corporate tax side will result in job creation and a faster growing economy >> over the next five years, apple will create 20,000 new jobs that is in line with its current hiring trend for the u.s apple is not saying what kinds of jobs it will fill or where. it will build a new campus, its third, in addition to cupertino and austin plans capital expenditures of $30 billion over the next five years. company spent a total of $15 billion but didn't break down how much specifically in the
u.s. and they increased the size of itsed its advanced manufacturing from 1 billion to 5 billion a big number for investors, of course apple says it will make a one-time tax payment of $38 billion on its overseas cash it's doing that in response to recent changes in the u.s. tax law in which companies pay a one-time tax of 15.5% on overseas cash. apple is not saying how much of its $252 billion in overseas cash will be repatriated, but the expectation is that it will bring back mostly all of it which will be used to fuel more stock buybacks >> josh, that's one of the key questions. for more on that, let's bring in an analyst wi what are your expectations when it comes to how much apple will bring back, and particularly as it relates to whether there's going to be any increase in cap-ex spending by the company or whether you expect it to
continue the trend that's been in place for some time >> frankly at this stage, there's no real reason to expect that they spend more than they would have otherwise in terms of investing in u.s. cap-ex and growing u.s. jobs. i think the real positive is it gives them the flexibility now and it's just clean. it takes this 250 billion plus sitting offshore they pay the tax bill. they can do whatever they want with it. i think that sort of flexibility is the key >> all right and if you had to guess, what do you think they're going to do with it? >> well, i think there's a chance that they do acquisitions, but apple historically has not been highly -- the biggest thing they ever bought was beats for a few billion dollars. that at least is on the table now maybe. >> although it doesn't appear to me -- i mean, their access to capital has never been in question it doesn't seem to me it matters. if they want to buy something,
nobody's going to stop them from buying it. why would it change their appetite now >> yeah, it would just be easier but beyond that, they did call out the fact they'll be spending a couple billion a year on u.s. data center capacity they could certainly keep investing more and more in data center capacity globally but also including the states, keeping up with some of their bigger competitors in data centers. that's one area they could definitely spend more. >> gene, give me your take here. we've gotten the big picture from apple they're paying the 38 billion. they can do whatever they want with this cash any future earnings overseas are not going to be taxed by the u.s. any real change that you've been able to delineate from what you heard from cook and what was said in the statement? >> we can fill in some blanks and just add some detail to some of the numbers out there the $38 billion tax bill implies they actually brought back 215 billion. it's a 15.5% tax rate.
pretty straightforward math. they got 215 billion more. >> wait a second, gene let me stop you. they've got to pay the 38 billion. it's a deemed repatriation on all their overseas tax it doesn't necessarily tell you what they're bringing back >> well, if they paid 38 billion and it's a 15.5% tax rate, it would imply they brought back all -- tried to bring back all 252 billion. >> it's not about that they're paying the 38 billion on all their overseas cash. every corporation in america has to do that over the next eight years. they chose to do it now. so again, it doesn't necessarily go to how much they're going to bring back we don't know. they can do whatever they want with that money. they could send it all over the world at this point. they paid the u.s. the tax they owe on it. what are your expectations there, gene? do you think they're going to increase their investment in the u.s.
>> well, they'll do something they talked about, that 30 billion. the other $5 billion is in this advanced manufacturing fund. that goes from $1 billion to $5 billion. the biggest piece is going to be going to investors it will be likely a higher share dividend our best guess is they'll probably increase the share buyback by about $70 billion over the next three years. so they'll announce that when they report their march quarter sometime in april. that's probably the biggest piece. we also expect a one-time dividend typically in a situation like this, we think it's going to be relatively small in the big picture of their cash, probably $12 billion. kind of sprinkle in some m&a, but i totally agree this doesn't change their strategy. it will be little stuff they'll be buying. >> 5 billion shares, still not bad. the yield is 1.4%. are you suggesting they're going to try to make themselves a higher yielding stock, or is that just as it goes up, the yield is going to look the same.
>> i think as it goes up, the yield is going to look the same. continue to buy back stock to improve that >> rob, what about just the financial profile for this company now that they're paying a 21% tax on earnings here in the u.s. by the way, they're still going to earn a great deal of money outside the u.s. at an even lower rate what do the numbers look like now? are we getting a better sense after tax reform >> yeah, we'll still see what they have to say in terms of what their ultimate blended rate turns out to be. it'll likely be a little lower than where it's been keep in mind, it's not like they've been paying a mid-30s tax percent. it's already been mid-20s. the financials, where they matter, is keeping in mind that even though this money is freed up, i mean, this is a company that still, we estimate, is generating about 60 billion a year in free cash flow on an ongoing basis. so, you know, their cash is going to keep increasing every
quarter irrespective of the tax rate my estimate is that their cash per share, which is currently net cash per share, 24 bucks a share after they pay this tax bill, is still going to increase about a buck and a quarter every single quarter they're going to keep having cash coming in on top of the cash that they're repatriating access to cash is not going to be an issue. >> despite it all the sudden being easier to spends cash in the u.s., you see the cash balance growing, not shrinking, as a result. >> right because they continue to generate an amazing amount of cash on a daily basis. >> what do you think about this idea of a second headquarters like amazon is doing, this idea they're going to have a second campus, rob? good idea, bad idea? >> sounds great, but i don't know operationally it's that big a deal keep in mind, the company is still growing. of course they're adding people and facilities i don't know that anything strategically really came out of yesterday's deal i think again, it just sort of
frees them up with more flexibility. >> and gene, finally, sort of in the bigger picture here politically, apple facing this challenge from these activist investors a couple weeks back, messaging clearly here in terms of the u.s., do you feel like they're under more pressure in a sort of broader sense, both politically and socially >> definitely. they're a big target i feel like what they've done here is struck a great balance between essentially giving what some people would say the fat cats, the investors, what they want with more money for a buyback, but also giving the every day person something that they want with some of these job creation so they have been under a lot of pressure i felt like they did a wonderful job of striking a balance with this plan. >> guys, appreciate your insight on the plan itself rob and gene, thanks to you both >> thanks very much. >> thank you when we return this morning, it is the first da anniversary of the largest coordinated protest in u.s. history, the women's march.
former merrill wealth management ceo sallie krawcheck is going to join us. back in a minute what's the value of capital? what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley
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this weekend marking the one-year anniversary of the largest organized protest in u.s. history, the women's march, with the subsequent growth of the me too movement continuing to give voice to women, one company has published a 2018 money report focused on gender inequality in the workplace. sallie sallkrawcheck is with us walk us through the findings >> really big ones we started thinking where women get their confidence would be work, family, economy, you know, all the things we talk about so much
if the glossy magazines said it right, how our hair looks would be the things that give us confidence you know what it is? it's money it's if we're investing. it's how much we've invested, how much we've saved number one, two, and three things that give us confidence >> personal wealth in a sense. >> personal wealth and the active investing here's the other interesting thing. when we asked women about something you know i talk about, the jengender investing gap, we don't invest as much as the guys do, just over half knew it existed. when we asked them how much they think it cost them, they underestimated the amount anywhere from -- they were off by 100%, 200%. they underestimated by up to ten times. >> why >> they said, hey, if that thing exists, it probably costs me, you know, $115,000 >> but why would they be so off? >> because they never think about it they never think about it. we talk as a society a lot about the gender pay gap we can debate it all day long, but they know that's there, but when we talk about the gender
investing gap, they're like, oh, you know, more of my money is in the bank, i think it's safe. then you start to say it's safe, but you lose ground because of inflation. if you were to invest in a diversified investment portfolio, you would have not tens of thousands more over the course of your life but hundreds of thousands, and for your viewers, even a million plus >> but still why why is it different for men than it is for women? what happens to them in their lives that they all arrive to adulthood and men do "a" and women do "b" why? >> men invest more than women do buzz of o because of our society money tends to be a male thing if tends to be something dads talk about to sons but not daughters. we talk about money and it looks crass and unattractive our industry tends to be much more male than female. our industry symbol is a bull. it's a phallic symbol. not a lot of women are looking at that like, you know, that bull speaks to me. they're like, wait a minute, this is not for me
>> i've also seen studies that women who do trade, trade less often. they're more risk averse >> well, no, no, no. i'd say more risk aware. they want to understand risk they don't want to understand it in terms of the terms we use here like alpha and beta and standard deviation it's no, no, no, how much money could i lose once they understand it, they don't take on any less risk than the guys do, but they pay fewer fees they trade less often. they don't fall in love with their winners as much. so i love to tease all the articles about mistakes retail investors make should be mistak mistakes male retail investors make >> we looked at pay inequality some took issue with the disparity, saying it's more narrow than it probably is what did you make of that? and is it a good step nonetheless? >> absolutely. it's a terrific step
sunlight is the best disinfectant i've spoken to so many ceos. we don't have a jendser pay gap. i say, have you measured it? no then you do. well, but i wouldn't on purpose pay women less than men. then we start to talk about how we all know when accepting a job, men always negotiate, women, besides the two of us, arele are less likely to negotiate >> they generally say thank you. >> and therefore, the guys tends to make more from that first job, negotiate every other job, and so the gender pay gap can exist even if everybody's well meaning because of course you give more money to the person who negotiates than doesn't. >> you're talking about stuff that starts in childhood, really it wouldn't seem to be this is something that changes overnight or even years. >> the gender pay grab is on track to close in more than a hundred years. the rise of women in business becoming more senior in business has completely stalled out
>> why >> i think because we women for a while have been approaching feminism getting ahead as an individual sport i'm going to ask for that raise. he says no oh, well darn it. you know, what we're now doing in the years since the women's march is approaching it as a team sport we marched, 5 million of us. when women began to talk about harassers and abusers, we all know when ellen powell did it, we all did this. women did this when susan fowler did it, we did this we believed her. we amplified her and real change happened at uber and market value was destroyed at uber because of that culture. >> i don't disagree with any of that but to add to david's question, tell me you haven't noticed in your life women have babies, men don't. >> i did notice that because i've had a few of them >> wait, request we get a breaking news on the screen. >> when women have babies, they're far more likely to
choose hr over something else, right? they don't want to be in charge. men, for some reason -- once a man's wife has a baby, they don't feel compelled to slow down, but women want to. why? >> because we are the only developed country in the world that doesn't have mandated family leave i have had babies. it hurts and it takes a while to heal from it in those first weeks, i can assure you, it's not because i'm not an ambitious woman i'm an ambitious woman, but i wanted to be with my children. majority of women in this country, working women, do not have family leave. so they have to stay at home with their families and lose their jobs research has told us that parental leave pays for itself in the first year. why? because women are allowed to stay home and heal for a period of time, they're more likely to come back to work. and companies avoid the 200% cost of her salary that it takes to replace her and retrain individuals to take over her job. so we do have babies, but this
country wants us to but don't support us when we do. our institutions are failing women. i feel sort soof strongly about this >> i noticed i'm glad i asked >> two big stories out of hollywood. one was the michelle williams, mark wahlberg pay disparity. the other was ellen pompeo on the cover of "hollywood reporter" and the mental journey she had to go on to demand anywhere close to equality from her co-stars what did you make of that? and is that going to inspire other women to ask for more? >> yeah, it absolutely gets back to women being socialized and talking about money as tacky and if we're too aggressive, people don't like us. i'm sure there are twitter comments about my little tirade just now if we're too aggressive -- yep, of course there are. right. because society sort of likes a more aggressive man and a less aggressive woman what is really interesting that's happening here with this conversation, it's encouraging
women to ask for more. at the same time, technology is telling us how much we should make you can go and find out what you should be making in your job today, the number one reason millennial women leave their jobs is not to have babies, not flexibility, it's not work-life balance, it's more money so the change i think is going to happen, companies weren't punished before for underpaying women, and today increasingly they will be >> that's a big shift. that's a very big shift. sally, thanks. >> i'll see you at the march >> okay. i'll bring a camera. sallie krawcheck with us here at post nine. >> i'll be home. thanks let let's send it over over to sue for a cnbc news update >> great conversation. here's what's happening in other parts of the world a double suicide bombing at a market in northern nigeria killing at least 12 people and injuring 48 more the first bomber, a female, attacked inside the market while
the other, a male, remained outside killing only himself officials in nevada have confirmed that the remains of the las vegas gunman, stephen paddock, have been cremated and delivered to his next of kin 58 people were killed when paddock opened fire into a crowd at an outdoor country music festival in october of 2017. the mideast's largest airlines, emirates, announcing it has struck a deal with air yn b -- airbus, a $16 billion deal and transport officials continuing to recover a plane. take a look at that picture. it skidded off a runway in northern turkey on saturday, stopping at a steep angle only a few feet from the black sea. none of the 168 people on board the peg slane were injured. wow. that is the news update. back downtown to you guys.
michelle, back to you. >> thank you, sue. when we come back, the cryptocurrency coaster prices are steady after a massive selloff. we're going to speak to a former federal prosecutor, juan zarate. extremely instrumental in the history of u.s. sanctions against other countries. tohe cpturn the risks of getting in tryocrency market and more "squawk on the street" is back after this you always pay your insurance on time. tap one little bumper, and up go your rates. what good is having insurance if you get punished for using it? news flash: nobody's perfect. for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch and you could save $782 on home and auto insurance. call
back to amazon's big announcement this morning. the company narrowing its list of finalists for its second headquarters to 20 cities, including newark, new jersey joining us this morning is the mayor of newark, ras baraka. mr. mayor, congratulations on making the cut >> thank you thanks for having me this morning. >> when you're honest, did you expect to make the cut >> well, actually, yes i think that newark is, you know, right for amazon we've been saying that for the longest time
i was telling everybody that we have a great chance at this opportunity, and it came true. so we're excited about it here in the city of newark. still elated by the news >> can you tell us a little bit about the process? have they contacted you directly has there been any back and forth? what was it other than the submission of your application >> well, that was it we submitted our application we advertised as much as we could on our side about our desire to have amazon in our region and in the city of newark we did that and they responded based on that. but we had no one-on-one contact, no one came here, we didn't go there. so we're waiting for the next iteration after this >> mr. mayor, what are your expectations now in the process, given it's going to be quite a few months before we find the winner, so to speak? what are you going to be required to do, do you know? >> no, they haven't given us any
details yet. i mean, i can imagine they may want to see the actual site, have a team out here or us go out there or have some kind of back and forth, some kind of process to narrow it down. we're just excited to be in the top 20 you know, we feel like we've made it to the super bowl, now we need to play. >> tell me, what is newark's biggest asset when you're advertising to amazon? >> one is we have over 20 miles of dark fiber underground here in the city that they can attach themselves to. immediately that's controlled directly by the city we have 60,000 college students here we have the second largest sea port in the nation one of the busiest airports in the region an international airport we have incredible assets for amazon, and we're just waiting for them to come >> mr. mayor, how did you find out about today's news >> "the new york times" and senator booker, you know senator booker sent me a text this morning, and we spoke by
text i looked at the times and saw the actual article after senator booker reached out to me >> yeah, the announcement, i think, is very plain no direct hints to any of the cities what do you say to residents in newark and in any of these other 19 cities who say i'm not enthusiastic about the way this could change the character of my city, the traffic patterns of my city, the housing availability should everybody be enthusiastic about or not >> sure. i think these are challenges that come with great opportunity. with every opportunity come challenges i think it's important for us to begin thinking about how the city possibly could change for the better because of amazon's presence and prepare ourselves at this very moment in terms of what that means for our residents, housing, traffic, transportation infrastructure, all these things that are important. yes, amazon and 50,000 jobs and billions in investment is going to change a city
that's why everybody is going after it we have to think now to prepare ourselves for that change and make it a positive one >> there have been complaints in san francisco like crazy and to a lesser degree but now starting in seattle as well that because of the presence of an amazon, because of the presence of apple near san francisco, that it just becomes too expensive for people who used to live there, who have lived there all their lives to stay there there have been big protests in san francisco, for example how do you manage that if it happens to you >> we've already begun -- we passed an inclusionary zoning ordinance months ago that would require any developer in the city, whether they're building new houses or refurbishing old buildings, that they have to put in a specific amount of affordable housing in their units based on the area median income we put caveats where they have to invest in other parts of the city to make sure that the area that is not invested in has some
investment in it as well we've already put together an inclusionary development committee where people are going to sit on, both private and public, to talk about how to mitigate those kind of factors we've begun doing that already so we're preparing ourselves for bringing amazon here >> so i hear all that, and that sounds great on the one hand when you're trying to manage all those things that i talked about. for example, san francisco but at the same time, those are constraints on how companies can invest they can actually turn off a company who says, gosh, look at all these rules about how i'm going to have to do this, that, and the other thing. then you end up shortchanging yourself how do you manage that trade-off? >> well, the actual rules we're putting in place are for the ancillary developments, people that come after that people are going to -- reside residential housing is going to pop up, commercial developments. when those people come, you have to have rules for them
you want to build condos, all this houses, you have to have affordable housing commercial development comes, we have to have opportunities to maintain -- >> did you offer amazon tax breaks >> yeah, the state definitely offered them tax breaks. and the comptroller's office has already measured that the breaks they offered, the return on investment is going to be greater than what the investment is to amazon in terms of the breaks absolutely >> last question, mayor. i'm sure you've seen the other cities on the list i mean, there's some fierce competitors, including new york and pittsburgh and washington, d.c. who dow you think is your fiercest competition >> i wish everybody luck, honestly, but i believe newark is the only place amazon should be it makes sense economically for them, and honestly, i think it's a way for bezos to tell a story about how to shape an american city in this particular time that we live in today.
>> well, if you get it, you got to come back first >> in person >> you got my word on that >> all right >> mr. mayor, thanks ras baraka, mayor of newark, new jersey, on the list of finalists for amazon's hq2 >> congratulations to him. the price of bitcoin sharply dropping earlier this week before stabilizing however, the bitcoin boom has investors concerned as regulators are sounding alarms over the volatility. joining us now is former assistant u.s. secretary juan zarate, a member of the coin-based board of advisers when we talk about sanctions in the united states against other countries, you're looking at one of the key guys who's there and built them good to have you here. >> thank you really appreciate that introduction thank you. >> i mean, if i were running any bitcoin-related company, i'd say, i'd like a guy like juan zarate everybody's freaked out about all this illicit stuff that can happen on blockchain and if i get a guy like him,
that's going to give credibility to the company, right? that's probably why you're there. >> well, i appreciate it you know, coin base has been very good to me. i've learned an enormous amount about the technology i've been able to, i think, help them think through how to not only deal with regulations but also to define the space from the perspective of being a legitimate citizen in this space. i think the actors dealing with bitcoin all have to recognize that it's a new space, it's not well regulated yet in all parts of the world the norms, principles, and even the technology is still under design there's an opportunity to build in the principles of transparency and accountability and even traceability in a system that is becoming more and more important to the digital economy. so i'm excited to be a part of this space, in part because there's a lot of opportunity, there's great utility potentially in the use of these
technologies, but there's also great risk we've got to be very sober about what that looks like >> i've heard conflicting things i've heard, wow, blockchain is anonymous. that allows illicit work, illicit trading. you want to launder money, you want to sell drugs, et cetera, you do it using blockchain however, i've also -- when i was in washington state last week talking to bitcoin mine operators there, they actually tell me, no, you can actually find out who's using blockchain, that it can be incredibly transparent. which is it? >> well, it's a little bit of both this is the nuance and importance of the discussion blockchain technology is actually technology that allows for an open ledger system to be seen by all the users. it's validated by the underlying computers and technology that are validating the transactions. and they, the blockchain sort of railroad can be used to not just
transfer tokens or coins or currency but also information, smart contracts. so it's actually quite an efficient system in formation if it meets its potential but there have been use cases, very clearly silk road, liberty eserve, btce, where authorities have pinpointed these dark markets where digital currencies have been used for human smuggling, arms trafficking, all the things we care about. so it's a mixed bag. i think that's why we have to make sure that whatever we develop in terms of this digital architecture takes into account the ability to trace and to account for who's interacting and for what purposes. >> yeah, i'm sure the authorities would like that. mr. zarate, thanks for joining us. >> my pleasure thank you. >> "squawk on the street" continues in a moment. >> the dow may be at record highs, but the oldest stock in the dow getting hurt we'll trade ge
more "squawk on the street" coming up. ♪ ♪ hi. i'm the one clocking in when you're clocking out. sensing your every move and automatically adjusting to help you stay effortlessly comfortable. i can also help with this. does your bed do that? oh. i don't actually talk. though i'm smart enough to. i'm the new sleep number 360 smart bed. let's meet at a sleep number store.
other text etf is trance parent we have a bellwether which is the 2% weighting or a nonbellwether which is a 1% weighting. 40% is bellwether, 60% is nonbellwether. we basically produce it by aligning it with companies that have direct revenue exposure to the industry a 2% weight has an average between 60% and 70% contribution
to ai. a nonbellwether has on average around 25% revenue weight. >> is it mostly a domestic story? global how about u.s. and xus >> that's a global growth story. 40% portfolio is in the u.s. 60% sin 60% is international investors need to be invested across the entire value chain of technologies and applications. but to get the exposure that crosses over into multiple different countries. our index has exposure to 15 different geographies. >> 15 different geographies. and then the split between software and hardware? >> don't have that number off hand i would say 50% of the portfolio we define as being technology. the other 50% are applications so those are the use cases of where robotics and ai are being deployed so everywhere from industrial
manufacturing, logistics, warehouse automation, health care, ag, food, surveillance just to name a few subsectors. >> and then finally, i wonder, what is the best number that you rely on at least to look at addressable market in the next five to ten years? >> well, we're looking for capture the company that's have the highest revenue threshold that correspondence to robotics automation ai. different than a lot of other indefr indefi indices, we're focused on the revenue side so that's the most important characteristic for us. and certainly for companies that have leadership in their technologies with what we think is a motor on the business so those are the characteristics that we're most focused on >> obviously one of the big changes of our lifetime on how that's going to evolve over the next few years william, thank you so much willi william studebaker
welcome back to "squawk on the street." stocks remain flat after yesterday's record session the energy sector is lagging to day, down .5%. shares of kinder morgan are down 3% phillips 66 is down over 1%. now let's send it back downtown to you guys. carl >> all right leslie, thank you very much. a lot more still ahead on amazon and apple. "squawk alley" starts in a moment don't go away. it's absolute confidence in 30,000 precision parts.
for those who never settle, it's either mercedes-benz certified pre-owned, or it isn't. the mercedes-benz certified pre-owned sales event. now through february 28th. only at your authorized mercedes-benz dealer. good morning it is 8:00 a.m. at amazon's current headquarters in seattle. it's 11:00 a.m. on wall street "squawk alley" is live ♪ allow me to reintroduce myself ♪ ♪ you can call me ceo of the roc ♪ ♪ fresh out