Transcripts For CNBC Squawk On The Street 20180201

Facebook falls, users are spending 50 million hours a day lesson the social network and happy about it shares set to open at the record. Its a huge day for tech earnings, mike soeflft, alphabet and amazon, all on tap after the bell. Futures signal a sharply lower open obviously a whipsaw week so far. Facebook is the top story. Up in the premarket, the social network post better than expected forecasts and increase in ad sales despite the time spent by Users Falling by 50 million hours a day. Mark zuckerberg last night on the earnings call. The most important driver of our business has never been time spent by itself. Its the quality of the connection and thats why i believe this focus on meaningful social interaction is the right one. The first ever quarter on quarter dau decline in the u. S. And canada they say its not a trend. They say its not a trend i think youve got to believe. The market probably doesnt believe in them because this thing is selling at a multiple almost the market multiple in 2019 i would say that what happened no change there. I think it didnt even it didnt erode as multiple, the large numbers being defied here. On the Conference Call, its not going down, down, down off the headline and the stock doesnt people probably wonder why if you look at the timing in sales, sheryl sand berg saying when people spend time viewing more posts because interacting with family and friends and not involved in longer posts which is like autoplay, we have actual actually more mondayization opportunities and there it is. Lets imagine the nfl. Lets say the nfl has 100 commercials and we go and buy doritos and turn on general hospital, they are not going to let users be overwhelmed by commercials. Like the nfl has done with the clock. Exactly you no yw can charge more. I almost feel like the analysts are not on facebook. Im on facebook with my wife and they took out a lot of ads that were my fungus. Com on the third post you know, instead they have these great posts that are now ads very in sync with what you talk about when youre on with my wife, ads about 30yearold women do because sometimes she watches in her 50s. It is finally relevant were no longer in lets just show them anything, you know my copper. Com is gone. Those who are bullish who say, i talked to a couple of investors and 6 million advertisers, only 2 million on instagram, long way to go there with the numbers themselves staggering thank you. They dont believe the cap ex guidance, 6. 7 billion last year. Always guides to a high number but many believe they wont get there when they use it as a percentage overall and it is going up so much 6. 7 billion last year, how much will they spend this year . They think less and thats Gross Margins are going up. Thank you. Then theres the belief that the losses in maus and canada u. S. Is not a trend line and stopped and they seem to import confidence. This isnt snap were not dealing with snap where frankly its like, wow, theyve been so right. These guys are heavyweights. They havent given us last time they gave us guidance on time spent was april of 16 where they said 50 minutes a day, right would it surprise you if that number was lower now yeah, look, you dont spend as much time thank hef vns lets default and talk nba versus nfl what a great thing, nfl now the games last four hours, not four hours 40 minutes because of the extra point is kicked right after. Nba, you tell your wife, theres only two minutes left, dont worry. And hour and a half later youre there. But everybody hates that so i mean, zuckerberg is not an idiot. I know what people hate. They hate a bad User Experience. Suddenly they decide maybe hes hurting the business and do everything to help the business and he saw this coming theres a lot of Things Research saying theres a social media fatigue. You think he doesnt read that hes addressing it correctly and has five more things to monetiz dz e and dropped them in a Conference Call. Whats app, monetiization there. Years are blowing away and you should be more cautious. If were selling at the infinite multiple amazon does, i would be more worried. The read through on amazon, if they dont below the number they are choosing not to. Every aspect of amazons business, whether it be online, cloud, whether it be advertising, it is they are the amazon this number really, amazons numbers should justify this breaking of the law of large numbers i understand, facebook selling 35 times earnings. I would say this may be the beginning of something but its selling well through clorox and Procter Gamble and then match it with alibaba, better growth than alibaba. Of course, we know about the year its had from a policy standpoint and as you say publicity standpoint i think wefl have a piece of sod talking about the challenges in 2017. For 2017 was also a hard year the world feels anxious and divided and that played out on facebook weve seen a bbus, including infeerns from nation states and spread of news its false and sensational and polarizing we have a responsibility to fully understand how our services are used and to do everything we can to amplify the good an prevent the harm this is my personal challenge for 2018 to your point, not blind on controversies. What he did was write his congressional testimony for when hes called in i actually sacrificed. Look at the amount of time spent, 50 million hours lower. We did exactly. Congress we came in and we hurt our business alphabet did that last quarter, they should have a blowout because advertiser s are back they are not your buddies at all. I did that to be gra tu us to. One day they may be my buddies again, were in a good place, were fine. It was one of those can i say at 4 30, the way that these stocks were trading you cant be on three calls at once and the analysts all follow the same stock. If in facebook to your point, people who are sellers with the stock down 8. Very impressive. And not waiting for the call and saying those are people. So the patriots jump into an early lead, 140 they are selling the eagles and it turns out the eagles rally in the Fourth Quarter that First Quarter doesnt mean as much unless youre playing some box okay i got it. Okay. There you go. 283. 283. Thats why the falcons came in with a head of steam and beat the eagles in order to rechallenge, that narrative didnt occur the vikings greatest defense on earth. One game ahead of you, stop replaying the previous one its going to be all that matters. I wish it were minus 5. The patriots play were going to talk a lot of football tomorrow. More tech earnings and microsoft better than expected results, a 5. 3 billion boost in Cloud Computing revenue. Baba coming in a bit shy but revenues ahead Cloud Computer revenue more than doubled its core commerce revenue up 57 separately at a 33 stake in its affiliate and financial. You cover baba better than anyone. Real quick on this, they had a 37. 5 Profit Sharing and arranged that back in 2014 you may recall this goes back to a real big dispute they had when they transferred the business out of alibaba to the consternation of yahoo at the time and then came to an agreement in 2014. 37. 5 Profit Sharing that goes away its not a purchase here they are simply saying no longer will we take earnings, we earn 33 of the company why now . It appears baba believes it can get approval from the chinese regulators, that was why they didnt originally continue to own that business that became ant financial and went with the 37. 5 Profit Sharing apparently or one would think things have changed from their perspective to the point they can get it through the prc that is expected to get approval, though we cant say with any sernts and they do that as for the quarter at alibaba, strong, but not as strong as some had hoped they been buying a lot of Grocery Stores and higher sales and lower margins and okay, maybe it overall it works out but what kind of multiple do you want there for that. And ant financial thing, most recently valued i think its 60 billion on the last equity raise they did there who knows what its worth . Maybe 100. They are going to go public at some point, though not this year that changes investors approach because now youre doing the parts as opposed to an incoming earning streak from ant. When you see the value of myosofmy microsoft, azure, that is a gigantic business, up 98 . Amazon will be amazing and alpha get could be amazing when i look at microsoft versus alibaba, i would rather own microsoft. Why i think its no opaque. The numbers are fantastic and accelerating and youve got gaming doing much better, you have windows 10 doing much better and intelligent cloud doing much better and higher multiple i think microsoft, the reason its down, it ramped at the bell it went to 95. 5, those are looking at that, whats the matter with that quarter it had a funky close but microsofts quarter was amaziin amazing. Im not even talked about linkedin. Hes very low key im upbeat. Microsoft had been strong but alibaba up 18. 5 this year up too much. It does tend to do that, run up into the numbers and then theres a mixed response if not a down response. Then you can get buyers could come in there. Its not a bad story, its just that we had microsoft and facebook im looking at tonight, i think alphabet will be good. Which call do you listen to amazon because its really shorlt they are only 12 pages and they do it and just get you in and get you out. Why do they have to the irishman is being filmed next to me. And joe pesci, deniro, do you think im going to focus on alphabet. Thats i didnt follow that. Irishman, 100 million budge and i have to go to minnesota to watch the eagles play. Greatest story ever told. What are you doing here i have a lot of stuff look at this this is called homework. Do you know what homework is you always have your little thing. You knew alibaba, i had the rest of the s p. Weve got to go. A lot more on earnings and mastercard, almmndor quco a me. We have a question about your brokerage fees. Fees . What did you have in mind . I dont know. 4. 95 per trade . Uhhh and i was wondering if your brokerage offers some sort of guarantee . Guarantee . Where we can get our fees and commissions back if were not happy. So can you offer me what schwab is offering . Whats with all the questions . Ask your broker if theyre offering 4. 95 online equity trades and a satisfaction guarantee. If you dont like their answer, ask again at schwab. Were getting auto sales, ford up first. Phil has it in chicago. A little bit better than expected a decline for january, which is not a surprise everybody is expecting to see declines across the board. I want to point out one interesting stat and something that i know jim will be interested in, fords transaction prices last month topped 37,000 per vehicle thats an increase of more than 2,000 per vehicle i think were going to see this with other automakers as well, increasingly as people buy suvs and luxury suvs in particular, youre starting to see more and more people push the transaction price close to 40,000 a vehicle. We get the number in a few minutes. Phil, at what point do we see a ford basically saying were going to take our dividend to 8 if we have to . They used to return capital in the 80s and 90s, this is a cash machine. I wouldnt be surprised, the other thing youll see from automakers, maybe not this year but sometime over the next couple of years, i bet you start to see them split. Mobility services will be a separate company and spun off from manufacturing of vehicles youre already seeing it with suppliers and wont be surprised if we see it with the automakers as well. Phil, well see you in a couple of minutes. Mike jackson sees the annual run rate going down to 16. 8, because you have 4 million certified preowned back to market and price gap is 14k now. Its a big issue and one of the people are saying autonomous vehicles, are chips going to be cyclical auto sales is done ford is reacting to that, not as international as gm. I say that if phil says what they split, they split into two, that would be brilliant. I want mobility i want that more than i want tesla. And im looking at you so you can go now. Were going to talk a little at t. Lets do at t and time warner, right . Time warner numbers were go at t numbers pretty strong as well this morning or at least i should say when they were reported after the close yesterday. John ledger may take issue with that look at the stock, the market is rewarding them to the tune of over 3 as you see right there what do they add post paid phone ads 229,000. That was a nice ad, churn. 89 and revenue beat came from Wireless Business Solutions and wireless equipment revenue now this continuing trend that we watch so closely here, namely the rise of the cord cutters and direct tv now added 368,000 subs and 1. 2 million subs, directv itself lofs 147,000 subs when you add in the uverse customers down 60,000, you can see there are those that say at t is giving up higher customers for lower and its a real service what john stevens said on the call, the cfo was hey, bundling is key for us, where were bundling with broadband, wireless products, bundling or bundling wireless with broadband or in other ways, they have seen significant improvement. 170,000 homes added bundled with wireless and satellite tv product. They love bundling there particularly when it comes to Broadband Wireless video and that continues to be strong for at t well see about time warner, they didnt have much to say than they said in the past, about expectations for winning the case. Is at t the bigger winner in tax reform they are one of the larger winners and its interesting Randall Steven son said when youre looking at your aftertax returns, it just changes how you think about your investment thesis, this goes as an interesting template across Corporate America, for capital intensive businesses it changes the profitability equation on fiber as well as on 5g, how you think about rural and first net. It goes on to say listen, its hard to say exactly all of the decisions were going to make as results as it relates to investment and premium content in media but the fact is theyve been planning this for some time and its here and real were digging in and asking what are the projects we want to be investing in and the initiatives we want to be investing in that continue to drive growth for next five or six years. We take entirely off the table the notion that dividend could be unsafe. I see multiple years where dividend goes up this stock became much cheaper last night, despite the fact john ledger says when you spend 49 billion on direct tv and lose 544,000 in one year, he questions that. A lot of people are questioning that because youre giving up higher paying customers and lower paying at directv now. How about when time warner merges with them it could be brilliant. At t became a must own. Gives credence to the case that even if the deal were to break, the stock would not suffer. Right. Hbo numbers were really Strong Revenue up 9 really good quarter. He likes the president. Well get cramers mad dash well get to ebay, paypal, qualcomm, ralph lauren, ge, chipotle and starbucks in a minute each day our planet awakens with signs of opportunity. But with opportunity comes risk. And to manage this risk, the world turns to cme group. We help farmers lock in future prices, banks manage Interest Rate changes and airlines hedge fuel costs. All so they can manage their risks and move forward. Its simply a matter of following the signs. They all lead here. Cme group how the world advances. When it might be time to buy or sell . With fidelitys realtime analytics, youll get clear, actionable alerts about potential Investment Opportunities in real time. Fidelity. Open an account today. [ 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 were bullish on the future. Yours. Weve got an opening bell about six minutes from now we have so many earnings to get to and other related stories surprised as paypal and ebay. Two great quarters but only one is shining, ebay is up big they are going to switch beginning 2020, they are going to shift over away from primary merchant of basically merchant of name, if you want to call it using paypal. From paypal to a dutch startup, is that right . It doesnt matter. Dan shulman had been telling me this was going to happen and prepping me and saying dont worry when the stock was 50, it will be up so much you wont even know. Ill tell you right now, they were ready and its a transition and its not going to happen overnight. Everyone is panicking and may i just say while i panic, dan shulman has enough to buy you now nine times sunday. They are not even moneadvertising venmo yet. Let it come in this is going to be viewed as a shock to everybody except those who follow it closely. Theyve been giving you hints but in the past they always reach a new deal. You always felt wait a second, its advantageous to use Paypal Paypal will be dropping as a percentage for the sales on ebay. Do you know anything about the Dutch Company . I dont think they do either frankly. Its a startup. Most of the sales are overseas. Well, look, ebay was a great quarter. I dont want to take anything away from it im saying the panic in paypal is misdirected and it was going to happen some day dan shulman told me it was going to happen. When it happened, they would be ready. Those who panic, i have to go. Youve got to go. Weve got to go. Well talk a little qualcomm and service now numbers, weve got so much other earnings to get to. Blackstone down, shouldnt be on that. Fire fighting is a very dangerous profession. 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We tried to work through a few theres more with apple and amazon and alpha get and amgen really quick on macro, the productivity number was disappointing and claims were okay san telli said thats the magic dust, you need that to go up. Thats one of the reasons why the actual market looks down numbers. Microoriented, that matters to many. Well watch all of that lets get to the s p at the bottom of the screen here and opening bell at the big boards hudson group and largest travel retailers in north america, celebrating an ipo today over the nasdaq, entertainment, lu m luxury restaurant and movie theerts. Hi thad them on, fantastic. Is it fun to go to one of those . Very nice but that netflix threat continues to knock its funny because if you talk about that, one of the things thats a common about a lot of these companies, they are the scorcese production, you want to stay at home, they are great, go to the movies, they are great it is remarkable the explosion of content being made by companies that make me feel like that the at t time warner deal should be stopped. Its ludicrous its hard to understand why they reiterated that last night at at t in terms of vertical mergers that they said so much times should be able to be remedied through behavior all changes and not through being sued by the government mr. Dell ra him has a different point of view, so much so that they are going to court march 19th as of now well see, is there a chance they settle on the courthouse steps . Unlikely but one never knows. If theres a justice ever stayed at home and watched tv, they would shoot this thing down the antitrust guys are very smart. I know the department. They are not on blif yus, just using a different doctrine, doctrine from say 2004. Unproven doctrine. Gm is out with its january nub numbers lets get back to phil lebeau. General motors first, increase of 1. 4 in january and thats a little below what edmonds was expecting which was an increase in 2. 4 . Listen to the number from toyota, an increase in january sales of 16. 8 the estimate was for an increase of 7. 7 . Much stronger than expected from toyota not surprisingly were starting to see the estimates for the sales rate for the month inch higher General Motors thinks it will come in at 17. 4 million vehicles guys, back to you. Thank you, phil dow, 3m boeing are the ones dragging us back. A couple of number bumps but apple is not a drag tonight. Even though i could make a very strong case apple is going to have very bad guidance based on the broadcom news, they were subpar but the qualcomm news last night the qualcomm and speaking of qualcomm, they are making it clear, look there is a problem. And in terms of with phones. Theres a problem with orders. China for inventory, thats more local for china but they pointd out, look, apple did not cut back on orders very big. Thats what we think the stock is down. If it was an unaffected stock price and now a 70 offer but expected to go higher in the not too distant future, it would be down more today. It would be more down today and they need that more than ever theres elliott continuing to buy more. And elliott at 7. 2 overall we are expecting the approval from the chinese in the next couple of weeks, as i said yesterday, just going to kinds of go best and final as opposed to try to negotiate with a likes of elliott that wants well in excess of 135, even though they originally came out and said 135. The numbers from qualcomm themselves as you point out and guidance not as good as some had hoped. In terms of what they are seeing on the chip side the intellectual side has been impacted greatly as a result and not getting paid by the suppliers to apple it is important to note, did you say everything with samsung. Oh, my, thank you for mentioning that. My bad i didnt mention that. That was the lead story. They resolved everything they amend and extend and they get more cross license agreements in terms of samsung patents and and importantly as well, the kftc, korean antitrust regulators, samsung will no longer be a party to their case against qualcomm samsung, which is basically south korea, not being a part of that case, makes the case less formidable, i totally agree. They have component supply agreements and they had a long relationship with samsung, the foundry does things for qualcomm and so forth they a lo of interrelated relationships and now involve everything involving licensing and patents. Bigger than intel now for semiconductors this market smacks of just the pajama traders again weve got the financials up big because of a little tick up in Interest Rates, weve got these major industrials, every number pretty good except for somebody worried about parker we have oil going back up, which is going to move that group as i said facebook is terrific, and then you have amazon tonight, which i think should be good the Cloud Business is very strong microsoft should be up 3 or 4 bucks by the end of the week you can take your cue from mcdonald aesz and unh or listen to the industrial and teches and they are very strong we are still dealing with a hangover of the empire striking back. Yes, the amazon berkshire j. P. Morgan. This is an industrial market, its an oil market and it is a tech market. Those who want to trade off this, be my guest. I think youre making a big mistake, fin tech doing great and j and j is down. The whole investment philosophy, be my guest, youre having a tough day. Mcdonalds has gone red for the year ups joins it going red for the year. That was terrible. Guide soft for 18. 703 to 737 estimates at 754. When we thil spend what they have to spend . C capex5. 2 to 7. United parcel is underspent, for so long versus whats going on in e commerce do not read through ups to fedex. Fedex has done the opposite. They have spent to get that business. Are you saying thats why rerun into these log jams. Yes, youve got to spend more money, particularly amazon once you to spend more money, theres way too much business. Fedexamazon is about 3 . Were going to talk to richard paris thats going to be fabulous. Is it okay to sacrifice near term profitability to spend out because e commerce is the major theme of the whole quarter whether it be retail or vm ware or service now with a great quarter. Service now had a Strong Quarter. Thats john done hoe. The ceo of the company, former ceo of ebay as our viewers well know. I am told very exciting, nice to see another faber guest show up on mad money, well done. The ackman war is over. I did not see that coming i thought absolutely sure, i mentioned ackman and thought he was going to say, that rascal or that brat, no, they are like buds. Moving on they are moving on water under the bridge i think thought incredible. Ackman comes with an olive branch do you think theyll do an olive branch. When they smack down akman. Stock is down though, jim. Please, come on consumer names, rl did not have a good quarter and chipotle and ubs goes to sell starbucks is another downgrade. They say listen, the domestic is bad the ubs on chipotle saying the brand had really, really serious damage im not going to disagree with that the numbers have not come back and they are lacking in people who legs sts say who run the company. Thats an ackman brand. How is herbalife. That hasnt done particularly well the story is for another day amazon, we get ready for the stock is up again, 25 gain so far this year. It should be up it should be up, the read through is amazing for amazon. It wants to get to 1500. It eclipses 700 billion in market cap. What do you think do you think apple will get to a trillion before alphabet with all of that cash alphabet has overseas they dont really need to, of course but speaking of alphabet, journal has a piece up now saying alphabet is in talks with awed saudi aramkrxtsco to build a teb in saudi arabia. Not clear if an agreement will be reached. They need power and need it cheap. They are with dominion in virginia frankly theyve got low cost power. Which is why by the way i always think amazon will end up being in that area because the lowest cost power away from hydro. Youre talking there about powering all of the data centers and because you need to be wind power, not enough. Isnt it juit just friends n kleinfeld running a 500 million project next week, Klaus Kleinfeld turned out to be a vision nar, not a plaque or anything him. One errant email never hit send at night. Dont write it down. Ever get an email, its yes, no, its y, t y, his emails, the most very good. Nothing more than five words, right, thats the rule youre good concise. Chutrunkated. Dow has fallen in february for the month. Bob . Sf up 10 of the last 15 and down five of the last 15. Fractional gains on average. Bit of a trendless open. We had a little bit confusion yesterday because between the fed statement and end of the month rebalancing, which was significant, there was a lot of confusion about that midday selloff now we dont have any of that distraction here lets look at the sectors. Energy Small Leadership Group here, semiconductors not doing much, thats a big leadership group. Banks fluttering around a little bit in the last few years. Big moves up in materials last first part of last month. Not doing much transports are notably to the downside, even though they beat the trading down, fedex also trading down if you look at the etf Leadership Groups, most of the big oil etfs on the upside something with robotics and in it doing a little bit better, thats also in the nasdaq internet index and two former Leadership Groups are having a hard time, Home Builders have been having a hard time and retail has been trending down for sefrlt days now. We have everything down, gap, elle brands, tiffany, nordstrom to the down side a lot of earnings out. I want to highlight conaco phillips, they looked about the outlook for Commodity Prices improving, they paid down a lot of debt and raised the Quarterly Dividend 7. 5 and increased the share buybacks by 2 billion very optimistic comments and they should be if you look at the trends recently, i mean, heavens, weve been highlighting the fact oil is 52 three or four months ago, its up 25 in four months u. S. Production, we talked about this yesterday, over 10 Million Barrels per day. That was a big milestone to pass and the demand numbers had been very strong. Eia highlighted significant upward demand revision thats very important. Weve had modest production shortfalls in venezuela and other countries and put it together, supply and demands looks pretty good. January, over another Record Number for inflows, i know i said this for many months, this 75 billion in ib flows in exts tfs, this was an all time record we managed 40 billion last year a month and that was a record. The oceans of money are coming in, going into u. S. Equity funds and International Equity funds, huge numbers going into emerging market funds all over the world, european funds fixed income also got modest inflows, we had some outflows from high yield as well. Where the money is going here. Most of the money is going into these simple plain vanilla index etfs like the s p 500 and european funds, emerging market funds, these are low cost cheap etfs and thats where the money is finally ipoairports here, hudson group is one of the world aegs biggest Concession Companies and they went public, 34. 9 million shares, waiting for that to start trading, that was the low end of the range, 19 to 21 another airport concession operator, america airports, this is an argentinian company, also price at the low end bitcoin down noticeably. The indian finance minister made comments about it saying they dont consider cryptocurrencies legal tender but they did not say they were going to ban it. They just said they were going after illegitimate activities and the indian finance minister said the government will explore use of Blockchain Technology proactively for ushering in the digital economy. That is not a ban. Theres been some people who i think have been misinterpreting what exactlyize been saying. Dow is down 71 points. Thank you very much what a morning for data and were not done yet lets get to Rick Santelli in chicago. Good morning, rick. Not by a long shot. Isms all important, were still smarting from the productivity disappoint it did affect the markets and indeed it should thats a piece of the puzzle that could get us a whole lot more tailwind if it eventually shows up twoyear note yields came within a whisker of 2. 17, highest level since fall of 08. We did trade 3 . Were not going to be going much further back on a comp for a while. Lets look at tens, hovering close to 2. 25, testing again, april 2014, thats where were comping. Lets look around the globe. Lets look at bund yields, now theyve popped over 70 basis points, highest yield closes since september of 2015. Hey, lets look at theres a lot of issues going on with the uk, leaked reports on how brexit will hurt the economy and make snap elections, a weak situation, shes visiting china maybe to try some trade agreements or at least set the foundation but despite that, the gilt hovering about 1. 50, highest since may of 2017. Lets go up north to canada. Over 230, 231, 232 on a canadian 10 lets go in the other direction. Since we keep talking about nafta, lets look at mexico, their 10year, what an investment if you knew what the peso would do, well over 7. 5 . In december there was one spike up there, but were getting close to that which would mean highest yield since mid2010 finally the dollar index, so much reasons and its not a new phenomenon and very little to do at davos, its going on for a long time, hovering at fresh cycle lows going back to right around middecember of 2014. Carl and jim and david, back to you. Thank you very much Rick Santelli, a lot to watch, drowning in earnings, well get to more as the morning goes on for the time being, look at the dow, down 64 germany continues to be under pressure down 1. 4, the worst day since july were back after a break is the monolithic view of emerging markets obsolete . At pgim, we see alpa in the trends, driving specific sectors of out performance. Where a rising middle class powers a booming auto industry. A leap into the digital era draws youthful populations to mobile banking and ecommerce. Trade and travel surge between emerging markets. Everyday our 1,100 investment professionals around the world search out opportunities for alpha. Partner with pgim, the Global Investment management businesses of prudential. Like you do sometimes, grandpa . And puffed. Well, when you have copd, it can be hard to breathe. It can be hard to get air out, which can make it hard to get air in. So i talked to my doctor. She said. Symbicort could help you breathe better, starting within 5 minutes. Symbicort doesnt replace a rescue inhaler for sudden symptoms. Symbicort helps provide significant improvement of your lung function. Symbicort is for copd, including chronic bronchitis and emphysema. It should not be taken more than twice a day. Symbicort contains formoterol. Medicines like formoterol increase the risk of death from asthma problems. Symbicort may increase your risk of lung infections, osteoporosis, and some eye problems. You should tell your doctor if you have a heart condition or high Blood Pressure before taking it. Symbicort could mean a day with better breathing. Watch out, piggies get symbicort free for up to one year. Visit saveonsymbicort. Com today to learn more. If you cant afford your medication, astrazeneca may be able to help. Hi, tom. Ings ] hey, hows the College Visit . You remembered. Its good. Does it make the short list . You remembered that too. Yeah, im afraid so. Knowing whats important to you. Its okay. This is what weve been planning for. Thanks, bye. Thats whats important to us. Its why 7 million investors work with edward jones. As we count down to super bowl sunday and our coverage beginning tomorrow, cnbc posed a number of questions to eagles and patriots players take a listen to some of their answers about bitcoin. I dont really care for it. I think it could be something great, but its hard when it cant be regulated i know that shares were insanely high. I never really got into it or anything i know that its a digital cryptocurrency it seems to be hot right now i know people are becoming millionaires off of it right now. I know a lot of people are interested in investing in it at this point just because supposedly its rising in the market i havent really felt comfortable investing in it, so ive just been watching from the sidelines. I wish i would have been into bitcoin about two years ago. A lot of teammates talk about it, but ive not put any money or anything into it. Thats up and coming. I dont know if its an extreme risk or not, but im kind of waiting and holding off on that. Notice how savvy the eagles were yes, yes, right im looking at my picture of matt collins, the first guy. I picked his name on the draft but the eagles clearly have it right. I dont know, the pats, what are they, buyers no, they were smart well, somebody who bought it would have been really smart and sold it. But they had the right approach. Theyre buyers. Another rough morning for crypto has hasnt made its way to the locker room yet. I think theyre focused on the game, which is very good that is good. Yeah, the Indian Government apparently coming after bitcoin as well. You guys saw that this morning, saying they were going to root it out i agree by the way, do not miss our show tomorrow. Its going to be a good one starting at 9 00 a. M. Eastern time jim and i will be live from minneapolis ahead of sundays big super bowl game. Youre going to stay for the real thing yeah, im going to stick around i dont know talk bitcoin with the boys see you guys. Dont let the door hit you on the way out. Thanks no problem. Dowecerin rovg a bit here well get stop trading with jim in a minute. You know whats awesome . Gigspeed internet. You know whats not awesome . When only certain people can get it. Lets fix that. Lets give this guy gig really . And these kids, and these guys, him, ah. Oh hello. That lady, these houses yes, yes and yes. And dont forget about them. Uh huh, sure. Still yes xfinity delivers gig speed to more homes than anyone. Now you can get it, too. Welcome to the party. Lets get to cramer and stop trading. So many things to talk about. Could have talked about mastercard the fact corvo took away a big contract the focus here is dow dupont ive got to tell you, the stock is wrong its better than expected. Theres a protection number. People are worried thats going to shift into q2. The numbers are much better. The stock is wrong its not the first time, it will not be the last time ed breen, congratulations. Well played. Jim, whats tonight you mentioned john donahoe yeah, and Gary Heminger youve got to talk about oil oils up a lot of people are worried california is going to have 4 a gallon oil well, who knows better than marathon so we got to stay close to that. Wow. Ill see you in minneapolis. See you in the morning. Ill see you yeah, whenever. Bitcoin next week maybe sometime. Next time you see him, well know the winner of the game. We know it now. You coming in on monday if they win if they win no no . No. Okay. Jim, see you tonight. Mad money at 6 00 p. M. Dows gone green boeing up almost 1. 5 . U. S. P. Still down sharply despite beating with its quarterly results. Well talk with the cfo in a few minutes. [ 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 were bullish on the future. Yours. 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 nobodys perfect. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch and you could save 782 on home and auto insurance. Call for a free quote today. Liberty stands with you™ Liberty Mutual insurance. Good thursday morning. Welcome back to squawk on the street im Carl Quintanilla markets in a Holding Pattern here boeing holding the dow up, although it just went green a few moments ago. Busy day for earnings and economic data. Lets get ism with Rick Santelli well, ill save the best for la last lets look at december Construction Spending first. We were expecting a number somewhere around up half a percent. We ended up 0. 7 solid. Now lets get to that aforementioned big number, january ism manufacturing. Looking for a number somewhere around 58. 5. 59. 1 sequentially following 59. 3. So its a bit less, but do keep in mind, if you look at the number we had in september at 60. 2, that was the best in 14 years. So these numbers anywhere near 60 are ultra solid if we can go through the internals real quickly here on the employment side, 54. 2 versus 57 on prices paid, whoa, 72. 7 versus 68. 3. New orders, 65. 4 versus 67. 4 it back filled a bit there on new orders the market seems to be hanging in stride for basically one basis point higher on most of the yield curve right now. Somewhat of a normal fixed income trade carl, back to you. All right a lot of good information, rick. Thank you so much. Our road map begins with tech titans reporting facebook, alibaba, microsoft all out with earnings. And it is the busiest day of earnings season. Well have a look at the key results, the impact of tax reform, and a lot of different names well be watching. Plus, on the heels of their reports, well speak with the cfo of u. P. S. And the ceo of cigna. First, a big b for facebook on earnings despite a spending push Ceo Mark Zuckerberg addressing analyst concerns regarding the profitability of the companys recent investments take a listen. I expect these investments, on top of other investments were making, will significantly impact our profit building but just like the changes were making that will impact time spent, these investments will help us build a Stronger Community over the long term time spent on the side a key issue for the quarter. For more on facebook, were joined joined by our analysts guys, great to have you with us. It was interesting to watch the reaction in the after hours session with Facebook First going down quite sharply time spent was down by about 50 million hours per day here zuckerberg points out, you know what, its not the amount of time spent, its the quality of engagements. How do you put quality of engagements into your model . Well, at the end of the day, what were trying to do is figure out what advertisers are going to do with that engagement and whether theyre going to be willing to bid up more if youre going to restrict the inventory, if theyre going to bid up more for it its pretty clear they will. What caused that stock to turn around is when the Management Team very clearly said they didnt expect the changes in the user face to negatively impact ad Revenue Growth. The basic underlying factor is you still see rising roi facebook that means theyll bid more. Pricing can still rise yield can still rise thats why this advertising Revenue Growth can sustain north of 40 for another year or two you know, aaron, if you listen to the language closely on that Conference Call, the comment that mark was talking about was made, i believe, by coo sheryl sandberg. She said it was not clearly a negative, the changes. So it wasnt that it was not a negative, its just that it was not clearly a negative how do you interpret that . Yeah, i mean, i think its been viewed by investors as maybe a slight negative near term, maybe as you spend less time on the site they talked about 5 decrease in usage. I think their point is if you have more meaningful engagements with your friends and family, ultimately you may spend more time on the site shortterm might be a slight negative, but if you have more meaningful time on the site, more engagement, active engagement versus passive engagement, thats a positive over the longer term as long as you see roi going up, advertisers are going to continue to spend on facebook, and were seeing that. Mark, how quickly do users notice the change, and is it possible that we do see some quarteronquarter weakness for subsequent quarters before people say, hey, this product looks a little different now theres two things. One is just remember here we are in north america where the growth year over year in users is were pretty low now like 2 , 3 growth in users. Theyve got, i dont know, 70 or Something Like that of all Internet Users in north america on their site almost on a daily basis. It can only grow so much more. They did talk about engagement coming down in the quarter my guess is its going to fluctuate for the next couple quarters it really depends on the User Experience and how many people notice it. I dont think majority of current users notice it yet. We havent picked that up. My guess is this is going to unfold over two or three quarters its almost impossible to forecast or predict. At the end of the day, facebooks big advantage is that its a massive a. B. Testing lab. They can run these tests and find out what leads longterm to better engagement. Its a major advantage these Digital Media assets have always had. Facebook is very good at this testing. Im pretty certain theyre going to work this out so that engagement rises long term hey, mark, while weve got you, on alibaba, your reaction to the quarter and whether or not you believe that move to go from 37. 5 Profit Sharing to a 33 Equity Ownership is of importance yeah, so the numbers look like a pretty clean beat and raise quarter. Expectations were high going into the print this is one of the best performing stocks weve seen over the last couple months. Looks to me like an expectations selloff. I dont think theres any real change in fundamentals margins were a tad better than expected Revenue Growth was better than expected they raised the Growth Outlook there was a lot of talk about investments in physical retail maybe that spooked some investors. Seems to me like a smart move given thats where 80 of retail spend is the financial move, looks like that should be a highly valuable asset. Having that 33 stake, i dont know why that is an upside to alibaba long term. You know, aaron, opex is a key metric facebook has run into trouble with in the past in terms of not meeting expectations and going above that yesterday they reaffirmed for 2018 a 45 to 60 . That a pretty wide guidance. Do you expect them to actually up that or at least guide for the upper in that range in future quarters . Yeah, theyve actually come under the low end by a meaningful amount. We think thats likely to continue in 2018 as well so yeah, were on 44 . We think thats even a little too aggressive a lot of it depends on their content spend. They plan to spend a decent amount this year on increasing content, particularly for their watch part of the facebook app we think if that spend doesnt come to fruition, well get the lower end of that range. Lastly, mark, whats the read for earnings tonight weve had three Companies Report now ebay, netflix, and facebook. The fundamentals were in line or better than expected for all of those. I dont know why that wouldnt translate into the same for if ebay has a strong Fourth Quarter, amazon certainly does if facebooks ad revenue is better than expected, it should almost certainly go up for google as well one key thing to watch out for, everybody is accelerating their Share Repurchases, in part because of some of the tax changes. Google is the one to watch they got 100 billion in cash burning a hole in their pocket thats the company that should amp up and Share Repurchases i hope they do that tonight. All right well see. Thanks, guys appreciate it, mark and aaron. Thank you thank you shares of u. P. S. Are down this morning the company with an earnings beat, taking a hit for underforecasting holiday delivery expectations. A short time ago in response to tax reform, the company says its boosting investments by 12 billion, including buying 14 new planes joining us first on cnbc, u. P. S. Cfo richard, good morning. Good morning. To you, whats the more important dynamic this morning for investors, the dplifr ri reflection or the guidance on cap ex today i think overall, its both the guidance on cap ex and where were growing the company. Were a 66 billion company that grew last quarter by 11 we know the demand and the opportunity is there a few years ago, we decided to invest in the international, and were seeing the results today were in the middle of investing in the u. S. Domestic operations in a way that we havent historically were going to see the results and leverage created out of those investments. So with this tax reform, it gives us a tremendous opportunity to continue to invest and take advantage of the 100 deductibility at the same time give us a sense of how capex will be different, how it looks different than it did a few years ago, and do you feel that with the booming environment and ecom that you waited too long to bring numbers up well, i think the first thing you have to look at is if you look at the aircraft we announced them this morning go back since 2013, weve seen volume grow in the air products double digit in the international, almost 15 export growth this year around 5 next day air those are some numbers we havent seen really in the last decade so at the end of the day, its about the economic engine that is really synchronized across the world. So were taking advantage of that and investing there then inside this small package environment, it really is about technology and capacity. Again, were a company that has historically moved around gdp, and were starting to grow much faster than gdp, really because both ecommerce and just generally the global trade growth rates are so high its a unique opportunity for u. P. S. , and were going to jump in and take advantage of that. Richard, you incurred 125 million in additional operating costs during this peak period when you delivered 762 million packages, which is quite a number of packages how difficult is it to really get a handle on what the traffic will be . This sounds like it was hard to anticipate, that youd have such a peak season. Welt, i first thing that we look at the National Federation of retailers and we see their forecast was somewhere between 3. 6 and 4 . It was 45 higher at 5. 5 the hardest area to really manage for is the millions of small customers. For the large customer, we have both the control tower and the forecast that we work with them on a daytoday basis. At the end of the day, this peak season what we saw was during cyber period, we saw a 20 lift, and it wasnt just all the big retailers or the big eline ecommerce customers we have it was every customer in every segment. In fact, this year 90 of the days between thanksgiving and christmas, were over 30 million packages go back two years ago, we had 20 of the days that we were over 30 million. So theres a tremendous opportunity in our industry. Its growing thatsfaster than. So we are investing to make sure we have the capacity for this period and the entire year within these small customers that accounted for such a huge surge, does that include the sort of thirdparty sellers that amazon has who may ship directly to customers yeah, when you take the whole Broad Perspective of all of our customers, most of our small and mediumsize customers are still independents who work directly with u. P. S theres a segment of our customers that are part of Amazon Family and do ship directly from their locations, but most of them, the volume surge that we saw was across the segment where it was also all the independent little shops that were also participating as well 30,000 for you, richard, in terms of macro germany above 60 greece, 55 i wonder, can you characterize growth in europe and to some degree asia versus what were seeing here in the u. S sure. So in europe, we actually talked about our crossborder movements, staying on continent. We saw another 20 growth in volume crossing borders on europe so we continue to see all four quarters this year really solid, good growth. Part of that is that weve got a product in the market. Its a little different than most others. It is an integrated Network Similar to what were used to having here in the u. S on the asia side, we continue to see great export both to europe from asia and asia to the u. S. Again, continued success and thats why we saw the earnings of the International Actually hit a record and currency adjusted, were talking about a 19 improvement in profit you know, richard, recently the president commented in the context of commenting about the postal service, the u. S. Postal service and how they continue to lose money that usps should charge players like amazon more money when the president says a competitor of yours should charge more money, how do you think about that is that good for you do you wish the president would stay out of commenting about pricing when it comes to shipping well, let me just start by saying the post office is both a competitor, a vendor, and a customer of u. P. S. Obviously because the Value Proposition they bring to the market has different features and service, their rates are different than ours. As they bring their rates up, that does help the pricing environment in the industry. So if we do see improvements in their pricing, we think thats a winner or benefit to u. P. S. As well so the president s comments could actually be helpful to you. Well, you know, obviously what ends up happening because the postal pricing is done through a regulatory process, well just have to wait and see. Richard, really good insight. Appreciate your time as always see you next time. Thank you richard peretz, the cfo of u. P. S. When we come back, well hear from the ceo of the nasdaq then later, the ceo of cigna a big announcement on worker pay and benefits due to tax reform its the first day of february take a look at the nasdaq 100 winners from last month. Netflix led the pack, up 40 plus followed by seagate and nvidia squawk on the street is back in a minute. Ronoh really . Gs going on at schwab. Thank you clients . Well jd power did just rank them highest in Investor Satisfaction with full Service Brokerage firms. Again. And online equity trades are only 4. 95. I mean you cant have low cost and be full service. Its impossible. Its like having your cake and eating it too. Ask your broker if they offer awardwinning full service and low costs. How am i going to explain this . If you dont like their answer, ask again at schwab. Schwab, a modern approach to wealth management. Markets generally in the red right now with the nasdaq eking out a small gain, breaking its twoday losing streak, seeing its best monthly performance since 2015 were joined by our own mike santoli along with nasdaq c ceo Adina Friedman i wanted to get your take right now coming into this year about the condition of the Global Capital markets obviously you operate a bunch of exchanges, see a lot of money in motion we came into this year, investors of all sizes, very heavily engaged, very high equity exposures, very high volumes. Do you see the possibility after such a lowvolatility stretch, any uptick in volatility, have we stress tested our markets enough are we in decent shape with how the markets might be resilient or not we did see unusually low volatility in 2017 were seeing a slight pickup into 2018. The markets, of course, are incredibly resilient and capable of managing through lots of different market moves but right now what were seeing generally in the market is overall optimism about macroeconomic factors, the growth in the global economy, and the tax reform creating a lift as well this market has gotten some comparison to some of the more overheated market cycles of the past so you actually think, though, that the market activity is linked enough to the underlying Economic Situation that you dont have to worry about staying on top of that possibility . I think every sector has its own elements to it, but i think what youre generally seeing is general optimism towards technology, a general optimism towards the impact of tax reform on Corporate America and what that means in terms of returns to shareholders but also investments in their business and their ability to drive further growth on the back of that our general view is it feels like, you know, strong optimism but there is definitely a fundamental backing to a lot of whats going on. Nasdaq, your company, yesterday reported earnings. Part of the discussion afterward was about this reorientation of the Company Along strategic lines, trying to get to where the industry is headed, the Investment Management industry and Capital Markets business what does that actually mean youre selling a lot more data tools, analytics, things like that, and making acquisitions as well where do you see the business of investing going and how are you trying to be there well, one thing about nasdaq is we provide the soft war to 90 other markets around the world we had six new exchanges launch last year using our technology in addition to continuing to see healthy demand for our Market Infrastructure capabilities to be applied to marks around the world. Thats one part of our really highgrowth part of our business the other thing is all the investors, including the ones here, are looking for new ways to be able to harness data and provide better Investment Advice or investing capabilities. What were finding is that machine learning, Machine Intelligence is being harnessed within the Capital Markets today. We are part of that with the launch of analytics hub, with our acquisitions how do we make it so people can make better investing decisions or compete better in the Asset Management industry, and thats a big part of our focus as well. As it relates to all things bitcoin and blockchain right now, one of the top examples of when people say, heres what blockchain could be useful for, it is security settlement, knowing who owns what. What are you doing in terms of realworld stuff over the last few years, blockchain went from an interesting conceptual element of what could be in the Capital Markets, then last year a lot of proof of concepts, experimentation. As we came through 2017, we started to have real applications for it. One is were implementing the block chain to support proxy voting in south africa on the back of a proof of concept we did in estonia we did a proof of concept in europe around the settlement of otc securities with an Exchange Partner and several banks. And we are applying the blockchain to our Nasdaq Private Market to allow for instantaneous settlement of private securities theres a lot going into the market today and being applied what youre seeing is its applying to less regulated spaces, and then Going Forward it will start to creep into the regulated markets as people understand the true benefit of the capital efficiency of what the blockchain can create. I think melissa has a question yeah, hi, its melissa. I wanted to ask you, you know, your exchange is going to be the last one to go and launch bitcoin futures. Weveseen them launch already in the cme and cboe. We had a chance to speak to the ceo of the nyse. He had some not positive words to say about bitcoin, the asset itself what are your thoughts on bitcoin the asset itself, and does that matter what you think of the asset when youre launching a futures contract well, i do think its important that we play an Important Role in the Capital Markets and people trust us to understand what we are ultimately going to be offering out to investors so weve been doing a lot of work to understand what is bitcoin or what are cryptocurrencies in general. Whats the ecosystem, how is it evolving, who are the biggest players, how resilient is it thats a big part of our education. And its also the reason why we didnt jump right in to doing a bitcoin future because we wanted to make sure that we really understood, is this an asset class thats sustainable over time and if were going to be providing it, are we providing something that will last so we are still in that education process, working with clients. We have a great partner that weve been working with on that as well. But we are still in the exploratory phases, and we will get ourselves ready when were ready. All right thank you very much for your time carl, back to you. Mike, thank you very much as we go to break, take a look at the dow winners for january as we wrap up that month boeing led the pack, not surprisingly microsoft, travelers, and nike also on the list down six on e thdow. Back in a minute today, innovation in the finger lakes is helping build the new new york. Once home to the worlds image center, new york state is now a leader in optics, photonics and imaging. Fueled by strong university partnerships, providing the worlds best talent. And supported with Workforce Development to create even more opportunities. All across new york state, were building the new new york. To grow your business with us in new york state, visit esd. Ny. Gov. To grow your business with us in new york state, where can investors seek pin an uncertain world . Pgim sees alpha in real assets. Like agriculture to feed the world. And energy to fuel its growth. Real estate such as ecommerce warehouses. And private debt to finance transportation and infrastructure. Building blocks of strategies to pursue consistent returns over time from over one hundred fifty billion dollars in real assets. Partner with pgim. The Global Investment management businesses of prudential. Major tech Companies Reporting on the busiest week of earnings facebooks move is having an impact elsewhere in the market dom chu mass more. Might be the kind of down day. Were fighting back a little its a record high for shares of facebook that Earnings Report is managing to put a bid to the stock at least for now. Facebook is worth around 555 billion, making it the fifth biggest stock in the s p 500 and the nasdaq 100 the point being, it carries a lot of weight in market cap weighted indices. It also carries a lot of weight beyond the etfs. One of those is the i shares u. S. Tech etf ticker iyw its a 4 billion fund thats geared towards the u. S. Stocks in the tech sector facebook here is an 8 weighting in the fund. It makes it the third Biggest Holding. One of the smaller specialty etfs that holds facebook in a big way is the global X Social Media fund, the ticker socl. This is 176 million fund, so smaller, but it does focus on social media stocks globally facebook is the third Biggest Holding in this fund its got a 10 weighting here. If youre a facebook investor and an investor in many of these techrelated etfs, it might be worth checking to see just how much exposure you have in total to that stock. With that in mind, given todays big Earnings Reports from apple, al alphabet, and amazon after the close, also worth looking at how heavily weighted those stocks are. Apple alone is at 16 of that ishares we just mentioned. So carl, a lot of these big mega cap Tech Companies have a big exposure at least weighting in some of these etfs. Back over to you all right, dom. Thank you very much. Dom chu back at hq obviously a whip saw day on a volatile day for the market. Lets bring in ubs director of floor operations art cashen whos here at post nine with us. People wonder if volatility is back first 1 gain, i think, for the s p since september. Then first 1 drop since august in the past few days yeah, i think youre seeing a battle between rebalancing and today new money for the new month. Thats why we started out soft and came back as new money began to drift in. I think the new money may outweigh the rebalancing yesterdays late move had to do with extensive rumors that there might be a massive selloff on the close for rebalancing. Again, the benefit of the viewers f you have a pension fund or Something Else thats targeted for 60 stocks, 40 bonds, you have a big stock rally and suddenly by asset value, you have 70 stocks and only 30 funds so then youve got to either sell stocks, buy bonds, or quite often a little bit of both so the rumor yesterday was that you might be a multibillion dollar selloff on the close in the final hour when it was evident that was not going to happen, stocks rallied back. So do we discount the pressure that weve seen on stocks the past two days some people were saying the rebalancing was happening on all of those days prior. I think you might have been getting some portion of it it certainly fits in timing and otherwise, month end, get things straightened out what you might have here is a little bit of spillover from that going on, battling against the new money for the new month. Ism prices paid sixyear high we just finished talks about to u. P. S. About their capex plans yields, should they be budging more, less what do you make of it i think the problem with the yields is how fast they move you know, i think people are assuming were going to drift up to 3 on the ten year, but its how fast they move i think that gives some of the bulls pause. On the other hand, we had Allen Greenspan yesterday in an interview saying he was worried we were headed for stagflation that doesnt seem to be with everything going on. Lets see how early he is with this yeah, hes been net negative for a while. Art, thanks. Well talk to you in a bit all right lets get to sue herrera for a cnbc news update a this hour good morning, everyone. Heres whats happening at this hour u. S. Special envoy to north korea joseph yun says recent tensions over pyongyangs Nuclear Program were not close to reaching a military confrontation. He spoke at a briefing in tokyo. I think you have to say it will it has to include military operations, but again, i would like to caution you that i dont believe were close to it and so i think we are certainly we want to see the negotiations the court of arbitration for sport overturning doping bans of 28 russian athletes, calling the evidence against them insufficient those athletes can now seek late entry into the Winter Olympics 11 more athletes were ruled to have been guilty of doping but had lifetime bans cut to a ban of just the 2018 Winter Olympics and fire crews were out late last night in arizona fighting a fastspreading brush fire. Officials saying it quickly spread to 25 acres no word yet on what may have started that blaze you are up to date thats the news update this hour guys, back downtown to you melissa . All right thank you very much, sue when we come back, cigna reporting an earnings beat, also an increase in worker pay and ben fi benefits because of the new tax law. Well discuss that and much more with David Cordani thats next. Cigna joining other Health Insurers reporting a Strong Quarter and upbeat forecast for 2018 the company also boosting investment in response to u. S. Tax changes, including raising its minimum wage joini joining us now first on cnbc, cigna ceo David Cordani. I was reading the transcript of your Conference Call you got a number of questions about this effort announced earlier this week by jpmorgan, berkshire, and perhaps most importantly amazon, as the largest, i believe, provider of Administrative Services only, sort of a middleman for so many corporations, should you be concerned that theyre coming after your business . We actually see it the other way around first, were delighted to report an outstanding 2017 result earnings growth, eps growth approaching 29 , and industry leading medical costs trending below 3 put forth an outlook for additional growth in 2018 of 7 to 8 revenue and 19 to 23 earnings growth. As it relates to the changing marketplace, we continue to expect to see employers demand more from a service standpoint as well as demand more from coworkers or employees to engage that fits exactly what cigna does as a Service Provider not an aos claims administrator but a Service Provider of clinical programs, behavioral programs, pharmacy programs, et cetera so we see more opportunity than not in the change. The markets seem to think otherwise. Your stock, i think, was of all of the names out there, perhaps the largest percentage loser. What does the market have wrong here in terms of concerns about your competitive stance, if and when this effort begins to bear fruit . Yeah, im not sure i would say the market is right or wrong, but we have to put it in context. For the six years prior to 2017, we delivered in excess of 30 tsr on a compounded basis. For 2017, withe delivered about0 tsr and will step into 2018 with very strong results. Clearly a disruptive headline and clearly a need of creating clarity in terms of next steps i think the question fundamentally for everybody in this space is can you grow, can you continue to innovate, and can you continue to deliver a strong value we put forth an outlook for 2018 that indicates all of the above. So were confident in the fact that well continue to grow the business and be rewarded by shareholders over time you know, i reported on, i think it was monday or tuesday, when this came out that its early days for it. Any thoughts on your part about reaching out to them, trying to be a part of the effort . Oh, we have ongoing dialogues. So were one of jpmorgans Service Partners to start with we have ongoing dialogue with jpmorgan on a regular basis. And you could assume that those conversations transpire on a regular basis, including this week secondly, more broadly, if you were to look at our strategic position, our number one strategic imperative is to be the undisputed partner of choice not only can we, we will we partner with a variety of players, whether its in the pharmacy space, employer clients, physician partners, and our hospital partners. So we do see this as an opportunity, and were in the middle of that conversation as you would expect you share that contract to provide j. Pmorgan services if jpmorgan actually pulled that contract, it could be 0. 2 to 0. 4 of 2018 revenues for you. You said you have ongoing conversations. Have you asked jpmorgan if they intend on pulling the contract do you have any sort of commitment from them theyre not going to do that in the near term yeah, i actually dont think about it that way. Every employer and every customer has an individual choice at any given point in time we view it the exact opposite. We have the speedometer respons reearn our customers each and every day. We support about 20 of jpmorgans business today, and were delighted to do so we continue to invest from an innovation standpoint. I think if you look at it bigger picture, were growing u. S. Health Service Company were a growing u. S. Seniors Service Company. Were a growing u. S. Priority company. We have one of the most diversiti diversitied diversified portfolios jpmorgan employees have the choice to choose cigna or another provider if jpmorgan decides to not make cigna a choice for them, then its not about the individual contract going back to the original question, have you asked jpmorgan if they intend on pulling the contract or what their plans are for that contract with you . Melissa, not constructive to comment on individual contracts. We have to earn the right to serve our employers each and every day. With such a diversified base, were not dependent on any one contract or segment otherwise. If you look at the National Account space, we retain about 95 of our employer relationships. If you look at the middle market space, we retain well over 90 of those relationships so we have a longstanding track record of high retention by earning the right to serve our clients and continue to invest in innovation. I dont lose sleep over losing that relationship. I lose sleep around the ability to continue to innovate, partner, and drive the right results for their coworkers, which is why we invest so much back on innovating our business. Were delighted with the fact weve delivered below 3 medical cost trend in 2017, which is less than half the industry average. Clients like jpmorgan benefit from that. Thats a good point this is carl really quick, some wonder whether or not i mean, some wonder whats different about this particular initiative than weve seen from other multicompany initiatives to help lower the curve. Do we hathey have something bes their market cap, their star power, or their buying scale, in your view . I think the single biggest difference is you have the leadership voices of the top of the suite which we view as a positive as we go to clients, we call an employer a client, an individual a customer, we think one of the most kr its call attributes is to have buyin and Leadership Support from the top of the suite to view the investments as a strategic investment jamie has long since been oriented that way at jpmorgan. We think its a positive that the ceo and leadership suite view it as a longterm strategic investment and want to actively manage it with their population. And stripping it from profit incentives, is that unique or not . Again, the profit incentives, lets flip it around each one of those employers today arguably functions as a notforprofit health Service Company themselves because theyre an aso servicer. Theyre coordinating billions of dollars of Health Services for their employees and trying to identify the right servicers to coordinate that. I would expect that to continue, and it will evolve through applications of new technologies so the stripping the profit incentive i think is a headline to try to make sure the best value is being delivered and theres fair returns being shared back to cigna, were largely a servicebased, feebased, transparent servicer of employer clients. We believe in alignment and transparency as a positive force Going Forward. So the stripping of the profit motive i think speaks more 20 the broad industry versus an aso contract david, you spent a lot of time, of course, pursuing consolidation. It didnt happen i think you may still be in a dispute with your onetime partner, anthem, about a breakup fee. When you look at aetnas decision to sell to cvs, does that change your view in terms of reengaging we view that the industry as a whole will continue to go through some reformatting. Stepping back, if you look at the industry as a whole, the aca revenue influx has largely subsided and established a new normal Many Companies have been confronting growth challenges. Many companies have confronted the inability to further consolidate horizontally and looking at different configurations cignas uniquely positioned. We have a global platform. We have additional horizontal opportunities in the United States as well as vertical opportunities more broadly beyond that, we seek the partner to drive ongoing growth. Weve had a couple targeted acquisitions in 2017 one in the technology space, one outside the United States in the middle east. And we see future m a as an important opportunity Going Forward aided by our tremendous current Capital Position we sit on billions of dollars of deployable capital as well as Balance Sheet leverage, which is further opportunity to create value for our shareholders so more times in the market as a buyer as opposed to anything else. David, thank you as always for your time. We appreciate it. Good to be with you today thank you. Youre welcome. David cordani, the ceo of cigna. Were counting down to super bowl sunday. Cnbc asked the eagles and patriots who their favorite ceos are. Amazon ceo just because of how successful hes been i like amazon a lot, just the convenience of all of it i look up to him a lot i think he has a lot of ideas where he pushes the limit with spacex and stuff my uncle is the ceo for Mattel Toy Company i look up to him warren buffett, Berkshire Hathaway jeff bezos, amazon just because theyre so successful ive always wanted to shake the hand of whoever created chipotle dont miss tomorrow, jim and myself live in minneapolis ahead of sundays big game baquawk on the street is ck in a minute. Dow is down 61 barry murrey when you have a really traumatic injury, we have a short amount of time to get our patient to the hospital with good results. We call that the golden hour. Evaluating patients remotely is where i think we have a potential to make a difference. barry murrey we would save a lot of lives if we could bring the doctor to the patient. Verizon is racing to build the first and most powerful 5g network that will enable things like precision robotic surgery from thousands of miles away. As we get faster wireless connections, itll be possible to be able to operate on a patient in a way that was just not possible before. When i move my hand, the robot on the other side will mimic the movement, with almost no delay. Who knew a scalpel could work thousands of miles away . Is ge about to get kicked out of the Dow Jones Industrial average . Deutsch bank out with a bold new call on the stock. Check out our interview with the analyst behind the call at tradingnation. Cnbc. Com more squawk on the street in a moment now lets get to the cme group in chicago and Rick Santelli with the Santelli Exchange hi, melissa lee id like to welcome my guess, dr. Judy shelton thank you for taking the time. Thanks for having me, rick. So yesterday was Janet Yellens last meeting. Of course, well be swearing in jay powell in early february, which is what were in right now. Did you have any observations on the february, but maybe more importantly, you know, whatever the normalized natural rate is, its going to be a lot lower than many thought. Three or four tightenings potential next year. Maybe the curve inverts. Can you weigh in well, i think that things are going so well in so many ways economically for our country weve seen signs of real strength in the economy. I think that the tax reform and Regulatory Reform policy plans are doing so much to put us on a much firmer foundation for productive growth. So in a way, were in a good spot when i see how weary the market is, i worry that somehow Monetary Policy could mess it up it looks like we could take higher rates are, and we talk about the need to normalize. For me, the problem is theres no such thing as normalizing in the way the fed rates. We saw the growth in excess reserves that banks keep in sterile deposits at the federal reserve. And you would have thought with this growth that that 2 trillion would have gone down. If you look year to year, there is actually been over 10 increase in those excess reserves so im concerned that as we raise rates, were just taking more money out of the pipeline that could be funding Small Business and creating new jobs interesting and the other thing that i find fascinating is that with all the weak dollar issues out there, the fact that a middle class family buying things that are exported by other countries has to pay up, yet we dont see huge amounts of inflation its up a bit but not as high as it was in 2014 but more important, this weak dollar is fascinating. Repatriation of over 3 trillion of big multinational untaxed earnings overseas may be coming back and that leads to my next question that money overseas isnt sitting in a dirt pile its invested in things. Could some of the market volatility currently be the notion that some of that is being unlodged from positions as its going to be repatriated your final thoughts. It could be related to that its counter intuitive the behavior of the dollar you would think that since weve been broadcasting higher rates, you would think that with this improved Business Environment that more money would be chasing u. S. Companies and going into our stock market and that would increase demand for the dollar and raise the value. Were not seeing that. I think the companies accumulating dollars overseas have invested them and some of those investments might be dollar denominated. Some might be euro denominated interesting dr. Judy it could translate back into the dollar we have to leave it there never enough time. You bring up a good point. We dont know what currencies its really in thank you. Next time were going to dig deeper david faber, back to you okay. Thank you, mr. Santelli. Want to update viewers on qualcomm this morning and the on going battle against that offer from broadcom. Qual co qualcomm shares are down. That does seem to be pressuring shares of qualcomm right now overall, potential weakness it seems to a certain extent in the ecosystem surrounding the sale of wireless devices. Speaking to people close to broadcom, what im picking up from them when is when they look at the number and guidance from qualcomm in light of that 7. 50 number that qualcomm came out with saying they could achieve in fiscal year 19 theyre concerned. He said we dont see that is a real possibility, particularly given the numbers. Now whether that actually plays through, no. I mean, they still are expected to raise their bid for qualcomm. And that continues to be what i am hearing that would happen in the short term but perhaps they will take into effect and account for diminished earnings near term for the company and their continued belief that qualcomm wont be able to reach those numbers that it put out as its own target in defense, of course, against broadcom as i reported previously, broadcom is trying to allay the fears of qualcomm shareholders the company was considering going hell or high waiter, committing to do anything and toef everything to get the deal done. Its more likely they would go to a massive breakup fee, the biggest breakup fee of all time in order to allay the fears. And then also includes some sort of material adverse effect clause on the target well see where all this plays out. Well be hearing most likely from broadcom in relation to what will be an increased bid for qualcomm in the near term given the time thats gone by. All right. Now lets get over to jon fortt talking about time, time to get a look at what is coming up on squawk alley. David, well, paypal down more than 6 thismorning after ebay announced its ditching them as the primary payment processor. We have chief Financial Officer of paypal who is going to explain whats next r at mpy mi up. Foth in stocks and bonds. They dont invest in alternatives or municipal strategies. What people really invest in is what they hope to get out of life. But helping them get there means you cant approach investing from just one point of view. Because its only when you collaborate and crosspollinate many points of view that Something Wonderful can happen. Those people might just get what they want out of life. Or they could get even more. Welcome back to squawk on the street. Check out what is happening with stocks trying to stage this come back after losses on the opening bell not helping matters, consumer staples. Losses are led by hershey, coty and sysco and altrea squawk alley starts in a moment your brain changes as you get older. But prevagen helps your brain with an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. Good morning 8 00 a. M. At facebook head