Transcripts For CNBC Squawk Box 20240713

We have a huge lineup this morning. Steven mnuchin will join us. That is at 7 45 a. M. Eastern at 8 00, well get reaction from political strategist hes been out all over the place what is there to talk about . A few things what did we say . President trump is ripping apple . Ive said all along, apple has to get on board. Switching sides no. Im not. It is not apples responsibility to keep us safe the issue is how much theyve been cooperating it does sound like the company has been pretty responsive they dont want to create an encryption key to allow any government to get any phone. They should cooperate in cases like this. I hope they are cooperating behind the scenes. I do want to see them cooperate on some of these but i can under the broader issue. The journals point is that in the meantime, apple shouldnt be seen as a public enemy no. So barr wants cooperation. Right but not just on this issue. He wants to create a larger issue. He wants to establish and create law for life that would allow him to go back to the apples of the world of the future and get this information it is about establishing the precedent. Thats what tim cook doesnt want President Trump called out apple tweeting, we are helping apple all of the time on trade and they refuse to unlock phones used by killers, drug dealers and other violent elements they will have to step up to the plate and help our great country now, make America Great again. That was over the difference of apple refusing to unlock the inpho iphone used by the shooter in florida this month apple doesnt want to open the backdoor apples point in the past, remember, this came up in december 2015 in the San Bernardino shootings there, apples point is that if it created the key, it is not only the United States that could demand that key but china and others it is an independent Company Unless we want americas huawei. You help the government when you can but you are not an arm of the security of the United States exactly unless we want a huawei, which we dont the great complication for tim cook now is that he has done this remarkable job so far threading this needle with the relationship with the president. They spend time on the phone together the press conference the time he went to austin. Right it is very difficult to be on the other end of the tweet this sounds like a little thanksgiving dinner squaubl. This isnt going to stop people from showing up for years at Family Functions they have enough selfinterest this is happening at the same time we are signing the trade agreement today. The interests of china and the United States are being tampered down thats good news for apple i cant tell where united edge care will open 3. 90 adjusted down around 3. 78 there is a trade that we have this morning thats a 300 stock,t itially moving up a little bit i was reading some crazy thing it was the huff post critique of the debate by cnn. I have to show you this. The questions seem perfectly reasonable, which is hard for me to say the huff post was so mad saying they ruined the debate by asking centrist questions someone asked Bernie Sanders in iowa, what will happen to these Insurance Companies if they dont do any business anymore in health care. Thats a good question. Thats what i thought the huff post is saying, of course we are going to destroy all of these profit mongering companies. Thats the only reason we have these problems i dont know the person on the stage for cnn, they kept coming back to things that were so horrible some of the other questions seemed reasonable too but that just shows you, the divide you can get someone you think is over here. No matter what you say, they are going to have people on both sides arguing with you well talk a little about the election and the debate. Trade also came up here is Bernie Sanders talking about the lack of environmental elections in the new nafta trade deal i think it is not so easy to put together new trade legislation. If this is past, i think it will set us back a number of years. Bottom line here, i am sick and tired of trade agreements well bring you more of last nights debate throughout the morning. The fire works were at the end. It was not as explosive as people anticipated apparently, Bernie Sanders tried to shake her hand and she kind of rebuffed him. Although they are talking. I dont know where does the whole . He said, i never said it. I never said a woman couldnt get elected. There is a video of me 30 years ago saying i could get elected she chose not to take it head on she said, the only two people here that have won every election are the women saying it is not fair, so what is the rational behind that i have no idea. So what is the reason . Who said they wanted this to happen i think what hes trying to do is i think hes trying to get a bernie or warren in to face trump do you immediately see this horrible motive conspiracy you are the one that brought it up . What happened to bernie last time you mean because of the super delegates . Without the super delegates, he would have won. Would that make him mad enough to say a woman cant win . I dont know. I dont know what happened behind closed doors. The two of them. I have no connections on my side coming up, when we return well get you ready for the phase one trade deal signing live from Washington Well get you there after the break. Still to come, two big banks expected to report today well hear from them in the next half hour. Squawk returns after this. Announcer todays big number, 136. 5 billion thats how much money Venture Capital firms invested in u. S. Based Companies Last year. Wn slightly from 2018 but still near record levels according to data from pitch book some things are too important to do yourself. Get customized security with 24 7 monitoring from xfinity home. Awarded the best professionally installed system by cnet. Simple. Easy. Awesome. Call, click or visit a store today. A very important day for the worlds two largest economies. Signing the phase one trade agreement after nearly 18 months of simmering trade war well learn more about what will happen to all of the tariffs in place. Well get to kayla for the details. Reporter negotiators are already celebrating, holding a small private dinner last night to cap off two years of inperson talks that saw new tariffs added to exported goods added by both countries. There are still questions of when all of those tariffs will be removed in a statement yesterday said, there are no other other oral or written agreements or future reduction of tariffs any rumors to the contrary are categorically false. Looking to talks to make sure china sticks to phase one. The tariffs are on until there is a breakthrough. Last night, saying could come during phase two talks if the president gets a phase two quickly, hell consider releasing tariffs as part of phase two. Nothing to do with the election or anything else no secret agreements he will go to beijing at a later today date to start those talks. Generating positive economic momentum todays event is being billed as a capstone event the most formal and large scale since Brett Kavanaugh which happened against the same back drop last year thank you for that report for more on what we can expect, bringing in the former deputy trade representative good morning to you. Are you celebrating the same way folks in the white house were . Im celebrating the fact that we are getting a reset in the arrangement with china what we are not celebrating is the fact that the toughest issues at the heart of the 301 action by all accounts still have not been addressed. The clearest fact that the u. S. Will keep tariffs are up to 20 of 370 billion of annual reports from china that is twothirds of all of the imports. That tells you on its face that u. S. Believes it has made some progress the vast interest are not yet part of a deal how do you handicap our ability to hold china accountable for purchases made over the next few years. There are the elements of a trade agreement thats not something we should see as a trade negotiation. I think they will use a variety of tools the metrics will be very hard to show and next to impossible to show metrics before the election that is part of this calculation which is china is willing to make promises that is not likely to be seen until 2021, 2022 the heart of the issues, what is the chance that they do get resolved clearly the administration would want to resolve those hardest issues first the fact that weve had two years, we get a phase one deal again, there is some progress. The fact that the biggest, toughest issues that underscore the 301 action are not part of this deal by all accounts. Really tells us that china is slow walking this because they dont want to make the kind of reforms the u. S. Needs because china believes it is in their interest to grow this economy. I think it is highly unlikely those issues will get resolved before this election it remains unlikely and very tough for this president in the second term or a new president to resolve those issues but we have to keep the pressure on the question is whether these high tariffs being performed whether they are worth the price for the nature of the phase two agreement in 2022 and beyond you bring in the key pressure they want to see what happens in the election too what do you think the outcome is or if a democrat wins, rolls off the tariffs and picks up again what happens in either scenario. Particularly, the chinese are slow walking this not because of the election they are slow walking because they dont want to do this largely because they think the imbalance in this type of industrial policy they have that underlies this risk to the economy. They dont want to make these changes. I guess the idea of rolling off the tariffs though, that wouldnt make them more likely to signing it at this point. The high tariffs imposed have been the basis on which china has made the concessions they made today if you look at the underlying action on this, which is the 301 report, that started to deal with the fundamental problem the fact that we are keeping tariffs on 370 billion a year imports the bulk of this hasnt been resolved. China agreed 10 years ago this they would stop the forced Technology Transfers they are making commitments 10 years later that should be enforceable. There is progress. There is a small portion of the pie. More needs to be done. What would you do with Huawei Huawei, one, should be treated completely separately from a trade agreement i dont have any intelligence information but when the u. S. Used huawei as a National Security threat or as having violated u. S. Laws subject to criminal penalties or sanctions, the u. S. Should pursue that but it should not be part of a trade off of National Security for economic interest thank you for your perspective as we await this signing. Thank you. When we return, our big interer view with treasury secretary mnuchin will get underway and more from steve bannon and kyle bass well be right back. Welcome back, underarmor unveiling its new Advertising Campaign in new york on saturday tweeting this image, the slogan is, the only way is through. A theme that is supposed to touch people facing struggles. The event in baltimore you can have all of the talent in the world and just fall out of bed but that is only going to take you so far you have to go through the hard work and the days you dont want to get out of bed. That is the difference between good and great the greats do things they dont always want to do. I guess we are all great. Forgetting out of bed every day. Sharz if you want to take a look at whats happening with that stock have been higher on the up swing lately. Was there a time in your life you thought 6 00 a. M. Was early. There was a time when i first started working, i thought 10 00 a. M. Was early when i was a reporter with wall street journal, i would be late at 10 00 a. M you worked late. Right you were like a lawyer, you showed up at 10 00 i can remember trying to get up to go skiing when i was in college. Something you really wanted to do . Yeah. But at 6 00 a. M. 6 00 a. M. Looks pretty good these days we are belly aching again about our kushy jobs you can read more about that story on cnbc. Com. What time did you get to bed last night 9 05. You late. About 10 00. Ill keep my distance you need sleep the neurotransmitters. I know one. Through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From using feedback to innovate. To introducing products faster. To managing website inventory. And network bandwidth. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. But in my mind im still 25. Thats why i take osteo biflex, to keep me moving the way i was made to. It nourishes and strengthens my joints for the long term. Osteo biflex now in triple strength plus magnesium. Welcome back target out with Holiday Season Sales Numbers they are calling disappointing. November sales up by 1. 4 . That is below the 3 to 4 Growth Guidance they had given before hand. Digital sales were up. Saying the company faced some challenges in key merchandising categories earlier, it said on an adjusted basis, it would be looking for earnings of 1. 54 to 1. 74 street was looking for 1. 70 on this that might make you expect the numbers would come at the lower side of the range. They are maintaining 1. 54 to 1. 74. Joining us now is charlie oshea, moody analyst. A lot to look at here. They say apparel was up by about 5 essentials and beauty was up by about 7 essentials up about 6 they ran into some trouble, home was down about 1 . Toys was flat and electronics was down about 6 . Toys were up from last year as toys r us were facing problems and closing its doors. Below what the company was anticipating apparel is a highmargin business what do you think. Looking at the disappointing Sales Numbers. Maybe they are able to maintain their guidance it seems like they werent chasing sales. The electronics is interesting that means one of those three guys is likely up. Is that weak overall causing concerns for some of those knee jerk reaction down 8 this was better than expected numbers. I think the costco results we saw earlier up 8 dort 5 roughly in the u. S that had to come from somebody a lot of overlap in costco and target i think in that batter, costco won, in electronics, either amazon, costco or best buy took back the market. Weve heard how strong the consumer has been i think that is the better question is that the problem for target or other retailers what is going on in electronics . Best buy is doing well best buy is doing very well this is based on a guess i think best buy had a good holiday. The problem is it is highly promotional. If target is preserving margins. Talking about that theyd be able to do just fine and theyd be able to make up for this in some places. Yes, i saw a b of a estimate for holiday sales. Costco was up 8. 5, and target is waund change weve seen some softness in other sectors. In the core categories home was heavily promoted during the holidays by the Department Stores there are bright spots here. If they are still sticking with the 1 clt 54 1. 74 earnings i know margins are good for them when it comes to issues of the delivery they use the stores for fulfillment. 19 is lower than it has been but the base is getting bigger the softness translates but 19 is nothing to sneeze at. Target shares down around 18 on this news earnings in for blackrock at 8. 34 on an adjusted basis beating estimate of 7. 69 quite handily. Revenue coming in above consens consensus. It looks unchanged well keep our eyes on that stock this morning well break down the numbers and what it could mean for the broader sector u. S. And china is expected to seal the phase one trade deal. The deal tails and what remains unsolved a remainder you can always watch us live on the go on the cnbc app. Well be right back. People take Museum Quality photos of things every day. Like grapefruits. We invented the everpopular feet on the beach genre. And that dont forget your parking spot genre. We share photos of friends and food and friends as food. And because were so good at taking photos were also really good at doing taxes. People can be good at anything. Yes, even taxes. Intuit turbotax. United health was out pretty good numbers. Joining us with a look at the company. Thanks for helping kyle, thank you for joining us how was the number overall the adjusted number was good. Guidance was good. Maintain guidance for 2020 that was what most people were expecting. So no surprise there the beat was good. 3. 3. 90 versus 3. 78 thats okay. You can kind of call it a high quality in line quarter. I think it is fine the set up here is very different from what we had three months ago if you remember, three months ago, United Health had the strongest stock gain in more than 10 years when they reported Third Quarter earnings that was all about the expectations coming in were very negative, very low the quarter was a little stronger than this one what drives it to this point. You are at a medical loss ratio. A lot of pbm type of stuff it used to be the core they are almost equal now. Yes thats a little bit of a misnomer so it is still the bred and butter business you got to look at absolutely. Are you ready for a World Without any of these companies and single payer im not not at all it is not going to happen. Is the state of iowa prepared for this apparently some of the Democratic Candidates think thats not a problem some of these people dont need jobs and the insurance is the solution. Anything is possible. Having that kind of dramatic transformational change seems pretty unlikely. Thanks. Becky, what is coming up we are expecting bank of americas numbers in the next few minutes. Well bring them to you. More to come on targets big holiday sales miss that stock now down about 8. 2 squawk box will be right back. Apps are used everywhere. Except work. Why is that . Is it because people love filling out forms . Maybe they like checking with their supervisor to see how much Vacation Time they have. Or sending corporate their expense reports. Ill let you in on a little secret. They dont. By empowering employees to manage their own tasks, paycom frees you to focus on the business of business. To learn more, visit paycom. Com i cowe can do theyour screening at her house. Hi. This is the man thats going to check your eyes grandma. Cognizant ai solutions are helping Healthcare Companies advance diagnostics and prevent blindness in patients with diabetes. Everything looks good. You have beautiful eyes. Back to squawk box this morning. Bank of america earnings just crossed. Good morning good morning. A nice little beat not as big as we saw yesterday from jp morgan revenue 22. 5 versus 22. 2 eps at 74 cents with expectation of 0. 68. Bank of america only has a slight beat. 1. 8 billion the are he have knew for fixed income expectation was 1. 7 billion 1 billion versus expectation of 1. 1 billion this is probably the biggest gap. Going to the more core part of the business, Interest Rate affected areas, Net Interest Income holding up nicely 12. 3 billion. Expectation was 12. 1 billion. The way this held up was a little different from yesterday. The Net Interest Margin down seven basis points quarter on quarter to 2. 35 sort of on line with expectations but didnt get a surprise like others did yesterday. Loan growth was stronger than others so loan growth coming at 6 growth overall expenses, always an important part in line rather than beating. They continue to cut expenses. They were up fraction kwally to 13. 2 billion. Efficient si ratio at 59 . Return on equity 50. 9 right in the middle of jp morgan at 15 and citigroup at 12 up about 6 . Was up about 0. 7 yesterday. Similar to weak gains we saw yesterday. Not as big a beat as jp morgan and citi but still a nice beat did they say anything about the health of the consumer so chairman ceo said in a steadily growing economy marked by solidly climbing economy, we produced another strong quarter. In general in terms of the numbers, very clear strong credit quality still no issues there. Definitely a theme of all of the Earnings Calls loan growth coming through the snap shot take away is nothing to worry about there the corporate picked up in q4, particularly and that drove increased activity Wealth Management as well. Obviously that helps because the economy has picked up, markets have picked up and you get a bit of the income from that. I havent got the full comments. Well listen about specifically the consumer but it seems like a nice healthy economy playing out too. Up to 4 now. Hey, wilf, thank you for that well talk to you more as well we want to bring in mike santoli and Portfolio Manager and also a cnbc contributor your instant Market Reaction. The big banks numbers are kind of good right now the fed keeps talking about it i think its a story that will be consistent i think the market has a better appreciation for that right now. Its about as long as you think it goes. The train left the station. But theyre still not expensive. There was so much talk about earnings season for banks. Expectations are high. But if you go back to 2018, that Fourth Quarter was so bad for all of these banks because Wealth Management business, trading business, any activity was all pretty much zero to negative so i think its a catch up to that and these stocks ran ahead of it. Now this is good to be beaten by bank of america, jp morgan had good numbers wells fargo, we all expected that t. That was kitchen sink. Probably a little while to go some people look at that as a bullish sign it is a bullish sign if you think the rest of their peers are really expensive but you have really High Quality Companies. They have a really goody verse identified businesses but if global picks up these are the companies that you want to be in as well. And you have exposure. If the stock is not super cheap at all relative to the big guys accept on a dividend yield basis. Some volatility and the offset of that if the bank is going to go down thats going to go down with it as well. Youre better off playing with higher qualify valuation matters. These are Good Companies to own. Does that make more sense to you . Given where the prices are. I think you pay for quality when you have Something Like jp morgan and bank of america theres some regionals to touch. They had great earnings yesterday but trades at high values you have to worry about regionals because their focus is all on lending they dont get the Wealth Management and some of the other m a. I do think that you can be in there. Theyre cheaper. Theyre cheaper for a reason but you have to be careful because what is credit quality were going to find out those earnings coming out today. Were pretty well diversified. We have it in financials across the board. You just have to pick your spots on it. When we returned Goldman Sachs set to report in the next few minutes. Well bring you the numbers as soon as they hit the tank. Plus later we have a huge lineup. A trade deal signing later today. They have both been very hawkish on china and well see what they think about the deal and then minority leader Kevin Mccarthy squawk box will be right back. Dont get mad. Get e trade, dawg. Take the personal assessment i love the new myww program, because its tailored to you and get matched with a proven weight loss plan. Find out which customized plan can make losing weight easier for you myww join for free and get two months free but in my mind im still 25. Thats why i take osteo biflex, to keep me moving the way i was made to. It nourishes and strengthens my joints for the long term. Osteo biflex now in triple strength plus magnesium. The economy and future deals with china. Goldman sachs ready to report the numbers and Market Reaction coming up. And from friends to frenimies. President trump with a new bone to pick with tim cook. A new hour of squawk box begins right now. Welcome back to squawk box on cnbc. Take a look at u. S. Equity futures at this hour we just headed to bank of america. But the dow looks like it would open up higher 23 points higher s p 500 up above 3 points. We have the nasdaq up about 13 points as earnings roll in also coming up ahead of expectations as well and we should tell you but later this hour we have a big lineup including treasury secretary thats going to be joining us ahead of the signing of that phase one trade deal with china. Heres some of the other stories making headlines at this hour President Trump is saying apple is refusing to unlock phones used by criminals. Its related to the shooting deathle of those at the naval station last month and in the meantime in the earnings front, bank of america and black rock beating bottom line estimates in their Earnings Report that was 6 cents better than consensus. Black rock reported a profit of 8. 34 a share compared to estimates of 7. 69 also talking about how its assets under management is 7. 43 trillion with the tee and then a comparable sales increase which the retailer says is disappointing. That stock is off by 6. 7 this morning. Target Ceo Brian Cornell says the company faced some challenges in key merchandise categories still target is reaffirming its prior Fourth Quarter Earnings Guidance they said earlier they anticipated earnings the margins were Strong Enough that they can stay within that guidance at some point part of this is because they were able to do well in important category where the margins are much higher. Its in terms of online sales and fulfilling to stores. You guys are still here i have a strong sense of de deja vu. Well, as long as youre here, lets keep talking should we do that . Lets start with targets holiday sales. Oh it says it right here. So its all planned. Here again is the managing partner and Portfolio Manager. Also a cnbc contributor. A second intro is cool Everybody Knows mike santoli has been doing this so long. Its still pretty good is this a time to say that. I think its pretty specific to what they were selling in terms of electronics they have run up so far so quickly. Target shares were up 94 last year. They were the 4th. Its about 110 before the last Earnings Report it had a big Fourth Quarter run. It does offer a little bit of a gut check. The premise is very strong economy. Enough to go around. Going to have it figured out its not going to matter that much margins in retail are not that high. So to your point this is a business its very hard to invest longterm. The margins keep on declining. This is where you have the biggest deflation. They have to spend on technology and leverage their all time high was at least 130 and change. They are trading just off of that all time high. This was a situation where target always traded at a discount to walmart if you look at price to earnings and then rebilled that valuation. The market put them in the elite class. Its still kind of there even with the pull back today but i think it will cause some more questions about what it means. Its going to be indicative of earnings season where if you dont beat bank of america beat by 10 . Sosome of these stocks run up so far that if youre in loin or just a couple of cents ahead youll get the pull back. Its interesting to see them both down on this by 1. 5 and to joes point i dont think this was an indication that the consumer was under pressure. Most likely not not under pressure but the question is where did the market get to in terms of thinking so i have been saying this in a couple of months the idea that we have a 2 gdp economy was a huge relief because everyone was panicked about a recession. At some price level for these stocks and the market, a roughly 2 economy comes as a slight disappointment perhaps so thats where were trying to figure out the right levels. So you mention 10 on bank of america and they say its monotonous. Id say consistently good there was a time when we had to worry about the solvency the story is slow and steady its never good so you are dazzled by bank of america. Wells fargo obviously has his own problems thats a separate issue the other side is so many people, thats also going to get a base on it if youre going to buy, its the High Quality Companies that are going to have stronger earnings and you have to look at valuation. Thats really going to matter when you have Companies Trading at 20, 25 times. Assets under management are 7. 43 trillion but in terms of where the funds are going. I think thats right. Thats across fixed income inequalities im guessing. They had 2 trillion in active funds and then 550 billion in cash. I mean i would imagine its because bond flows have been strong as well perhaps thats the difference. Becky to your point on Asset Management, you think if you listen to jp morgan, bank of america also has a big Wealth Management the banks that are going to have Wealth Management are going to do well. I totally mess that up. Its the opposite. 110 billion went into active. We want to finish up with apple. It makes targets gains, i guess theyre similar because of double but in terms of market cap its unbelievable. But now we have got some of these i dont know what you call this latest concern i think if you look at apple, its 24 times earnings its 1. 3 trillion company its a Great Company but its really going to blowout its earnings just to keep the story going. So this is a stock thats priced to perfect perfection. I would be worried at these levels because everything has to go right for apple and the Earnings Call is interesting. But a year ago they said things are slowing down the stock is up 70 . I agree. I agree with what youre saying. Only on its own terms is it richly valued. All the earnings are Free Cash Flow the way the market is pricing the steady very Profitable Companies right now this is where theyre trading. Trading like alphabet. Alphabet is still cheaper but if you look at it on a cash flow basis, google has better growth Going Forward thats the argument, right . So i would pay i would buy google today and apple is trading is this it . Im not sure. I think i gambled if we ask nice. Were going to talk more about what were seeing in the markets. Also the New York Times columnist and author of tightrope. Nick will join us to talk about the trade deal and much more dow futures indicated by 10. S p futures up by 3. The nasdaq up by 13. Squawk box will be right back. Some things are too important to do yourself. Get customized security with 24 7 monitoring from xfinity home. Awarded the best professionally installed system by cnet. Simple. Easy. Awesome. Call, click or visit a store today. Amazons feud with fedex appears to be over the ecommerce giant notifying Third Party Merchants yesterday that they could use fedexs Ground Network to ship orders placed under amazons prime program. And that comes after he imposed a ban over the service on performance issues. The company signing a multiyear deal to lock in supplies and protein as the main ingredient. Thats the main ingredient in plant based burgers and sausage. In terms of that deal, it hasnt been disclosed but it expands an existing ten Year Partnership and halted for volatility. I just think when someone should have thought about maybe theres some other way yellow pea protein dont eat the snow. Theyre putting in a lot of protein bars now its all. Yellow pea. Who doesnt want to play. Protein bars, you have a big stash. You have a big stash. A big stash of the protein bars. We starve, we freeze. Thats okay im all good i have kind protein bars im taking and cashews and dried fruit. If youre nice ill share. Its squirrels for the winter its sad. Its okay well be good. In the meantime the Trump Administration is reportedly close to publishing new rules that would vastly expand its powers to block shipments of foreign made goods they placed them on a trade blacklist in may citing National Security concerns. That allowed the United States to restrict sales of u. S. Made goods to huawei. Golden sac Goldman Sachs numbers at any minute. And todays signing of the phase one deal with china and much more squawk box coming right back time now for todays after lack trivia question how many times has tom brady been named super bowl mvp. The answer when cnbc squawk box returns. Us. We are committing to aflac. Why aflac . Because Health Insurance doesnt always pay it all. Aflac after surgery we had extra bills followed up visits, deductibles. 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Talk, talk now the answer to todays after lack trivia question, how many times has tom brady been named super bowl mvp the answer, 4. We are just minutes away from our treasury secretary who will share his thoughts on the u. S. China trade deal we want to bring in the columnist that won his first prize over 30 years ago. Hes now the author of a new book called tightrope. Were going to talk about that in just a moment really about some of the people considered forgotten in this country. I want to get your thoughts on this phase one deal and also maybe in a broader sense, the bigger relationship between the u. S. And china and where you see it headed. Sure. Im going to say the deal is a little at least what we know of it seems to be a little bit better than we might have expected i do have concerns about how much it will be implemented. The usgr about a year and a half ago said 8 times refused to implemented promises about forced Technology Transfers. Its just the tip of the iceberg. Will this be adhered to any more than the previous 8 have to wonder about whether the gains that appear to be real are worth the upheaval i also think at the end of the day probably this year the economic and trade issues will be secondary and issues about a million muslims which the administration they work with allies and raise the cost to china and a million people. Do you believe that theyll ever be able to get a deal on the second phase the true issues around intellectual properties. I am skeptical that there will be a real deal on things like state subsidies on something really substantial on intellectual property but i mean, it relates a little to our book but at the end of the day we want to increase american competitiveness that will have less to do with our intellectual property rules and more to invest Human Capital in the u. S. The other issue is we had the debate last night and i want you to relate to your book and maybe to the economy in terms of thinking about the economic tightrope that you talk about in the book where you really highlight and talk about this community that you grew up in. The question i had is are there any of the Democratic Candidates that are out there, who do you think is actually speaking to the people that you write about in your book so i think there is a lot of ambivalence. A lot of them identify social conservatives. And Bernie Sanders speaks in a populist way about the working class. The other candidates talk about the middle class its what you consider it theres a deep suspicion of him for other reasons. On the other hand, the populist appeals that talk about increasing labor reputations that resinates the minimum wage the federal minimum wage, if it had kept pace with inflation and productive would now be more than 22 an hour people had felt that across the country. How do you square the idea of what happened. At the same time what feels like historic unemployment the people in my hometown obviously theres more jobs nationwide available theres so many people that are deeply wounded and who werent available and partly because of lack of investment in Human Capital and also half of prime age men that are dropped out of the labor force take a pain pill every day. So we have got we have a broader problem than just the labor market we have a problem with a huge part of the american demographic. That tends to happen when you have huge social changes and when you have economic unrest. But its striking that these are global changes so in denmark it pays almost 20 an hour as a minimum wage but its not completely required minimum wage its a market clearing wage but the reason it can do that is a low end member of the labor force in denmark is a High School Graduate that is actually highly productive while somebody on the low end of the u. S. Labor market is not a High School Graduate is maybe only borderline literal and may well have mental issues dependency issues, may have a drivers license suspended so they cant commute regularly. We need to do more to also invest in the labor force itself you talk about this at the end of the book. The kids on our school bus, a quarter of whom are now dead, what would have made more difference than Everything Else is Early Childhood interventions. Thats the moment when we could have got them on track so they could have competed at school and they could have found they could have overcome other disadvantages that they had. Every study finds thats just the highest return investment that we have in the country. So a lot of parallels and so many people have come out to me and said i grew up in maine, i grew up in tennessee, i grew up in texas. Can i call you a hill billy you can a lot of the same i take a couple of advil every morning. But thats just me its not west, east, south, north. Its thriving america and left behind america often right next to each other. The book is called tightrope. Interesting. Good to be with you. Well be joined by treasury secretary steven mununuchin and then the investor kyle bass will join steve bannon. Reaction and that and much more coming up later in the show House Minority whip, Kevin Mccarthy is our guest. Squawk box will be right back. New york state is taking business to the next level. Supporting Innovative Companies that will shape tomorrow and Building Workforce development and tuitionfree College Programs to generate the talent companies need. With a 150 billion investment in state of the art, modern infrastructure, and a nationleading commitment to lowcost clean energy, new york is doing more than any other state to build for the future of your business. New york state, the state of the future. Learn more at esd. Ny. Gov. Goldman sachs is down a little bit right now hey, wilf. Just diving into it, it looks like on the headline theres a one off. 9. 96 billion and the expectation is 8. 5 billion the eps expectation was 546. It came in at 469 on a reported basis. Looks like a miss but theres a 1. 1 million litigation charge in there if you took that out completely it would be 764 so a huge beat theres always a couple of hundred million but typical to expect a couple of hundred million. And assuming that the litigation charge was a quarter of the size it should be 7 or so eps. Its still a big beat on both lines. I am just looking at this as we go the Investment Banking revenue came in at 1. 2 billion so thats out of expectation. And income trading like the others its a beat and its a healthy beat its not like jp morgan. 1. 8 billion the expectation was for 1. 2 billion. Asset management coming so that page these are double sided but ill keep diving into the numbers for the individual lines. And part of Asset Management to come in from 3 billion 3 billion Asset Management expectation was 2 billion. Its the last month coming into this announce that youre reporting structure about a week ago its up about 5 relative to the banks index coming up this week and about 9 coming into this. Theres a big confusion here on the eps. 469 reported if you fully strip out the litigation charge then its 764 the expectation 546 somewhere in between that its a beat on both lines. Mike santoli is here too because we asked him nicely. I do think that its about exactly how much of this extra litigation expense, a year ago it was about a half a billion dollars in legal charges that suggests that t increase of expenses over the one year is about a half who knows if the last year is normalized i think the upside came in the Asset Management business. I guess the area of the firm thats now being reemphasized and a steadier higher value business in terms of the way the street treats it its a very good number. All around the stock has been on a great run. How much this has built in. We said 3 billion revenue expectation. Basically got rid of the segment in investment and lending. And the investing part went into Asset Management nonetheless, this is still a beat relative to expegations, readjusted expectations over the last week but the question mark as they go through it and at the end of the month its whether people want to put the full multiple that a division would have on that full 3 billion of revenue or whether theyre getting their heads around what investing this is. How sustainable it is. How much growth would come from that area in the past. A big beat in that department and fixed income trading look at the headline revenue and of course whatever department anything falls into, readjusted departments, it all adds up to the same thing theyre expecting 8. 5 billion revenue and they have close to 10 billion revenue. Its more than the litigation charges they were expecting. Exactly. So you have a decent beat whatever happens still some question marks over the individual departments youll learn about more on a call and the investor day. A decent beat. And were up 9 . Were not through Bank Earnings season yet. We have a bunch of guys that are out. Bank of america and now Goldman Sachs today. I guess this is what you have been talking ability out performance. Thats been a tail wind. And theres enough to go around. Weve already heard this is the take up that youre getting right now. Thank you. You have done your homework. You do well. I want to thank you for being here with us. My pleasure. Its great to see you well check in with you later. I just add i love this mnuchin interview live camera. The treasury secretary will be joining us in about ten minutes time were getting ready for that right now. Its not going to happen immediately. Anyway, a reminder that you can always watch us live on the go on the cnbc app. Were coming right back. Coming up on squawk box, whats in phase one of the china trade deal well hear from treasury secretary Steven Mnuchin about the potential Economic Impact and then at the top of the hour, kyle bass discusses market implications and much more plus, House Minority leader Kevin Mccarthy joins us with his take on the deal and whats next for congress from washington to wall street, squawk box has your investments lvered. Wel be right back. 20 days out from the iowa caucus joining us now to discuss the top moments related to the economy as pollster and political strategist without reading. Its better not to read anything, frank. And you saw it yourself what were your impressions of the highlights, low lights and who stood out. No one took any shots, theres really no fireworks and in fact of all the debate so far this year, i found it to be the most its like Elizabeth Warren the best because i felt that she made a very strong appeal to women, not for her own candidacy but for women in general that this could be something significant in that. There are no losers but there werent any big winners either. Is there another run back to the top three for Elizabeth Warren and who wins New Hampshire and thats my job. You put me on the air to be able to prognosticate but it is so close in those states and i have been up in New Hampshire now for four days. I have been hitting the streets. I have been in half a dozen cities here. And theres no way to tell there arent many lawn signs out, not that much door knocking i was expecting to see politics everywhere, 24 7 and i havent seen it. Thats because everybody has to have her eyes focused on iowa. If you win iowa, your chances of being the even actual nominee are better than 50 or below 50 . Heres what interesting iowa goes first and iowa makes a statement but New Hampshire picks president s so i am focused on let me make it clear if joe biden can win iowa or New Hampshire, he is probably unstoppable and he had been falling in most surveys for the last 100 days. Hes easily at the top. He has not budged. Second or third moved around and not a lot of money being bet yet. I just dont know where else to look really. Let me be precise here. Joe biden is the number one nationwide and not in iowa and not in New Hampshire hes third or fourth up until the last few days. If he wins those states he will exceed expectations. Thats exactly what he needs to run the field. But should he lose iowa and New Hampshire it will be a tough challenge for him. Thank you we appreciate it you got it. Thanks. A historic moment will take place later this morning Steven Mnuchin, thank you for being here today. Its great to be with you. Walk us through we were beginning to get some of the details. We heard stories to you one of the most important components of the deal today. Its a very significant deal. It deals with intellectual Property Technology transfer. Deals with agriculture, structural issues, Financial Services, currency, purchases and fully enforcement agreements theres a dispute mechanism. What didnt make it in that you wish had theres a lot of complicated issues Technology Issues are in phase one. Theres other services away from Financial Services that will be in phase two theres certain additional Cyber Security issues. Theres still more issues to deal with. That has always been one of the issues that people who have watched over a long time and how would the United States follow up with that the president has been very clear from the beginning of this that if were going to have an agreement, it has to be a fully enforcement agreement. Did a great job with a very large group and we have people with every Single Agency involved in both the negotiating and the legal issues and he has developed a very thorough dispute resolution mechanism that makes this fully enforceab enforceable. Enforceable how does that mean the tariffs will be jacked back up if we feel like theyre not living up to their bargain. Thats correct. The president has the ability to put on additional tariffs. When it comes to intellectual property, that would mean that the chinese would have to make the admission that they have been stealing intellectual property is that the case its a question of what theyre going to do and china has agreed to put together very significant laws to change rules and regulations. Made very strong commitments to our companies. There will not be technology Going Forward. Thats a very big win for our Technology Companies and businesses and american workers. That was the huge Sticking Point when the deal talks first fell apart was that china didnt want to make the structural changes or agree to make laws. What happened to change that mind set i think these negotiations have been going on for a long period of time where china agreed they would work with us on the structural issues and reducing the trade deficit. This is a complicated agreement. This is the first time when we release the text and very detailed commitments on both sides. About 120 billion worth of goods. What would have to happen in order for those tariffs to be lifted and those tariffs too will be li lifted. In phase two there will be additional roll backs. Its really a question of it and its really focussing on enforcement but this gives china a big incentive to get back to the table and agree to the additional issues that are still unresolved. Mr. Secretary there was some work done last week about the effects of what the negotiations with china over the last year on gdp around 2 and it wasnt nearly as bad as what a lot of people have predicted. The effect on the economy. But there was an effect on manufacturing and Capital Spending and agricultural and farming and if all we got. It wasnt worth it look at the economic plan the economy is performing because of it. It was about regulatory relief and trade we have china phase one, there is a deal with japan a deal with korea. These are all going to have significantly positive effects on the 2020 economy. Do you foresee the day, and this is an overall philosophical question do you see the day when the United States and china are walking arm and arm into the future as allies and friends or is this the beginning of a decoupling or cold war and were always going to realize that were both vying for Global Leadership i think both sides are trying toward the first theres a lot of work to be done theres a billion 350 million in china theres a growing middle class if we can open up the economy where we can compete fairly, that will be great for american workers. Rick scott joined us yesterday. He has been a big china hawk for a long time. He thinks human rights should get wrapped into these talks is that likely to happen in phase two. I like the senator a lot. You have to negotiate different pieces at different times. This was an economic negotiation. Theres also discussions that were having with them on National Security issues we have discussions with them on iran and our expectations that comply with iran sanctions we had discussions on humanitarian issues and we continue to have discussions with them on defense issues and theres a lot of issues to address. Is it fair to assume in the future that the human rights aspect will not get wrapped into economic talks we as different people internally, china has different people were dealing with the vice premiere thats responsible for economic issues, secretary pompeo is dealing with his counter parts on these other issues. Speaking of, i wanted to get your thoughts. This larger phase two negotiation. And again as a National Security threat and also im looking at a comment from senator marco rubio and he says we cannot allow Chinese State directed Telecommunications Company to surpass american competitors how much of this is about National Security and how much of this is about having National Champions . Well, let me just say, i dont view huawei as a chess piece. We have said this repeatedly across the administration. When it comes to military networks and networks of all of our allies we want to make sure that the networks are fully secure. We want to make sure whether its china or any other state athlete. Thats also important. This is a great advantage for the u. S. They are both issues that are real does that mean that huawei is not going to be wrapped into these talks . Going back to this idea that china wanted to separate Security Issues and human rights issues in some cases but i think in some cases they wanted to wrap huawei back into these economic talks will huawei be part of the dialogue in phase two . Now that doesnt mean at different times i dont convey messages that are National Security issues to them or they dont convey messages back to us so we do have communications in these issues and theyre important. These are going to be negotiated separately we talked earlier. I like to have you on because its not all just, just analysis were talking about apple and what we want our role for apple to be in terms of helping with certain Security Issues that the United States has. Youve seen the latest President Trump would like more help with the pensacola situation. And then we look at huawei which we view as an arm of the Chinese Government how do we make sure that we dont try to really get apple in the same type of position as an arm of the government here why cant they be totally independent and we take care of our own security where do you come down on that i understand the president s view and it is absolutely critical for our Technology Companies to cooperate with Law Enforcement. This is a complicated issue. Were not looking for our Technology Companies to be controlled in anyway by the government we are looking for cooperation and theres areas of concern also being discussed creating an encryption key handed over to the government. Im not getting into the specifics of the conversations. Lets talk about where things stand with the iranian sanctions. The additional sanctions that the Treasury Department handed downment how are those working right now and what have you seen in terms of cooperation from our allies. Theres no question the sanctions are working. Theres no question since the president terminated this agreement. We literally cutoff tens of billions of dollars that would have gone to iran that would have supported additional terrorist activities that would have been used to develop more missiles and more things that could attack our troops. Theres no question. The president has been very clear. One is that they agreed they never have clear weapons and fully enforcement agreement. And including Ballistic Missiles so the president has been very clear. This is about protecting our interests and our allies interest in the middle east. I have had very direct discussions as well as secretary pompeo has with our counter parts. I spoke to several of them yesterday. I think you saw the e3 did put out the statement that activated the dispute resolution and we look forward to working with them quickly and would expect that the un sanctions would snap back into place. Those keys that you said had to happen and they will agree to never have Nuclear Weapons it seems like a big lift for this particular administration there. Do you think that this something that can happen with the existing regime . I do. I dont think its a big lift. Theres a great outcome for the iranian people they have the opportunity to have great lives and have a great economy and i think what were asking for is really what every member of the International Community wants. So this is about protecting the United States interests and our allies and peace in the middle east. I wanted to circle back on apple and to some degree china can bring those topics together for just a moment. How would you feel if the Chinese Government were to call up apple in an instance where they felt that they needed to get access to a phone for somebody inside of china or of an american citizen inside of china using their phone . Again, youre getting into a very specific issue on a specific company where there are on going discussions so im not going to comment on the specifics of this at this point. Up about in the past three months, 12 from a year ago. Is it a one off because of defense spending record revenue but the spending is still putting us in that position. Rates are low and inflation is low and im not saying that it you know, its going to hurt us immediately but do you think about that mr. Treasury secretary and the next three or four or five years . And i think once you said you might set a record for how long you stay at least 12 or 13 years which would be crazy if you did. Im glad you asked me the question but the record is 13 years. I dont think ill break it. You said it was possible. Well see. But let me comment on the deficit because i think this is important. First let me just say ill stand by my previous comments and theyll pay for themselves over a ten year period. We had two years of actuals. Were tracking exactly on our two year average so in the first year the revenues didnt go up quite as much as we expected because there was more expensing and in the second year the revenues went up more than we thought so were tracking our projections now the president was very interested in military spending. To get military spending we had to agree to nonmilitary spendingment i think the deal with Speaker Pelosi and i negotiated will have bipartisan support. We got the extension and two year deal on spending which met a lot of priorities. I think at this point this economy can handle the deficits. Theres no question over time we need to look at these Government Spending issues. We need to continue to increase Government Spending at the rate that we are. Were actually having our tax revenues actually growing up on a very healthy basis as a result of what is a very strong trump economy. Would entitlements be beyond the agenda or reform in the second Trump Administration. All im going to say is that we talked about there needs to be bipartisan review of Government Spending and thats something at the appropriate time overtime we have to deal with the deficits we have bipartisan support on what were doing and the dense numbers were very critical to this president. Thank you for being so generous with your time today. We do appreciate it. Thank you as well when we return, more on todays big trade story. Theyll react to those comments from treasury secretary Steve Mnuchin in a moment and later Kevin Mccarthy will she arhis thoughts were right back after this. Go to hilton instead of a travel site and youll experience a whole new range of emotions like. The relaxing feeling of knowing youre getting the best price. Thesell work. The utter delight of free wifi. Oh man this is the best part. Isnt that you . Yeah. And the magic power of unlocking your room with your phone. 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Its time for investing to feel individual. Just how tough is President Trumps trade deal two china critics. Former white house strategist steve bannon and kyle bass join us ahead of todays phase one signing. House minority leader Kevin Mccarthy joins us with his thoughts on the deal squawk box begins right now good morning, everybody. Welcome back to squawk box im becky quick along with Andrew Ross Sorkin dow futures up after gains of more than 30 points yesterday. S p 500 and the nasdaq both pulled back yesterday. The nasdaq up by 22 points and the s p up by 3. If youre looking at the treasury market we have seen a pull back in yields. The latest for the ten year is back below 1. 8 . These are stories this morning. Results out from two big banks just this morning. And its latest quarter results. And then Goldman Sachs also scoring a beat on the top and bottom lines and record consumer and Wealth Management revenue as well as record assets under management were also watching shares of target this morning. And targets at november and december same store sales were up 1. 4 versus a gain of 5. 7 from a year ago. The company said it saw strength in the apparel and beauty categories and its maintaining the prior outlook for Fourth Quarter earnings and taking on apple. Hes had very Good Relationships with up until now trump tweeting yesterday we are helping apple all the time on trade and so many other issues they unlock phones and theyll have to step up to the plate and help our country make America Great again it turned over all the information that it had and would not build a back door and give Law Enforcement its products and that continues. We just wrapped up an interview with Steven Mnuchin. He had to say about todays trade deal i think its a very significant deal its the first time we ever had an encompassing agreement with china and all of these issues it deals with intellectual property and forced Technology Transfer and deals with agricultural and Financial Services and currency and purchases and fully enforcement agreement. Theres a dispute mechanism. More reaction from the treasury secretary and trade negotiations and a beautiful lasting friendship and former white house chief strategist steve bannon. This could go on the road. Im not sure what could happen from this. What do you make of his comments that you just heard. From my perspective i think what this deal is, this is a temporary truce and decoupling between the u. S. And china bringing the sides together. Gave into pretty significant concessions and the u. S. s position where we said were going to leave tariffs in place until the end of the year was something that china had to swallow because they were going to sign this on the 15th no matter what was announced they were going to have to sign it today the bigger issues that were involved here, this is a really simple deal. What were signing here is chinas desperately short food and energy and they have to buy it from somewhere in the world and what we did is get them to buy it from us what i think is particularly significant about the deal, i havent read the deal yet but going over whats reported is now this is measurable and enforceable and were going to hold the chinese to it thats the first time that anyone has ever been able to get the chinese to sign a deal thats measurable and enforceable. Thats particularly important. What theyre buying from us is insignificant from our perspective. I think the buys time for President Trump into the november elections its to become more selfreliant and not rely on the u. S. For a number of things they could both bill it as a win. That is not consensus, steve that we actually got something i think what were really hearing is that we went through a lot to get very little i think kyle down plays it. What youre seeing today where they make north america and mexico a geo strategic manufacturing in east asia today youre seeing is the begin of the decline in the United States kyle is right. It was his tariffs he went against all orthodoxy and was land blasted by people came on this show, the financial press, the wall street journal oped page and stood up for the taf ris and broke t tariffs ad broke up the party to start working not totally from forced Technology Transfers on intellectual property and getting access to their markets. And eu and japan and ourselves talking about the state of industries at the wto yesterday with the eu. And you can see trump in a geostrategic context go after china. This deal today, this is why xi isnt here to sign it. This is why the state owned media and china is not talking about it the hawks dont want to talk about this and invasion of the body snatcher and last night on the stage of the Democratic Party and many people didnt disagree with trade policies and its the entire center of gravity. And as a protectionist as someone thats in the camp President Trump stuck to his guns and today he gets the deal. Its only phase one. But directionally this thing is powerful and have some runway in china and make some fundamental changes. We reverse this decoupling on technology and the single most important event of 2019. I think you could eventually get back to the deal of may of 2019. And to merge the industrial democracies of the west. The tariffs rolled back in something is not put on in other places youre okay with a lot of the things that we thought we would get immediately put in i thought he might want it to go a step further what they call the super hawks absolutely and i think when you see the tariffs, you see today, when you see today i think when this thing comes out on the enforcement mechanism. They got so happy talking about bilateral assessment i think the president demanded donald trump is judge, jury or executioner on this. His big thing is no gains. Unilaterally he has to go and cant do anything. Hes going to give them a chance to see if they will actually live up to a commitment. Not like they stiffed obama and biden with the Cyber Security. Not like they lied on the paris accord and now they have half a trillion dollars of coal fire plants the Chinese Communist party lied to everybody in the world. He has to hold them to transparency, accountability and enforceability and hold them to account in front of the entire world and thats why this is so important. This begins the end of the decline of the elites in this country and this is donald trump and his tariffs. Do you anything that steve ban nonjust said anything that you disagree with. Did i take it even further than you were i agree with almost everything that steve is saying. I think one point that becky made in his questioning of mnuchin. The u. S. Is supposedly engaging in where were sanctioning chinese entities as far as their relationship with iran you know, one thing that secretary mnuchin isnt doing is we know that the chinese buy the most oil from iran to fund the purchases they use chinese soe banks. We know which banks theyre using. Our treasury should be sanctions chinese banks today. Thats something we havent been willing to do and trump hasnt been willing to do and we talk like were going to sanction companies that are contrivening our sanctions on iran. She said Something Worthy of our discussion and its whether or not we should talk about human rights in the same context or same conversation as the economic or National Security concerns and becky, you know, i dont know how many of you have read the china tribunal. Com and on live Organ Harvesting practices. China is committing the largest crimes against humanity of anyone in the 21st century we cant wait to sign an economic deal with this evil regime and couples himself from the National Security and human rights perspectives in china thats something that should be discussed first and not second or third or put away and let us read it another day. This is something thats enormous and its not being discussed. So id love to hear steves view on that as well as becky. Steve is ready. Listen looked the other way on china this is across the board we have the economic war china has been running on us for 25 years. But in addition, look at whats happening. Look at hong kong. The revolt against the ccp, look at the proxy in taiwan the last week the landslide victory a couple of months ago in hong kong also. Look at teheran. Beirut baghdad, lavonte ran, theyre in the streets. They wont walk in taiwan. People understand hes choking down their allies in lavonte ten i think the way trump looks at this theyre not separate. Should they be on separate tracks or should this all be combined should you be able to come up with economic agreements and say were not going to deal with the huaweis and were not going to deal with hong kong rights democracy rights. The way they want to break it down is the 40 40 20 but the way trump is doing it even with apple, trump at a strategic level its all happening at one time remember when he first came in as president our government had this the pivot to asia was hit or miss. It was all over. He now has a whole of government were patrolling the South China Sea and the straights of taiwan again. Were confronting mack is in london to convince the British Government that they cant go with huawei. Rubio is now talking about actually having a billion dollar fund you had the entire government its been outrageous what wall street and the corporatists have looked the other way on china but now theyre coming together. But thats almost an argument that we shouldnt have a phase one economic agreement because we have all of these other things. I think the phase one agreement starts listen, what we dont want, we have an information war going on and a cyber war and we have an economic war going on. This is a hot war economically and a hot war on cyber and information we dont want it to he involve into the other and thats why truchmp is trying too these and do these in segments but theyre all of one piece. Walk us through which you get to that second phase of a deal in terms of how do you get to the intellectual property. Huawei is not a chess piece. I respectfully disagree its not part of the Chinese Government its the front of the pla. The Peoples Liberation army its the telecommunications army im much more of a hawk on huawei than the hawks in the administration i think huawei is the trojan horse. It forces the issue. Were definitely going to force the issue. Were doing Component Parts and Systems Technology they had a couple of business leade leaders. That shows you how they work, right . By the way, youre getting more and more voices. Like to have Chuck Schumer take a cheap shot i never saw the Obama Administration everyone is standing up like President Trump. I asked you a related question, when you think about how the u. S. Is treating and thinking about apple relative to the way that you might think that china treats huawei look i agree with President Trump. I think apple has got a theyre moving their manufacturing back there but do you think its appropriate to force apple to provide a back door access to those phones yes, 100 its in the same way that i imagined that you look at hua i Huawei Huawei is part of the pla. Its of the Peoples Liberation army its two totally Different Things one is about getting access. The other is about you actually owning the entire system. If youre tim cook given the relationship he has had with the president which has been a Good Relationship for apple, how do you think it changes in this dynamic . It changes dramatically hes going to drop the hammer on it. They just went down to texas and has done a great job of showing the jobs of the future and training of the future. You think he does not comply. I will say this, i happen to think that directionally if im one of the guys at apple i would Pay Attention to President Trumps tweets you wait for the people that is a very strong fund. Where are we right now and whether the president should where does he stand in the senate you say theres cracks the nullification project and they understand but last night on the debate stage this is van jones, theres no way that debate stage is going to be donald trump van jones said that. They need to defeat trump some other way. Thats the permanent Impeachment Party is going to continue on and on and on. If its not about killing general soleimani theyre going to continue to find things i think you let them have their witnesses. If they want it, lets do it the jury is not the senate the jury is the American People and the audience is the world. Lets go back to the china deal in the streets of lavontehran ad taiwan and beijing theyre going to watch this closely that the established order is trying to shutdown donald trump and thats why to me they should get the house fire breathers in there. We should give them bolton and take the whistleblower. I think the best witness is zalenski that is great thank you. Im not going to ask you about impeachment next time. I do appreciate all year House Minority leader Kevin Mccarthy right now lets take a look at the Marquee Companies that have reported results this morning. Bank of america is coming in with better than expected numbers, Goldman Sachs the bottom line number say little bit below. That was a one time charge better than expected numbers you can see mixed reactions. Shares are up by. 7. Were also taking a look at shares of apple again this morning given the president s tweets warning apple that it should hand over and help with security in the United States. 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Microsoft releasing a patch for windows 10 a security flaw that was discovered by the National Security agency. Both microsoft and the nsa say theres no evidence that the flaw has been used for any malicious purposes its up by another 50 162. 65 also shares of beyond meat this morning. Companies striking a deal to supply a key protein expanding an existing partnership and helping them avoid shortages. A stock down by 4. 6 . Coming up this morning, breaking Economic Data prices coming up in a minute away well see you in just a second i can. The two words whispered at the start of every race. Every new job. And attempt to parallel park. electrical current buzzing each new draft of every novel. typing clicks the finishing touch on every masterpiece. newborn cries it is humanitys official twoword war cry. Words that move us all forward. The same two words that Capital Group believes have the power to improve lives. 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Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Yes, our Producer Price index coming in at. 1 on headline expecting. 2 and thats also a. 1 and now lets get to the year over year numbersment final demand up 1. 3 as expected. Its up 1. 5 year over year thats a bit light so its sort of a mixed bag when you get to the year over year numbers you can argue that trade year over year its a little bit hot. Its unlike the big string of year over year numbers over 2 in Consumer Price index. Were not done yet were expecting 3. 6. That equals exactly 4. 8 from august we have to go to may to find a higher number and that was much higher at 17. 8 here we are at 178 the last couple of spike low closes and you have to pay close attention. Thats also significant. All yours. Thank you, sir. Great to see you appreciate it. Expect to sign off on that phase one. We spoke to secretary treasury Steve Mnuchin about what was next. There were certain roll backs in phase two there will be additional roll backs. So its really just a question of and we have said before phase two maybe 2a, 2b, 2c, well see. First step is focussing on enforcement but this gives china a big incentive to get back to the table and agree to the additional issues that are still unresolved. We want to bring in our guest, House Minority leader Kevin Mccarthy its good to see you we had the secretary on and we had a debate afterwards about whether this phase one deal goes far enough where do you land . I think its a great start. Think for one moment were better off than four years ago by having this agreement if youre going to judge this agreement, judge it on the power that you gave the negotiators. If we had the United States, mexico and Canada Agreement that are number one and number two traders canada and mexico already ratified our negotiators would have a stronger position in negotiating with china but our speaker has held that. All of that time during negotiation so its remarkable that we got what we got. Its the first start a lot of this hinges on what does china want to do. For the first time we have an administration and really hinged on the idea of a trade thats going to be fair to me it is a very good first start. We are stronger for it the economy is stronger. You have advocating the need to fix this intellectual property issue. Very much so. As a singular issue perhaps more than anything else have we gained or lost leverage on the issues that matters to you. We gained on it china can sign a new law it does not mean that china is going to abide by it we have to get every single nation together. China has not only just harmed america. They have harmed the world with everything they have stolen. They have continued to do this throughout the decade. Why are you convinced that were going to be able to hold them accountable its going to be perfect 100 . Its a change in where we were four years ago its a change in having the president of china come to washington with president obama and him just promising something would happen they are now signing the dotted line and theyre now making a public saying that theyre going to do Something Different that they sign an agreement for it. They also have a president in the white house that actually held china accountable and many people such as myself and they will stand up to them thats the only reason they came to the table so from that standpoint, we are stronger today than we were before. I wanted to also get your thoughts on other topic that we talked about this morning which is the tweets from the white house aimed at apple and tim cook who was at least over the past year or two seemed to thread a needle in terms of his relationship with the president. And whether apple should provide access this is not an initiative if a terrorist has done something inside america we need to Work Together i watched a report using their own american citizens and thats why but you have a known terrorist and its this is what congress should get engaged in a Company Wants to be able to i want them to keep that but in an instance of a terrorist from a foreign nation killing an american citizen in our individuals we would want to have all the data we can and i think we can make that happen. Thats a little more nuisanced than the argument we heard so far from the attorney general and then the tweet from President Trump last night is there space between you and them on that are there negotiations taking place between congress and the white house right now . I think the instance we watch this in San Bernardino we have the same instance where people are working together and they found a way to get inside and the company did not provide that. From an American Point of view you want to make sure that government isnt looking at everything that youre doing. You have a terrorist. You want to be able to get in there. Clearly william barr wants to set a legal precedent on the record so not only can he get access to this particular phone but i imagine getting access to phones in the future that could represent or present an opportunity. Thats something to be said. Thats your statement thats not william barr saying it so before i would answer Something Like that i would see what actually william barr is saying in the process. He wants to protect americans and does not have information and he has the ability to do it. Which is to say if the Chinese Government were to say we need you to unlock this other phone because we believe that it represents a National Security threat to china. I dont want a back door for government to look at everybodys phone. We have an individual from a foreign country that came from america and killed american servicemen and women from that point of view if its a different situation because theres an action taken, were there any more plannings to kill american citizens. Where did this come from i think in those situations maybe government has to get involved here from a Congress Point of view. But from this point of view these were foreign nationals and theres a place that was different. And thats the nuisance of what we have to put together to find those answers. You give us your thinking on some of the comments some of the comments that you made about biden not campaigning during the impeachment trial so that everything was fair for senator sanders. I think youre still stinging from what happened last time and i just think its very gratifying to see you commiserate so much with senator sanders. No, but lets put it in perspective. Four years ago, the eve before the Democrat National convention where theyre going to nominate, the chairperson of the party resigned. Why did she resign . Because information came out that they had cheated Bernie Sanders for getting the nomination and what they had done, they had what is called a super delegate thats the democratics insurance policy to let the establishment decide who can be the nominee. Because of what took place they changed the rules. Theres no super delegate on the first round. Holding the articles of impeachment. Were sitting february third the iowa caucuses. Biden is not doing well there. Normally becomes the nominee for the democrats Going Forward. And they sit in their desk and say nothing. There is a great advantage to those that are not sitting in the senate why did nancy pelosi, one of the reasons she helped this to go back to exactly what they did before they cheated Bernie Sanders from becoming the nominee they understand this greatly its openly cheating the individual. If the other Party Started what is wrong commenting on the way republicans are, you would hate that why do you care . Its all about that, if there was something that the Republican Party was doing i would be the first to stand up. It is true and you know it. Okay. All right thats nice. Thank you. Thanks. Hope to see you again. Hes putting his money to work as tensions move to the back burner. That fund was up about 41 last year its companies that have reported results this morning. Bank of america Goldman Sachs, black rock all three under Pressure Bank of america and black rock both beat expectations pretty handily. United health down by. 5 . Right now as we head to a break, a reminder for you you can always watch us live on the go on the cnbc app stay tuned well be right back. At synchrony, were changing whats possible every single day. And if you run a business, that means a lot. We create Financing Options for your customers. To help them get the things they love instantly. Our data provides insights into what your shoppers have already bought. So you can offer them what they might consider buying next. Our technology and Financial Solutions are changing whats possible in all sorts of ways. So, how can we change whats possible for you . High protein. Low sugar. Tastes great high protein. Low sugar. So good high protein. Low sugar. Mmmm, birthday cake pure protein. The best combination for every fitness routine. And when you open a new brokerage account, your cash is automatically invested at a great rate. Thats why fidelity leads the industry in value while our competition continues to talk. Talk, talk welcome back to squawk box take a look at the futures right now ahead of the market open about 45 minutes before 9 30 rolls around and we do have a little bit of a mixed picture now. The dow would open down about 24 points is the s p 500 off more than a point. Goldman sachs is not helping. So i dont know decline of over 1 and i dont know thats one of the reasons the dow wouldnt be down. United health. Thats about half a percent. Opening bell as we said the wall street open he may be talking about this. You just talk about Goldman Sachs but banks and retail are certainly front and center for this mornings movers. Well start with the financial front here and its still a big one and now theyre down roughly 1. 3 millionaires of volume and top analyst estimates. And then you have shares not in the bank but it is black rock. Theyre marginally lower on 7,000 shares of premarket volume this is the worlds bigger asset manager and quarterly profits of revenues given by more inflows and etf products and also in the cash management. Which is down. 1 of 1 then well end on retail and target after the retailer said that sales growth at its established store locations during the Holiday Season grew by 1. 4 . That was lower than forecast and relatively flat and sales of electronics are overwhelming and target did reaffirm its Fourth Quarter profit after 94 run in a stock in 2019 those shares are up 7 premarket value. You were tweeting earlier talking about how that stock is one of the four best performers in the s p 500 absolutely. Its far and away the best retailer in the s p 500 so when you look at target its down big but after an almost doubling of the stock. Good to see you. Thanks. A new all time intraday high on four of the sessions. S p 500 and the nasdaq on sick of them. Joining me to talk about where we going from here is noah his fund by the way has returned more than 300 over the last decade correct me if im wrong, i think it was up by 41 last year. Its a goodyear the market was so strong the portfolio is a growth stock. When argue rolled around and then we had the yield curve and had the Fourth Quarter rally which was in some of the more beaten down names but thats okay, theyre left for dead in august and so they caught up in terms of price which was good to see. You cant have a market lead by a few stocks for sure. Target is a good example target doubled last year almost. But were at a point, target and Semiconductor Names where you have the stocks up 100 last year their revenues on earnings were down double digits last year so anticipation of recovery and a better economy probably a china trade deal a lot of these companies have to deliver on their stock by me or both. I think, you know, its gone back up and were at that level in december and up until the 24th of december were talking about the Great Depression anlages so we havent seen the recovery and i dont see a major pull back. And its not escalating. And well see what happens so i dont see we can focus on th the earnings has to catch up to the stock prices in terms of looking at the high growth stocks, what sectors do you like, what stocks do you like in health care and technology, the Software Names had a big run up until the spring and gone sideways since i think a lot of the names whether youre looking at the move to the cloud or digital transformation, thats continuing onward and they have sort of very high growth rates here i also think 5g is a reality and rolling out and i think its going to unleash a whole host of new applications as well so i think you can focus in on that jpmorgan, you see the sort of postjpmorgan selloff and the biotech and health care names for the jpmorgan conference in San Francisco. We saw a tremendous amount of m a last year and thats going to continue. You made some comments in your notes about how we might be on bt ver on a lot of big breakthroughs why is this time different i think were nearly data on crisper technology, repairing genetics, where you have drugs for Cystic Fibrosis but maybe you could repair the it, na is exci dna. The m a in oncology the therapies and what the opportunity is for combining oncology medicines in terms of progression for survival in life i think theres a lot of things going on in health care. Last year i think when the sector got hammered with Elizabeth Warren when she was in the lead, obviously rallied back as she fell in the polls, as we move to the election, though, if she drops out do her votes go to sanders and make sentiment trading on health care more difficult . You need to watch that as we get closer to the election not just sanders and warren who raised questions about this. The Trump Administration has done its own sort of move to try and keep drug prices under control. For sure. Theyve also been good in terms of approvalless of new drugs especially in, i think the approval process at the fda is much more patientfriendly do you think that continues with Scott Gottlieb leaving the position at the fda . I think he had a large part of why that approval process got better i have no reason to think it went to but well have to see i dont think it will change with you we have to see. Great to see you. Thanks for coming in thanks for having me. The cnbc bureau in San Francisco, jim cramer joins us now. Noah was talking about health care i know you are at the conference, jim, target is an issue today, Goldman Sachs, what is on your radar target shows how fickle the consumer is. Turns out the hard goods looks like they went elsewhere i keep thinking about the costco number and how terrific it was i see walmart down, im not sure if thats necessarily right. Who knows how much of this is amazon it is surprising especially because just a couple months ago we thought it was going to be a target christmas so im kind of thrown by that. Look, goldmans real good but goldman is up a gigantic amount. Im not going to find enough about goldman until the end of january, i think well outline a credit card strategy that will blow people away, credit card with apple i saw you tweet earlier, got to roll out the msm or get ready for the msm to roll out the china deal, Means Nothing and we didnt get anything. Steve bannon went off in true bannon style, the trump doctrine, its manifest in every part of this deal and youre seeing it around the world in demonstrations in iran, and taiwan, elections, and i mean, i was listening to him, mike not many people make that cogent a case for connecting all the dots look, you get mexico to do the right thing. You get canada to do the right thing, china to do the right thing. You were unraveling what many president s have done in this country, to cede these really just cede our country to these countries for no particular reason other than the fact that they want to be globalists i think globalists as men lets let the other countries do better than we do, maybe it helps earnings per share for a couple of companies. I think its rather remarkable, and i really hate, hate the idea that as soon as you win the super bowl, these companies, these look, the analysts but also mainly the media is focused on the next super bowl no no thats just ridiculous all that is a dodge to say listen, were not going to see what tariffs are done, whats gone right well talk about whether the next thing is going to work. This is just a dodge it is entirely almost like the media has just said were not going to focus on this win were going to look at whether theyll win the next thing that is ridiculous this is gigantic, 200 billion, all the changes. Like the eagles, how many years ago was that, youre still celebrating that super bowl. It was like last year why not its for the learest of your li. Bizarrely, its a good example it changed things. It changes from losers to winners. Yeah, right i think this changes from losers to winners but youre not supposed to say it, joe. Okay, but how about the next one . Who darcares about this one lets make him do it on camera my eagles fly show him, not me fly eagles fly andy reid late of the eagles to win the super bowl. Yep, thats right San Francisco looked tough i lost money on every day. Chiefs versus San Francisco, i agree with you it would be amazing if the titans go all the way in theyre just not that great a team but it could happen because best running game ive seen this year 4 for 4 in ncaa last night. Thats not teasy wow in basketball, really not i had gone 12 for 12 lose so long i guess its all thanks, jim. Thank you, guys looking forward to your exclusive interview tom yo with microsts tyofsaa nadella, thats tomorrow, tomorrow night on mad money. Blocking the pdl1 protein, lets the immune system attack, attack, attack cancer. Pdl1 transformed, revolutionized, immunotherapy. Pdl1 saved my life. Saved my life. Saved my life. What we do here at danafaber, changes lives everywhere. Everywhere. Everywhere. Everywhere. Everywhere. Hey, our workers comp insurance is expiring. Should i just renew it . Yeah, sure. Hey there, Small Business owner. Pie insurance here with some sweet advice to stop you from overpaying on workers comp. Try pie instead and save up to 30 . Thirty percent . Really . Sure get a quote in 3 minutes at easyaspie. Com. That is easy. So, need another reminder . No, im good. Reminder for what . Oh. Ho ho, yeah need workers comp insurance . Get a quote in 3 minutes at easyaspie. Com. With Td Ameritrade youve got courses, tools, and help from pros. Its almost like youre training me to become an even smarter, stronger investor. Exactly. rocky theme music fiftysix straight, come on thats it, left trade right trade. Come on another trade, i want to see it more 80sstyle training montage . Yeah. Happens all the time. Danafarber Cancer Institute discovered the pdl1 pathway. Pdl1. They changed how the world fights cancer. Blocking the pdl1 protein, lets the immune system attack, attack, attack cancer. Pdl1 transformed, revolutionized, immunotherapy. Pdl1 saved my life. Saved my life. Saved my life. What we do here at danafaber, changes lives everywhere. Everywhere. Everywhere. Everywhere. Wilf is back with an update. I think well hear more on the Earnings Call about the oneoff items, the litigation charge nothing is in the bag until its in the bag but i feel according to various sources they are getting closer to settling the 1mdb issue and closer to a global settlement, seeking malaysia and the doj soon and based on best estimates they provided for everything that they think would contribute to that they fully sold out of uber as well they were of course a holder of that, travis is no longer part of the lockup. Wilf, thank you the stock down 1. 3 after beating earnings expectations on the revenue line but missing on the bottom line. Join us tomorrow right now its time for squawk on the street. Take me to the next phase, baby, take me take my soul to the next phase take me to the next fails, baby welcome to squawk on the street. Im Carl Quintanilla with david faber at the New York Stock Exchange kr cramer is at one market in San Francisco. Larry kudlow, the u. S. And china sign the phase one trade deal. Futures are soft in the wake of targets surprisingly weak holiday comps. Goldman good, europe is red. December wholesale inflation runs cool. Road map this morning begins with historic day in our