Transcripts For CNBC Squawk Box 20170118

Citigroup, Goldman Sachs and Charles Schwab report before the bell. And well hear from netflix after the close on the day. We should tell you that squawk has an extension today, because we have interviews with jamie dimon who will be with us later on sidewalk on the street, and loyal blankfein will be with us later as well. Dont miss that. When nbc has a saturday game, its thursday night football a lot of times on saturday. It may be in the 9 00 or 10 00 hour back on the east coast, but its still squawk box. Were just extending this. Yeah. Extending the programming. Lets not confuse anyone at home. Normally we have the futures in the red. Rarely do we get the thermometer in the red. Its actually minus below zero. Is it right now . Minus 3 celsius or fahrenheit . No, minus 3 fahrenheit. But sunny and beautiful. Tobey cosgrove in the sun. Look. Hes glowing. Lets turn now you cant see him. Youll see him in a moment. Turning now to the agenda, which is on capitol hill. Just two days away from president elect Donald Trumps inauguration. Confirmation hearings continue today in washington for many of his cabinet picks. Among the names to watch, scott pruitt, trumps choice to run the epa. Governor nikki haley, up for consideration to be u. S. Ambassador to the united nations, and commerce secretary d designee, wilbur ross. He will say hes not antitrade but the billionaire investor will argue that the United States should not allow for malicious practices or unfair subsidies from foreign trading partners. He has promised to sell a stake in his private equity firm, divest other assets and resign from corporate boards. He will keep interests in mortgage lending and shipping. Yesterday lead story in the wall street journal, president elect breaking with longterm convention and saying a weak dollar may be good. Sending the dollar down. A lot of the take on that is saying out loud what administrations have thought for a long time. But when youre president you always need to have a weak dollar. Hes broke with a lot of convention. My favorite thing about yesterday, president of china warning that no one country should be out for themselves. They should be global and not pursue their own interests as much as maybe the United States might try to do now. Leading by example, as china always does in being a global citizen. Never looking the other side of that, people looked at that speech as not just what were doing, but what we should be doing. Stepping into the vacuum with the United States. Fair is foul, foul is fair. The world is topsyturvy. I was quoting Abraham Lincoln. Exactly. For the people, by the people. Its a repressive regime there. Lets tell you about a new nbc news wall street journal poll out this morning. According to that poll, 44 of those surveyed approve of how president elect trump is handling the transition. 6 52 disapprove. And 98 still expect hillary to win the election. Thank you, joseph. Some stocks to watch this morning. Shares of csx, the rail, dipping in the premarket after the Company Posted missed quarterly results. Profited declined in the Fourth Quarter as the railroad firm said they felt the effects of lower commodity prices. And the strong u. S. Dollar, which maybe wont be as strong in the future. United airlines out with disappointing numbers, lower fares, and an increase in labor costs led to a 5 52 decline. And the botox maker, allergan will pay a 15 million penalty and admit to wrongdoing after being accused of failing to disclose their 2014 merger talks with activist investors. Wait. Did you Say Something about botox . What was that story . Caught your attention . Botox, allergan. Trying to buy activists. I just heard caught your attention. Yeah. Needles in the forehead. Your face is looking smooth. With botulism. With food poisoning. Cosgrove knows about that. Not that you used it. As a doctor. You might have, represent you like 75 or something . Older. We talked about that before. Youre our idol. Among the issues at the top of trumps agenda, we have Health Care Reform. The president elects pick for health and human services, secretary tom price designee tom price will face the senate today amid questions about some of his stock transactions. Joining us now, dr. Tobey cosgrove, president and ceo of the cleveland clinic. You will not be serving as director of va. It was reported that you were first picked. Do you know . I dont know if i was first picked, but i was offered the position. When it came down to your decision, it had to do with the cleveland clinic. You know, i have made a substantial commitment to the cleveland clinic. We started a lot of new opportunities. One of those is a medical school that combines the latest in technology and bringing together doctors, nurses, dentists, p. A. S, all in one facility to teach team play. And with a lot of technology that will be incorporated in that, including holograms, which we will teach anatomy now without cadavers. And also opening a facility in london. Thats a major investment for us. I think i have to see some of those things through. Do you know the gentleman that that the president elect picked . I dont. Lets get to obamacare, repeal and replace. My first question to you, as we hear a lot of the other side loves this issue now because trump will own their albatross, lets say that we did absolutely nothing. Let it go for 2017. How many exchanges would be left in most states . What would the premium increases be across the board . If we did absolutely nothing . I think if we dont do anything, well see fewer exchanges. How many fewer, i cant say. Would it collapse eventually . The exchanges . Obamacare. I dont think so. Under its own weight . I dont think so. Going from volume, paying for value, it has done some good things, but clearly with any 3,000 page bill, its not going to be perfect the first time around. Ive seen the way to get around the individual mandate is to do it with large groups. So that everyone is able to get in for a certain price. Is that viable or is the the mandate didnt work any way because a lot of people didnt buy into it. It was surprising that more people didnt buy into this. Thats the problem with the exchanges. Mandate seems to be a bad word. Most insurance look at car insurance, you cant drive a car without insurance. You stop and think about it, why would you not have to have some sort of healthcare insurance . That requires mandates. How do you do that . The penalties werent enough this time around. How do you force people to do that . You can tell people if theyre driving a car without a license, you will throw them in prison. And you choose to drive a car. Clearly there are other ways to do this, but the important thing is reforming healthcare. There has to be a couple things that we like to see. I think they like to see the number of regulations decrease. We have 3,000 pages of regulations right now, which is just tremendous burden for us. And a lot of things we have to report. We also have a limitation on how we can consolidate. Every other industry in the United States has consolidated over time. Theres not enough push to keep people well. And to begin to decrease the burden of disease across the United States. Do you have any idea of what this will look like in practice . I dont think any of us do right now. I think that hes said that come monday he plans to announce something. Ive seen detailed stuff from the house on how they are planning to do it. Rand paul has a detailed plan. Rand paul has a detailed plan. Very few of us in the Healthcare Industry know what that bill is about. Now its by april, is that the time frame . Do you know tom price . I do not know tom price. Any feelings about i dont know enough about him nor are yis he too antiobamacar . To anti i would hate to see this whole bill completely wash away without various a major replacement. You have 20 Million People being covered. A lot of those were covered and are now covered by this. I havent seen what the actual net number is. I see a lot of numbers thrown around. Im not sure how the majority of those came from medicaid, because it got expanded. Exactly. I think we picked up 750,000 in ohio. Do we know what net addition was in terms of insured people . Everybody has a different number. Supposedly 20 million. What would happen if obamacare was repealed and there wasnt a replacement . It would throw our industry into chaos. We would lose a lot to of reimbursement. Hospitals across the country are running in the red right now. Even with the reimbursements. Each year its come down. And ive been talking with several of the major hospitals here, each one of them has seen a decrease in their net this last year. Were down to about 2 . Those payments from the government from obama care were supposed to increase as years went on. You guys took a hit in the beginning with the promise of payments going on down the road . No, we had decrease in what doctors are paid substantially each year. We see what were being paid from the hospital portion of it coming down. Private insurance is paying us less and less. Weve taken 700 million out of an 8 billion organization, our costs, we figure we have another 700 million to take out. Thats why you point to consolidation as the only way to negotiate with Insurance Companies . I dont think a lot of people talk about the fact if you consolidate, you can negotiate better. 60 of our payments now are medicaid, medicare or no pay. So theres no negotiating with that. Those payments are going down. Similarly the payments from the private insurers are going down. I dont think youll see a major jump in the ability to negotiate if we do. You think about book stores, accounting firms, all of whom have consolidated to get rid of competition. Pharmaceutical prices what is the true narrative . Theyre the best deal in town because they treat chronic conditions without hospitalization . Theyre wonder drugs . Or the other side that we hear, they spend all this money on marketing, extending protection on pat tents and we dont negotiate prices with the government being a big buyer. Which is true . We saw our pharmaceutical bill go up 19 last year. Which is a huge jump for us, particularly as we are getting less and less to look after patients. Part of that is the bad actors, the valeants, epipens. Weve seen pharmaceutical drugs go up 10 a year. If medicare and lets say the government starts negotiating for lower prices. Is that what should happen when you have a large buyer in a free market . Is that the government exerting some type of pressure . How are we supposed to think about that . You know, i dont think theres anything the matter with competition. Is it competition if the government is dictating that we want to lower prices if youre going to get our business . Exactly. I think we should negotiate with the pharmaceutical company. Its still free market. You stop and think about what has gone on right now with the va, the va has the lowest drug prices, substantially lower than the rest of the industry. How much lower are we talking . 20 . I cant tell you the percentage. I dont honestly know. But they have a guarantee of the lowest of the prices. If you know that clearly the pharmaceutical industry is a tremendous industry for the United States, great exports, grade innovation, great research, but on the other hand we are supporting the rest of the world in terms of drug innovation. The rest of the world pays substantially less for drugs than we did. You said it was genetics why you look so good at your age. But your parents are not alive, are they . No, theyre not. The mekpresident elect said want one guy, i wanted cosgrove to run this, in a speech to the entire country. It would have been nice for them to see that. It would have been nice. You would have liked that. How proud would a mother be. Thats what i mean. Im surprised theyre not alive looking at you. You have good genes. Thats what you told us. Its not your lifestyle, right . You know, i exercise, dont smoke, take care of myself a bit. Get the weight under control. You have that research at the cleveland clinic. If you go in for a test, it comes back in an hour for you. And theres a programming noted here. Well talk much more about healthcare with the ceos of the mayo clinic and kaiser pe permiente. We are just getting started. Larry summers recently told us the markets were on a sugar high and its only a matter of time before disappointment sets in well talk to him about that and more next after the break. First, look at this date in history. So if you have a flat tire, dead battery, need a tow or lock your keys in the car, geicos emergency roadside assistance is there 24 7. Oh dear, i got a flat tire. Hmmm. Uh. Yeah, can you find a take where its a bit more dramatic on that last line, yeah . Yeah i got it right here. Someone help me i have a flat tire well its good. Good for me. What do you think . Geico. Fifteen minutes could save you fifteen percent or more on car insurance. Tadirectv now. Stream all your entertainment anywhere anytime can we lose the all. Theres no cbs and we dont have a ton of sports. Anywhere, any. Lets lose the anywhere, anytime too. You cant download onthego, theres no dvr, yada yada yada. Stream some stuff somewhere sometimes you totally nailed that buddy. Simple. Dont let directv now limit your entertainment. Only xfinity gives you more to stream to any screen. Theres no denying theres been a spike in confidence from many businesses since Donald Trumps election, nfib, even consumers. But the view beyond the shortterm is unknown. Our next guest is arguing in a new Financial Times column that were likely in the midst of a sugar high. He says we could be in for disappointment, disapproval and disillusion down the road. Were joined by Larry Summers, the former treasury secretary of the United States. You wrote a piece on davos recently too, right, larry . Were all davos men one and all. I think theres a lot to of anxiety here. A lot of anxiety about whats happening politically in many parts of the industrial world, brexit vote, elections, and what the election of president elect trump of the United States means. Theres no doubt that animal spirits are running high. Some of that is a welcomed correction to probably was some feeling that had become overly punitive in some sectors. But i think theres also a deep concern about populous policy. Particularly populous nationalist policy that lurches into protection. Thats a real risk hanging over the global economy. If its not put to rest, theres the risk that as is so often the case in the past, that the p populist policies were pursuing will have shortrun benefits, ultimately more uncertainty, reductions in confidence, a bit of a downward spiral. Theres always a chance that as a dealmaker who has built a business and negotiated, that instead of it ending up in protectionism, it just ends up in he wants the United States to succeed. He wants to export goods. He wants to be a president that, you know, that helps the economy. S this a chanctheres a chance lot of this is posturing to extract deals. Sometimes it seems we get taken advantage of. I have no doubt at all about his sincerity for wanting a better economy for all of the american people. No question at all. Its just a question of which strategies are most likely to be effective. It needs to be recognized that the consequences of rhetoric so far has been a 15 appreciation in the mexican peso, that makes every business decision 15 more favorable to mexico, relative to ohio. And thats a big step against the economic interests, against the workers who are an important part of the president elects constituency. This is not all hypothetical. Were seeing some of the direct consequences of it. He said hes in favor of a weaker dollar. Hes in favor you would have never said that. I would have never said that. I would have never said it. I think it courts increased uncertainty over time. But i think what needs to be very, very careful about pursuing policies and rhetoric that are indirect contradiction. Fiscal expansion coupled with monetary tightening, coupled with increased protectionism, coupled with a border adjustment tax is a policy prescription for a stronger dollar. So it pursue across the board policies that will push the dollar up and then to use rhetoric about a weaker dollar, i think is to leaf tef leave th confused. If theres clarity that the boarder tax is off the table, that will happen. But if you take the border tax off the table, you wont get the 15 , 20 rate. I think the world would be okay if theres no 15 , 20 rate. But the flip side is he may have to do the 15 , 20 rate and not be neutral if he doesnt do the border adjustment tax. If that happens you will see substantial increase in deficits, to no great benefit many terms of spurt investment and that will have consequences for the economy that are not likely to be so to be so favorable. I have a feeling this Corporate Tax reform debate will be more complex and contentious than many suppose. And the process may take a while. Did you see president xi quoting Abraham Lincoln yesterday in davos . I did hear i did hear about it. All things are possible. Certainly not something that one would have expected a decade or two ago. Certainly i hope that the United States will not abandon its role as a principled supporter of an open cooperative Global Economic system. I think chinas professing adherence to those norms as a welcomed development. There are steps they have to take to go beyond professing adherence to actually adhering. He said no one country should be out for itself. Thats my favorite part. No one country should be so single minded to pursuing its own selfinterests. Hearing that from china is a direct dig at trump. Do what i say, not what i do. Get real. I think there was an important concept some years ago when zelleck spoke about china as a stakeholder in the Global Economic system. China, when it was a poor country, it was fine for it to be focused on itself. With the passage of time and with gaining economic strength, they do need to do more to uphold the system. We need to encourage them in that and recognize that its not our system, its everybodys system. And well have to be prepared to engage in a spirit of compromise. Hopefully no lectures on human rights from china. You wrote for years about our problems with secular stagnation, low growth, a savings glut, everything else. Lately youre wondering if the supply side pro growth policies exacerbate income inequality. We did not have supplied side growth policies for the past eight years, which left the fed as sort of our only supporter with quantitative easing and zero interesticypolicies, in the end exacerbating income inequality. Part of the reasons for the animal spirits, maybe its a sugar high, the idea that well go back to what you would probably call voodoo, trickle down or pro growth policies, how do we know give than we had no success in the past eight years in terms of goosing Economic Growth excuse me, joe. The Unemployment Rate went from 10 went from 10 to 4. 5 . I understand that. We have not seen that kind of 5 move during a president ial term. We had the fed at zero. The longest period of employment growth. But you wrote about how bad everything was. It would have been much better if we had expansiona expansionary fiscal policy. The president didnt propose the amount of expansion air fiscal policy that i would have liked, but he did so, particularly in the Public Investment area. Thats kind of a complicated political history back and forth. Do i think indiscriminate regulation would drive growth . I doubt it. I think particularly if we go too far in financial deregulation, we court the possibility of another financial crisis. Markets could be wrong, but youll come back. What is a sugar high . You actually gain weight . What happens . Its a crash. Right. You dont have anymore sugar and you feel horrible. Or you feel better, you work out. Well see a year from now what this is. We certainly will see. I heard you, you said its possible this could be real. Yeah. I dont think anybody makes absolute certain economic forecasts. You do occasionally. I do. I do. I missed the correction phase of your various predictions of over the years i watch your show avidly. When im wrong, ill let you know. I can change in hypindsight. Really . You might wanted to catalog we dont have a lot of institutional memory. You may not have institutional memory, but i have personal memory, you and a variety of your friends on the show have been were for many years worried about that crazy fed. Im still worried. Welcome back to squawk box live from davos. Some of forest whitakers best known roles have been characters surrounded by violence and brutality, including his portrayrole in the last king of scotland. But hes been supporting peace. Hes being honored in davos this year and joins us now to talk about this. Thank you for being here today. Thanks for having me. I didnt know about this initiative. How did you move from acting into the activism part of this . I had been working with dangs and Domestic Violence in the United States. But i had not done it on a concentrated way until i got to uganda. In uganda, i met some of the first child soldiers i had ever met that moved me into the work that weve been doing. We started our own ngo that works in conlict resolution and development. What does that mean specifically . How does the ngo do its work . We train youths in conflict resolution with ictcos, commuter technologies, life schools, and development or end pra ntrepren skills. They go back into their cities and develop projects. We have that. So were also in the protection and civilian camps where we have about 3,000 people that we work with, youths there. Wie moving into another refugee camp, working with about 10,000 youth there. When you met the child soldiers in uganda, what happened . How did that touch you . I remember one in particular. I met him, after all the things that happened, he had some psychological things that were harming him, that he wouldnt be able to sit in a room by himself. We started working. And it threw me the sweetness of this persons heart, but the tournament because of the things theyve seen and had to do. Now hes been working with us, he opened up an electrical store, he is training about 30 youths in electronics. Theres hope these things can move forward. We were working extensively in south sudan right now and were in mexico as well as the United States. When you come to a place like davos, i dont think people appreciate how many ngos are here, how many philanthropists are here. Tell me what goes on behind the scenes in terms of what youre doing and the work youre trying to accomplish. Its kind of diverse. Today i had there was a Discussion Panel on humanitarian the future of humanitarian aid. So we were discussing that. Then i also had some meetings with people i was working with at the u. N. , talking about how we could Work Together. And ive run by a few friends here. Its exciting. Seems like everyone is trying to move the envelope forward trying to improve the quality of life. I only say that because of the cynicism that we talk about with davos and davos man, there are some organizations like yours that are doing interesting things and it does move forward. Im curious in terms of money raising, how much money did you need to raise . What did you look for and what are you trying to do while youre here and elsewhere . Initially they brought me here for the crystal awards benefit. We are looking at our organization and trying to scale up. Right now probably looking to scale properly and slowly probably 10 million, which is the work well be doing in other countries. How do you identify the people that you want to work with from here . Initially it was people you had met. How do you find new people in new countries . How do you find new people and new countries . Yeah. We look at places in need of either in conflict or impacted by conflict, try to discern if there are people opt ground to work with us, locals that can work with us, and the local government and how we can come in with support. We make a decision from that. What well be moving into next is moving into myanmar, one of the places we just scouted. Looking at colombia, and starting to talk about jordan. Slowly looking at it. I guess initially we were looking at this is the youth peacemaker network, we were creating spots around the world where we can have this network be able over the world, all areas of conflict, for people to support each other and work with each other as youths trying to fight for peace and development. Can we talk fillingmake imma . Yeah. Are you a film guy or a tv guy . I have a number of projects made for tv. We have a film called Roxanne Roxanne that opens at sundance in a few days. I havent made a decision. I go where my hard leads me. You were just in rogue one. Yes. You will be the voice in this other project. I have been in rebels. Is that hard to do, the voicing thing . Its actually fun. Youre sitting there, youre free. Youre speaking. Hanging out. Yeah. Were you a star wars fan before rogue one . Yeah. I was a star wars fan since i was younger. I guess i watched all of them. I like the force, we have the capacity to do anything, if you believe. Thats really great. Do you like acting or directing more . Directing i cant do. I love it a little bit more, but i can only do it periodically because it takes time. What about directing yourself . I have never directed myself or done a cameo in any film ive directed. All right. Thank you very much for joining us. We appreciate your time and talking to us about the initiative. Thanks for having me. Coming up, when we return, blackstones chairman, Steve Schwarzman will join us and weigh in on president elect trumps agenda for the first 100 days. Hes running that Business Council and knows a lot about whats going on in the administration. At the top of the hour, ray dalio will join us. And later, tom freiedman will st down and talk policy and trump. A universe of data in your case literally and turn it into medical discoveries, diagnostic breakthroughs. Proof that black holes collapse into one singularity. I dont know what that is. But yes. Innovation runs on supercomputers. 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There were heated exchanges during the trial, especially when the lawyer told zuckerberg that improving a technology doesnt make it yours. Maybe there will be a sequel to the social network. Those scenes in the depositions. I would have sent Jesse Eisenberg yesterday. Who i thought was a better Mark Zuckerberg than Mark Zuckerberg. Have you told Mark Zuckerberg that . Hes a millennial, right . Hes a millennial. 31. Speculation he may want to run for president. I saw that. He has to get to 35 first. This car is traveling over 200 miles per hour. To win, every millisecond matters. Both on the track and thousands of miles away. With the help of at t, Red Bull Racing can share critical information about every inch of the car from virtually anywhere. Brakes are getting warm. Confirmed, daniel you need to cool your brakes. Understood, brake bias back 2 clicks. Giving them the agility to have speed precision. Because no one knows like at t. When you travel, you want your needs to be understood no matter where you go. You want an experience that feels highly personalized. With watson on the ibm cloud, travel Companies Like wayblazer can apply cognitive analytics to social data to understand what a destination is really like. And who exactly, it will appeal to. Today watson is helping businesses create experiences that revolve around you. Because thats what the ibm cloud is built for. Welcome back to squawk box. We are live in davos, switzerland this morning. Were less than two days away until the inauguration of donald trump as 45th president of the United States. Our next guest was appointed by the president elect to chair his strategic and policy form. Joining us to talk about that, the next 100 days, chinese relations we have a lot of questions for him, Steve Schwarzman joins us. We want to understand what is going on in trump land. China, president xi was just here. I want to start there, and go c a Abraham Lincoln and talking about free trade and open borders and being much more global rather than nationalistic player. Trump is on the other side of that, at least some of the rhetoric has been. Where do you land in terms of your conversations with him that youve had and the people around him, how you think hes thinking about this. I think president xi gave a really brilliant speech yesterday. Sort of covered the waterfront and was a great exposition on a way the world should be going. I think whats going on in sort of trumpland, as you call it, is a lot of stuff. Standing up a government from a standing start with a group that was widely perceived as not having a chance to win, so that they werent as well prepared for transition. I think youd have to give them pretty high grades for standing up their government now. Theres a lot of people coming together, theres a lot of stuff happening. Imagine, you know, theyre like house moving. The offices will all be opened on monday. Theres a lot thats going on. At the same time, other governments and constituencies are calling on them to be functional before theyre even functioning. So id say its a lot of juggling as things come together. Have you talked to him about some of the comments hes made around tariffs and border taxes and things of that sort . You are, to some degree, a globalist. I think you believe in globalization. As you said, were defensive of what the chinese president said yesterday, which really is the antithesis to some degree of what trump is saying, no . Its a little different than that, i think. You know, sort of the new administration is interested in fundamentally creating a better life for americans. And thats how they won the election, with half of america that has not really shared in a lot of the improvements that have happened over the last 10 to 15 years. So theyre looking at different ways to do that. And thatll drive them, you know, to looking at almost everything. Its sort of like in business youd call this zerobased budgeting. What should we be doing . Not what were we doing. In that sense, its very exciting period, and its going to touch a lot of unfamiliar places and ultimately, my own sense, and i cant tell you what i talk to people about or else i wouldnt be worthwhile to confide in, but you could whisper. Just to becky. Everything is secretive. Its all secret on cnbc. I find that people are quite responsive when you communicate with information thats useful. So i think were in a period of adjustment and learning and thats normal. So im not pessimistic. I think if you dont like change, this will be an uncomfortable period. But growing at 1. 8 , that was an uncomfortable period. The benefits for the american people, you know, have not been substantial at that growth rate overall. So were going to be trying some new things, we as a country. Some will work. Some wont work as well. But the leaning forward, if you will, to experiment, to debottleneck, to change taxes, there are going to be a lot of things, most of which on a theoretical basis, most people would say are good things. That explains a lot, steve, that people are resistant to change. In a null shell, you just said it. 1. 8 is what we were used to. The number of ceos and Business Leaders and republicans that were saying lets continue these policies, thats why im backing Hillary Clinton, because we know what the policies will be, and we know the stability. So many of those same people now are saying, wow, this other stuff might be pretty good. They didnt say it before the election. They didnt understand maybe deregulation might help. Maybe Corporate Tax reform might help. They were willing just for the sake of not changing to stick with 1. 8 . Now suddenly they see the effect of this already. Now theyre on board. Its bizarre. Well, most people, joe, like the world they live in. I guess. It is the human condition. There are some of us who have chosen occupations in the securities business, investment business, where its all about change and anticipating change. From my days when i was doing deals, its the uncertainty of that, that some people are comfortable with. What are you anticipating right now . If youre in the business of anticipating change and youre a betting man, where would you bet wed be after the first hundred days of this administration . Well, youre going to have a lot of action by definition. I think youll have major rollbacks of whether its executive orders or regulations, putting people in place who are going to do those type of things. But when you have your monday meeting at blackstone, what are you telling them they should be thinking about in terms of places to invest, things to do, things to sell, things to buy . I think were saying, just for a start, that were going to have higher growth rates in the United States. Were liable to have a stronger dollar. You know, we have to watch to see what happens with some of the tax proposals. Because theyre highly complex. Theyre interrelated. At some point, you know, initially difficult to understand for most people. So we have to be mindful of that. Okay. Steve schwarzman, thank you. More squawk in a moment. Heads of state, Business Leaders, and celebrities gathering to discuss the issues facing the global economy. In this hour, manager of the Worlds Largest hedge fund,ing ridgewater capital founder, ray dalio joins us, first on cnbc. Plus, nyse Group President thomas farley, the ceo of levis and the ceo of paypal. We hit the topics most important to your portfolio as we get ready for a transition of power in washington. Rising Interest Rates, jobs, Corporate Tax reform, and much more. The second hour of squawk box live from the World Economic forum begins right now. Good morning. Welcome back to squawk box here on cnbc. Were live from davos, where its really sunny but that doesnt mean that its warm. Its really sunny and really cold, but its crisp. Im sort of developing a taste for it. Although, minus 3 at 8 00 in the morning will get your attention. But you know what, i was out this morning and i didnt realize it was negative. You get used to it. Its kind of dry. Its a dry cold. Its not like the cold in new york. If it were windy, dreary, and snowing, we might be crying, andrew. We have little heaters under here. People dont know. But my leg is on fire and the rest of me is freezing. Im joe kernen along with becky quick and andrew ross sorkin. And mack the snowboarder, the knuckle dragger. Futures at this hour, well take a quick look. Futures have been well, now theyve turned negative. Down about two points on the dow anyway. S p still positive, barely. Nasdaq up 3 1 2. The ten year has been trending around 2. 3 or so. Its 2. 36 this morning. Well take a quick look at the oil markets as well. We should probably look at the dollar, given that was the big story yesterday with some of tru trumps comments. 51. 71 on wti. Theres the european markets. Only one is positive. I would have put in the dollar if its the lead story in the wall street journal. Dollar a little weaker yesterday. He said he didnt want a strong dollar. I know he said that. It got awfully strong. Just adding the context. Then Larry Summers said he would never say that he wanted anything other than that strong dollar. Youre not supposed to say it. Even though thats what they want. Worried a about strong dollar. Everybody talks out of both sides of their mouth. I thought you were going to Say Something else. Lets get a look at whats making headlines at this hour. Were just about a half hour away from the latest earnings reported from Goldman Sachs. The firm is expected to earn 4. 82 a share on revenue of 7. 724 billion. At about 8 00 a. M. Eastern time, well be getting quarterly numbers from citigroup. Analysts think citi will report a profit of 1 a share. And president obama will hold the final News Conference of his presidency today. That will be taking place at 2 15 eastern time. I think hed like to hold some even after the inauguration. A final, final, final News Conference. I dont think you really can. This is probably definitely the last one. Is this the last one, andrew . This is it. Okay. Turning now to the agenda on capitol hill, we are just two days away from president elect trumps inauguration. Confirmation hearings continue today for a lot of the nominees in washington for his cabinet picks. Among the names to watch, scott pruitt is trumps choice to run the epa. Governor nikki haley is up for ambassador to the united nations. Commerce secretary designee wilbur ross. According to prepared text do you remember what thats from . Yes, mr. Ed, the horse. Yes, it is. Ross will tell senators hes not antitrade, but the billionaire investor will argue that the United States shouldnt allow for malicious practices or unfair subsidies for trading partners. Thats something weve heard. Ross has promised to sell his stake in his main private equity firm and divest other assets, also resign from the corporate boards hes on. He will keep his interests in mortgage lending and shipping and hopefully will keep his frequent appearances on squawk box. The rise of populism across developed nations is now more important than Central Banks these days for global markets. This according to ray dalio, ceo and cofounder of. In a first on cnbc interview is ray dalio. We always love seeing him out here in the alps. I always love being here. You just wrote a piece about populism. You always talk about the economic machine that youve developed, at least in terms of the framework for how you think about the world. Were all trying to make sense of trump world and what its going to mean to the markets and what its going to mean to the economy. How are you positioning yourself, and how are you thick all of this . I dont think theres probably much insight that i can give beyond the interviews youve just had about trump. Meaning, i think i wont go on at length. I think theres a phenomenon that exists that is called populism that we really dont know very well, that it existed in the 30s. That phenomenon partially is due to a wealth gap, but its also partially due to the sense of inefficiency and make the place work on time for the common man. The values that are National Values rather than global values, there are those elements that exist right now as an influence that is more important than central banking. This is the first year that i would say politics is more important. So i think its important to look at what existed in the 30s. I think the 30s parallel, maybe we could take a few minutes and go through that. Okay. Tell us about the 30s parallel then, if thats how youre thinking about it. Well, okay. If you take the wealth gap, comparable in the 30s. So 1929, 32 was analogous to 2008 and 09. Then when we hit zero Interest Rates in both cases, what we had was Monetary Policy, the printing of money and the recovery that took place. The recovery in the 30s and the recovery we had was a bimodal recovery. As a result, as you got to 1936, 37 and through the 30s, there became the sense of we need to gain control of this by the common man. As a result, we had populism. Populism became more theres populism of the left and populism of the right. Populism of the left was then communist and socialism. Then populism of the right was fascism. Fascism was that nationalism. What were experiencing now the word populism a year ago was not popular. As were now youre going to hear more of populism. If you look at europe as a whole and youre going to say what is the greatest threat to the european union, its not the debt crisis. Its not central bank policy. It is the movement of populism. Do you think were headed dh down that same road though . Im saying that the phenomenon exists. It as a driver will become more and more of a driver. The impatience, these elements but the economic implications of that are what . Just remind you, we had a conversation with tim geithner at the delivering alpha conference probably now maybe 12 months ago. No, six months ago, in the fall. I said to you and to tim, what do you think the growth rate could be in the country . This was after donald trump said he thought he could get to 4 , 5 . I think both of you said somewhere in the twos seems realistic. Now all the sudden were having a whole new conversation about threes and fours and who knows what. I think thats one of the advantages that were having. We can rekindle animal spirits. In other words, if you look at where youre going to get it from, youre not going to get it from Monetary Policy, right. Its not going to be stimulative. You can get a certain amount of it from fiscal policy. In other words, change taxes, but you got to spend it and still got to balance the budget. So youre not going to get much from there. What is interesting is from deregulation, from creating the excitement and the can do, to create a home where the United States is a place where making money for wealth to create businesses and creating productivity. It starts to create an environment in which capital from the rest of the world starts to make a move over here. So you look at it, and you think globally, even the comparison, do i want to put my plants in china or do i want to put it within the United States. The calculation is very different. If you want to be in the u. S. Market and you want a market in which youre going to have its okay to make money, its okay to make things happen, and its a market in which theres also respect for property rights, rule of law. It makes the United States a very unique place. If you change the capital repatriations and you bring money back and you do some of these other things, these are stimulative things. So is the market move weve seen to this point just the beginning . If youre laying out a story like that, that sounds like a much longer term move. I think the market has discounted the obvious, meaning if you take the Corporate Tax rate and change it by that amount and you take those various things, the market is adjusted now to that level. Okay. Now were at a point where we have to wait and actually see. I think the real question is what is a Trump Administration . Is it going to be wise and thoughtful and well calculating . So when you have Something Like the border tax, is the border tax on . Is the border tax off . Is that going to be worked out intelligently . How will the 1. 3 trillion that was supposed to be raised in the border tax and then pay for other taxes, where will that come through . So were at the stage that weve made the initial reaction to that, but now how these people Work Together and actually operate, and then theres geopolitical issues. There are questions in terms of geopolitical. The issue of will the china situation what is actually going on there . How will that work . How will that play out . And will that carry through in terms of other policy . What will that mean for iran . What will that mean for other places . There are right now i think more question marks on the implementation of it. We have a lot of question marks on how it is actually going to go, right. We could be underestimating the effects of all these things synergistically. One plus one could equal three because we havent tried this pro business zeitgeist. We havent had it for a while. Others say its already a sugar high and theres going to be bumps along the way so that it doesnt proceed smoothly. So weve already been rewarded, weve paid it forward. I have a feeling that we dont that were underestimating how powerful it could be. I think if its done well w the calculations done well, it can be extremely powerful because if it didnt take place, then the malaise and the impatience would produce even worse results. We needed a revolution. In a sense, we need a reinvigoration and that kind of revolution. So theres an optimistic possibility that this can be, but the question is, donald trump is aggressive, is he aggressive and wise and thoughtful and calculating, or is he aggressive and reckless . I think were going to find out. Which one are you betting on right now . I would say so far ive been optimistic about the selections of the people hes made, so i dont but you know theres also a time to know not to take a big bet. You dont have to always have a big bet. The way ive done best is know what i dont know. Its not because what i know. So when i look at what the next few months are going to be, i think that well learn a lot over the next six months. Okay. One of the things that youve written about recently was your experience with the wall street journal and a story they wrote on you. You took issue with a lot of what the reporters laid out and wrote a very precise memo detailing a lot of the points you took issue with. What kind of response have you gotten to that . Ive had a good response, but i dont want to be about bridgewater. No, we were just talking before. Its interesting in this era of socalled fake news the experience youve had with traditional media outlets. I think you know and all of us here know that its all too common that the desired story is what drives at not the truth, and we all know that. So when were dealing with that particular issue, thats a threat to our society because if we have democracy, we have to know whats true. If youve been involved, of course you must be involved in a situation and then you read about it, you know that it doesnt resemble what youre reading about, right. And if you agree and you know that, then you know that thats a threat to our system because if you dont know whats true, its terrible when its intentional. And your point is that its important to have a very strong journalistic community, but one that you know you can trust at the same time. I would say if you all were looking and others were looking and saying is that quality journalism if somebody is looking and saying is that quality journalism, and i dont think it should be the government. That would be the worst. But almost if there was a selfregulatory organization or somebody making judgments or even the awareness of the problem. The awareness of the problem itself raises probably will produce a higher sense of responsibility. Its a big echo chamber right now. They talk back and forth to each other. They nod so much to each other that the world is the what i theyd like it to be rather than the way it is. Thats what i see reported a lot. Im in the going to mention any names. I know i just looked at you, but i didnt do that on purpose. I think theyre well intentioned, but its an echo chamber. Theres also many that you know are not well intentioned. There are some that are even not well intentioned. In other words, the story is more important than the truth, right. Commonly. Yes. Ray, thank you for talking to us about all of this. We look forward to seeing you again soon. Its always a pleasure. Thank you. A quick stock to watch, just moving in the last couple minutes. Take a look. News just out from target. The retailer saying the Holiday Season Comparable Store sales were down by 1. 3 . Thats softer than the street had anticipated. So target is now cutting its fullyear 2016 earnings and sales estimates. That stock, as you can see, is down by 4. 8 . Probably amazon too. When we come back this morning, nyse Group President tom farley joins us from davos. Were going to be talking ipos and the future of the big board. Later, well also be talking denim dollars. The krerceo of levi strauss tal to us about the new designs. Plus, paypal Ceo Dan Schulman on life. Stay tuned. Bp gives its offshore teams 24 7 support from onshore experts, so we have extra sets of eyes on our wells every day. Because safety is never being satisfied. And always working to be better. With newfound corporate confidence about Donald Trumps president ial administration, many are expecting a pickup in the ipo market this year. Joining us for more, tom farley, nyse Group President. Good morning. Good morning. I cant really call you mr. President anymore. President of the nyse. You can call me tom. Call you tom, call you ray. We just had ray on. So youre feeling the animal spirits even in the big board. Yeah, its a bit of a setup to ask me to talk about the economy after ray dalio. Might be the wisest head on these matters. I dont know. If anybodys there with their pulse on whats happening, youre no slouch. Who knew that if you talked about lowering Corporate Income taxes and smarter regulation that maybe wed see a pick up in the markets and animal spirits. Maybe you knew, joe. I saw a lot of people that should have known better sayi i i just want to stick with what weve been doing because im scared to do something different. Then it didnt work out for them, obviously. Republicans across the board, republicans for hillary. Your buddy hank paulson said i think hillary can reach across the aisle to get things done. What about electing a republican on the same aisle and see what happens. It made no sense to me. And now suddenly they see whats happened and its like, wow, why didnt i think of this befo beforehand. Its working. The narrative has been the dow is going sideways, but its up 2,000 points since the election. What do you hear from all the companies you talk to . People are excited. The number within issue that ceos have talked to me about for the last three years is Corporate Income taxes, especially u. S. Ceos. Its not rocket science. Theres a lot of just angst because some Companies Benefit from deductions. I wont call them loopholes. Other companies are paying, you know, 33 , 34 , 32 Corporate Income taxes and theyre feted with it. People are really excited about it. I was at dinner last night with a very big ceo who said to me, said to the group that in his industry, hes already seeing regulations not be implemented that were otherwise going to be implemented. And thats a relief. So were already seeing positive pickup. They were supposed to kick in. They will never see the light of day. So i think these will be good things. Obviously we need regulation. We need safe and sound markets that are trusted. We need safe and sound corporations that are trusted. But weve gone too far. It feels good right now. Do you know jay clayton, the appointee to be the head of the s. E. C. , who i imagine will oversee some of what you do. I do not. Im not just saying this, but everyone ive spoken to, the number one thing they come back with is first and foremost a very good person and somebody who will be a good s. E. C. Chair. I think they picked him for a reason. This is somebody, he was not a former prosecutor. I dont mean that as a jab at chair white. I respect chair white. I think she was a very good chair. But this is somebody whos going to really have a probusiness bend. Obviously will have an Important Role as a regulator and enforcer. Tom, very quickly, ipos. Not a great year last year. What are you seeing in the pipelines . I think it should be a really good year. By the way, welcome back. Congratulations. Thank you. I think it will be a very good year. Thingsing change. Im not making a prediction, just looking at the facts. Last year was lousy. The whole First Quarter we did zero ipos. We obviously raised zero money. Next week and the following week well have six or seven ipos. We have a billiondollar ipo, a couple 500 million plus. Its coming back. Thank you, tom. Great to see you, sir. Great to talk to you guys. When we come back, the ceo of levis on the business of denim, the consumer, and the retail sector. Well talk about it on squawk when we return. Time now for todays aflac trivia question. Which company was listed first on the New York Stock Exchange . The answer when cnbc squawk box continues. Yeah looks like y moving back in with his parents. What . No. I just broke my leg. No, this is a full blown move in to the basement, youre gonna be out of work without that money from. 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We touch millions of lives every day. Conduent. Advancing the everyday. Now the answer to todays aflac trivia question. Which company was listed first on the New York Stock Exchange . The answer, the bank of new york. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. God morning. Welcome back to squawk box right here on cnbc. Were live from the World Economic forum in davos, switzerland, this morning. Among the stories front and center that were looking at, target reporting softer than expected holiday sales. As a result, it is cutting its fullyear outlook. Its also now expecting adjusted earnings of 5 to 5. 10 per share. That compares to analyst estimates of 5. 20. Target pointing to disappointing traffic and sales trends in its stores. Also, Mortgage Applications rose 0. 8 last week. That coming according to the Mortgage Bankers association. New purchase applications falling 5. 2 . That was offset by a 6. 8 increase in financing activity. And netflix has signed a deal with comedian jerry seinfeld. That news coming ahead of the companys Quarterly Earnings report, which comes today after the closing bell. Theyve been on a streak, picking up a lot of rights to different comedians. I think chris rock they just paid a fortune to. Just like hbo used to do all the big standup specials. Now theres a whole new competition in that market. Good news for the comedians. Extra money going around. Good to be in content these days. Among the unofficial themes at the World Economic forum this week, making Business Decisions as president elect trump prepares to take office. The Auto Industry has already come under fire just this week. As a result, gm announcing this week its investing 1 billion in the United States, including new jobs. We caught up with Ceo Mary Barra right here in davos. The United States is a very, very important market to us. So as we look at how do we drive the business and make it more efficient, a lot of these jobs are a big part of that. You know, weve consolidated our Engineering Centers from seven to three and centering a lot of those jobs here. As we look at logistics costs, it makes sense to do some of the work close to an assembly plant. So it really has been looking at how do we drive efficiencies, but also work with all of our stake holholders to do the righ thing. Barr are da did not say the announcement this week was a direct response to the tweet from donald trump, kind of going after gm. But very clearly, she did say that the world is changing, the way we communicate is changing, and that twitter is something theyre paying close attention to. Blue jeans is one of americas fashion staples, something that never goes out of style. We have levi strauss co. To thank for that. Levis is one of the oldest American Companies still operating. In fact, it dates back to the 1800s. While the company has had its share of struggles through the year, the companys current ceo came in five years ago and has changed the face of a very wellknown denim brand. Joining us now is the levi strauss co. Ceo chip bird. You have done some amazing work over the last five years. Levi was a fantastic brand that really came under pressure and started losing money. What happened to bring the brand down, and what have you done to turn things around . I thi i think in short, the brand lost its way in the late 90s. We lost a lot of consumers. We lost our mojo. Im a brand guy. Proctor gamble. 28 years. I saw this as kind of an enormous opportunity, an enormous challenge. Now the brand is back. Were growing solidly around the world. Building the brand through kind of reestablishing the brand back to its roots. How do you do that . What are some very concrete steps you would take . This sbrand brand is at its when were at the center of culture. Back in the day, we were there when the berlin wall fell down. We were there through the riots in the 60s and 70s. So we are at our very best when we are right at the center of culture. So weve put the brand back at the center of culture. We did levis stadium, culture sports. Culture, music. We do a lot with music as well. Music happens in big stadiums like levi stadium. We launched a new Advertising Campaign to put the brand right back at its roots called live in levis. One of the things i learned very early on is everybody has a levis story. First date, first kiss, going to college. Everybody has a levis story. Weve capitalized on that in our advertising. So reestablishing ourself with youth, making brand cool again. The brand is hot, especially here in europe and in asia. I do my informal market share tests by just looking at peoples butts as i walk through the airport. Youre one of the few people who can get away with it. Right. Ive got the perfect excuse to do that. Almost everybodys leisure wear pants im not really sure why denim is what i would always you know, if i have to wear khakis, i feel like im dressed up. Now i got to make a choice. I have some of those really expensive ridiculous things. Your stretchy ones. Yeah, i have those. Those are okay. But then ive also got some jeans i dont like. Theyre dad jeans. Remember obama jeans . He had that one pair. Theyre baggy. Levis, if you can put the time in to break them in, thats what you need. So you havent gone up on price points. Theyre not 250. You dont make the dad jeans. Theres still constriction in the crotch. Theyre tough. But its worth it to put in the time. So we actually do play across a variety of price points. We go from 30 all the way up to several hundred dollars. Several hundred for levis . Levis vintage. Im wearing maiden crafted today. Let me see those. Italian denim. So you chose those today to come on squawk box. I was wearing 501s yesterday, which is our authentic, the originals. Theyre stiff but theyre worth it. How much time do you have to put into it . Theres a commitment. With the stiff levis, yes. But once theyre broken in, they are formed to your body. Thats why theyre so comfortable, right. It is worth the investment to have them form to your body. Who makes those dad jeans . Are those wranglers . Who makes those things . All the bad guys out there. Theyre terrible. Theyre thin denim and eri everything. How much is the jeans business, on the pants of it . Youre wearing a levis shirt, blazer. How much is that now . The pants are still the majority of our business, about 70 of our business around the world. Were also underrepresented in womens. Most denim brands, bigger on women than men. Our mens business is three times bigger than womens. Meeting the womans need for more stretch, better stretch. Our womens business is on fire. Weve relaunched it about 18 months ago. Its grown double digits every single month since we relaunched it. Where do you manufacture most of your stuff . All over the world. Were a big global how much are you paying attention to some of the comments that donald trump has made . A lot. One thing about the apparel industry, 97 of the apparel sold in the United States comes from overseas. This is an industry that has historically chased lowcost labor because its still very labor intensive. We make jeans the same way we did 143 years ago, by hand. So this industry has historically chased lower cost labor. Theres disruption coming though. One of the themes of this event is the fourth industrial revolution. So theres disruption coming that will probably change that. Meaning computers . Youll make the stuff by hand . 3d printing potentially, robotics. All those things could come into play over time. Is it true you never wash your jeans . I never put my jeans in the washing machine. Thats what i said. So you hand wash them . I spot clean them. I mean, you can really ruin denim by throwi ining them into wash machine. Have you heard of people putting them in the fridge or freezer . Its an old wives tale. I made that comment really to rattle the consumer. The average consumer throws their jeans into the washing machine every time they wear it. What should we do . You can wear it many, many times. If youre careful. No machine. You think the machine is a bad idea. Machine is a really bad idea for denim. Good to know. Got to just take your time. And never in a drier. Never in a drier. Thank you very much for joining us. Come join us in new york sometime too. I will, definitely. This was a lot of fun. Thank you. Coming up, paypal recently inking a deal with discover and strengthening its relations with card networks. Well also ask Ceo Dan Schulman about that and the future of Digital Payment right after this break. At the top of the hour, Glenn Hutchins, north island chairman, to talk the global economy, president elect trump, and more. Squawk box will return live from the World Economic forum in davos, switzerland. Your Insurance Company wont replace the full value of your totaled new car. The guy says you picked the wrong insurance plan. No, i picked the wrong Insurance Company. With Liberty Mutual new car replacement™, you wont have to worry about replacing your car because youll get the full value back including depreciation. And if you have more than one Liberty Mutual policy, you qualify for a multipolicy discount, saving you money on your car and home coverage. Call for a free quote today. Liberty stands with you™. Liberty mutual insurance. The markets change. At t. Rowe price. Our disciplined approach remains. Global markets may be uncertain. But you can feel confident in our investment experience around the world. Call us or your advisor. T. Rowe price. Invest with confidence. Welcome back to squawk box, everybody. Earnings just out from Goldman Sachs. Came in with earnings of 5. 05 a share. Street estimates had been 4. 82. Revenue also beating forecasts. Goldman says the first half of 2016 was challenging, but that the operating improved during the remainder of the year. A couple of programming notes for you, by the way. Later this morning, were going to be interviewing jpmorgan chairman and Ceo Jamie Dimon. Well be talking to him from here in davos. A little after that, Goldman Sachs chairman and Ceo Lloyd Blankfein also live from davos. Thats coming up this morning on squawk on the street and squawk alley. Also, friday we are live from washington, d. C. For the inauguration of the 45th president of the United States. Lawmakers and Business Leaders gathering in d. C. For this historic day. Squawk box will be there to bring it all to you with special guests through the morning. Thats starting at 6 00 a. M. Eastern time on friday. That goldman chart is unbelievable. Its almost like a thermometer or a barometer of animal spirits. You know what i mean . In the meantime, the Financial Services industry continuing its shift to whats called mobile first as consumers become more comfortable paying online. For more on this trend, the health of the future of mobile payments, lets bring in the ceo of paypal. We always love seeing him out here. Last time you did not wear a coat, if i remember. I learned my lesson. Our last guest asked us to ask you what kind of pants youre wearing. 511. So hes a levis man. All the way. Worth asking about. Lets talk about mobile payments. One of the things thats going on here in davos you guys have been talking a lot about, how mobile payments are changing the world, the idea of being able to bank the unbanked. I want to get into the actual business itself. Youre here in davos this year speaking a lot about that issue. I am. There are 2 billion people in the world that live outside the financial system. The things that we take for granted, paying a bill, cashing a check, sending money to a loved one, are incredibly time consuming for them. They wait in line sometimes for hours to make that transaction. And very expensive for them. The promise of fin tech is that you can make those transactions much quicker and much less expensive. For instance, international remittances, 600 billion business today. It costs on average 8 for somebody to send that. We can send that same payment for 3. 7 . Thats a savings, if you extrapolate it, of 28 billion that could be returned to people who really need that money. Lifting almost 30 Million People out of poverty. Why can you do it so much cheaper . We dont have the middleman thats changing that transaction from digital to cash. Then when you have cash, its really inefficient. Theres a lot of leakage in the system based on that. So if you can do it all digital, you can do it much less expensively. And you dont have to wait three days to get that money. You can get it instantaneously. Talking about the middleman, you used to be the enemy of the visas of the world and the mastercards of the world. Youve recently partnered with them. How did that happen . Why are they doing t and why is it going to work for you . I think what we came to the reali realization of is that the war is against cash and against waste. Governments waste over 130 billion, 140 billion in leakage of cash. If we could become allies and partners in the advancement of Digital Payments, that would be a win for all of us. Im sorry, what is leakage of cash . It means if you put out a check to a consumer, a benefit payment, it can get lost in the mail. There can be corruption in between so that end user that the government steals it or the middlemen in between to cash that check, they charge fees for it. Theres tremendous leakage in the system. Well over 100 billion. Weve all come together and figured no one company or government can do this alone. There has to be collaboration at the heart of it. If we can collaborate in a productive way, which weve all decided to do, we can probably take the best assets of traditional financial institutions, the best assets of emerging technologies and create better value propositions. What do you make about all the emerging crypto currencies. Ta take bitcoin out of it for a minute. I think you need to separate out, for instance, bitcoin from the underlying protocols that allow for the transfer of bitcoin. A lot of the crypto currencies right now arent really currenci currencies. Theyre commodities. Theyre traded because theyre not really they bounce around so much. Its difficult to use it as a currency. Say youre a retailer accepting a bitcoin and it goes up 10 , youve lost all of your margin. So the first thing you have to do is convert it into a fiat currency, which costs you money to go and do. So you cant really use it as a currency yet. But the underlying protocol, the block chain protocol, shows some promise to take out costs in the system and some unique ways of thinking about Different Things like identity and protecting identity in different ways. Anybody can avail themselves of applications written on top of the block chain protocol. So it doesnt really disintermediate folks, but it allows for more efficient transactions potentially. Still early. One thing you do every time i talk to you is scare me. Because youre somebody whos so actively involved in cybersecurity threats. How many times a day does somebody try and hack in . The typical American Business has about 4 million attacks a year. 4 million attacks. Financial services have over a billion attacks. Thor e er ior e ferocity of thos going up. Not only has the number gone up by tenfold, but the amount of force inside of those attacks has gone up by 20 fold. Its a constant battle to make sure that we can protect the consumers identity and their management and movement of money. And that really comes down to data. The more data you have, the more sophisticated your algorithms can be. Because you cant just keep people out. Its not really about building, you know, higher turrets and deeper moats. People will get in because peoples credentials have been compromised. Its then identifying behavior thats abnormal and being able to look at algorithms and prevent money from leaving the system. Its that combination of the two things thats important, and the key to that is having scale and data. It feels these days that people, users are willing to put out more of their own information publicly, which probably makes your job that much harder. You have this fastgrowing app called venmo. I use it all the time to transfer money. I just type in somebodys phone number, and i can send you money. Its the easiest thing in the world. I dont know how you make money on it. We got to talk about that, actually. However, when you do that, you can also write a little note. So publicly, its like a social network. Everybody can see what youre spending your money on, which i find shocking. I do it privately, by the way. I dont turn that on. You dont want to say what youre spending your money on . Venmo . Who do you pay that way . All sorts of random people. Sometimes people maybe we shouldnt talk about this. You know what, actually, no. Keep talking, andrew. Jim cramer, the trainer at the gym. Just pay them directly. You wouldnt want to give a credit card to the establishment and have them bill that . Its harder to do it that way. Now you can do it instantaneously. Its the most amazing thing. How do you make money, by the way . Investors want to know. Its cooler than paypal, right . Venmo is part of paypal, but its targeted at the millennial segment. Its interesting. 95 of venmo users, and its like the leading app of the gen tech generation, put a comment on it. They share it with their friends. I think one of the interesting things is theres a generational difference in public private. Look at me. The older you are, joe, the more private you are. This is why i know im old. Theres a fluidity between that public and private. And we really see thathat in ve. Its an interesting thing. Im going to send you im not going to send you much money. Send me a dollar. Thank you. Great to see you, sir. When we come back, stocks to watch ahead of the open and at the top of the hour we have north island chairman Glenn Hutchins. Hes our guest as we head to a break. Take a look at ray dalio of bridgewater associates. This was earlier today on squawk box. What is interesting is from deregulation, from creating the excitement and the can do, do i want to put my plants in china, or do i want to put it within the United States . Ea ininte aen. Evngeshm. Veinisievi ea t aniog. Ininte aen. Anything with a screen is a tv. Stream 130 live channels, plus 40,000 on demand tv shows and movies, all on the go. You can even download from your x1 dvr and watch it offline. Only xfinity gives you more to stream to any screen. Download the xfinity tv app today. Lets take a look at a couple of stocks to watch this morning. Goldman sachs is reporting quarterly profit of 5. 08 a share, beating estimates of 4. 82. Revenue also coming in above forecast. Goldman Ceo Lloyd Blankfein and Jpmorgan Chase chief executive jamie dimon will both be on cnbc later this morning. And u. S. Listed shares of british Publisher Pearson are tumbling this morning. The Company Caught its profit forecast for the next two years, also slashed its 2017 dividend. And Software Maker adobe systemings announced a new 2. 5 billion Stock Buyback Program that will replace the 2 billion program, which is nearly complete. When we return, another big hour of squawk box live from the World Economic forum right here in davos, switzerland. North island chairman Glenn Hutchins will be joining us from the mountains of davos. That interview is right after the break. Then, the ceo of the largest broadband provider outside of the United States will be joining us. Plus, threetime Pulitzer Prize winning author tom friedman will be joining us as well. Hell stop by. A busy hour ahead. Squawk box will be right back. E e cirywein seimateg e ri timrbto c infrtu d ngkepartrtr thgithe nvt World Economic forum, our allstar lineup continuing this hour. Up next, Glenn Hutchins. Goldman sachs and citigroup roll out quarterly results. The numbers and Market Reaction straight ahead. Plus, the new world order. Pulitzer prize writer tom friedman joins us. The final hour of squawk box starts right now. Good morning and welcome back to squawk box here on cnbc, live from the World Economic forum in davos, switzerland. Inauguration week. Here we are. Im joe kernen. Were glad to be here. Along with becky quick. That looks like a hobbit sword. I broke it. I had a nice long one. Andrew ross sorkin is here. Like the futures, weve moved into positive temperature territory. I think were at 4 degrees now. A nice balmy 4 degrees. But its crystal clear. Its beautiful. I can see how people that live here would say you get used to it and its pretty nice. Its invigorating. But cold early in the morning. The dollar, well take a quick look after what was a tumultuous session yesterday after comments from the president elect. Were going all over the place. Someones finger got stuck on the board button or something. The markets look like i think the dow is up, what did it say, 25 . Did you notice . I was busy playing. Tell us about citigroup. An earnings alert. Citi reported profits of 1. 14 per share. That came in two cents above estimates. Revenue coming in slightly below the forecast that had been expected. Thats after hearing we heard the Goldman Sachs earnings earlier. Well be talking to Lloyd Blankfein later. Lets tell you about some of those Goldman Sachs numbers. Posting better than expected earnings and revenue. The firm says that after a challenging first half, the operatie ining environment impr during the remainder of 2016. Of course, were going to be hearing more about what theyre seeing in realtime when we speak with Lloyd Blankfein later this morning. That stock is up by about half a percent. Target says that Holiday Season and Comparable Store sales were down by 1. 3 . That is softer than target had anticipated. It is now cutting its fullyear 2016 earnings and sales estimates. That stock has been hit relat e relatively hard today. Right mow its down by about 4 . And on the economic front, we have a busy agenda today as well. Coming up at 8 30 eastern time, december cpi. Then later in the day, well be getting industrial production, the monthly Sentiment Survey from the National Association of home builders, and the feds beige book. Plus, this afternoon fed chair janet yellen is scheduled to deliver remarks at 3 00 p. M. Eastern time. Joining us now to talk about all things market and beyond is Glenn Hutchins. Great to have you here. Nice to be here. Thank you for having me. So many places we could start, but why dont we start with the president elect. Donald trump is going to be taking office in just two days. Youre somebody who was a very strong supporter of Hillary Clinton throughout. What do you think, as were now heading into the Trump Administration, where are your thoughts about where things stand from a business perspective . Well, lets look at it from the markets perspective, quickly. Its one of the issues you wanted to talk about as well. The issue theres a lot of talk at davos about animal spirits. Joe has been a big proponent of that, we all know. My concern right now is the markets are pricing in everything this Incoming Administration wants to do as if its already been done. Tax reform, regulatory lessening, the infrastructure spending. And there is a lot of differences of opinion within his administration about how to do some of these things. Theres a lot of complexity associated with getting it done. Theres a lot of time lag in actually getting things done in washington. He starts off with the very low Approval Rating and high expectations, which is a very unusual combination. Those animal spirits can turn quickly if theyre not satisfied quickly. So my concern is the markets might be overextended right now based on that kind of sentiment. We spoke with ray dalio about an hour ago. He said that where the markets have come to this point, he thinks its because of these expectations being built in. He said himself that he knows what he doesnt know, doesnt know whether there will be additional gains. You make it sound a little more dire. You think i dont think its dire. Joe and i have talked about this in the past. I think these things go in cycles. Its now time for the theory of lower regulation, lower taxes. They release these animal spirits spirits to see if they can work. Ray was pretty enthusiastic about that. I hope it does. Theres a lot inside that philosophy. Im just concerned the markets are overreacting to what can be accomplished in what time frame. If this works out, youll do were v very well, as you said. Weve talked at length about this. Your caveat is as some of the people that are benefitting from these things are doing well, it probably is a good idea to remember people that are unaffected by, you know, when business does well and when assets do well. You dont want to take your eye off people that wont do as well while all these positive animal spirits and we agree on that. The africans have a saying that when the elephants fight, only the grass gets hurt. One example of that facing us right now is what to do about the Affordable Care act. And medicare. One of the accomplishments of the Obama Administration has been covering 20 millionplus people who werent covered by health care. Our Health Care System is very complicated. There might be a better solution to it. If we can find a better solution, im very, very supportive of that, but if that involves taking Health Care Away from all those people who are not advantaged by all the benefits that were getting from the markets right now, that would be very troubling. Donald trump says hes in favor of repeal and replace and that there is going to be coverage for all americans. So if you have coverage for all americans and you cover preexisting conditions and you allow kids to be on their Parents Health care until theyre 26 years old, im not sure how you take a lot of cost out of that system. Right. So what should we be doing . Obviously its not a perfect system. Toby cosgrove is here this morning too. He said when you have a 3,000page bill, its not going to be perfect. You have to change things. Sure. If you take your time to get it right, if you cooperate remember, most of these important reform legislations have had tens, if not hundreds of modifications and improvements. Obamacare was never once addressed by congress. But in washington you dont have the two sides working together. Youre not going to have a thoughtful sitting down of doing Something Like that. But thats just one example. Another one is what happens with taxes. In other words, if you cut taxes for the wealthy and dont spread that across the economy in some constructive way, then youve tilted the Economic System for people who have already benefitted enormously by this massive runup in the markets since 2009. So i think the philosophy of trying to stimulate the economy with a more republican, conservative point of view, cyclicly its maybe time to go back to some of that. What does Glenn Hutchins the investor do right now . These times have historically been good times to make money. Its very favorable for the markets. Lower regulatory barriers Mean Companies can oftentimes do very well. Does that mean youre betting all these things are going to happen . There are two things im thinking about. One is a whole bunch of stuff going on here in the Technology Space that im very interested in, particularly the whole apropos your prior speaker, the bitcoin protocol. The other thing you have to worry about is historically these excesses lead to market and economic problems. So you have to learn to protect yourself against that. The last two periods of this sort of the applications of this philosophy has led to Serious Problems in both the economy and stock markets. Youre looking back to the 1980s. Yeah, talking about the 1989, 90, and 2008. You have to keep track of the imbalances building up so you have to get out or be hedged in the right way. You layer on top of that right now the problem that this has so far been one of the longest economic recoveries in history. Four more years of it, 48 more months would make it the longest in modern economic history. At some point, i think a better person would be wise to think about a cycle, Business Cycle here too. But the other thing is, and people say it again and again, that recoveries dont die of old age. I dont know if night follows day in terms of just where all the sudden the clock runs out. If you havent through some type of flawed policies or through printing too much money, whatever has caused recessions in the past, i dont know if the Business Cycle is eneinevitable. Right now you have asset markets that are reasonably extended. All sorts of things that are Interest Rate sensitive. Youve got pretty extended prices in a time period in which were likely to see rising Interest Rates. If you cut taxes and do lots of spending and have a large funding need, thats going to put more pressure on Interest Rates. So the Interest Rate effect could be very profound. Thats one. The second is theres a lot of international issues. Our relations with china, our relations with russia, potential events in the middle east that can interact with economic events to create these sort of questions. The one thing you have right now, people on both right and left agree, is a lot of unpredictability. That obviously always usually creates some sort of conservatism in markets. Unpredictability combined with this huge rally. That just causes an investor to kind of be cautious, not to be negative, but to be careful. Very quickly oh, theyre rolling the music on us now. You have been somebody whos laid out great explanation for bitcoin and convinced a lot of people as a result. Well, davos has now discovered the block chain. Since the davos consensus is almost always wrong concerns me. But i think that what people are missing is the what i call the bitcoin protocol, which like the simple mayo protocol and the voiceover internet protocol is a way in which we can move value around the world at the speed of light with no cost. And the block chain is just a way for accounting. I think people are missing that. Great. Thank you. Great to see you, sir. Nice to be here. Thank you, glenn. Coming up, were going to talk media with Liberty Global ceo mike fries. Then the ceo of chobani is here. Were going to talk yogurt and the consumer. Then later, Pulitzer Prize winning writer tom friedman. Theres a golfer. Ive heard about it. Its like a bee that flies. Shouldnt really be able to do it. You look at him and you cant. Anyway. Heus 5. At,onaled oanac o ok, a m anything with a screen is a tv. Heus 5. At,onaled oanac o ok, stream 130 live channels, plus 40,000 on demand tv shows and movies, all on the go. You can even download from your x1 dvr and watch it offline. Only xfinity gives you more to stream to any screen. Download the xfinity tv app today. Welcome back to squawk box this morning. Were talking media. Lots to talk about here this morning with mike fries, the president and ceo of Liberty Global. Lots to talk to you about. We were just talking during the commercial break about brexit and its implications. Weve talked to a lot of other ceos about trump. I dont think thats necessarily going to have a huge implication on your business, but brexit will. It should. We have a big business in the uk. Thousands and thousands of employees. Were all anxiously awaiting the process and how it will unfold. The comments yesterday i thought were received well. My concern is that consumers start to bear the brunt of this a little bit. If people stop investing, if industry slows down, then theres a trickledown effect on consumers. We havent seen it yet. Thats your concern as an operator, it will creation recessionary environments . Were investing 3 billion pounds, as we speak, extending networks, building out fiber based networks throughout the uk. Were not going to stop. But if other companies who are investing billions of pounds say maybe ill invest 2 billion instead of 3 billion, theres a trickledown. Hopefully she can help create clarity and confidence among the business community. John malone recently made a comment that had people speculating about a possible takeover on tmobile. Right. Well can you give us a little bit of color . Dont ask me to comment on what john says. Well, hes the guy. This is the news. Thats the u. S. Business. I think hes just speculating about something we believe in, which is fixed mobile convergence. If you look at our business throughout europe, we will be i think ultimately there will be two fixed mobile players in every country. We want to be one of them. Which means we have a broadband fiber based network and a mobile network. We have mobile in nine countries. The u. S. Will ultimately go that direction. I think Cable Companies will have to find mobility in their future. Thats a good thing. But do you believe that broadly every Cable Company is effectively going to have to have a mobile piece to it. Every company that has scale. So a small regional operator in the u. S. , no. But we have scale in our european markets. So for us, we need a mobile solution. We want seamless connectivity for our customers. That connectivity layer is where its at. Functionality and content for sure, but getting that connectivity layer right so when you look at this time warner at t merger, does that make sense . It does because i think at t has national scale, national reach. They have a directv product now. They can stream video across their phones. The time warner piece adds premium contend. I think its a smart strategy. Ultimately, when you have the connectivity layer and the functionality, i think its a matter of time before vertical integration starts becoming more and more. You live ed through the regulatory hurdles that took place in europe. Do you have any sense of how you think the u. S. Will all tultima look at that transaction . I think itll get done. You do . I do, and i think it should get done. Im not an expert. Im not as close to it as others. But i think it will get done. We spoke with larry fink just last week. He was talking about how were always talking about how positive things are in the market, how the u. S. Stock market has taken off, but that investors most investors have a global perspective. They have a global portfolio, and other places in the world arent doing so well. Can you tell us how europe is doing . I think theyre pretty steady for the most part, surprisingly steady. I think, you know, we havent seen anything our business is growing every quarter. Weve had 45 straight quarters of growth. Were fortunate to be selling a product that grows in demand 50 a year in broadband. So were fortunate. I think our business will continue to grow. We havent seen much in the way of instability on the gdp front or the economies. I think people are more or less positive. There are tectonic issues, whether its politics in the political sphere this year will be interesting for a lot of people. Would it be a problem if the eu were to fall apart . We would prefer it not. I think one of the biggest impacts would be, of course, the instability and the uncertainty around currencies and trade and regulatory. I dont think thats going to happen. I really dont. What are the implications of apple trying to get into the content business in your mind, and also even just facebook and the growth of snapchat and things like that . I think you have to define content. Facebook is really defining video content differently than we defeign vine video content. Its great for our business. We win when people download more, upstream more. Again, were that highway that people are utilizing. Its good for us. Were partnering with netflix everywhere. Were putting netflix on all of our platforms. Every year when we talk, i sort of tell you thats where its going, and it has. Its been great for consumers. More video consumption is good for us across both broadband and video. You think netflix stays independent . Good question. I think theyd like to. Whether they will or not, well see. Okay. Mike fries, thank you. My pleasure. Thanks, mike. When we come back this morning, breakfast at 5100 feet. The ceo of chobani joining us next to talk about the battle for the Grocery Store shelves. Later, dont miss our live conversations with Jpmorgan Ceo Jamie Dimon and Goldman Sachs chief executive Lloyd Blankfein. Two interviews you wont want to miss starting at 10 30 eastern time. Coming up, president elect donald trump has promised to repeal and replace obamacare. Were going to talk about the impact on the Health Care Sector with the ceos of the mayo clinic and kizer permanente. Stay tuned. Didi 9f ounse sh her thelo s r . Noeld. Itll. Thtrafress run s r . Noeld. Ou ol. T r hintnc. scoveri. Hsuepy at o r. Tesrdxu. N s. 20 ene. Moree the300 5came my name is danita seaton. Im a Gas Service Representative for pg e here in oakland. When i work in oakland, i feel like im home, because i grew up here in oakland, my family still lives here. Every time i go to the customers house, i treat them like theyre my family. If they smell gas, or they dont have hot water, im there to ensure that by the time that i leave, they feel safe and they can go back to their day to day life. To learn more about gas safety in your home, visit pge. Com safety together, were building a better california. Good morning. Welcome back to squawk box here on cnbc. Were live in davos, switzerland. Lets tell you what big stories are front and center for us this morning. The Federal Reserve is out with its beige book later today. The regionbyregion assessment of the economy comes out at 2 00 p. M. Eastern time and comes less than two weeks before the next meeting of fed policymakers. Fed chair janet yellen will talk about Monetary Policy today in an appearance in san francisco. That begins at 3 00 p. M. Eastern time, 12 00 noon pacific. Shell take questions from the audience right after her speech. Of course, well bring you that news as it comes. Also, more homeowners moved to refinance their mortgages last week. The Mortgage Bankers association saying refinancing applications rose 6. 8 , even as new purchase applications were declining by 5. 2 . The average 30year Mortgage Rate fell by five basis points during the week to 4. 27 . Some news just in involving j. Pmorgan chase. The u. S. Has filed a complaint against the bank, saying they charged certain minority groups higher Mortgage Rates. Thats according to reuters, quot quoting a court document. Again, that news just coming out. President elect trump has been very vocal about his plan to tackle Health Care Reform in the first hundred days in office, including the fight to repeal and replace obamacare. Lets bring in the ceos of two leading health care organizations, dr. John noseworthy of the mayo clinic, and bernard tyson, president of kaiseh permanente. Have either of you adviced the new administration . We meet a week after christmas. How about you . We have not. We were pleased to speak with him and his agenda was focused primarily on the va and the next changes in the va, a little bit about the nih and its future, and then we talked about some of the lessons from the Affordable Care act. We didnt spend a lot of time on the Affordable Care act. Our focus was really on complex care and how the Affordable Care act needs to be addressed. Lets say that and bernard, you can start, or either one, but both give me the recommendations. Lets start, since john has already spoke, bernard, how should we do this . Whats most important that we keep . Whats most important we modify . What would you tell them . Well, im pleased so far that the narrative is repeal and replace. I think its important that we not lose ground on what weve gained so far with the Affordable Care act. We have over 20 Million People who now have coverage that go in through the front door of the american Health Care System. I hope that we do not go backwards. Weve dealt with preexisting conditions. We no longer discriminate against women by charging them more than men, simply because they are women. Theres a menu of Preventive Services thats included inside of the policy. And we started, as you know, down the path of looking at the aca for both insurance reform and delivery of care reform. Its my hopes that has we talk about the replacement, that we learn what worked in the first paradigm, build on that, and then problems that we were having with the Affordable Care act that we start to address. Have we dealt with preexisting conditions, or is that part of the reason for the problems that were having . Were not getting Healthy People. Were not getting enough Healthy People to spread out the risk right now. Only people that have problems they wait until they get a problem to sign up. Isnt that why were imploding here, john . I think what he probably meant is theyre covered. We want to do it, but we want to do it in a system thats viable and that will, you know that we cannot have to be is not bleeding. I couldnt agree more. I think one of the outputs of the discussion on health care is the American Public is more aware of the importance of the decisions they make. Theyre actually now part of the dialogue, what they want, what they need. Its on every Kitchen Table in america. That wasnt the case six or seven years ago. Although, we still dont know. I have to say, so much of it i thought we were going to be getting more transparency, that i as the consumer might know how much things were costing. I might be able to shop around a bit. We dont see that. Absolutely. Theres a need for much more transparency. But that question is being asked now. I think we have a more informed public. The dialogue, hopefully, will be brisk and informative. But i also think how do we continue to expand on the narrative. Right now the narrative is, just as you framed it, right, there arent enough Healthy People to cover those who are sick. Well, after a while, if Health Care Just continues to go up and up and up, it doesnt matter after a while about the risk pool in terms of spreading high cost across a risk pool of Healthy People. But there are two problems. One is rising cost of health care. Second is not having enough people. Thats right. We have to work on both of those. Do either of you know tom price, have views on tom price . I have met tom price years ago. Ive read about his view. I havent spoken to him in the last year, so i cant speak to anything current. And i dont personally. Talking about price, but in a different context, the price of drugs. Donald trump has made a lot of comments recently about trying to negotiate prices. Does that make sense to you . Do you want that to happen . What does that do to the Overall Health care picture in terms of cost overall . Well, drug pricing is 12 to 15 of health care costs, so its very significant. We would say at mayo clinic that valuable drugs should be priced for their value, and drugs that add less value should be appropriately priced. There is predatory pricing, but theres some terrific drugs. Theres a lot of innovation coming out of pharma. Thats the question, do you think youre going to kill the golden goose. To the extent you believe the narrative that we have the greatest system in the world to create that innovation, you know, that we will kill that. We cant afford to kill it. I think a lot of it is the regulatory system that is limiting innovation and slowing things down, both in terms of the necessary regs and those that impede innovation and health care. I must say our conversation with president elect trump did focus a lot on regulation and essentially we said that if youre going to regulate the Financial Services industry and the energy sector, please have a look at health care. There are agencies writing regulations that contradict each other, and theyre limiting our activities. What do you expect, gentlemen, starting next week . Bernard, even if there is a repeal, the rug is not going to be pulled out from the 20 million. Theyre doing it a certain way. When would you expect a replacement . You think it could be done in three months, six months, a year . I think its going to depend on what kinds of replacement, what kind of replacement were debating and ultimately going to decide upon. I mean, weve been working at this for six or seven years now. We still have a long ways to go. Its going to be very important that theres an orderly transition to whatever new plan that were going to go to, if it is a dramatic change from the current plan. Weve essentially advised review and repair, not repeal and replace, just because this is very complex, as bernard mentioned. Theres a speed. You can do something quickly, but its hard to imagine how this puzzle will be solved immediately when its taken so long it is so complex. If it does, well adjust to it for the needs of our patients. Well look after them somehow. I mean, all the changes weve seen since november 8th, still president obama. This is amazing how much weve talked about how much action theres been in all the markets in anticipation of this. Its really going to happen. Next week. Get ready. Its really going to happen. Gentlemen, thank you. We better come to work for the first time. Be ready to go. I think we should be here every one of those days. Back in new york. When we come back this morning, chobani ceo will be joining us to talk about the global consumer. Then trumps Foreign Policy priorities for his first 100 days in office. Tom friedman will join us. Stay tuned. Squawk box live from davos back in just a moment. Ierleho inmiecs. Th on ac d nd inmiecs. Oft,harerica welcome back to squawk box. Futures right now indicated up about 30 points on the dow. Nasdaq indicated up 9. 25 so far. Okay. We have a lot to talk about this morning. We are talking about global politics, of course, but were also talking about yogurt right now, one of my favorite yogurts. The chobani brand is a dominant force at the Grocery Store. Recently, the company has come under fire for hiring refugees at two of its u. S. Factoriefact. The founder is here with us. Hes set up a refugee foundation. He has a new oped out today on linkedin. Thats where i want to start. We talk about inequality here in davos. We talk about how to fix that inequality. One of the things you did and have got an lot of attention for is you gave out a lot of shares in your company to the workers. You made millionaires out of people who never expected to be millionaires. You really encouraged and tried to advocate other businesses in how to share the pie. What reaction have you gotten to that idea here . This is why we are here to davos, talk about that. Whats in everybodys mind, not in america, but around the globe, is this gap is widening between rich and poor, this income inequality is widening. Nobody has an answer for it. I think we have an answer, which is the ceos and businesses, tomorrow they can fix this by doing stuff like this. What i did is from my own personal experience. I come from a small town in the eastern part of turkey, growing up hating ceos, businesses, because it was like they come from another universe of something. We farmers didnt have much. When i started chobani. I started in upstate new york in a broken factory with five factory workers. As business grew, these people work as hard as i did. We all did. The community did. Something created i always wanted to give more than anybody else when it came to wages, 401 k s, insurances, everything. Its just not enough. You make the calculation, and ordinary factory works, even with high wages, theres no way they can have a Healthy Family environment, that the kids eat better, go to schools, or have vacation. So whats your answer . I found out the best answer is the people who work in the company so hard to make this successful, not only they get their salaries and benefits, but they also secure their future. You were able to do that preipo. The complicating question is how do shareholders if youre currently a Public Company today, how do you go about doing that without having shareholders say, youre giving away the store . Youre increasing your costs in a way that are uncompetitive. Theyre doing it for their executives. You know, theyre doing it in the high level. It just doesnt go to everybody else. My question is why. Why not . We all do participate in this whole thing. And shares might be one option. There could be other options. Profit sharing or whatever you may call it. But i do believe the only model hasnt been tried is this one, which is employees, associates, or members, or whoever works at the company have a stake at the company. And you dont think it creates a competitive issue . No. I think it creates a competitive issue in a positive way. Now you have 2,000 partners. But im assuming some of your senior people have to get paid less at your company because more of the money is going to people farther down the chain. The question is, do those senior people say, you know what, its a competitive market, im going to work wherever it is. Well, how are they doing . No, you can still make it work. This pool, the 10 pool, and it can grow. Im a founder and the vast majority owner, and i can do whatever i want to do. Its easy for this. But this to become a norm, we have to talk about it, this needs to become a norm. Yes, we can hire executives and give them, you know, the benefits and all the longterm initiatives, incentives. At the same time, if you talk to them, they all love the idea that somebody works in the factory who contributes as much as they do and is going to secure their future. I really believe theres not going to be any challenge in that. I notice you guys really kicked off the trend for greek yogurt. Everybody is now trying to copy it. Major brands who never had these things before have it now. How much has that changed the Competitive Landscape for you . I mean, early days we were very fast. We focused on making more and making more. I knew at one point these Large Companies were going to come after. My biggest advantage was i was in a factory and focused on making and focused on the product. These Big Companies sometimes can be very, very slow. When they come in, of course it changed the dynamics for us a little bit. We built a brand and created a very good product out there. If you look at the landscape in the last two, three years after they came into the marketplace, you know, we all look at the news. Yoplait lost that part of it. Yogurt is still extremely exciting. Last year, we had a record year, financially and growthwise. We have so much to go. We launched products like flip and yogurt drink. I believe drinkable yogurts is going to be big in this country. What your going to see is some of the small players are going to get larger and larger. Before we go, we did mention this refugee project but also the controversy. Can you speak to that . Sure. Look, im from turkey. I know this feeling really well. I settled in upstate new york. I didnt realize that there were refugees coming from 19 Different Countries to utica. Same thing with twin falls in idaho, when i built the plant. These people did not have a place to go. They didnt have a place to work. They legally came to this country, trying to build a life through this horrible journey. The factory, the community, and these people from all over the world create a family. They made yogurt and built life. And this has been happening for the last five years. I think when were facing this greatest humanitarian tragedy, 65,000 people without home and going through this horrible journey, when they settle in somewhere, the minute they get a job, thats the minute they stastop being a refugee. Thats the minute they start contributing to society. We have amazing, Amazing Stories in our plants. Iam so proud last year at davos we launched ten businesses. Today we have 70 Amazing Companies working around refugees, especially on integration. Okay. Thank you. Good luck. Appreciate it. Were going to be eating some chobani yogurt, as we do every day. Coming up, the world according to tom friedman. Le imy enhe e. Coel le iotminiw ed 5 e. O ,ookitoacro 7 conth lke time now for your kensho stat of the day. The Smart Buildings index was kenshos Top Performing index in 2016, surging 38 . 2016, surging 38 . Its top components were and theyre absolutely right. They say that its hot. When really, its scorching. And while some may say the desert is desolate. We prefer secluded. What is the desert . Its absolutely what you need right now. Absolutely scottsdale. Let us now get down to the New York Stock Exchange, where jim cramer join us us now. Were over here, but back in the states, there are some pretty important numbers coming out from some of these companies that have done very well since the 8th, november 8th. Yeah, i mean, look, its hard to figure out what to do with Goldman Sachs and citi. Theyre up huge. You want to sell it at 58, be my guest. Goldman is a terrific value. Tangible book value is up. The window for selling is going to open. All i can tell you is that the stocks go up when Interest Rates go up. Interest rates are up today. So theyre in control because its algorithmic right now. This is a hard market to trade. If you dont have conviction, get out, because man, these stocks are all over the place. If i had one thing to ask lloyd for you, what do you want me to ask him . What do we do with stocks like target . Bricks and mortar are so dead. Targets worst enemy right now is online. Online was superb. What do you do . What do you do when your online doesnt make you nearly as much money as your bricks and mortar . Thats the situation facing retailers this particular quarter. It happened way too fast. Theyre not ready. Okay, jim. Thank you. Well see you. U. S. Relations with russia, israel, and iran are likely to look very different app president elect Trump Takes Office just the end of this week. Lets bring in tom week. Lets bring in tom friedman, New York Times columnist to talk about what hes been seeing and anticipating. Tom, great to see you. Great to be here. Thats one thing everyone is talking about here in davos is how the world changes and the u. S. Relationship with so many countries will be affected. The one thing everybodys agreed on is its changed, nobody exactly knows how. Yeah. I you know, lets take the russia relationship. Personally im all for better relations with russia. There are a lot of things we can sure do together. Where president elect trump has talked about working with him is in syria to fight isis. Thats the first paragraph. The second paragraph for me is russias allies in syria are iran, hezbollah and collection of mercenaries from asia. Theyre going to be our allies, number one. Number two, putins goal in syria has not been to defeat isis. His goal has been to actually reinforce the leadership of bashar assad. Right. Whos been a bit of a genocidal authoritarian there. So the question is how are we going to balance that . How is it all going to work out . Because syria only ends well if its on the premise of victor no advantage kwish. If russias ready to be a partner for that, that could work out really well and use leverage with assad. If its to use us to crush allies, that will end really badly. Thats one question. Another question is china, big question on everyones mind here. So whats the best way, i think, to counter balance china and asia would be to sign tpp. Basically consolidate an alliance of likeminded allies around free trade principles because this is important, i think, for security as it is for trade. But president elect trump is either going to renegotiate or so far has been abjure tpp. Look, the whole idea trump has said hes in favor of free trade but doesnt think the trade we have right now is set fairly or evenly and that america has gotten the wrong end of the stick. Ive heard that repeated by nkt democrats and republicans here this week. When they look at it and dig into it they dont think were getting a fair deal either. Hes said things that resonate with me. You know me japan, how many oldsmobiles have you seen on the streets of tokyo . Theres a reason for that. Using greater leverage i think to open up some of these markets i think could make a lot of sense. Its all about how you do it. Im just watching. I wouldnt im not pricki i predicting anything in that regard. Did you sneak up to the tower . I was there, joe, when he came for the times. You havent been up the elevator . I havent been up the elevator. I dont want to be surprised. Theres friedman. Hasnt happened. Is it scheduled . I talk to everybody. Is it scheduled . Right, left or center, so well see what happens. Tom, we were at a dinner last night and one of the conversations that came up is the world still flat . In that we now almost feel like in a world that felt like it was getting smaller because of globalization, maybe that flatness is having some bumps in it. So i would disagree. Okay. I think one of the reasons this election happened because its flatter than ever but flatter in the way i actually wrote about flat, which is not borderless. I never believed in that. I think globalization thats driving us forward today is not your grandfathers globalization. That was containers on ships. That is declining. Its digital globalization. Everything is being digitized or globalized whether its facebook or twitter or mooks or paypal. Paypal did 2 billion last year in small loans in basically the developing world to its customers. Theyve got big data. They know andrew sorkens a good risk. So its all how you measure it. And i think the worlds flatter than ever. Which is one of the things thats stressing, i think, a lot of workers in the developed world. Because . Because the technology is displacing them . Theres two things going on. One is technology is displacing a lot more jobs, and its creating a world and this is what i meant by flat where more people in more places can compete, connect and collaborate than ever before. I think on balance thats a good thing, but obviously it poses, you know, challenges for us. I think we have a lot to think through now. Yeah. But i think the biggest thing roiling people is one of the things i say in my new book is when i grew up in minnesota the 50s, 60s, 70s congressman in minnesota, growing up in minnesota then you needed a plan to fail. As america stood astride the world with so much economic and industrial dominance that you needed a plan to fail. Now you need a plan to succeed. And you have to update that plan every six months. I think its true if youre an individual. I think its true if youre a country. And i think thats one of the things really stressing a lot of people. You know, we just spoke with jim cramer and he was talking about targets numbers that were out today. Their Comp Store Sales were down weaker than expected for christmas. And youve written recently about how, look, the worlds at a Tipping Point right now and cyberspace is taking over for everything. Yeah. I think what happened this year we saw it in retail sales. Yeah. We saw it also in politics that our lives move to cyberspa cyberspace. Our lives have moved to a realm where were all connected but nobodys in charge. And theres no 1800stop putin from hacking me. Theres no judge, theres no court. I think we havent really figured how to manage in my book is god in cyberspace, for that reason, who is going to govern there. I think this could be a huge governing challenge going forward. Tom, i want to thank you so much for joining us today. Always a pleasure. Great to host a show here. Yeah, hope to have you back in the states with us soon. Is there a golf course down there . Do i see it . Get a lot of distance. I think its frozen. Doesnt go into the snow. You need orange balls though. Exactly. Thank you guys. Dont try blue balls. Still to come, talk to j. P. Morgan Ceo Jamie Dimon and Goldman Sachs chief Lloyd Blankfein, two interviews starting at 10 30 eastern time. Squawk box will be right back. Whs tm irs atswolkom tueflkod welcome back to squawk box. We are live in davos, switzerland. Tomorrow you dont want to miss Morgan Stanley chairman and ceo james gorman. And we are all getting on a plane to head to Donald Trumps inauguration. So join us in washington, d. C. On friday. Our guest lineup includes aei president arthur brooks. Really big show. Really big show. Were not going anywhere by the way here because were going to be on in just a moment with jamie dimon and Lloyd Blankfein later. Yeah, were stuck. Were not like done. But were done with this show. But then well be back. Almost. We want to be back. We do. I do. That does it. Make sure you join us a little later. Right now its time for squawk on the street. Good wednesday morning, welcome to squawk on the street. Im Carl Quintanilla with jim cramer, david faber at the New York Stock Exchange. Dow looks to gain at the open after falling five out of six. Lots to watch, goldman and citis earnings, target warning, netflix tonight, trump on taxes, ftse and pound lower this morning, 10year 2. 37 as cpi biggest annual jump in six years. Ro roadmap begins with can the rally rally