Transcripts For CNBC Squawk Box 20180112

The nasdaq is on track for its best monthly gain since july of 2016 the s p 500 is at its biggest monthly gain since last february the s p and nasdaq have risen seven of the last eight trading days if you were waiting for things to slow down, you are still waiting. Triple digit gains for the dow already this morning overnight in asia there were gains this came after the strength yesterday with the dow up 200 points. The hang seng was up by 1 shanghai was up by 0. 1 . The nikkei did give back some ground in europe this morning, there are some green arrows across the board. Gains of a quarter percentage point for germany and the ftse in london. The cac in france is up by a third of a percentage point. If you want to look at treasury yields which have been picking up ground, you will see the treasury yield for the tenyear, sitting about the same, 2. 544 lawmakers in germany reached a break through in talks to form a new government the euro rising. You need a government. Euro rising to new highs on news that Angela Merkel recommended that conservatives enter formal talks with social democrats. This follows months of Political Uncertainty and deadlock in the largest economy in the eurozone. There are some stocks to watch this morning theres going to be more once we start seeing results Fiat Chrysler plans to shift production of its Ram Heavy Duty pickup trucks from mexico to michigan it will invest 1 billion in the u. S. Plant and add 2500 jobs, and add a bonus to some workers. Thats a move that was made possible by the pathetic new u. S. Tax law nancy pelosi pathetic amd is admitting the exposure to the spectre flaw is much larger than first thought last week amd said there was a near zero risk of its chips being susceptible to the flaw. And intel is asking customers to hold off on installing patches that address the spectre and meltdown flaws the patches have bugs whic could cause computers with older chips to reboot more often than normal facebook is unveiling its biggest changes to the news feed in years they will prioritize posts from friends and family over public content like viral videos and posts shared by businesses Mark Zuckerberg saying he is changing the goal i give our product teams from foe kcusing u find relevant content to helping you find more relevant interactions this could affect the social ned works metrics overall he says he expects engagement to drop but time spent on the site will be more valuable. But i expect the time you do spend on facebook to be more valuable and if we do things right well be good for our community and for facebook this is in the face of fake news, russian manipulation over the president ial election. Shares of facebook are up 44 in the last year. Almost an oxymoron. Whats that social contact on a screen. Not if youre in touch with family there are cousins i never get to talk to. This is social contact. Youre there im here yeah. Wouldnt you love a screen between us if youre looking at a little phone, by definition, its not social contact i was skeptical of it before i got on it, then you talk to people from high school, you talk to family i never get to see. If someone has a death in the family, thats usually the way i learn. Friends from long ago, people you have not talked to people you remember fondly i have to say, i think this is something that would make me appreciate it more i dont need it as a flu news f. I get plenty of news here. Too much lately, like a fire hose right blackrock out with Quarterly Earnings profit came to 6. 24 a share compared to the estimate of 6. 02 revenue Beat Estimates as well like a real number, up 12 year over year. Blackrock announced a 15 increase in its Quarterly Dividend now that would be 2. 88 a share Ceo Larry Fink will join us to discuss the quarter in just a couple of minutes. The political buzz, if you need one this morning, theres one. A profane comment coming from President Trump creating a stir inthe immigration debate eamon javers joins us with more. Before i get to that, let me bring you up to speed on some tweets from the president overnight. He made some rare late night tweets last night stirring the pot on a couple issues including immigration. Heres what the president tweeted last night on immigration. He said the democrats seem intent on having people and drugs pour into our country from the southern border risking thousands of lives in the process. Its my duty to protect the lives and safety of all americans. We must build a great wall, think merit and end lottery chain. Usa. So those are his thoughts on the negotiations going on on capitol hill he also tweeted last night about his decision to abandon his trip to london. He was invited last year by the queen through theresa may to visit london at some point they thought that would happen in 2018, but not so says the president. The president gave the reason as im not a big fan of the Obama Administration having sold perhaps the best located and finest embassy in london for peanuts. Only to build a new one in an off location for 1 1. 2 billion wanted me to cut ribbon, no. It was actually the Bush Administration that began the process on that. And theres some critics in london who say the president is canceling because he wont get a good reception politically not a lot of fans in london. So come questions there about what the president s motivation was. Lets go to this comment yesterday that everyone will be talking about today. The president was in a meeting with republicans and democrats on immigration in the oval office at the white house. He was briefed on efforts to include haitians and El Salvadoran immigrants. He said why are wehaving all these people from shithole countries come here. Thats a dramatic comment from a president of the United States got reaction from around the world. The interesting thing here is that the white house put out a statement after that, it was reported, this was not on camera, reported by the washington post. After that the white house put out a statement not denying that the president made that comment. Here is the white house statement. Certain washington politicians choose to fight for foreign countries, but President Trump will always fight for the american people. So the white house not denying those comments mia love, a republican congressman from utah, she said these comments were unkind, divisive, elitist and fly in the face of our nations values. She said this behavior is unacceptable from the leader of our nation those comments last night, joe, will scramibble that immigration debate that the president was tweeting about well see where it all lands this morning a dramatic and profane remark from the president of the United States at the white house. Saw those mia love comments shes great. Unedifying, low brow, thats what they are calling it the journal combined his comments with Nancy Pelosis comments about im supposed to be negotiating with five white guys to do immigration what are they going to do, open a hamburger stand next steny hoyer calling this offensive. A mudslide not to compare it to the horrific events in santa barbara, but calling this a washington mudslide. Once you think you have gotten to the lowest point, you can get, theres a floor below you can go to the basement the president said he doesnt want immigrants from hate pi itr questions why they should be here, but he would prefer immigrants from norway the subtext of that is racially tinged hundreds of thousands of comments this has set off a debate around the country on whether or not the president is a racist, whether he said something racist or whether he in his heart of hearts is a racist he is not doing himself favors in the debate with comments like that. All right thank you. I dont know whether well see you again. If not, have a good weekend. We can always use weekends lately fridays thank you. When we come back, blackrock out with its Quarterly Results they beat the street we have the chairman and ceo, larry fink, hes here with us o set to talk about the numbers and what else he sees in the numbers and around the world squawk box will be right back with larry fink. Lets begin. Yes or no . Do you want the same tools and seamless experience across web and tablet . Do you want 4. 95 commissions for stocks, 0. 50 options contracts . 1. 50 futures contracts . What about a dedicated service team of trading specialists . Did you say yes . Good, then its time for power e trade. The platform, price and service that gives you the edge you need. Looks like we have a couple seconds left. Lets do some card twirling twirling cards e trade. The original place to invest online. Welcome back blackrock earnings are out this morning. That Company Coming in with earnings of 6. 24 a share versus 6. 02. R revenue up by 12 . Larry fink joins us. Blackrock has about 6 trillion a sets under management. Larry, thanks for joining us great to be here. Numbers are better than the street was expecting whats happening is this a continuation of etfs more money coming in what are you seeing . Over the course of the year, we added a trillion dollars. That gives you the extent of what market beta has done. We also grew across institutional, retail, cash. A couple of statistics i look at for the breadth of the type of demand we saw last year, we had 14 countries where we raised over 1 billion we had 67 individual differentiated products that grew by a billion. So the demand was global worldwide. You know, all different products i think the surprise for me, when you reflect on the year, we still saw about 1 190 billion o inflows and fixed income everybody is calling for a change in the regime of fixed income yet we saw huge flows in credit. Thats why credit is so tight. And many other different types of fixed income products about 150 billion of flows in equities, multi asset, cash and alternatives we are Warren Buffett on this morning. He talked about bonds. He said i told people for the last decade or so, they should be in equities, not bonds. Thats the right call. When you look out broadly, just because you mentioned those bond inflows what do you see as somebody who knows these markets so well . What we try to tell everybody is to be mostly in equities. Ive said this over the years. Be 100 in equities i said in 2012 i think people are not good at market timing. For those who are saving saving is not as much fun as consuming. If youre saving for the outcome of retirement, a 30year, 40year obligation, that thing should be in things that can compound over a long period of time equities is a far better asset class than fixed income. That being said, if youre a responsible pension plan that you have to navigate around, men and women in your pension plan who are 70 years old versus young people who are 30, you have to have a mix of bones, equities and alternatives. For the individual investor who is listening, they should be even at 50 years old, the majority of those assets should be in equities no question weve had a dramatic run up in equities yet over a 30 to 40year period of time, even at this entry level now, i believe youll do better in equities and in bonds. Lets talk more about your earnings touching on that point, thats a huge call to hear that from you this week, from Warren Buffett this week. Even with stocks at these levels, youre telling people that this is the time to be if your horizon is two weeks, thats not a good decision if youre 50 years old, youre telling them to do this sure. Lets talk more about earnings what else stands out to you. As i think you said earlier in the show, revenues are up 12 . By growth in base fees, performance fees and technology and risk management. Technology was up 14 were seeing more and more youd utilization of our aladdin system its our penetration with clients is deeper and broader. I think i said this over the years. If we can work with our clients on outcome investing, not momentary investing, if we can provide them a holistic review of what of all products, passive and active, were winning more and more clients, more of their wallet across the board, worldwide, were pretty humbled by this, but we have greater and greater confidence with clients and working along side Blackrock Etfs are 30 . They crossed 1 1. 8 trillion t blackrock. So under 30 still growing rapidly. We had 2 245 billion of growth i etfs this year if you add up the growths of etfs at blackrock and our ishares products, the growth over the last two years is more than the entire pool of etfs that we bought in 2009 in 2009 when we bought bgi, ishares had 3 340 billion that was only in 2009, october of 2009 when we closed and now today its 1. 8 trillion. Lets talk about markets once again. You told us the last time you were on you were concerned about the fed po tententially raising rates too quickly. The economy is chugging along. Unemployment is continuing to fall to record low levels, 4 . What happens we dont see inflation yet we had numbers where inflation was more muted than we thought. However this is an unusual time. We have had a path by the Federal Reserve that is a tightening path. You rarely see fiscal policy stimulus when you have Monetary Policy tightening. You mean the tax plan that just passed. People will tell me, if you can get a tax plan, lower Corporate Tax, you do it any time im not trying to suggest timing, but its unfortunate when we have that stimulus and we believe that tax bill will create at least 1 added stimulus 1 gdp growth. So were more constructive on the competition of the tax ccomf the tax cut and what it will do to the economy at the same time theres going to ab certain point ificat be a where the tax cut is stimulating the economy but also slowing down tax cuts front end a lot of growth, the question is whether it will create permanent growth. Larry, two things when you go and davos man, when you go and have your 150 meetings over there, which you do, keep one thing in mind number one, certainly were going up in rates. But theyre so low historically, im not sure it means the same thing. Number two, if theres headwind from going up, you might think its a time where to offset some of the headwinds, and its not a bad time to have stimulus. I dont disagree. Factor that into your globalist thinking i appreciate you helping me out. By theres going to be a certain point where the tightening can pull down the economy. Youre right that may be the appropriate thing to do. If rates were coming down and we were at 4 and adding stimulus, i would be like, wow, were throwing gasoline on it. But we need to look at the composition of the yield curve if the short rates rise up much faster than the long rates, if we see incredible tightening, weve seen tightening on the tens tens the question will be could we see this will be linked to how the Federal Reserve unwinds qe, and begins selling could we see a point where i think i talked about this last time i was on the show, could we see a point in time where we have an inverted yield curve i dont believe those are good for anybody. So im not suggesting that, but i blooelieve theres a grear possibility we may see that. Do you use the long end of the european curve we already got one what does that mean . It means that theres more demand for intermediate investments than but how do we get is this time different because of Central Banks around the globe . 40 basis points in germany. I agree its weird. Im speaking about our yield curve, not the german yield curve. I think ours is because of that, right . We look so much more attractive. I think our flows at blackrock are evident of the type of demand were witnessing. Weve seen so many clients stand on the sidelines, despite the flows weve had, we still see most investors underinvested, we see most investors sitting with the duration of their liabilities longer than the duration of their assets so theres a lot of theres quite a bit of purchasing power even at these levels that keeps the markets stable. This is why were still quite bullish on equities at these levels this is why we think well see high Interest Rates, but not as high as people fear, and inflation is muted we dont see it this time inflation changing the two keys for inflation are dominated by are we at a point in time where wages now will start increasing dramatically . Were seeing that in the highend area, the programming, engineer types were seeing large wage growth were seeing this throughout the country. The key is paying attention to china. If china aggressively does reforms that they talk about, what the reforms mean to me, they will take out the excess capacity china has been an exporter of deflation. Could china become Something Different . That will change the metrics of global i flanflation your investors, because you have so much assets under management, youre investors are not just the rich effort aest a wealthiest, you have a democratic view of whats happening with investors right who are they . Somebody walking down the street right now theyre were the largest manager of pension assets in the world. Its a deep responsibility we are in charge of school teachers, police so what we see gives us an average feel of what the investor sees. The investors are looking to put money to work now. Theyre underinvested. This is why were not as frightened as some of the fear mongering going on related to rates and the market we believe the u. S. Economy and the synchronized global economies are Strong Enough to continue the upward bias on equities we believe the demand that we see in credit and other assets is going to keep a spike in Interest Rates to be more muted. We think Interest Rates will be higher, but were not frightened as joe was talking about we dont think this is necessarily bad. So your people my people called cnbc and said is rick going to be on and can larry come in . Im sure thats true. You heard a song, and you said thats the umineers so rick allen will be here the dead guy is steve with a c. Like an important guitar player he died early on rick allen lost his arm in 1984. Before hysteria. It was their album pyro mmania was taking off were showing our age our audience knows this. Much more from larry after the break. Well continue to talk about what he sees happening around the globe. Also still ahead, Quarterly Results from jpmorgan. Well bring you those numbers and reaction from the markets. As we head to the break, yesterdays s p 500 winners and losers its time for sleep numbers lowest prices of the season on the only bed that adjusts on both sides to your ideal comfort your sleep number setting. And snoring . Does your bed do that . Its the lowest prices of the season on the queen c4 mattress with adjustable comfort on both sides. Now only 1199, save 400. Plus, 36 month financing available. Ends monday. Visit sleepnumber. Com for a store near you. What we do every night is like something out of a strange dream. Except that the next morning. It all makes sense. Fedex powers Global Commerce with vast, farreaching networks. Deep knowledge of industries. And, yes. Maybe a little magic. Welcome back youre watching squawk box, live from the Nasdaq Market site in times square. Welcome back. Its time for the squawk planner. Theres a trio of economic reports expected on the wall street agenda the december Consumer Price index is out at 8 30 a. M. Eastern time that comes along with december retail sales at 10 00 a. M. , november business inventories. Eric rosengren and Patrick Harker will speak today. We will hear from Robert Kaplan right here when he sits down with Steve Liesman on squawk box at 7 10 a. M. Eastern time stick around that is just about 40 minutes away on the earnings front, jpmorgan results will be in the next half hour and wells fargo will hit the tape at 8 00 a. M. Eastern time well bring you those numbers and reaction on wall street when they hit u. S. Equity futures, even after a 200point gain for the dow yesterday, youre looking at a triple digit gain in the futures this morning dow up by 110 points s p futures up by 7. The nasdaq up by just over 15 points this comes after a phenomenal run weve seen in the early trading days of this year. Look at the euro rising to threeyear highs on news that german lawmakers made a break through on efforts to form a Coalition Government so that was larry, well get back to you that was from pyroman pyromania. That was the one before rick allens accident hysteria was the huge one. I recognized one other song on pyromania. I was reading more about it. Think about the hair we had in the 80s. Yeah. Not quite what those guys had. Lets get back to larry fink. We have not talked about some recent developments in washington as far we saw walmart, another company today, depending on your political persuasion, these are either oneoffs, throwing a bone to the workers while youre getting big bonuses yourself and Share Holders are getting big dividends, or its the start of this longawaited narrowing between the middle class and is it possible that were starting to address that in a more substantive way i think we began a trend a couple years ago, some states started raising wages to 15 sometimes that doesnt work i understand that this is organic this is from the companies themselves wouldnt you rather have it this way than than mandated absolutely but i believe the legislation in some states is causing that pressure too some state also have higher wages than other states, and theyll have to equalize them. The most important thing that i dont think will happen is a narrowing in wages youll have wage pressure, but it will be in the high you already said about the highend we have labor shortages, and i think those labor shortages will continue. If the gap stays the same but both the skilled go up and the lower go up, is that necessarily a bad thing . Youre not unhappy that the skilled people are making more money. If were elevated, thats fine thats your insinuation. No, im not insinuating, im poz s positing the question. This is a good outcome. How can i say this is not good i dont know. Im like pulling teeth to get it out of you so, were you for this tax deal im still unhappy related to a few things, the state taxes. For you and for you, joe. You throw in my agent fees. Were working in new york city you know about our agent fees well move on about that. Heres some things, its a great bill as much as state taxes. Its going to do wonderful things especially for small businesses. Bringing money back bringing money back to me is not that significant areas of that i thought they should have done, which is almost i dont want to say irresponsible but should have been done, that was they should have totally eliminated carry interest that is an unfair tax advantage. Agreed. Theres a surcharge now for income over 1 million for not for profit entities. If youre trying to get the finest leader of a president of a university or a president of a hospital, theyre competing with a private sector, and now they are taxing not for profits in addition to everyone elses taxes. Stan druckenmiller has been upset by this, too you cant itemize no, its a 5 surcharge for you for any not for profit, Anyone Running these, they will pay a special surcharge. We kept carried interest. Yeah. Its not a lot of money its small. I know youre talking optics, in fairness. And charities largely escaped any of the draconian methods that were being considered yes the most the one thing i can complain about is that average people the only reason average people would give money is because they need to itemize it. A massive amount of Charity Donations did happen in december overall, it will stimulate the economy. It is strong for strong and medium businesses. The one thing people miss, a tax cut is below the line. For large companies, theyre measured by Revenue Growth thats one thing when you talked about blackrocks credit, you talk about Revenue Growth, margins, operating income. Thats above the line. So the marketplace is recalibrating. It was assumed by analysts that the new tax rate was going down from 31 to 25 , its going down to 23 so the marketplace is rallying because theres a new rec recalibrati recalibration. Thats a onetime thing. A lot of this market runup is a recalibration of how corporate earnings will be and you will adjust now the stock price to the new eps level. After that onetime event, now we have to see does the tax cut stimulate more growth, more demand, well see that in the revenue line it will make american businesses more competitive than where they had been before what it will do is going to make the u. S. More come pettive for a company to come back to the United States. For companies to put factors here one of the problems that will face mexico is now the u. S. Corporate tax rate is lower than mexico so historically companies identified mexico as their place of where they should be domiciled for tax. Because companies have businesses in the u. S. And mexico but they identified mexico now company also reidentify and pay taxes in the United States like what weve seen from Fiat Chrysler, them saying they will be relocating to a factory in michigan from mexico. Maybe thats a way of smacking down nafta without doing anything thats i dont know if that was considered in the nafta negotiations, thats just one of the effects of having a lower tax rate you were not expecting 35 , or 30 last year, youre probably not expecting 30 this year 30 in market movements youre right i didnt think that. I didnt think that last year. Im sure in your world is it global synchronous growth, its not deregulation or the tax law . Those are all good things how much credit do you give it to those things versus global synchronous growth i think we have a gdp thats growing. But how much of the stock market is due to the gdp going up 1 . Look, corporate earnings are stronger than i ever anticipated. I talked about that a year ago, two quart otherser quarters ago. Corporate earnings have been larry, do you think the government being kinder to the private sector than historically seen in Democratic Administration is responsible for lifting the market, lifting gdp, lifting the quality of life thats not your party that usually wants to do things like that lets not go there. Why not do you think we would be doing this if Hillary Clinton had won . I dont think we would have had this deregulation. Right i dont think we would have had the tax cut. So where would everything be . I dont want to speculate where it would be. Do you wish you had voted for trump now . Lets not go there, joe why. Im on television, im not here to talk about that. Youre reaping all these great benefits you are, too. I know i am good for you. Okay. I just wondered so this is happening because synchronized global growth. Everybody said the waterboarding of the private sector ended on november 8th we never anticipated japan to be where its at theyre back to 28,000, not back to 40,000 well pass them with our market. We were at 10,000 when they were at 40,000. They have 2 growth theyre the Third Largest economy. Are we helping their growth maybe yes. Sure we buy a lot of their products but theres many things that are helping their growth tourism is at a recordhigh many things. China no one thought it would continue to grow at 6 we had merkel create the coalition. Youve given me a lot of concessions that its good to hear from you. Another 100 points today this is crazy. We were at 25,000. In the first week of january, first six days, almost 100 points every day yes a 12point pull back, 200 yesterday. Unless this is building into some sort of inflated b ed bubb i dont feel that thats the interesting part we had this conversation in the break, based on what youre seeing, you think theres another leg in this. I dont think well see a 30 market movement. Could we see 12 , 14 . I would like to see the market grow 10 , 12 this year and digest this growth i wonder whether you feel the narrative that the u. S. Economy because of slow population growth and low productivity is no longer capable of growing faster than 2 , whether that was a false narrative. Well find that out we will but the market is not perfect in forecasting the economy, but it almost seems like its saying maybe we can get back to those i dont know if the market is saying that. The market is saying that so you dont think 3 , well do that year in and year out i would say no, demographically, i dont see that i could be wrong i dont see a new normal being 3 jamie dimon said 4 we can put him on. Put him on. Were you surprised when he said we could do 4 . No. You just said we cant do 3 . Im not going to question somebody elses opinion on this. Youre asking me opinion my opinion is i think well see accelerated growth the next year, year and a half. I do believe demographics do matter i do believe that we have shortages with in the upper job market where were going to where we have shortages, and were hiring more people in different parts of the world because we cant find them here. You know the millennials are starting to get married and have kids they may finally come through for us we will to wait 22 years for this before we change the child labor laws we have other issues well have to find help on theres an economist who says Technology Advances are being underestimated i totally believe that. You see it. That could bring us i actually have told the japanese who have horrible demographics, they should embrace technology because their demographics are so bad. If they embrace technology as a country with the horrible demographics, you will see a rise in standard in living in japan. Because if you substitute more machines for the decline of humans in japan, and if youre not going to have immigration, the only way japan over a long horizon can build the standard of living for the remainders is through technology right im a big believer that technology is a great assistance for i want three people working on every robot then blackrock, one of the great statistics, we doubled our asset base with a growth in human beings a fraction of what it was years ago which is why we look at the margi margins, too thats why blackrocks margins have grown as fast larry, thank you very much for joining us on this earnings morning. Well continue to watch blackrock shares when we come back, jpmorgan is set to report the next of the big financials well bring you numbers and Market Reaction. In the next hour, dallas fed president robert klaapn will join Steve Liesman in a cnbc exclusive interview. Squawk box will be right back. Day. s over the years, paul and i have met regularly with our ameriprise advisor. We plan for everything from retirement to college savings. Giving us the ability to add on for an important member of our family. Welcome home mom. With the right Financial Advisor, life can be brilliant. I thwell wait. What did you meetthink about her . Its definitely a new idea, but theres no business track record. Well, have you seen her work . No. Is it good . Good . At cognizant, were helping todays leading banks make better lending decisions with new sources of data so, multiply that by her followers, speaking engagements, work experience. Credit history. That more accurately assess a business chances of success. This is a good investment. Shes a good investment. Get ready, because were helping leading companies see it and see it throughwith digital. 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Watch out, piggies get symbicort free for up to one year. Visit saveonsymbicort. Com today to learn more. If you cant afford your medication, astrazeneca may be able to help. Whos the new guy . They call him the whisperer. The whisperer . Why do they call him the whisperer . He talks to planes. He talks to planes. Watch this. Hey watson, whats avionics telling you . Maintenance records and performance data suggest replacing capacitor c4. Not bad. Whats with the coffee maker . Sorry. We are not on speaking terms. Jpmorgan is reporting and the stock is initially off it doesnt mean its going to end the day here, but well see its down. 8 of a percent. A couple of numbers. The adjusted earnings per share is 1. 76 versus estimates of 1. 69. The managed revenue number is 25. 5 billion, 25. 55. The estimate was 25. 153. The net number, if you want to know, they initially posted 1. 07 which comes out to 4. 2 billion in net, but the company did say that the net impact in the Fourth Quarter of the tax cut and jobs act was 2. 4 billion. Other metrix that people sometimes pay attention, to the provision for did you see that for losses, for credit losses, 1. 3 billion in terms of the individual parts of the company, this keeps moving on me, the homelanding revenue 1. 4 billion and Community Banking 12. 07 billion in revenue and card, Merchant Services 5 billion, Corporate Investment bank 7. 4 billion, so well obviously have to when we talk to an a analyst well see whether these metrix individually or are above or below. A couple of points we can tell you, too, jamie dimon, the chairman and ceo making some comments pointing out that for the first time the firm led the nation in total u. S. Deposits as consumers and businesses continued to view them as their partner of choice. If you look at some of the global trends, dimon says the Global Economy continues to do well, and the u. S. Consumer remains healthy with solid wage growth he said, unfortunately, natural disasters in the United States and abroad vim pacted many of their customers, and they have responded with financial support. Consumer and Community Banking, card sales and merchant processing, volumes up once again double digits and loans and deposits he says continues to grow strongly. A lot of different noninterest revenue, 12 billion, Net Interest Income 13. Had billion, expenses everything is broken out, but when its all said and done people that are parading the stock right now have it down 1. 2 stocks well see what happens on the open the dow component, up over 100 points i dont know if the dow is still indicating that. Yeah. When we come back, well have much more on the Jpmorgan Earnings report. Thats coming up right after the break. Then, dallas fed chairman Robert Kaplan joins us and drummer rick allen is drumming for peace and hell be on set with us to explain at 7 40 a. M. Eastern when this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. Bank Earnings Take Center Stage a day after the dow jumps 205 points reaction to jpmorgans result and a preview of whats still to come from wells fargo straight ahead. All this putting the fed in focus, and we have a squawk box exclusive interview with dallas fed president dallas kaplan, exclamation point. Def leppard drummer, philanthropist and drummer rick allen joins us live on the set to discuss his latest tour as the second hour of squawk box continues right now. Live from the heart of business, new york city, this is squawk box. Good morning, everybody welcome back to squawk box here on cnbc were live from the Nasdaq Market site in times square. Im becky quick along with joe kernin and in studio with us steve grasso, Stuart Franco and a cnbc market analyst. Good to see you. Good to see you also. Lots to talk about. A check on the futures at this hour on this friday. Youre going to see that the futures are once again indicated up even with the declines that we saw in jpmorgan shares. You still see the dow futures up by triple digits its a gain of 105 points. Thats the implied open of where we would open if we started the market trading right now s p futures up by 7. 5 and the nasdaq up by 16. The nasdaq, by the way, is seeing its best start to a month since july of 2016 strong records across the board. Every one of the major indices closing at another new record yesterday. Well see where this heads some of the headlines this hour. Blackrock reporting a quarterly profit are 6. 24 a share beating the estimates of 6. 02 revenue also coming in above forecast it was gains of 12 year over year and they also raised their Quarterly Dividend 15 blackrock Ceo Larry Fink told us in the last hour despite the big surge in stocks, hes still bullish. For the individual investor who is listening they should be even at 50 years old the majority of those assets should be in equities and no question weve had a dramatic run up in equities, and yet over a 30 to 40year period of time, even at this entry level now i believe youre going to do better in equities than bonds. He also says that the new tax laws should add about 1 annually to gdp, at least in the first few years. Two economic reports are due in 90 minutes time. Well be getting december figures for retail sales and Consumer Prices. Retail sales are expected to increase. 4 of a percent with the cpi seeing posting an increase of. 1 of a percent. Boone pickens has closed his equity hedge funds he pointed to his deteriorating health as well as poor Fund Performance. He took a fall last summer, as he pointed out, the recovery has been slow and hes says that hes not excited about trading oil when its been trading sideways for so long. Until now. Yeah. Jpmorgan results were out just moments ago wilfred frost has been poring over the numbers what have you been powering over thats a def leppard reference. Its pour, ing anyway. This is a strong beat they have revenue 25. 5, forecast for 25. 2 eps 176 adjusted for the tax writedown versus 169. Just a couple of core headline things, loan growth 2 quarter on quarter, top end of the estimate decent because loan growth was thought to have slowed before the effects of the tax bill came in trading is really interesting so the headline trading number seems very bad its down 26 , but adjusting for the oneoff effects. Still worse than expected but not as bad probably down high teens they guided to down 15 so trading is worse than expected that almost all comes from very poor trading this to imlast year was a very Strong Quarter after the election and this is the last quarter where the comps will be very tough for trading, but in terms of why its worse than expected in Equities Trading theres a 143 million loss on a single client trade that they had to take a writedown on so well be asking about what exactly that was, but either way even when you adjust for the oneoffs, the oneoff tax bill, the trading is high teens down as opposed to just down sort of 15 as was previously guided. Now, lets get into the tax bill, really, really interesting. So the effective tax bill for the last year was 30 . They are guiding that for 2018 its likely to be 19 so this is an encouraging kind of announcement because people werent quite sure of how thats intricate more obscure parts of the bill will guide them clearly below the headline rates still of 21 lets see what jamie dimon has said about the tax bill. The enactment of tax reform is a significant positive outcome for our country. U. S. Companies will be more competitive globally which will ultimately benefit all americans. Im going to skip the middle sentence and go to the last sentence he said weve also invested in difficult times in our employees, customers and communities and as a result of the tax plan well be increasing and accelerating some of those investments. About a year ago they upped their minimum wage to 15, so they havent followed suit after the tax bill but hes said they will be increasing and accelerating which is the kind of tangible effects that the tax policy wants to see in terms of boosting the economy guys. Not down anymore, wolf. Youre working magic there it was down, you know. Theres a lot to pick through in this. A lot of upoffs and stuff so its long oneoffs pnc is a decent 9 cent beat on eps citing tax reforms as one of the reasons. And depending on who you are, it affects it differently. Citi group with all the tax loss carry forwards. Got that for jpmorgan as well not as big. Thats why the headline eps was a big miss and adjusted to 176 but the guidance on what the tax rate is going to go forward. Clearly not as below as it used to be. 30 versus headline and they are guiding 19 versus a headline of 21 thats encouraging. Close to a high, and obviously, the yearly high is 110 so at a new high, 110. 93 the alltime high so right where it was. You ready for wells fargo not yet i will be by 8 00. You redady youre not . Jpmorgan mindset. Red for wells fargo at 8 00. Dont try to chew gum, doing two things at once thank you. Joining us on the phone is dick bove, analyst and what are some of the numbers that are jumping out . The very mediocre are right across the board if you just get to the bottom line numbers which are the most important, and i like to use the recorded numbers, not the pro forma numbers. The numbers are down on a quarter over a quarter basis, and their operating expenses are up you cant have anything worse than that. In addition, if you go into a number of the subsectors, you know, the revenue sectors that wilfred just described, most are down pretty substantially on a quarter over quarter base so i would say that i cant see anything in this quarty that would say. I really love this company, i want to go out and buy this stock. The important point, however, is that this is ancient history i mean, weve had a massive change in the financial system, in the economy, and none of that is reflected yet in the Earnings Report that they see today in other words, in my estimation, Investment Banking will be extraordinarily strong in 2018 because theres a shortage of shares, you know, to meet the frenzy of demand for shares and, therefore, youll see a huge increase in stock offerings. Theres a bill passed on the mortgage sector hopefully in the next, you know, couple of weeks which should benefit the banks enormously youve had this tax cut which should benefit, you know, a number of businesses and were already seeing though Business Loans were up in a very weak basis, you know, for the full quarter, the last couple of weeks, Business Loans have started to pick up relatively meaningfully weve seen a change the head of every Bank Regulatory agency is changed the number of people on the boards of these regulatory agencies have changed, and, therefore, well see reduction in regulatory costs. Weve got a tremendous increase in technology which is simply driving the cost of running the banks lower. Dick . Yes, maam. I heart laundry list of reasons you like the stock you said the Earnings Report is not anything that would make you go buy the stock, but you said its ancient history does this mean based on laundry lives other things you would still buy shares of jpmorgan today . Yeah. I think its very clear if youre going to live in history, you know, which is what the Fourth Quarter report, is you know, youre not going to buy the stock because this is not a good report. If you live in the future which is what could have happen, you know, given all of the significant changes that i just listed. Right. Then you definitely want to buy the stock. And how would you look at jpmorgan versus its peers if you were looking at banking stocks which would be at top of the list well, i think right now jpmorgan is the best bank perhaps the country has ever seen, so its very hard to say that there are other banks better than it, but i think the stock that i like the best in the Banking Industry is bank of america because its still coming from a major hole and its getting back to more normal operating, and as i was look at the investment banks, given what i think about what will happen in Investment Banking, i think Goldman Sachs which weve had a sell on all throughout 2017, i think Goldman Sachs is an outstanding body. Great thank you very much for your time today, dick appreciate it. Thank you. Gm is locking to take the Steering Wheel and the pedals out of the autonomous drive cars selfdriving car with no manual kroempts joining us first on cnbc is General Motors president dan amonand our auto reporter phil lebeau. I guess we all figured eventually an Autonomous Car would not have a Steering Wheel, its superfluous but you have to file for approval to leave that out. Is that what gm did . This is a really exciting mixed step to deploy selfdriving cars in 2019. Weve filed a petition with nhtsa, the regulatory body to seek approval and meet Safety Standards in a different way without the driver in the car. Need to meet a different set of Safety Standards with a different approach and thats what that becities about. You know, i like driving. Godspeed to what youre doing, but when will i not be driving anymore . Just give me an outside what do you think our goal was to deploy these vehicles in 2019 so youll have the option to not drive in that time frame. Youre kidding. Have the option to not drive far out into the future. Right when our kids are exactly. Okay. You know this inside out is gm the first to do this or just the latest. There are others who have worked on prototypes without Steering Wheels. Waymo is a good example of that, but General Motors is petitioning to be the first to put this practice into atleast seven fleets in the u. S. What do you think is going to be the reaction of the driving public in the first time you say lets say you have these deployed in San Francisco, the first time someone sees this drive up, no driver, no Steering Wheel, what do you think the reaction is going to be . We think it will be pretty interesting. Youve seen the image of the inseerior of the car without the driver controls and quite striking when you see that for the first time our whole approach here is all about safety and safely deploying these vehicles and in conjunction with the petition that weve filed today were release our selfdriving Safety Report for this year which describes how the technology works, the approach were taking to safety and why people should feel safe deploying this technology there will be an adoption curve and it will take time for people to get used to the idea but everything were doing is all about the safety and the approach and we want people to feel comfortable with the technology right from the outset. Can i sit anywhere i want, dan . Im sorry, say. Encan i sitanywhere i want . Can i pretend i have a driver and sit in the back. I dont know if andrew has ever been in the actual drivers seat hell automatically get in that right rear back seat can i sit back there you can absolutely sit back there. Really . Wow. Thats cool. I feel like i might be dreaming is this phil, are you surprised that this is as lows, 2019 im not surprised look, i was out in San Francisco and had a chance to go for a test ride in one of the first autonomous drive vehicles that they are developing out there, but joe brings up a good question, dap. Ultimately this is about the ride hailing program that youre developing and testing in San Francisco. You want to free up that space so its not a driver thats occupying space within a vehicle. Youre potentially opening up a revenue source, correct . Exactly right. We see these vehicles getting deployed, first of all in, a ride share environment and thats what were aiming to do in 2019. Obviously having maximum space inside the vehicle available for passengers as customers is a benefit of what were doing here. What do we need to do infrastructurewise for you to to make this absolutely safe i dont know my i wouldnt want to trust my gps sometimes im driving off driving into a river i mean, what do we need to do infrastructurewise . So, the approach weve taken is we need the technology to work inside of the existing Infrastructure Environment we decided we couldnt wait for, you know, for infrastructure to have to happen thats different thats whats on the road today so our system and our technology is designed to work entirely in the current environment with the current infrastructure. Crazy. And some of that is detailed in the Safety Report weve released sglad dan, its steve grasso to joes point when will the laws catch up . Youll be ready in 2019. When do the laws catch up to you, and youve done the analysis do people fear this as a safety spleen do they want a failsafe to have a Steering Wheel well, we think you think safety is real the critical dimension here and everything were doing around this technology is focused on deploying it safely. The vehicle that youre seeing images of today has multiple players of redundancy, redundant systems to deal with any kind of, you know, technical issue, so we have multiple layers of safety in these vehicles because in order to get people comfortable with the technology, we need to be able to articulate why its safer than what they are doing today. Phil, weve got to go, phil thanks, dan. Have you thought about uber, do they make more money because they dont need any drivers now . What does this do in. Look, joe, they still need to get this out on the road. No, i know. Im talking about is the target date. Down the road. And its not just General Motors anybody who is developing an autonomous drive ridehailing or ridesharing service, whatever you want to call it. They are looking at the cost per mile, and you get rid of that driver it drops dramatically. This is a bigger disrupter than uber. Theoretically it could be now its not going to happen overnight. You wont see uber drivers and taxi drivers go away but its coming. Thank you dan ammann thank you. Appreciate it. Coming, a cnbc exclusive with dallas fed president Robert Kaplan where Interest Rates are headed and then later def leppard. You know who def leppard is. Spelled weird rick allen is on tour. I do its not for his music hes an artist hes like a renaissance man. Its going to be fun to talk to him. Well hear about his drum for peace project, how he veps vet, a big Wounded Warrior supporter. Check out the future at this hour, up triple digits up 109 stay tuned youre watching squawk box on cnbc what is the power of pacific . Its Life Insurance and Retirement Solutions to help you reach your goals. Its having the confidence to create the future thats most meaningful to you. Its protection for generations of families, and 150 years of strength and stability. And when youre able to harness all of that, thats the power of pacific. Ask a Financial Advisor about pacific life. But through goodt times and bad at t. Rowe price weve helped our investors stay confident for over 80 years. Call us or your advisor. T. Rowe price. Invest with confidence. Welcome back, everybody fnlg right now its time for a cnbc exclusive. Lets get to Steve Liesman who has a very special guest steve, good morning. Becky, good morning im other across down with dallas fed president Robert Kaplan thanks for joining us, rob. Good to be here. President cap lap, excuse me. Thank you. Lets get right to it last time we talked you had not raised or altered your Economic Forecast because of the tax cuts. Right. I think it was early days you havent quite passed yet have you done so now yeah. So how much for 2018 weve marked up our gdp forecast by a few tenths of a Percentage Points so were expecting 2. 5 , 2. 25 gdp growth for 2018 a little less of a positive effect for 19 and even a little less for 20 so we think the effect of the tax law will be frontend loaded and will tail off. Why does it tail off . Well, the first theres a Corporate Tax reform element we hope that part will be sustainable. Right. Which encourages people to domicile invest and all that have and theres part thats a tax cut financed by the increase in the tax debt. Thats the part i was more concerned about which gives you a shortterm bump which then tails off in the out years, and so thats the reason for this. Okay. So you can write the next question im going to ask you. If you bumped your gdp forecast, have you changed your rate outlook in. My base case is still that we should increase rates three times this year. I probably have a little more stronger conviction, the three times, not less than three times is appropriate its possible that it could be more than three times but thats still the base case, and i have more conviction that were going to get down into the 3s in terms of headline unemployment ie, were going to overshoot full employment and have a tighter job market than we even would have had. Does that make you nervous about the sustainability of the expansion . As a central banker, will you have to lean against that low Unemployment Rate . The history of overshooting full employment in this country has not been a happy one normally what happens is you get an overheating and then the fed has to then play catchup and what happens then is you tend to have a often have a recession or an inverted yield curve and a recession so its my view the best way to prolong this expansion is for us to move now in a gradual way but to continue to remove accommodation, and i think that that gives us a best chance to extend this extension. The reason you come on and we talk is were trying to understand the reaction function. Right. What input of data causes your reaction by central bankers. Tell us what is a scenario of four rate hikes look like, a 3. 5 Unemployment Rate and does that lead to you a fourhike scenario i would rather not speculate because the economy is going to unfold and the views will change and so i would rather just stick with base case is three. Im still focused on though the big drivers of Economic Growth, not just in 18 but in the outyears aging population, slowing work force growth and sluggish productivity not at Companies Companies will be far more productive, and they are becoming far more productive ive worried about what happens to workers, particularly high school educated and less who get squeezed out, dont get retrained and find their incomes going down those are still the drivers that i would rather focus on. But we have situations like walmart yesterdayration the minimum wage so it looks like on the low end skills area of the job market, those wages are going up yes thats right, so heres what were saying and what im saying when i talk to businesses and our survey skilled workers, i. T. Specialists, registered nurses, construction workers, oil field workers, half of all businesses say they cant find skilled workers. Right. And then if you make less than 15 an hour, 10, 11, 12 an hour, no question there is wage pressure there which is why youre seeing the companies react. If youre making 20 an hour or more, the supply demand in the workforce is still pretty good. One thing of a lot of importance to you is the oil price. Gone up nearly 70 whats your expectation of supply when it comes to oil, and what does that mean for prices 2017 was a big year for increase in supply in the United States youll have another big year in 18 is what do i mean by that our best judgment just in the permian basin, 70 of production, we think it will be up 700,000 in new production net. Okay. Wow so u. S. Production right now lets say ended last year at 9. 6, 9. 7 we believe it could be in the low to mid10s and by the end of 19 that could be 11 million u. S. Production so u. S. Drilling is going up. Now what will happen ive got to the do one more here real quickly. China recently, a concern about it buying bonds. How much. How much concern does that cause you for rates and were out of time. The quick answer is i still believe theres over 20 trillion in Central Bank Liquidity in the world so chinas reball i think ought to be manageable well have to be vigilant about it by thinkwell have to be manageable. Dallas fed president , Robert Kaplan, thanks for joining us. And thanks for the short answer on the back end there. Back to you guys across town. Three tikes well see what happens when we come back, an outlook for retail in 2018 with the ceo of the National Retail federation and the president of saks and well rock. Drummer rick allen is here well hear about his project to help military veterans theres some of the art hes put together, some right there what is the most streamed song of all time on spotify . The answer when cnbcs squawk box continues and a gentle wavelike motion. Liberate your spine. Aflac and reach, toes blossoming. Not that great at yoga ya but when i slipped a disc, he paid my claim in just one day. So he had your back . Yup in just one day, we process, approve and pay. One day pay. Only from aflac what is the most streamed song of all time on spotify . The answer, shape of you by ed sheeran. Thats my wedding song. Never streamed that song. Shocked, ive never streamed t. Good morning and welcome back to squawk box here on cnbc live from squawk square at the Nasdaq Market square among the stories front and center, one more bank Earnings Report still ahead this morning. Were expecting wells fargo to report at the top. Hour wells fargo is expected to report 1. 07 of on revenue of 22. 4 billion Jpmorgan Chase and blackrock both beat forecasts with their latest numbers jpmorgan is mostly flat, you would say, and and black rock with a nice gape but its up in the 500 area already but up just less than a percent and facebook is making some big changes to its news feed. Its going to prioritize posts from friends and family over public content like viral videos or posts from businesses Mark Zuckerberg says the change is geared towards creating more meaningful social interactions when we come back, retail taking center stage right here in new york this weekend the National Retail federation ceo matthew cia and saks president mark metric will be joining us after the break and give us an outlook for the sector in 2018 take a look at the u. S. Equities future, dow pulling back ever so slightly but still youre looking at the dow futures indicated up about 93 points and s p futures up 6. 5 a tndhe nasdaq up by 15. Can squawk box will be right back squawk box will be right back squawk box will be right back squawk box will be right back squawk box will be right bk tens of thousand will be packing the Jacob Javits Center in new york for nrf 2018, retails big show. For more on this lets bring in the National Retail Federation President matthew shay and saks fifth avenue president mark metrick who is executive director of the committee. Gentlemen, thanks for being here today. Nice to be here. Matt, lets talk about the state of retail. We went into the holiday season, went into last year thinking that this was a really difficult time for retail, what was happening with Online Shopping and decimating some of the bricks and mortar things, but we came out with a pretty strong overall Holiday Shopping season because consumer was back in full force. We did, and were doing see that later this morning when the department of commerce releases their numbers so well be releasing our final numbers for the holiday sales period. Give us a hifnlt was it north of 4. 2 . Our forecast was 3. 6 to 4 and Steve Liesman and i have a bet on whether who is taking the over and the under. I think well on the high side. You probably nope what the numbers are later today. We dont get commerce. Thats an input into our final numbers. At 8 30 well get that and i think we saw from thanksgiving weekend it was very clear consumer is back and retail is a good place and i think thats carried through most season and well find out later this morning. Mark, how but do you think youve turned a corner how dependant is it on the economy and the consumer doing well and how dependant is it on retailers kind of changing how they do some of their presentations in. For us i think thats about how the consumer feels at saks thats what were focused on, a good sign and a good way to propel us into next year. Sure. Where are you in the everyone thinks that amazon is going to kill every retailer in the world. Where are you as far as digital, as far as artificial intelligence, Virtual Reality in the stores you know, i think whats important about when you think about the online versus the offline experience, we have we dont need ai in our stores we have eye. Living, breathing 4,500 style advisers in our stores so the focus for saks in the luxury space is convergence between tech and this living, breathing selling associate, and thats what were focused on at saks. Lets talk about that weve seen a huge surge in the Consumers Health and just consumer confidence, the way people are feeling what toss that mean, and is that something the changes that weve seen, can they be sustained if the consumer is not feeling quite as healthy in. I had this conversation with a ceo the other day who said that he feels like this is really sort of a hockey stick beginning to the year because november sales were 6. 1 , and if you strip out the nonstore sales in november, store sales were 5. 1 so the majority of the sales came from the stores in november we think it will continue in december so the wind is at the back in the way the Fourth Quarter went and then you have the tax cut so the estimates weve seen from the joint Tax Committee is there will be an extra 100 billion of Consumer Spending generated, and then you combine that with a lower corporate rate which you talked about earlier with larry this morning, i think theres a lot of wind at the backs of the retailers which give them the room to then make investments that they need to make and marketing and ecommerce and all the channels they need to be representative. If youre look at the different categories of retailers, is there one or two that you think benefit particularly well or most likely to benefit well from these tax cuts is there going to be the discounters out there . What would you say i guess you would say based on those that have been under the greatest pressure, they are likely to benefit the most all paying the 35 corporate rate and then its close to the 40 marginal rate and if youre under a lot of pressure youll benefit the most because you get a big influx of tax that you can redistribute across the portfolio of your grand. Did you dodge a bullet with the border adjustment tax not snapping. That would have been a 500 billion hit so we ended up 100 billion on the good so a 600 billion swing. Why dont you talk about your expectations because those are two fairly different areas what are you seeing . Im real excited. Theres a tremendous office and im really excited to get in there with the team. Saks off fifth, there have been some talk of some of the luxury off price areas being hemmed back in because there hasnt been enough excess stuff that you want to offload and what is the future for saks off fifth . Thats the goal the goal is to have a better balance between supply and demand so what the opportunity is for saks off fifth is to deliver something special, give them a reason to come in and shop with us so not too different what you would see at the full line retailers. L there be expanded offerings or Additional Stores or is this focused on a smaller number of stores with maybe a better mix i feel good about our store base now, and, again, im two days in, but i think its focusing on the core and focusing on what we have right now. Marc and matt, thanks for being here appreciate your time. Thanks very much. And when we return, squawk rocks with def leppard drummer and philanthropist rick allen. Well hear about his new project and whats next for the band as we head to break a look at european markets at is hour. Squawk box coming right back becky, our next guest turned a personal traj ghi an ongoing project of hope. Lets bring in rick allen, drummer for rock band def leppard, also an artist and many other things allens work will be exhibited in the new york and philadelphia metro areas this weekend with the proceeds to benefit veterans organizations. Rick, thanks for joining us. You had 300 pose, and they all sold, right . I read that in an article. That was one of my first shows. That was in vegas, and now ive joined up with wentworth gallery. You know, thats pretty much an exclusive deal, but they have got galleries all over the country, so its its a great deal for me because, you know, i i said, you know, i want to sell art, and they know how to sell art i mean, ive seen you have some i think you drew one of your band mates that passed away, steve clark, and have you a talent you seem to imply that your painting is childlike, but you say it in a good way. Right. Because its not trained, but you have a talent. I could not do any of this. For sure. Theres some tricks and techniques, but the steve clark piece in particular, thats the one im most proud of and the fact that that i sent a photograph of it to my mother and she keeps in touch with steves family and she she took it around there and made had a little print of it and took it around there and steves mother was sitting there with tears rolling down her cheek so it had the desired effect. So much to talk to you about because becky, you werent a groupie. No, no, no. Kind of seem like one just now. How old were you, 15 and 16. You did not get backstage. You did try maybe. What year was that, 1987. Steve was still alive at that point, and did you still have your arm at that point at that point it was a couple years after you had relearned to play drums but more with your feet which is unbelievable. It was a huge blessing, but i did discover the power of the human spirit and thats what propelled me. The greatest success for you as a band and drummer as after you lost your arm. Thats true. I had to figure out all this stuff. It was after pyromania and before hysteria. So it was the last day of 1984 that i lost my arm, so as you can imagine i ruined a lot of peoples new years celebrations. Exactly. Sorry about that. Youve done a lot with vets and Everything Else because you understand ptsd to some extent becae it happened to you its not always in combat. It can be in a horrific accident. Youre absolutely right its not combatrelated but people who have been in Car Accidents or abusive relationships or you name it, you know the mind sees it as trauma. Its trauma. Its not that different, so, you know, when i started hooking up with the vets, i realized that they were speaking the same language as me and a lot of experimented that i had gone through through meditation, breathing, diet, you name, it i brought that to the table and we were able to have a conversation about it and can i help other people. How did you first meet up with some of the veterans . Actually through walter reid. I want to walter reid and held it together and saw so much suffering and also saw a lot of mow tension and thats the thing that caught my attention i called my wife and said we need to refocus the foundation on wounded veterans and thats exactly what we did. What do you see about the music landscape which right with streaming . How has it changed from the 80s to what you see now, better, worse . Thats a really good question music these days for us has become more of a calling card for, you know, to preempt playing live shows obviously theres technology that is moving in a direction to favor us, but its still not quite there, but i i see it coming around. How come when i go on spotify i cant get so many of your most popular songs . Thats another good question. Our Record Company finally came to the table, and we sorted out the Digital Rights and i hope that that will be available soon. Whats behind the scenes . Are you allowed to talk about any of that . Not really. No. Thats a personal annoyance that i cant play your songs. A personal annoyance of mine for a long time, and, you know, when we first made a lot of these records digital didnt exist and there was never any provision put in there so were trying to work it how the. Crossing my fingers i think of def leppard not locked in a time warp necessarily but not a certain genre a lot of people are repeating, a lot of good music that i like is good. Who do you like right now . Im sure its not hair bands or metal bands . Are there some still yeah. I still keep going back to sort of the age of discovery. Whenever we are making a new record, ill always go back and start, you know, start listening to music that inspired me when i was, you know, first like what zeppelin, you know, the stones. Yeah. The beatles, you name it. Anyone new . Would you ever listen to like alt nation or the second wave of new wave i do, but i i tend to i tend to sort of stick with what i know. As far as getting out all of your creativity, what does it better for you, music or or painting, if anything . Both. It takes music takes me to dont get this wrong that mindless place where you just are in the moment and painting is the same its great therapy its great therapy for my ptsd also and music kind of does the same thing. Its not just painting and music though its also jewelry that youre wearing and photography, too. Yeah. All this stuff is inspired by, you know, some of the designs that you see on the artwork. I was i was told to mention about the things that went on inside the telephone boxes during bad weather. Like what it was a way it was a refuge you know, when it was raining outside or whatever, that is where we would hang out. And thats part of the reason that you paint the telephone box. That part of my life experience, you know, and so you cant talk about spotify but we can talk about the telephone booth. Yeah, thats fair game, you know. You paint the American Flag and the union jack as well the wounded vets make you patriotic, would you say are you american or british or both right now both. I i i tend to deal with whats in front of me, and i live in america so moy focus is on, you know, on this country. Even with the flag theres always i mean, theres a respect for the flag but you might also do something a little quirky you might put a peace sign. Peace sign or whatever. That to me is a way to boil it down to a common denominator, something that pulls people together as opposed to the stereotypical views of what, you know, of what a flag means i just want to soften it, soften the edges and give people a reason to talk about it, you know its a flag, but its got a peace sign on it wow, thats interesting. Why . Well, i want to bring people together and give people something, you know, something in common. I guess the last thing, just technically im trying to figure out dish mean, if you told someone its a great band, they have a onearmed drummer, wait a second it seems like it seems very difficult. Paper hangers, it seems like it cant be done. What did you transfer to your feet, the snare or the snare drum and tomtoms. And tomtoms go there and then this is just so right hand is playing, you know, tip kit and then my left foot is playing everything that my left arm used to play and interesting enough there was less learning involved than you would think. The information was in my mind and what happened was the information just champed out to all of my limbs, so i noupd i could do things with my right hand that i could never do about. I was very right footed playing soccer as a kid and after the accident i realized i could kick with moy left foot nearly as well and it just happened automatically. I mean, if youre a fully abled dri abled drummer, you feel bad about yourself, youre not using one of your legs. There eat got to be a trick to there. Anyway, wheres in the control room. You are not the groupie our ep is out of control. He told me a week and a half, i was talking about not being here today for something. Look, youve got to be here that day. I just signed his entire record collection. Rick allen is going to be that who the f is that . Thrilled to have you here. Great having you here thank you for having me. Love the hart. Thank you for sharing. Lovely. When we come back this morning, weve got some stocks to watch ahead of the opening bell and at the top of the hour senator Heidi Heitkamp will be talking infrastructure, Energy Policy and Energy Prices and much, much more. Stick around squawk box will be right back. Us. When we come back well have more earnings coming up at the top of the hour. Our thanks to steve grasso for joining us today as well our bond is fraying. How do we get back to us . The y fills the gaps. And bridges our divides. Donate to your local y today. Because where theres a y, theres an us. But prevagen helps your brain with an ingredient originally discovered. In jellyfish. In clinical trials, prevagen has been shown to improve shortterm memory. Prevagen. The name to remember. Like you do sometimes, grandpa . And puffed. Well, when you have copd, it can be hard to breathe. It can be hard to get air out, which can make it hard to get air in. So i talked to my doctor. She said. Symbicort could help you breathe better, starting within 5 minutes. Symbicort doesnt replace a rescue inhaler for sudden symptoms. Symbicort helps provide significant improvement of your lung function. Symbicort is for copd, including chronic bronchitis and emphysema. It should not be taken more than twice a day. Symbicort contains formoterol. Medicines like formoterol increase the risk of death from asthma problems. Symbicort may increase your risk of lung infections, osteoporosis, and some eye problems. You should tell your doctor if you have a heart condition or high Blood Pressure before taking it. Symbicort could mean a day with better breathing. Watch out, piggies get symbicort free for up to one year. Visit saveonsymbicort. Com today to learn more. If you cant afford your medication, astrazeneca may be able to help. Dad dad can you drive me to jessicas house . Uuughhh this is what our version of Financial Planning looks like. Tomorrow is important, but so is making the most of the house before theyre out of the house. Spend you life living. Find an advisor at northwesternmutual. Com. Earnings alert Quarterly Results from jpmorgan, backrock and wells fargo financials in focus straight ahead. Another record rally. Stock futures jumping as the s p remains on pace for its best week in more than a year plus, new this morning, facebook making major changes to its news fed well tell you why and what it could mean to the companys bottom line as the final hour of squawk box begins right now. Live from the most powerful city in the world, new york. This is squawk box. Good morning, good morning. Welcome back haiti heitkamp is here. The girls are ganging up on him, thats right. Live from squawk square at nasdaq in this very new studio. Very nice. How have you been oh, my goodness, thats just beautiful. Real good. Oh, yeah. Im joe kernin. There you go, you guys have a nice place here. Real do you bet we do. Are we done with this in. Are we done picking on the way i talk now, joe . Were done now, senator. Andrew is out becky is here. Our guest host for the hour, north dakota senator Heidi Heitkamp which says fargo was from brainerd, minnesota. There is a difference you always say you betcha. I say there you go there you go. Thats really good. Thats kind of a different. If you dont like something you say thats different. You dont really criticizing. Thats kind of interesting. Kind of like bless his heart. She looked at my hair and said thats kind of interesting. Lets get a check on the markets this morning up again, triple digits. At least they were jpmorgan reported. The dow component and its been moving around, just barely triple digits now but we were up 200 yesterday. Great start to the year so far is it its the 12th, right, i think i got that right once i get the year, then i cant possibly get the right day but its 2018 now. The futures on the s p up just under 6 and the nasdaq is strong up 15. Nasdaq having a great start to the month and the year treasuries which looked like they were yields were off to the races, they have moderated in recent sessions now 2. 54 on the tenyear. And todays top stories, blackrock posting better than expected Fourth Quarter results. The firm alsoration its dividend chairman and Ceo Larry Fink joining us in studio earlier this morning over the course of the year we add 1 trillion that just gives you the extent what have market beta has done, but we also grew 367 billion in asset across institutional retail, ishares, cash. 6. 3 trillion under Asset Management at this point and blackrock is the largest manager of pension assets in the world fink is quite bushel on equities and calls the recent runup a recalibration of lower Corporate Tax measures jpmorgan also posted higher than expected quarterly profits gains in Net Interest Income offset a slowdown trading ref now and if you take a look at the shares of jpmorgan this is a dow component. When we first saw the results they were down by a little over 1 and shares up by over 1 and right now it looks flat line and well see what the company has to say on the Earnings Call and how that influences trading as well. Famed oil manback pickens has closed his Energy Hedge Fund as well as equities hedge fund. 89 years old, he pointed to his deer toating health and poor Fund Performance remember, he fell over the summer and has had a slow recovery from that fall. There you go. Wells frgo results just cross the table and wilfref frost joins us with the breaking details. Reporter revenues basically in line, a tiny bit soft, 22. 75 billion. Eps is a decent beat at 1. 16 a little headline number, loan growth is down slightly and less than a percent but jpmorgans was up 2 . Wells fargo last quarter was also a bit behind, pulling back on a little bit of loan growth margins. Jpmorgan showed a five basis points improvement in net interest margin, a slight slip so a little disappointing. On the tax rate some forecast for wells fargo it would be closer to that 21 , the baseline rate, but they have estimated 2018 will come in at 19 and thats the same as jpmorgan and thats encouraging yet again for both of these banks that they are coming in below that line for the forecast for the year ahead. The one outlier, ill get to the bot thomp because it sounds too bad on the headline is that the efficiency ratio, expenses over revenue so you want a low number is coming in at 76 . Last quarter was 65 and that was seen as too high in itself, ie the expenses are too high there must be oneoffs in there because thats astonishingly high if its the true comparison number to the last quarter costcutting is an important thing for wells fargo this year. They havent real delivered on cutting expensed in the last couple of years the way the others have. They need to this year this suggests they massively missed it in q4 and there must be oneoffs in it. Stock price basically florida. Guys okay. Wilf, thanks very much. Other corporate news, corporate unveiling changes to the news feeding years yulia, this is a pretty northern change. Reporter absolutely and, becky, this is really the heart of the facebook app. The Facebook News feed is going look had a whole lot different, this as the company starts prioritizing posts from friends and family over public content that means youll see more friends photos and fewer viral video and posts shared by publishers and businesses. Mark zuckerberg saying after doing research an getting feedback from their community, quote, were making a major change to how we build facebook. Im changing the goal. I give our product teams to helping find relevant comment to helping you have better social interactions this could have a negative impact not just on publishers who rely on facebook to reach consumers but on the facebook metric i expect the people spending time on facebook will go down and the time you do spend on facebook will be more valuable, and if we do the right thing thats good for our community and business over the long term, too. This comes after a year of unprecedented scrutiny of Facebook Facebook does report its earnings coming up on january 31st well be watching more on what zuckerbergs new focus means for bottom line of the company becky . Julia boorstin, thanks very much now to our guest host, immigration, tax reform, all made headlines and what else is in store for 2018 . Our guest host is north dakota snort Heidi Heitkamp and were so glad to have you here today. Thanks for having me. We just heard from wells fargo, jpmorgan, blackrock this morning, all of the Financial Firms coming out this last year was a year where it was republicans only in everything that came through we keep hearing that this is potentially a more bipartisan year is this an area you think there could be bipartisanish us. Reporter there already has been a huge bipartisan success, at least for seven hours and marked up a reg reform bill for Small Community and regional banks i think by the time were done were hoping well have about 70 sponsors in the senate thats a huge momentum were trying to get floor time from mitch i think that eventually. Mcconnell. Sometime in the next 30 days well actually pass this out of senate hopefully it goes to the house, the house doesnt moaning around with it too much, and and we will have for the first time a very significant Regulatory Reform for dodd frank for Small Community banks, small lenders and the regional banks. What does do specifically one of the problems that you have, especially with banks in Rural Communities is that they cant meet the compliance requirements if their mortgage has to be qualifying, it is hugely expensive, so they have retracted and moved out of mortgage alleged business, or they are using gimmicks like, you know, well take the title to your pickup to give you a mortgage for your house because, you know, the equivalency in terms of cost and value, and so what we did is said, look, if a Community Bank or a small lender wants to keep that loan in portfolio, why is it the federal governments business if they want to take that risk as long as they are their institution is secure and sound and thats part of the relationship they have with their cuters this was a federal overreach that was went to the big banks that ended up affect all these Small Community banks. Absolutely. And when you look at what happened, and theres so many people saying the big banks have gotten bigger and thats because weve basically put regional banks and the Small Community banks and Credit Unions at a competitive disadvantage with excessive compliance costs. I remember several years ago after the financial cries and dodd frank came and a guest same in that said you wont have a bank that will have a market cap less than 1 billion. Weve had some of those youve seen huge consolidation because people dont want to rub the risk of an audit and High Compliance cost and weve real excited about this package, working on it since ive been on the Bank Committee since 13 and this is just an excellent opportunity and i have to give a shoutout to chairman mike crapo from idaho, working with him as a Ranking Member and now as chairman of the committee and hes been absolutely willing to doing everything that he can to get this across the finish line so it you know, when a town where people dont say theres no bipartisan support, i think youre seeing a huge amount of willingness to do things that make sense. Is this going to be a oneof course, or will it lead it additional issues in immigration and infrastructure, the headlines that we keep hearing every day coming out of washington i want to talk about infrastructure because it goes back, to you know, when you spend is. 5 trillion and youre running the risk that that is going to result in debt, increased death, and we can argue about, you know, whether the joint committee was right or whether all the analysis on whether were going to see Economic Growth that will pay for it is right, right now the number counters basically tell us that we at least dug ourselves a 1 trillion hole is that why you didnt vote for it in. Yeah. It was fiscally irresponsible. What could we have done with that money that were giving in tax relief infrastructure is one thing. Youre talking about debt and deficit. My somers point if we pass on a highway system that is depleted and depreciated, if we pass on a rail system that doesnt work, thats another way to pass on debt and deficit we need to get our Infrastructure Spending back up. We need to make sure that we are a facilitating interstate commerce with the things that the federal government should be investigating in, like roads and rural broadband, i can go through the whole list. Would you say that you would still like to spend on it, even though you were worried about the potential for deficit building from the tax bill, would you still be willing to double down and do an infrastructure bill anyway and see what happens in terms of the economy . I think the administration wants to do infrastructure bill, but how its going to be structured is it will be 200 billion to leverage an additional 80 i dont know any state so flush with cash right now that they could in fact make that commitment. It could come from private industry as well. I always tell people, you know, am i going to be able to find an investor who is going to find the road between steel and medina this really affects rural states like mine so were looking at rural setasides, but were not spending enough on infrastructure, and by we i mean the entire country, not just the federal government, but and as a result our infrastructure shows it we have huge failing systems in this country and we need to amp it up. But when we spend 1 billion on tax relief, that limits what we can do on infrastructure. All right were going to continue this conversation senator heitkamp is with us for the rest of the show and well dig a little deeper in. Thanks, becky. I know you got a couple of oil wells. Is there any infrastructure in north dakota does the road count . Actually whats really interesting is we have huge amounts of investment in infrastructure in north dakota because what have happened in Western North dakota, and the state has ponied up because the state could afford it because of the Oil Extraction tax. And youre just rolling in it at 60, 63. It stabilized back actually theres two sides of the equation on revenue on oil one is whats our production numbers and the other one is price. This has been dish mean, what were looking at is a 50 to 60 west texas intermediate west texas intermediate price that will sustain the industry, and, in fact, we know because of the because of the reduction that the cost centers have been greatly reduced. This industry has gotten so much more efficient in the shale space that at 60 thats about where they want to be. Right. Because anything above that would encourage mammoth growth and once again we would get a surge and increase in costs so i think were right at the speed spot for permanency in the Shale Development. You like hydrocarbons and you like fracking. I do. You like Economic Growth. Are you comfortable where you are politically . Do you write that down. If you did a ben franklin, i like this, this, this, this, this, this you would come out republican, senator. Have you thought about it . People have done it. Wouldnt be the first time you would feel like, you know, were youre uncomfortable doing that. Does it matter what she calls herself though thank you, becky. Yeah, joe just trying to figure out where youd be more comfortable. Actually, you know, what you look at, you look at medicare and medicaid. You dont want those to go absolutely you probably want to reform those, too, dont you . I want to reform healthcare lets quick talking about reforming how were paying for it. Youre sounded like a republican. No, thats not. Coming up, three big its just common sense. Im going to rename my party, the common sense party. Three big Earnings Report ndom blackrock, jpmorgan a wells fargo. An analysts view next stay tuned youre watching squawk box on cnbc whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley Flexshares Etfs are built around the Way Investors think. With objectives like building capital for the future, managing Portfolio Risk and liquidity and generating income. Thats real etf innovation. Flexshares. Built by investors, for investors. Before investing consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. whispering excuse me, are you aware of whats happening right now . Were facing 20 billion security events every day. Ddos campaigns, ransomware, malware attacks. Actually, we just handled all the priority threats. You did that . We did that. Really. We analyzed millions of articles and reports. We can identify threats 50 faster. You can do that . We can do that. Then do that. Can we do that . We can do that. Wells fargo out with wells fargo out with they gave it to me. Out with Fourth Quarter earnings just moments ago the company posting better than expected Bottom Line Results however, revenue fell a bit shortstop joining us now, the principal and bank analyst the that was a really sort of overarching development a couple years ago when i it used to be warn buffets favorite, you know, the rollsroyce of banks and now we think of wells fargo, thats all we think about. Are they past the problem . Were in the later innings certainly. In the coming couple of weeks well probably see an occ settlement and took a litigation for that and that will allow them to close the book thon. How come its taken so sflong h so long . How do we keep getting dribs and drabs of that . You raise a good point. Number one, virtually everybody out there needs to extract upon the flesh and we have a litany of regulatory bodies in the u. S. So each one is sort of taking their turn. It was their own investigation. Thats where i was going next and once they uncovered the sales practices in the Community Bank, they shifted gears immediately and said, look, we cant have problems like this. Well turn over every work at the bank in general so thats been a while. I would disagree with your characterization that once they discovered it. I think they discovered it and thought they fixed the problem and had to go back had they dealt with it when they had the first indications they would be better off today. Thats a very fair point. Whether its back in 2012 or 2013 it would have been a small thing. The big disappoint in investor mind, joe, as you pointed out, this was the Gold Standard of regional large banks out there but the Real Investment in investor minds and probably the community at large was that perhaps they knew about it and didnt act at all or certainly not aggressively enough, but, you know, i think the main point in my mind and for investors, is you know, you look at the changes we made over the last few years, new ceo and lots of turnover in the board and lots of turnover in Senior Management weve clawed back tens of millions of compensation and does that remove culpability, not at all but i think tim sloan is starting to turn the corner. But in damage control, First Impressions matter. Yeah. And in damage control First Impressions, i mean, i was on the committee when the ceo came in i remember you questioning him. And it was not good. Yeah. And it was absolutely the wrong way to approach this kind of problem. Oh, yeah. I mean, if we can turn back the clock, i think we all would have done a lot of things differently. This caught us all off guard in very unfortunate ways but, again, tim sloan, the still relatively new ceo, tried to take ownership of this to all degrees possible so, you know, i think theres a lot of got a lot of goodwill to try to claw back, with regulators in that vain. They were one of the first movers to move to a 15 minimum wage to their employees and i think they will donate 400 million this year to their found po days, so theres a lot to claw back and unquestionably this has been a huge almost extension issue for the company, but we think they are beginning to turn the corner just with the operating metrix, three highlights of this report three things we were watching for, lean growth, the margin and the expense story, the third is the big one. Fourth quarter in particular, so they reported 1. 16 we were looking for 1 i think the consensus was around 1. 03. Concensus Means Nothing this quarter, kitchen sink quarters in the grandest degree, tax adjustments and business line sales, litigation, accruals, et cetera so the big thing markets will focus on is the companys cost guide, a number between 53. 5 billion and 54. 5 billion, right at the midpoint and the consensus is maybe toward the lower end of that range which could be a little bit of a disappointment but thats clearly the thing people will focus on on loans pretty much flat, where we were looking and margin down a couple basis points. Need to do a little more work because there was perhaps a little more work in there but plus or minus is fine with me. Did sandler get more bullish after tax reform on the group . Yeah, you know, taxes are a big issue for this group number one, the bank group is wholly domestic and two among the biggest taxpayers in the country and just to the exhasnt we were able to revise our estimates upward on account of lower expected tax rates, thats a direct benefit which makes the group look more reasonable on a pe basis in 018 and beyond what youll see are the ancillary impacts, whether that means Better Capital return from the group, ideally more robust Economic Activity that will help for things like loan growth which has been confoundingly low for the past couple of years and were finally moving the pendulum to a slightly easier Regulatory Environment and given that wevin under the thumb of regulators for so long this is a favorable move so we actually just came out at sandler with an overweighting for the group a couple weeks ago, and we think the group is in good shape. Okay, weve got to go i dont know a yield cure with 40 basis points in germany. Does anything make sense one glimmer of hope two things, one higher shortterm rates are good for the group so thats number one number two, the curve is actually steepening just a touch. Okay. Talking to scott about wells fargo and now were finished talking about say it again. There you go. Play it again, sam. Thank you, scott. Thank you, guys. Never gets old. Actually, maybe it is getting old. Just a little. Maybe. Not old for me. When we come back well look back for a rnd oouupf other financials to watch. Stay stupid. Youre watching squawk box here on cnbc and the International Brotherhood of electrical workers helped make that happen. The ibews Outstanding Union professionals have the skills and training to get the job done right. Thats good for our customers and for our bottom line. Ibew members are our power professionals. They should be yours as well. Thank you so much. Thank you so were a go . Yes we got a yes what does that mean for purchasing . Purchase. Lets do this. Got it. Book the flights hai si si ya ya ya what does that mean for us . We can get stuff. Whats it mean for shipping . Ship the goods. Youre a go you got the green light. That means go oh, yeah. Start saying yes to your companys best ideas. Were gonna hit our launch date scream thank you goodbye we help all types of businesses with money, tools and knowhow to get business done. American express open. Coming up, breaking Economic News retail sales and the Consumer Price index. Numbers and Market Reaction just ahead. First, take another look at u. S. Equity futures triple digits in the dow nasdaq stronger, up almost 23 points well be right back. Or fixed income. What people are really putting their money into is what they hope to get out of life. But helping them get there requires a real refusal to settle for average. Because when you approach investing with a tireless desire to beat the status quo, Something Wonderful can happen. Those people might just get what they wanted out of life. Or maybe even more. 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. Breaking news. Actually quite important breaking news. Our december read on cpi up. 1 as expected. Strip out the allimportant food and energy, up. 3, thats. 1 higher than expected no. Revisions to the up. 4, up. 1 for last month year over year, 2. 1, expected. 1 cooler than our last look and if we look at cpi from the perspective of the Federal Reserve, those numbers are a little bit hotter than ppi but still not hotter than they have been historically. You look at retail sales also out. Up. 4 on headline. You could say thats a tenth light. Youre looking for half of 1 , but you did gain that tenth back on a revision of last month. Take out autos still up. 4. Thats better than expected with a. 3 revision. Last month up 1. 3. Autos and gas, up. 4 and gained. 4 on the revision last month from. 8 to 1. 4 the control group used to insert into the puzzle, the bigger puzzle piece what were expecting the number up. 4 there and maybe thatcism fielders choice this process. It was up. 3. 1 light, but like all this data it really reflected another upward revision, up. 6 which is reallyquite large on last months control number bringing it to 1. 4. So, if you look at it from a sequential standpoint, maybe youre a bitdisappointed if you look at it and try to meld the two together thinking, that you know, you have some be a norm tis there, lets look tat from an averaging process pretty decent the big news today is the dollar index, or the euro, whichever is your palette there or over 12 is on the euro versus the dollar and getting ever close to 19 on dollar index and this comes at a time when were several basis points away from the highest yield closes since march of last year thats something to think about. Beck, back for you. Rick, thank you very much rick santelli. By the way, happy threeday weekend. We saw strange bed flows in m a, most necessarically with amazon and whole foods it will continue in 2018 as established retailers search for growth joining us is rob sweeney, global head of banking at whole foods. We mentioned sustaining bed flows, amon and whole food caught everyone by surprise and we look at where Everybody Needs to be heading to is that a trend right now . I think its certainly a trend. Well see as it plays out. It was not the needed for rick and mortar and i say that because us a mentioned the other day, joe, dominos is not really a store, it can be a store, a store of a future can you go in and pick up your food or have it delivered. I think that first validation is brick and mortar is part of the future the second is thats a low margin industry. Delivery of retail and low margin, compression and margin, that lead to consolidation so thats likely to be on the delivery of retail side as well as on the packaged food side the strange bed fellow point, our common enemies become friend and with amazons approach to technology were seeing google express, walmart, target, see it in other markets that will continue. Mark mah ha ney joined us a couple weeks ago and said he sees amazon buying and taking out target is that a thesis that you think holds water . I wont speak to specific names in that context. I think the idea of being at the point of everyday consumption is important to all of our clients, both technology and retail in commerce is the idea that a Technology Company could buy another retailer plausible yes, i think so. Who does that make the winners of this year, in terms of stock prices because people look at it because theres a whole new layer of value here . Its treacherous to bet on winners on the likelihood of Technology Companies buying that thats a longer term trend the winners in retailers, put themselves at the point of consumes, whether thats on my phone or in my neighborhood or in a store with a compelling proposition develops a relationship with me and leads to through the use of data and technology, a longer term relationship and a lifetime value that exceeds the cost. They are going to be everywhere that the consumer wants you to be basically. Everywhere you the consumer wants you to be. The purchase of whole foods, they already have amazon prime pantry so they are already delivering groceries so with whole foods its spoking to a whole different consumer, what they think is the millenial consumer of the future, but one of the challenges for retail long term is marketplace fairness hand what were going do with the sales tax, and theres huge developments in d. C. , either Supreme Court is going to take cert on the anticoal case or we might move something out of congress to basically once and for all deal with the state sales tax issue. That would be fantastic. Yeah, i think, you know, i litigated it so its been 25 years in the make nothing finally get this done, but, you know, when youre looking at margins as small as what you have in retail and youre now saying, okay, at 5 , so in some cities including the sales tax, thats a huge hit on the bricks and mortar and weve got a level playing field. Do you think theres been a shift in washington dish remember back in the late 1990s, maybe 1999 when that when you know, the sales Tax Exemption to the internet was given as a way of trying to boost them up, and they were getting a lot of help from washington for a long time, including in the last administration do you think that shift that things have shifted and that now internet conditions and internet retailers will have to be on the defensive . I think, number one, as they are looking at next day delivery they are seeing more physical presence and amazon can say were now on board and we think this is justice. They have to have physical presence in order to meet the requirements of next day delivery or same day delivery so its a little disingenuous i think, but when you look at kind of long term, the internet tax bill was basically on internet service. It was never on the sale of product, and its always been the quill case, that line of legal restriction that prevented states without physical presence jim posing a collection responsibility, i think its going to change. Gorsuch wrote the opinion and kennedy on the original court said we need to revisit this in the next couple of weeks well find out if the court takes cert. Weve seen walmart and a lot of wage hikes coming, i remember a wage price spiral and we dont even use that term anymore for inflation because weve been on the flip side of it for so long. Is there any danger eventually that theres some margin pressure from whats happening, whether states go to 15 or whether they sort of me, too, do it because everybody else is doing it do they have to worry about it ever theres absolutely danger of it, and i think were seeing it as the wages rise i think the tax reform which we havent spoken about has given retail which gives them ten plus points of margin which helps them reinvest in the store. Is it crumbs or actually meaningful i think its moaningful where theres a potential disconnect the market expects more will come to shareholders. What happened to walmart came out kudos from everyone and they closed how many sam stores 63. Was that a tin ear or what happened with that theres a cover many of those are being converted into Distribution Centers as you saw. Maybe 12 or 13 of them. The 63 are being converted into Distribution Centers. Something to watch is the overlevered retailers. We talk a lot about the benefit to retail which is largely correct. The overlevered retailers generally dont pay cash taxes so they dont benefit from a reduction. They have nols, deferred taxes that are left. They have business expenses less than a third of ebitda and cant deduct the expense. People hated the border adjustment tax, and then they went back to that. How are the retailers what. When you replace the border adjustment tax with the s. A. L. T. Thing. That looked pretty good. A year ago, change in sentments, all we talked about was border adjustment tax. Weve got to the see the shift in Technology Replacing some of the menial jobs and the support can that productivity ghan be invested back into the economy to encourage job growth somewhere else. Thanks for coming in. If you didnt have to work at Goldman Sachs, you would have to go to work at Goldman Sachs. You could youd need to play a ceo on television. Stay tuned. Hold on, hold on. Were still on. I didnt know there was a Goldman Sachs look. Thats it, seniw. Hes well put together. So flattered by your you have a dictionary. Com search Goldman Sachs. Yeah. And the picture you dont look anything like gary cohn. I cant believe you said that lloyd does not look like you. Jamie dimon, Jpmorgan Jamie dimon and cfo marion lake. You never know where its going to, but funny things happen. Joins us on the breaking news desk. Just to quickly sum up the earnings as a whole for jpmorgan, pretty poor trading and still a beat overall and a large part of that is strong guidance on taxes in terms of weighing out the plusses and minuses. Just got off will call first ill go the into the 143 million loss they have taken against a single client, margin loan in the executive Derivatives Department and was related to the south african home retailer called stein ohoff much in the news, using steinhoff stock as collateral. The stock was around 6,000 round and turned it around to 25 and they have turned it around to market and its already down 90 so they havealready taken the full substantial loss on that. Trading more broadly, equities despite that was pretty good the fixed income commodities was very poor indeed and a reason why they were a bit worse than their guidance they were down 17 that bodes badly for the heavy fixed income traders, particularly Goldman Sachss a we get those numbers next week and say the environment feels similar to trading as well and the low volatility continuing. Tax reform, as we said, the guidance there particularly good jamie dimon said Great Companies are coming forward and boosting wages. They havent announced their own plan on that and already at 15 an hour minimum wage from last year they said that in the next two weeks they will come out with their announcement about what they are doing for their staff based on the tax reform bill so thats coming. Not got it yet and in terms of loan growth, cni and industrial loan growth, whether the tax firm little will boost that going forward. Looking for high single digit growth next year from the 1 that weve seen because of the tax reform bill. Guys all right, wilf thank you, its livelily here, wilf. The big story on facebook this morning, shares adding to their losses as we move closer to the opening bell on wall street, and thats taking a toll on the nasdaq futures. They are not up as much as they were youre watching squawk box on cnbc my experience with usaa has been excellent. They always refer to me as master sergeant. They really appreciate the military family, and it really shows. Weve got auto insurance, homeowners insurance. Had an accident with a vehicle, i actually called usaa before we called the police. Usaa was there handson very quick very prompt. I feel like were being handled as people that actually have a genuine need. Were the webber family and we are usaa members for life. Usaa, get your insurance quote today. Two,that was awful. Why are you so good at this . Had a coach in high school. Really helped me up my game. I had a coach. Math. Ooh. So, why dont traders have coaches . Who says they dont . Coach mcadoo you know, at td ameritrade, we offer free access to coaches and a full education curriculum just to help you improve your skills. Boom thats lesson one. Education to take your trading to the next level. Only with td ameritrade. Welcome back to squawk box, everybody. Were watching shares of facebook the Company Announcing big changes to its news feed it says its going to be prioritizing posts from friends and family over public content like viral videos or posts from businesses, paid content Mark Zuckerberg says that that change is geared towards creating more meaningful social interactions, but obvious think could put some pressure on the money they will make so stocks are down 7. 4 . The nasdaq is up 25 and its now down 2. Look, this is an important change and a way of pushing back against whats been seen as problems in facebook over the last year or two lets see the nasdaq now. Its actually down. Unbelievable. And the dow is no longer up by triple digits. Yeah. So dow up by 70 points still and s p still hanging on with a point above fair value nasdaq down by three points. When we come back, we have jim cramer joining us live from the New York Stock Exchange and well get his take thon nirnings stories, earngs reports and lots of other things weve about talking about. Stay tuned youre watching squawk box on cnbc lets head down to the New York Stock Exchange. Jim, this just happened. Weve got things we usually talk bork jpmorgan and wells fargo, but did you see the nasdaq was up 25. Its now down just in the last half hour or so. Yeah. Its finally reacting to the Facebook News, and i think the market wants the sellers of facebook frankly dont really understand the implications longer term about how positive it, but they are obviously saying, look, this is a bigcap stock. Its obviously the nasdaq, drive the rest of the nasdaq down. I think the move is necessary because facebook is peaking and cant do peak and autoplay, and ruins the user experience. And youve got to hear what the government is saying what they are saying now, if facebook is look were experiential and about family and community, come after us. It kill help uwill help user. Hes not thinking about the six to aeg months that just happened but what will happen the stock is down because the analysts dont get it. But they will get it by the time it gets to 175, 174, theyll figure out its good, not bad. Its weird. How about wells or j px mop mor the expenses are out of control for wells jp morgan the amount of money in fixed income is hideous that said, jp morgan going up, i think it was right about whats going to happen with the future there. Wells fargo has to explain the efficiency ratio, which is really horrible. Wells fargo not that much to write home about the weakest of the three most definitely i would say the great thing about jp morgan, the Consumer Bank is doing incredible and thats going to drive things and it is a big driver i like the stock blackrock has to just keep coming in, another home run, larry fink, genius, what can i say . Eight and a half minutes to you. Well see you in just a few. Up next okay. 2018 priorities from senator heig camp at ally, we offer low rates on home loans. But if thats not enough, we offer our price match guarantee too. And if thats not enough. We should move. Our home team will help you every step of the way. Still not enough . 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Our guest host this morning, senator Heidi Heitcamp the question becomes how do we pay for it youve got a few ideas. I think Public Private partnerships can work. We have a great example with the red river valley Diversion Program but the state was able to do that because it had a ton of oil and gas revenue coming in we have to be realistic about rural areas and state contribution that were expecting and thaen we have to be realistic about how we expect to privatize or bring in the private sector the example that always gets talked about the parking meters in chicago you know, they continue to believe that that was a bad deal weve got airports in australia now that are restricting who can fly in theyve been privatized. We dont want to just pass that off and not make sure that those are public assets. The traditional role of a utility or public asset. The bottom line, 200 billion over ten years is too anemic and we need more dollars in infrastructure. One idea is raising the gas tax. How do you feel about that i feel this is one you go first because everybody looks at it as we saw gas prices come down with the advent of the Shale Development and more supply in the market we think weve stabilized oil and gas prices could consumers wouldnt take a big hit. All of the truckers association, major infrastructure groups are promoting a gas increase we have to be realistic about fuel switching and new high mileage vehicles the gas tax is a great user free but its inadequate even at its present level. You would be in favor of it, may not want to be the first legislator to say im add vo indicating for it but if there was a bill i think thats not what i heard. You would be in favor of it no, im saying you cant do a user fee without taking a look critically at how you fix the gas tax structure. And so meaning it cant be spent for anything else . Absolutely. I think youve got to look it up and say its just for infrastructure or you would have a revolum volumvolum volumrevolt theres a lot of bipartisan work being done, come up with an infrastructure package that does increase gas taxes but you have the house with the pledge. We arent going to raise any taxes. If you look at across the state governments, state governments have found a path forward and very conservative estates to raise the gas tax. Lets talk about this idea of another way of funding it could be from raising taxes sales tax numbers on internet retailers and theres i didnt real rise this is somethinging happening in next two weeks. Its happening in the next few weeks if it happens in the courts and there is decision in year end plans, what i call year end, now the beginning of the year, on funding either extenders or on the in a infrastructu infrastructure you could see an argument that look, were giving you the ability to collect these sales from remote sellers. Thats money that you now will have to reinvest in infrastructure and to pair up with whatever federal investment there is. You think theres a daca fix and immigration plan to be had i was in the meeting on monday and i walked out of there believing we could come to some kind of agreement and then yesterday it blew up again so weve got to take blew up because of the president s comments or not being able to find legislators on both sides . I think the president is in the middle at one point and i think it was on the Live Television feed, i feel like im the moderator and thats exactly the role hes playing in the hard line over here does not want to the tom cottons and the steve millers do not want the deal that was done by the six bipartisan groups. So the question is, how do you begin to have this discussion, not taking out o emotion, its hard to take out emotion of kids who have incredible stories. How do you achieve the commitment that we wanted to do something for these kids thats the criticalpiece and were talking immigration, and lottery system do you think there are certain elements that would like the government to shut down to score political points. I do not think that is in any way any position of anybody in the democratic conference. Absolutely. I dont think anyone thinks anyone wins there was a time when democrats now anything has anything to do with the law its a nonstarter. But thats not true either. I mean, my big argument on the wall and i sat down with the homeland secretary Homeland Security secretary and basically said, you havent given us a plan tell me where it is and what the plan is. Thats exactly right tell me are we going to be able to see through it. Senator, you go ahead, great to have you. Fun to be here. We laugh. We do. Wish we could show off camera stuff but we cant. Enough made it on camera. Thats right enough off camera stuff made it on camera. Now you have to sit in a borg me boring meeting in washington. Can i take becky . Yes good friday morning, welcome to squawk on the street