Ed lee, New York Times squeezed reporter, cnbc contributor. We have so much to talk about. So many things happen from last night my good bs below the belt picks. Well be talking about that in just a little bit. U. S. Equity futures take a quick look at this hour. Show you whats going on the Lunar New Year holiday hong kong reopened after a threeday holiday. Hong kong was down about 1. 6 at the open on this negative development that weve seen in the last day or two about china trade talks with the u. S. , but recovered pretty sniesly throughout the session, as can you see. It was only down 0. 2 having been closed for a couple of days japan, though, obviously still down a couple of percent 2 yourp down sharply flat or mixed today. The data more mixed as well. Italian Industrial Production was soft, but french rebounded, and the german trade data was better than expected theres that mixed picture across europe. Week to date for europe, also fairly mixed apart from germ an, which is down 1. 5 ferz are for the week as a whole. Treasury yields, lets check in on those tenyear at 2. 65 . Okay. Folks. Here it is front page of the New York Post. Its a business story, and i would also say that its basically in every other newspaper as well. That is all the all of the new shows last night as well. Main stream News Business news. Lets start with the story that is rocking the world. Bezos exposes pecker september that the best headline its one of the best because it speaks for itself lets explain to everybody. Amazon. Coms founder jeff bezos unbelievable yesterday blasted the National Enquirer, accusing the publisher of blackmail in a blog post. Bezos said a lawyer from the nashlg enquirer threatened to post sexual pictures he had texted his girlfriend laurensa chesz in exchange for a statement that the enquirers coverage bezos wasnt politically moesh ated bezos claims that the national enyourers owner, American Media also wanted him to drop an investigation to how the tabloid obtained those Text Messages exposing his extramarital affair he published emails he says are from the National Enquirer to his attorney describing the graphic sexual photos that would be published it looked thats what it looked like to me. Excuse me. Straight up blackmail. Cnbc has not independently reviewed these emails. Weve all reached out to amazon in ama ami declining to comment an interesting twist to all the Business Insider reporting that the ip addresses for the enquirer site are assigned to amazon, meaning that amazons web services, like the host for the enquirers website, in another twist of irony, by the way, amis lawyer, one of their lawyers, is a former lawyer for amazon here we are in fact, the lawyer threatening some of the sort of potential that was one of the lawyers for amazon he moved over to ami this all hit late last night, or for a news thats relatively late, and i know a lot of newsrooms scrambled decipher whats going on in this. Can we break it down . Theres three pieces. You break it down. I want to know if you agree with these things. One is thats because were a Business Network if you are an amazon shareholder today, are you happy are you unhappy . Are you upset that he is involved with the Washington Post he actually talks about being involved in boston and the complexities he uses an complex fewer and what that means b, he says he is trying one of the things he says in the note is he says he is trying to have investigators spend as much time on this as possible and no expense spared he doesnt want to spend his own time on this the last several days he has not spercht every last waking second then i want to know on the media side could there be a criminal investigation indictment both of david pecker and of ami effectively putting this company out of business. What does this mean for the world of media in terms of how Media Organizations get treated as journalist oorz nonjournal is when you start to see did. If are you a Media Organization thats owned by a billionaire under threat theres a million things going on where do you want to start . Lets start with the investor thing. If you are an amazon investor, i think ultimately this specific thing, you shouldnt be too bothered by, right again, this involves his personal life a little bit the Washington Post, and this some people think its fabulous what he just did. That he is standing up for himself and saying imauto not going to take it there are people who hate jeff bezos on a normal day who think that he is the modern kay version of jesus i swear. The other point on this as well is that the share price its down 0. 6 so is the Broader Market the share price has never really reacted to this. If we rewind like a year and a half when the president was tweeting directly at companies, it had a negative effect, but it doesnt anymore. It was always shortterm, and it doesnt anymore. I think if you are an investor, you could like his what he is doing, and not necessarily buy more stock, right . Thats the other sort of thats the even way to look at it the other end of this sort of going down your buckets here, with complicating understanding this is that david pecker, the head of ami, the National Enquirer, he has cut a deal with federal prosecutors, right bezos, how did the texts get leaked out he hired the security guide, security guys of the stars debecker he found that, yes, we think its politically motivated a, david pecker says thats not the case at all. You need to back off your investigation of us. They think that pecker is closely aligned with trump pecker put together a special issue on behalf of nbs at one point. So for saudi arabia they come in on behalf of trump. Theres a lot of crisscrossing connections. Lauren sanchezs brother who they think actually somehow is apparently some protrump supporter, and they have a view internally that somehow he was the one who got the pictures and leaked them to the National Enquirer just to put the full information out there. To make it as complicate as possible we were reading through bezoss post, and its like trying to solve for x. It was cloont jtd clear what he was claiming is he trying to is that whats happening at the same time pecker he has turned basically he is going to help out the federal prosecution into trump, and so theres a concern that, like, is he now turning on trump . Incredibly complicated its unclear where the dots really line up to Andrews Point about the National Enquirer and ami, if theyve been gifted information, whoever gifted it to them, however that person had to retrieve got the information in the first place, vongs they theted the accuracy, are they still fine you can decide whether this whole topic is something that needs to be chasing anyway its not particularly were talking about, you know, sort of the tenants of journalism if you have information that is relevant and ami and National Enquirer felt that he is a public figure. This is as long as they didnt technically as long as they did not steal it themselves. However, theres a question as to even once you there are many questions, but once you have the information, right, how are you use it journalistically, if you go off and publish it, thats one thing. Its another thing to then use the information to blackmail somebody else and then the question is what constitutes blackmail . Can lawyers blackmail each other. Does that constitute blackmail . Are the lawyers jumping theres a lot of layers. The deal that ami that david pecker has with federal prosecutors, that deal could be in jeopardy now, right if they determine that this is blackmail. Theres a big liability there. That could have implikdss for trump. Then on top of that, you know, there is back to your question, what was the point of how did you get this information . What was the point who gave it to you i think i have another question as well, which is sort of semantics, actually, more than anything mr. Debecker, the security boss. Security guy to the stars he said that the mr mr. Bezoss phone was not hacked he implied in the report, according to the reporter from the Washington Post, that it might have come from a government entity. I dont know why that means its not hacked. If this is two Text Messages twoen two people, and neither of them have leaked it, i would still class that as hacking of some sort. Its semantics theres a good chance that my point was going to be, in this wikileaks type age often we celebrate when information is exposed even if it came back by hacking. Clearly today the debate seems to be that that would be a bad thing. Right is right, and wrong is wrong. That should be the case always should always be the case you are wondering about how if there was hacking involved and who the government entity, if thats the way it came from, doesnt have the right to do this does not have the right to did this, but i think the question is the question is did somehow someone stumble upon this and then motivated by the idea of embarrassing bezos and helping trump. My sources tell me when his thing hit the web, the post had no idea. The publisher had no idea. The executives did. He did it on medium thats not the thing you want. Amazon. Com its a very Silicon Valley move to do that. They love posting things he announced his separation on twitter for one thing. Right . And the fact that he wassing to put it all out there, i mean, that to me was really something. Thats why i wonder if prosecutors its interesting. Federal prosecutors would be under the department of justice, which would be under President Trump, so maybe they dont do anything i dont know how political you think this whole system really is, but if it isnt, a federal prosecutor might want to actually take a real look at this for the first time. You could say the entire separation a criminal enterprise that would be the argument you set a new standard for that, right. The other thing to note is were talking about you dont want to make this political, but now more than ever, especially in Silicon Valley, tech enterprises, its everything is becoming much more political. D. C. Is much more aware of the power of Silicon Valley, and looking for ways to reign it in, while not sort of tafrping down the economy. I think its part and parcel of the the whole thing made me think of peter teal and gawker that was what i thought about last night you have to remember, the lengths to which peter went to go to get gawker again after gawker had outed him or that was years and years. It happened. Ool every ill be here. Amazon stock only down half a percent. Sort of in line with what futures are down at the moment not really moving in relation to the story, therefore coming up, mattels stock soaring. The toymaker posted a surprise and its crediting a familiar friend we have the details of that next as we head to break, heres ray look at the biggest premarket winners and losers in the dow. Were back in a couple of minutes. So, servicenow put your workflows in the cloud, huh . Mmhm. Your employees must love you. [ chuckles ] thank you. You could say that. I love you. Servicenow works for you. The latest inisnt just a store. Ty its a save more with a new kind of Wireless Network store. Its a look what your wifi can do now store. A get your questions answered by awesome experts store. Its a now theres one store that connects your life like never before store. The xfinity store is here. And its simple, easy, awesome. Mattel reporting a surprise Fourth Quarter profit as a maker of barbie helped to lift sales barbie sales rose 12 measures and hot wheels by 9 both easily beating forecasts. The Barbie Dream House that retails for 200 was among the best selling toys in america last year. The stock jumping 16 this morning. Shares of sketchers are surging today. The shoe company swung to a profit in the Fourth Quarter topping estimates, although revenue fell just short. Also issuing guidance that is above analyst expectations that is up 17 expedia is adjusted Fourth Quarter profit beat forecasts. Revenue rising 10 as the owner of travel sites such as expedia, hot wire, and travelocity sell more hotel rooms and airline tickets. Its up 7. 5 . Yesterday apple confirmed it would compensate the family and make an additional gift towards the 14yearold grants education. No word on the value of the reward, but appear offers up to 200,000 to security researchers who discover vulnerabilities and report them. We congratulate both grant and michelle good work we love talking to them i hope we get 200,000 towards his education. Might not that much. I hope so mr. Cook, if you are watching, thats the number were looking for. Zhoo they have a lot of cash coming up, they do have a lot of cash. Just a business expense sure barely a business expense for that im just thinking of the taxes. A Health Launch for our fourlegged friends. Henry spinning off its annual health business. Theyll begin trading here on the nasdaq today were going to talk to the ceo next clock ticking bell ringing its time. Time for a new kind of cloud. The ibm cloud. The cloud that proactively protects your business from threats, instead of just reacting to them. That lets you modernize and move more of your apps without rewriting. That unlocks insights from all your data and puts it to work with ai. Get a faster, more secure journey to the cloud. The ibm cloud. The cloud for smarter business. The firstofitskind lexus ux and ux f sport, with the latest Safety System standard, bestinclass turn radius and bestinclass mpg. Experience amazing at your lexus dealer. Lies beyond the tech sector. Its about technology transforming every sector. At pgim, our bottomup approach uses a technology lens to identify longterm winners. From energy. To real estate. To retail. Finding such opportunities for alpha is the true value of active investing. And around the world, you have a partner in that pursuit. Pgim the Global Investment management businesses of prudential. Welcome back henry spinning off its annual Health Care Business and merging it with vets first choice. The new company it listing on the nasdaq in just a few hours joining us right now ahead of todays ipo is ben he is the president and ceo. We saw you about a year ago. We did. This is a big deal for you. Its a huge milestone for the company. Weve been working towardsthis for a year its a big day for veterinary medicine because were creating a new company thats going to help veterinarians be very successful were giving them new technology, new services to help veterinarians be successful practitioners. For investors out there, who are thinking about what they need to do or think about your company, in terms of comps, everyone for a company like this wants to know what is the right comp how do you comp yourself whats the right comparable . Think think its a unique service. The only global ecosystem for veterinarians. We operate around the world. We get to work with other like organizations that are also really important operators in this space all of these companies are committed to giving or arming veterinarians with a lot of technology, a lot of services, pharmaceuticals to help nem be successful in business we get to play we are like the operating system of veterinary practitioners. Is this disrupting the veterinary market, or theres a lot of growth within the market itself its an afracturive market. It has strong samestore sales growth, but its really an opportunity to figure out how can veterinarians respond to changing client expectations how do they respond to increasing retail pressure were giving them opportunities to help figure out how i can better compete online what are the growth pros peks youre talking about retail sales. Is that where the new money is coming in, where the people are spending more on health care for their pets it turns out we have to be more proactive as a profession right now. Its hard for veterinarians to figure out who needs what and when if we can be more proactive and communicating with clients and getting them back in Office Services and make sure they timely refill medications, we can create a lot of new category growth we can improve medical compliance. I do think your company is a little bit different than what might be considered, like, how do you actually count this out thats the issue there are other great Human Health Care technology and services business. Were unique and operating in the veterinary category, but this parallels other successes weve had, whether its Athena Health or Health Equity or other organizations that have helped disrupt and drive a lot of new outcome into the Office Practitioner market. Were doing that in a veterinary category, and thats a Global Market versus on the Human Health Care side the global question was coming back to my last question, and that was then going to be different nags spend a very different amount on their pets yourp is a significant veterinary market. Australia, new zealand, and china and brazil will be some of the Fastest Growing and maybe the largest veterinary markets in the world in a lot of ways, the spend per patient outside the u. S. Is maybe higher than in the u. S. Market im thinking five times revenue. How about that . Thats your number . Okay just want to know. Thanks a lot thank you very much. Appreciate it still to come, stock futures under pressure well talk earnings, trade tensions with china, and thats coming next. Plus, more on the buzz story of the morning. Amazon Ceo Jeff Bezos accusing the National Enquirers publisher of blackmail as we head to break, a look at yesterdays s p 50000 winners and losers were back in two. What do advisors look for in an etf . I tell clients, etfs can follow an index, but which ones target your goals . Its not about quantity. Its about quality. No trendy stuff. I want etfs backed by research. Is it built for the longterm . My reputation depends on it. Flexshares etfs are designed and managed around investor objectives. So you can advise with confidence. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. With being back. Youre watching squawk box live from the Nasdaq Market site in stooimds times square good morning. Welcome back to squawk box. Among the stories front and center, its the bez yoes bombshell. Well have more on the developing story that has just sort of overtaken Silicon Valley and just about everywhere else things are back up and running we should tell you separately at wells fargo after what was a major outage yesterday knocking services to some of the atms and Online Banking apps its all working now the issues were due to a power shutdown at one of the banks facilities not clear how many wells fargo customers were impacted, but i dont know, i got a million emails from customers and i was about to say why arent you reporting this. This is unbelievable there was another big bank story. I think that the interesting thing to see is how much ayre it causes customers when they cant get access to their money. Its different from if you are shopping website goes down or whatever they feel more passionate about it it should be up and running today. They keep telling us fully and clearly its not a huge stock aspect even losing access for a minute or two, its nerve racking. Of course, it is. By the way, do that for a day or two, and then call me, right . Thats when you have a real problem. Its cleerlg a case of wow, theyre meant to be doing a full review and sort Everything Else out, even though this is unrelated to what theyve been reviewing. Its not a good look if it lasts much longer where. The soap opera that is sears. The saga rolls on. The retailer getting yet another lifeline after bankruptcy judge approved Eddie Lamparts latest bid to buy the company they offered to pay 5. 2 billion. It would allow sears to keep 425 stores open and create 485,000 jobs Eddie Lampart seen as the firefighter and the arsonist its a complicated situation take a look at u. S. Equity futures. We are in the red. 94 points off. Nasdaq off by 40 points. The s p 500 off by 11. Reporters were present, and he was asked at the end whether he would meet with chinas president xi jing ping, and he said its probably too soon, but that the two would maybe meet in the next month of course, the reason why people are focused on this march 1st deadline, it was the deadline set by the United States back at the g20, and its the date at which tariffs will automatically double from 10 to 25 on some 200 billion in chinese goods. That is set to happen auto plaktly unless there is a president ial memorandum that President Trump signs. That would require talks to continue progressing with china, and that is happening behind the scenes remember, a deputy delegation will be going to china early next week. The treasury secretary and the trade representative will be joining later in the week, so they are still working as secretary mnuchin says around the clock for a deal the president remains predisposed towards making one there are two desires at play here on one hand, you have the president s desire and many of his outside gop advisors to limit the disruption to the u. S. Economy going into the reelection season on the flip side, you have the desire to not let this opportunity and the leverage that the president has created with tariffs pass, and to really hold china to account this time. And that if this moment passes, they wont be be able to reopen this conversation at this level again. Wolf kayla, is there any sense that the recent back and forth on the domestic front in relation particularly to the shutdown has altered whether the chinese side are seen as tough or weak . Well, its worth noting that the chinese havent significantly altered their offer. Some of the things that theyre offering now are the same things they were offering in 2017 an opening of the Football Services industry which back in 2017 the administration actually rejected as a deliverable that the president would announce when he went to china. That was not viewed as strong enough. Maybe they think the president is slightly more willing to make a deal on the other hand, china could just not be willing to do much more and hope that, you know, its sort of death by is,000 cuts if they keep saying theyll do certain things over and over and over again, potentially the white house will change its mind cio of Haverford Trust if i start with you, clearly, yesterday we saw a percent or so decline in the markets, but weak to date still flat yesterdays move was that because of this trade story, or because of the Global Growth downgrade . I think the news flows from trade. If you are looking at the data thats coming out, its really hard to see bad news its not 25 its still pretty good i was sitting yesterday looking for some bearish sign. You are still pretty bullish on u. S. Equities lets just suppose you thought we would get back to levels that we were at the beginning of q4. 10 or 15 Earnings Growth by definition, thats a so or 15 contraction. Thats very reasonable albeit, i guess, hank, markets are more forwardlooking than just this Current Quarter do you think Earnings Growth can continue to deliver those sorts of Growth Numbers . I think Earnings Growth will be positive. Its still going to be positive, and we totally agree with simeon that this market pullback yesterday is all related to trade. If you want to go back to the Fourth Quarter correction near bear market, it was all selfinduced based on misstatements by the fed and then trade rhetoric that turned into actual tariffs and the threat of a trade war with china. We put the Building Block of the fed back into place. Theyve stepped back from the aggressive comments in early october. Now all this bull market is needing is for trade to come off the table, tariffs to come down, and an agreement with china to be put into place, and i think youre going to see this bull market resume very in a very healthy way. Hank, how are you positioned . Whats the trade between value growth or which sectors really stand out for you . If you look at the market last year, you had bear market returns in the more cyclical sector, such as industrial basic material financials. Even tech to a certain extent. You have seen a big rebound. At the same time i think you do need a balance between offense and defense. You cant go all in with a cyclical you do need some defense in the Consumer Staples and Health Care Sector as well the big tech stocks have been a large part of the rebound since christmas. Can that continue . I think its wise to be wary there. Tech is the weakest sector in terms of Earnings Growth top line is only is 1 yes, theyre rebounding from q4. Im not sure that thats a great play Going Forward whats your take on that sector we did see very nice intraday recovery for google after they missed it shows a lot of buys out there. They were beating on the top line this quarter, and that was a positive sign. If you look at the income statement and Balance Sheet, there are worse growth margins and better returns on capital. That seems like a pretty reasonable farm la if top line is weakening and growth is weakening. Those better Balance Sheets should play well well leave it there, guys. Simeon and hank, thank you very much earnings out just moments ago, and quarterly profits is 1. 33 a share well below revenue also coming in well below estimates. Hasbro was hurt by the liquidation of toys r us thats in sharp contrast to rival mattel, which is rising this morning after avoiding an unexpected profit for its latest quarter. You are looking at hasbro down almost 10 off 9 mattel, on the opposite end of that up 14 coming up when we return, joe and becky, they are in pebble beach. Theyre going to join us with a huge lineup of guests from the at t proam. Joseph is playing there, including the ceos of Waste Management, chevron, cisco, and at t then we will continue with the conversation of the morning. The bezos bombshell. The scandal between the National Enquirer and the worlds richest man and what it all means. U wchg quk x yoreatinsawbo right here on cnbc what do you see . We see a billion more people breathing free. We see access to fresh food being the global norm, not the exception. We see homes staying cooler, without the planet getting warmer. At emerson, when issues become inspiration, focusing core strengths to create a better world isnt just a result, its a responsibility. Emerson. Consider it solved. Driverless cars. All ground personnel please clear the hangar. Trips to mars. 4. 95. Hydroponic farms. Robotic arms. 4. 95. Delivery drones or the latest phones. No matter what you trade, at fidelity its just 4. 95 per online u. S. Equity trade. Ates i special edition of the program this morning for more on that, we want to get out to joe and becky because they are at the at t proam in pebble beach theyve got a huge show lined up for us this morning. Hey, guys. Good morning. Good morning. Did you read the New York Post did you read the cover on air . We have already done it we spent a good i dont know 20 minutes have you read the whats the take from the west coast . I hope the New York Post never goes out of business what makes it great its straight forward well put it up again bezos exposes pecker i must say, though i thought that jeff on his own in his medium post, no thank you, mr. Pecker, was pretty close. And, by the way, im grad he is kind of taking this tack with it lets get back to a show coming up . We have a huge show coming up there are many ceos who are here, and plenty of them are joining us some of them the ones that are pretty good boards jim fish will be joengs he is the ceo of Waste Management we have jeff yang, the head of red Point Ventures he has big tech investors. Media guy one of his biggest investments, recent biggest investment just went public. Were going to talk a little bit about that he is going to be talking to us about sewn yoes and a lot of the things in the ipo market chevron ceo Michael Worth is here, chuck rob bins, and samuel oneil and well talk to him about banking consolidation, and at t ceo Randall Stevenson at t is the sponsor of the tournament we have a lot of things to talk about. Seeing whats happening on the media landscape with them as well mr. M a i didnt see your coverage yesterday, and i dont have so be it i dont have a dvr out here. No playback. So like i normally do for your reports and stuff. Theres actually not there isnt that many. U. S. Bank corps is now going to be out there pnc is out there, and theyre actually closer to the limit in temz of their full size and how big they can get the interesting thing yesterday where analysts were taken by surprise, joe, was that everyone saw these two banks as potential acquirers of small boltons. They didnt see such a big deal like these two coming together as for the stock prices, it was also interesting to see the big caps trade down yesterday. I think it was the potential target names, and you see the regional jump off the back of it usb and pnc are the two that are thinking, gosh, do we have to run in and do an acquisitioning ourselves now because the new merge bbnt plus suntrust will be the biggest money center by assets joe and becky, joe from the golf course, becky from the valley, whats the hot gossip you got out there . You know, you are talking to people we are. You know, were trying to enjoy ourselves too, though. It hasnt been all m a for us out here theres been althoughdy see jimmy dunn, and im glad that i had to twist his arm a little. I kind of blackmailed him. Either you come on or im going to talk about you being out here, and that turned out to be a good thing he is coming on and you are blackmailing him at the same time no. If he well. Yeah, i guess so by coming on, we know he is here exactly. Anyway, we have got a lot to tell you some of the stuff that we cant tell you just yet, but maybe later well slip into the conversation okay. Were looking forward to it. They have a huge show, and a number of things theyre going to be bringing us throughout well come back to you guys in a little bit when we return, well continue that conversation about jeff bezos. The worlds richest man accusing the National Enquirer of blackmail. We have the full story next. As we head to a break, a quick check of whats happening in european markets right now i consulted with your grandmothers doctor. We can do the screening at her house. Hi. This is the man thats going to check your eyes grandma. Cognizant ai solutions are helping Healthcare Companies advance diagnostics and prevent blindness in patients with diabetes. Everything looks good. You have beautiful eyes. When did sleep become something that requires effort, like an obstacle we have to overcome every single night . With tempurpedic, it doesnt. And now is the best time to experience the most advanced pressurerelieving material weve ever created. So you get the deepest sleep youve had in your entire life. This president s day, save up to 500 on select Adjustable Mattress sets. Theres nothing like tempurpedic sleep. Find your exclusive retailer at tempurpedic. Com. Welcome back to squawk box. It is the buzz story of the morning. Amazon. Com founder jeff bezos accusing the National Enquirer of blackmail were joined now by robert frank. In a politically charged and revealing blog post, jeff bezos accused the publisher of the National Enquirer of trying to blackmail him on the coverage of his diverse. Threatened to pub establish compromising photos unless he ends claims that they were politically motivated. Rather than capitulate extortion and blackmail, ive decided to publish exactly what they sent me despite the personal cost and embarrassment. This is the quote you mentioned earlier. If in my position, bezos says, i cant stand up to this kind of extortion, how many people can ami sent bezos attorney with photos of him and Lauren Sanchez whose affair was exposed last month. If bezos said the coverage was not politically influenced, the enquirer would agree not to publish or distribute any of those photos or texts. Bezos entered into an agreement with the involvement of hush payments aimed at helping thencandidate donald trump. Trump has been a frequent critic of bezos and his ownership of the Washington Post. Bezos for the first time yesterday commenting on that criticism saying, quote, certain powerful people who experience Washington Post News Coverage will wrongly conclude i am their enemy. President trump is one of those people obvious by his tweets one question real quick one is amazon shareholders how do you think they should feel about this whole situation . He gets into it in this letter about his ownership and how proud he is of owning the Washington Post. He says when hes 90 if he gets to be 90, that thats the thing hes going to be proud of. The two things i would say is number one, we dont have any of the correspondence from bezos to ami. So we dont know, it is possible that in phone calls or letters bezos folks proposed Something Like this. And then ami is saying heres what we talked about so its unclear that would be very nefarious. Not nefarious, but it would undermine what hes saying but its interesting we dont have any correspondence from their side to ami. Maybe they were smarter that is my guess. If it was, in fact, that way the other point id make which is more important to shareholders and investors and our viewers which is your point. What does this relate to the original divorce which is that bezos exwife under current divorce law is entitled to become the largest shareholder of this company next to bezos. There has not been a divorce filing despite his claim this was an amicable filing we dont know anything about the future of the 16 of amazon that bezos holds and the divorce and all of this. Not only stemming from that problem but also his distraction which continues and only grows by the day it has to its hard to focus on running amazon when youre dealing with all this stuff zblif to say on a personal basis, i feel bad for mackenzie and the kids i cant imagine the phone call he has to make to her at some point saying im going to write this note. And the kids are old enough theyre reading this on the web. I think for the kids especially its terrible is there a different liability in terms of these divorce proceedings, that she has a higher claim i dont think it really its a washington is a nofault state, so it doesnt relate to the terms of the divorce at all but whats interesting to me is that it implied from his original tweet announcing the divorce this would be a quick filing and they havent even filed for divorce yet which means they havent settled on the terms which means the future of the 16 is uncertain an even more because of this issue a couple big things robert frank we got to thank got to thank ed lee for staying for the hour youre sticking around i thought i was going well thank you to you its just the three musketeers coming up, when we return joe and becky in pebble beach joining us with a huge lineup of guests including the ceos of Waste Management, at t, chevron. Plus toy stocks on the move this morning. Mattel a huge winner up almost . 15 hasbro off 10 well explain when we return largest gigspeed network. Then went beyond. Beyond chasing down network problems. To knowing when and where theres an issue. Beyond network complexity. To a zerotouch, onebox world. Optimizing performance and budget. Beyond having questions. To getting answers. Activecore, hows my network . All sites are green. All of which helps you do more than your customers thought possible. Comcast business. Beyond fast. Welcome to a special presentation of squawk box. Worries about u. S. china trade sending a chill through the markets. The latest on upcoming talks that have investors on edge. Spotify making a big bet on podcasting is this the next frontier in the content wars plus, squawk at pebble beach. Becky and joe teeing up exclusive interviews this hour, jim fish, ceo of Waste Management and jeff yang of red Point Ventures the second hour of squawk box begins right now live from the beating heart of business, new york, this is squawk box. Good morning. Welcome back to squawk box here on cnbc im Andrew Ross Sorkin becky quick and joe kernen joining us this morning live from pebble beach. Hey, guys, again what do we have cooking this hour well, we got at least we got Waste Management this hour but we got chevron coming up, Randall Stephenson coming up from at t. Jeff yang this is you supposed to be talking were kind of doing this together. We are. I like the whole idea of a twohour show and a oneminute commute for me so im ready to you know, i do need to go home eventually, i guess. But also wall street legend jimmy dunne will be here which is good. Chevron ceo going to join us. Mike werth will be here as well and there are big issues that are kind of involved in just about every one of these ceos who are here some major issues happening around the globe youll hear from it all day long but everything from china trade thats been out there to changes in the Media Industry and to these big consolidation in the financial industry right now too. Weve got ceos who can speak to every one of these issues happening. How do we do the china deal if he doesnt meet xi until chan 1st . Its not for a lack of trying its north korea is kind of getting in the way of being able to meet beforehand andrew, not to get political and, you know, were 3,000 miles away i know. I know its hard. Far be it from me, but the left really hated getting involved with tariffs and china anyway and now the left is so mad because theyre saying trumps going to get just a half measure deal its just weird. Now the criticism is hes going to accept way too little to, you know hes going to get taken by xi, if you will, by a soybean promise. And hes not going to extract the really tough things he should have extracted from something that the left loathed him beginning in the first place. How does that work i dont think thats the argument, joe. I think its being twisted around a little bit. I think that the argument is that if you i wouldnt do that. I dont twist. If the administration was going to have this fight and was going to put a line in the sand, they should be winning this is twisting now. Youre a pret sell for the goalline from what they put on the table. But if theyre not going to get that, thats a failure of the negotiation. Its not necessarily a failure of what the other side wants you know what . Were going to see each other next week. We can debate this in person you want it to be a favorable resolution you want it to be a favorable resolution for the country, no question but given the back and forth the uncertainty the past six months has created right, but that would be favorable for trump though if it was favorable for the country. You still okay with that all right. Go ahead meantime on this very topic, joe, sticking with the u. S. Trade talk story, they are expecting to get back on track next week. At least thats what the administration is saying want to get over to Kayla Tausche in washington whos got that story talks are continuing to move toward a deal at the president s direction. The deputies are going to be in china early next week and then the treasury secretary and trade representative will join in beijing later if the week. If those talks go well, officials have suggested that the president would order tariffs to stay at 10 instead of doubling to 25 secretary mnuchin and ambassador lighthizer would also make a recommendation on next weeks talks on whether or when or where they should meet the assumption that meeting would only happen once theres an agreement for the two leaders to discuss but theres now less time pressure on that meeting with President Trump saying yesterday its probably too soon to have that meeting before a march 1st trade deadline that the United States set at the g20. The backdrop for those comments from the president is that theres still too much ground to cover in a deal. Theres no hand shake deal for the leaders to sign. Theres no paper agreement as of yet. And white house advisers want to limit the scope of the president s trip to vietnam to north koreas denuclearization an issue that on its own is high stakes enough without tacking a meeting with china on the back of that. But the president still appears open to meet with president xi the senior official i spoke to said that could happen shortly after the march 1st trade deadline is that recommendation will come from the trade secretary and trade representative well see where we are there thank you for that. Were going to continue this conversation we made it all the way from california to washington now back to new york on the same topic of u. S. And china. Bringing in our guest senator chris coons here hopefully becky and joe can jump into this conversation as well i dont know if you had an opportunity to hear what joe was saying in the way he was sort of positioning the democratic approach or view of whats happening in these china negotiations what is your view . Well, let me give you another analogy thats relevant and recent north korea. President trump sort of escalated the rhetoric with north korea and threatened and threatened and threatened. We did months and months of rattling to the point where most of our allies were concerned we were about to go to war with north korea. And then deescalating with a hand shake photo op that produced nothing of substance. Returned some remains of americans killed in the korean war. Some announcements about what theyre going to do, but virt l virtually nothing of substance in terms of denuclearization on the peninsula. The president says there would be a war with north korea if not for him thats great. The state of the union was as it often is full of some puffery, broad declarations, not a lot of specifics. On that particular point, i dont know how one could know that i far prefer a President Trump trying to negotiate with our allies and engage china and contain north korea to a President Trump who is daily threatened but lets talk to tariffs what would success look like in your mind . First, i think the president is right to step up to chinas unfair trade practices we expected that they would begin to play by the rules as they modernize and open. That hasnt been the case. The way he went into this was not just to slap tariffs on chinese goods but to start by slapping National Security based tariffs on some of our closest allies like canada, germany, the United Kingdom if were going to have a successful trade fight with china, we need allies with us and a clear plan for an exit strategy i dont think the Trump Administration has either. I would hate to have this expensive difficult unsettling trade fight rovled with just another hand shake summit. The president got it right in the state of the union when he said there need to be structural changes to u. S. china trade and how china engages with the world economically for us to renormalize relations. Joe wants to get in here. Are you rooting for his failure in these talks no. I want the United States to succeed which means i want him to succeed but i dont want him to withdrawal from the field without getting significant concessions. Joe senator, you remember the missiles going over japan, like, every couple of months and the worry that they could break up over japan and fall on a civilized joe, the president has a hold on youre actually with a straight face youre saying that his position and whatever weve done with north korea is worse than where we were before . Do you know whats going on right now in terms of where south korea is in negotiations and china . Do you know how this is going to pan out . You know its going to be unsuccessful you dont think it helps that were at least talking, smiling at each other, shaking hands, arranging new meetings so youre criticizing trump for whats happened with north korea. Did i get that right no. You got it exactly wrong i was trying to compliment the president. You got it exactly wrong i was trying to compliment the president for gets us to a place of stasis, but saying the broad goals of his summit with kim jongun in singapore have so far not come to pass of course i think it is better that we dont have Nuclear Tests and missile tests, but i was pointing out he may have withdrawn from the field without having secured all of the concessions from north korea that he was hoping for and so i was looking for and i had hoped to deliver here an analogy to the tariff talks when you were saying the left is criticizing he cant win i do want the president to succeed because i want our country to succeed but i hear from farmers and Chemical Companies in delaware who say that these tariffs are really affecting their bottom line i understand the pressure on the president to get off the field and to stop this tariff war. My concern is we do it without getting real accomplishments moving onto the wall, i saw some of your comments about the wall each democrat has a different way of sort of maintaining solidarity with Speaker Pelosi but in a different they sort of have a different method its got to be, you know, not really a wall or if its a with you, i guess you figure there are certain places there could be some type of structure but not exactly call it a wall and have Something Else that looks less where are you on that because democrats have, you know, okayed a lot of funding in the past for Border Security and they seem to be in a position that, you know, its just hard for me to understand exactly everyones different take on why theyre against any funding at all. My biggest challenge in terms of the Border Security negotiations is finding what the president s position really is that we can then negotiate from. When Speaker Pelosi said that a wall is immoral, i went on fox sunday and said its not immoral. Its a piece of infrastructure weve already got 600, 700 miles of border fencing, socalled normandy barriers that i think have made a difference in reducing illegal immigration the larger question is how should we most efficiently and effectively spend billions of dollars more like many democrats, i have voted for billions of dollars more in Border Security as part of broader Immigration Reform packages every time i hear from the chamber of commerce, the business table, they want to see broader comprehensive reform shutting down the government of the United States for 35 days and getting nothing out of it in terms of greater investment in terms of modern Border Security didnot help us either with china domesticicly or with the rest of the world. How do you handicap this going down do you think a deal will be had with the president i hope so we frankly really need one it matters whether or not the president can hear, yes, he took the deal we had already agreed to right at the end of the year. Its got to happen this weekend. It is in the countrys best interest we should invest more in Border Security i have one final question which is weve talked a lot about the Democratic Party over the past couple of weeks and the pitch forks being out on the wealthy when it comes to wealth taxes that have been proposed. Whether its aocs comments, whether its elizabeth warrens comments some of the other comments that have come out from the folks who president ial candidates. Do you feel like the party has lurched to the left . Even senator schumers decision to go hand in hand with senator sanders on this buyback program. Im looking forward to my predecessor joe biden being someone who has a louder voice in the competition hes going to refine the party in 2020. You think hes going to run i hope he will. Better than anyone he understands what the rigors of a president ial campaign are like for yourself and your family and i think hes got a clear assessment of just how a personal and aggressive President Trump will be. He attacked senator cruz with things he just completely made up about his family. So i think hes weighing that. I think he would be a good voice. And i frankly think democrats will win if we are optimistic and positive about opportunity okay. Fair enough. Senator chris coons, its great to have you here thank you very much. Coming up when we return, the other story that has the nation buzzing this morning. The bombshell from jeff bezos. Accusing the producer of the National Enquirer of blackmailing him we will talk to the Parent Company ami. Before all that, becky quick is going to tell us whats coming up from pebble beach becky . I was going to talk to you. And it just seems like you can tell me it just seems like youre coming towards me. I hear you and i saw the look on your face with some of the things youre talking about, aoc, and you almost sounded like me like, youre not saying. And the senator said im with biden. Ive always been in the middle im right down the middle. Where the hell are they i want to keep flying. Can i keep flying or no flying can i have bacon anymore i saw your tweet on that. Have you thought this through . Have you people thought this through, andrew . Anyway, andrew, weve got a great lineup of guests coming this morning lets tell you about the first ceo. Jim fish of Waste Management then later, jeff yang founder of red Point Ventures hell give us the investor perspective on the china trade talks. Stay tuned you are watching squawk box here on cnbc sometimes, they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. The latest inisnt just a store. Ty its a save more with a new kind of Wireless Network store. Its a look what your wifi can do now store. A get your questions answered by awesome experts store. Its a now theres one store that connects your life like never before store. The xfinity store is here. And its simple, easy, awesome. Coming up, the ceo of Waste Management jim fish will join us the companys north americas largest recycler of postconsumer waste. But they also just get rid of our trash. Okay do not down play that business, jim. You ever seen what happens when you dont get rid of trash well see how china affects his business and also advances in technology. If were going to see driverless garbage trucks in the future sounds scary like, big people know aflac. Aflac . But not what they do. So were answering their questions. Aflac is Auto Insurance, right . No. Uh uh. Is it Homeowners Insurance . No. Uhuhuhuh is it duck insurance . Nope. Ahhh do they pay me money directly when i get sick or injured . Yeah. Aflac you got it. You know aflac boom get help with Expenses Health insurance doesnt cover. Get to know us at. Aflac dot com. All right. Now the man whose vision is to capture value by cleaning up the worlds waste. Jim fish is president and ceo of Waste Management he joins us now. Things have been going pretty well for Waste Management. Things have been going great. As far as the stock, as far as results, and Everything Else. I told you off camera, to start with your bread and butter business in a strong economy, theres more waste right yeah but its somewhat resistant to downturn as well. Okay. So you have a lot of the dumpsters and a lot of them are able to actually talk to each other. Youve seen that not anymore we dont do the talking things anymore. How long ago did we had our Golf Tournament last week. We went away from those. We now have a set but you have a lot of dumpsters. They never talk, actually. But thats the how much of the business at Waste Management is just dumpsters, getting the trash residential and commercial 90 . 90 . 90 is kind of the traditional garbage collection business 10 is recycling okay. We do talk a lot about, you know, plastics and the trying to get that out of the system we talk about how much recycling material that you export to china that they use. But its still a small part of the business, really why does it get so much attention . I think part of it is society is focused on recycling. Last week we had our Waste Management Golf Tournament its been a wastefree event for seven years now. How do you do that . There are a lot of people coming through. It means everything goes either for recyclirecycling, foe for compost. All of the forks and knives, they have to make compostable forks and knives or they cant work with the event. Its a combination of effort between fans and vendors and even the players are involved. So its a nice piece for our event to be able to establish an identity as a zerowaste event when you come in and replace our old friend what was our buddys name he always wore black remember the last ceo i was thinking gary player for a second david steiner. So you replaced steiner you come in. The 90 of your business, what did you need to do there since thats where the lions share of your are there efficiencies are there logistics . How does it work where you run that business even more effectively than in the past just not focusing on the recycling for a second. So were bringing technology to the 90 how does it work . When you think about a customer interface, its been decades since youve been able to book your airline reservat n reservations online. Were just moving into that area so were starting to interface the way we work with the customers digitally. Meaning youll come when i ask you instead of the same days every week residentially, itll be on a contract basis, but commercially and industrial, those are typically going to be either on call or scheduled if you prefer. I mean, you can schedule it and say we want you here on wednesday or you can do it on call as well theres no more rolling out being done, is there, of smaller players in the business . Sure. Theres some acquisitions being done that was the model for Waste Management for a decade and a half youre done then . Well, we do some tuckin acquisitions we bought so far this year through three quarters 300 million of Small Companies that sort of roll into our business and theres still some rollout being done but not like in the 80s and 90s. Is there a compelling reason to do the automated sure. What about all your employees . Guys need you have a lot of guys that are paid to do what they do. Its a pretty solid job, i would think. Were doing a test right now with caterpillar right now outside of denver at a landfill. Theyre sitting in a separate room opposed to sitting on this piece of heavy equipment and running this thing remotely. You can imagine that a millennial would look at that as being similar to fortnite or something running a game yeah. Were also looking at autonomous trash trucks. I dont see a day in the near future, probably not in the next two decades where you have a driverless truck kind of prowling around a neighborhood but i could see a day where you have a technician sitting up front whos monitoring equipment while this is running autonomously the benefit there is we have these efficiency programs today that dictate where the drivers should go. Once you move to level four autonomy, you become perfectly efficient because the drivers not really making decisions on where the truck goes its just the driver is just making the decision. So landfills. Theyve got methane that seeps out of them. Is that fair to say . Theres a way of cap we capture it you can capture it and sell it for fuel. Its 80 times worse than Carbon Dioxide in terms of trapping heat which is why we capture it. Two reasons we capture that. One is that and because its Revenue Generation for us. Is it de minimis for the revenue . Its not a huge component is it 1 , 10 its less than 1 okay. Yeah, thats definitely not huge but it can be bigger than that so we can put renewable plants that take advantage of the fact we have a fleet and those credits are available to us. That can be valuable to us can i ask you quickly about recycling . We know its become less profitable as china has stopped buying much of the waste material is that because of the trade talks or is that because chinas economy has slowed what happened . Actually, its kind of neither. It happened about 18 months ago and china felt like the material we were sending them was too contaminated so they put some Quality Controls out there and so weve been in the process of cleaning that material up, but at the same time weve reduced the amount of material going to china we used to ship almost 30 of our recyclables to china now its 3 . Where does it go instead . Some of it is going to other countries like india, indonesia, vietnam. A lot of it now is staying in the United States to mills in the United States. Jim fish, thank you hope to see you back in new jersey next time absolutely. Jim fish of Waste Management. Lets get back to andrew who is back at times square at the Nasdaq Market site thank you for that. Coming up, we will talk more about jeff bezos battle the worlds richest man accusing ami one lipublisher national en of blackmail squawk returns in just a moment the latest innovation from xfinity isnt just a store. Its a save more with a new kind of Wireless Network store. Its a look what your wifi can do now store. A get your questions answered by awesome experts store. Its a now theres one store that connects your life like never before store. The xfinity store is here. And its simple, easy, awesome. Welcome back to squawk box. Its a story everyone is talking about this morning jeff bezos blasting the National Enquirer accusing its publisher of blackmail in a blog post last night, bezos said a lawyer for ami threatened to post sexual pictures of his girlfriend wanted a public denial that the coverage of bezos was not politically motivated and an end to bezos investigation of how the enquirer obtained his texts. Describing the graphic sexual photos that would be published tmz has not yet independently reviewed these we have reached out to amazon and ami. Ami declining to comment to talk about this, we have an insider here that knows a lot about ami who lived inside the company. Stu zakim is here. He was at ami from 2004 to 2006. You saw the news last night and you thought what oh, my god. Have these guys not learned anything because common sense alone would say youre going after jeff bezos and putting it in writing . Theres nothing private anymore. Its going to be a Public Document spending time with them, what do you think the mote viv was . And was it political that he is doing the bidding of the white house. Well, lets look at the political side because thats what most people are interested in right now there was a falling out, we thought between pecker and trump when all of a sudden the enquirer stopped covering him as lovingly as they did as we know with both, no one is ever out of favor. When they need you to come in, theyre going to call you up and they also want to keep the communication going. So i would imagine people who are speculating that trump kind of asked pecker to do this, i think probably pecker did it for not necessarily to help trump but he knew it was going to sell a lot of copies of the enquirer and get him publicity. Its the top story today let me talk to you about the blackmail and having lived inside this company yourself there have been stories for years and it really came out from the Harvey Weinstein of the catch and release. The idea that the company would actually, you know, pursue stories and blackmail others did you see that in your time at the company . Well, lets see when i was at the company, number one, the enquirer was one of many magazines in the stable. I handled a lot of Different Things, but the enquirer certainly took time because of what it is the catch and kill is not a new concept. This has been going on long before it got broken with trump. Pecker has been in this business for a long time. People want to be friends with a guy who owns a media property like he does he uses his properties to help his friends and punish his enemies. As any media owner would thats why you own a media property to influence public opinion. Hes looking to target certain people i would like to argue that publishers of other publications are not pursuing it in the same way you just described you think david pecker is operating in the same way that jeff bezos is as the publisher of the Washington Post no. But he is using the leverage that he gets as being a media owner to his advantage so its a little more cynical when were talking about the enquirer because of the salaciousness of that brand. But many media owners murdoch does it all the time people who own your company. This is why you own Properties Like this. Because you have that ability to control what people think. What do you think the liability is for ami in a sigs like this legally . If you were still working at the company, what do you think the dialogue is in the room right now about whether a prosecutor is going to look at whats happened here and say this is blackmail and im going to go after this company im going to indict the company and im going to indict david pecker. More importantly and im not an attorney but i do read a lot and i play one on tv, no, no seriously. When you look at the decision with the district of new york, they had to be on their best behavior one could say this violates that and could throw that out the window as somebody in the pr business in terms of image making, what does this do or not do for jeff bezos . Because there are a lot of people today who are applauding what he has done but at the same time there are shareholders of amazon who say you know what . I dont like that hes involved in the Washington Post has created this distraction plus his own personal life. I wouldnt say its distraction. He is the richest man in the world. He does own tthe Washington Post but he owns a lot of other things the fact hes stepping up and calling them on this is pretty amazing. I think that the enquirer has gotten to where it has through the years by bullying people and having the attorneys to go after you and put that stuff in writing is how they do business. But i give bezos all the credit. Well, im with you, stu i give him a lot of credit its a remarkable story and its a remarkable thing of courage and bravery he had in what was a very difficult situation without a doubt thank you, andrew. Appreciate it very much stu zakim, former spokesperson for ami. Coming up when we return, a lot more on squawk box. Spotify making a big bet on podcasts will this be the big next Battle Ground the content wars well talk about that when we return and then joe and becky live at pebble beach this morning with their incredible lineup of corporate and wall street titans youre going to be sineeg Randall Stephenson and Chuck Robbins in just a bit. Squawk returns in a minute when you look at the Critical Issues facing our world, what do you see . We see breakthrough medicines getting to patients in record time. We see harnessing natural gas unleashing the promise of clean energy. We see engineers simulating the future to improve today. 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Geico, fifteen minutes could save you 15 or more on car insurance. Welcome back to squawk box this morning spotify making a big bet on podcasting spotify ceo spoke about the deal and its investment earlier this week on squawk on the street. We are investing in more original content that will broaden the appeal of the platform as were doing that, we believe obviously subscriber acquisition cost wills go down which increases our longterm opportunity. Forecast boast acquisitions but its also our own efforts in investing in creating these shows. We had 14 exclusive shows in the Fourth Quarter of 2018 were doubling down on that. We want to grow the number of shows we have. Joining us now to discuss the Market Opportunity of podcast is propagate founder howard owens good morning, howard good morning, andrew. You know, every month i think were peak podcast how could there be more podcasts all you hear about is podcast, podcast, podcast then spotify buys gimlet im waiting for yours that would be the high sign by the way okay. Yeah i think theres a long way to go theres a lot of leg room and i think its really just beginning. As the masses are experiencing podcasts and as, you know, for a long time radio was so dim and such a poor experience now anyone can make a podcast. Theres comedy theres drama. Theres crime. Anyone can make one. But its an escape from the madness of all the thousands of tv shows and social media. Its an intimate kind of experience and i think it has a lot of run room in terms of theres a couple different kind of podcasts anyone can get a microphone and do an interview, but increasingly these are expensively produced productions. Right . So the question is how many of those can ultimately be supported . I mean, they can be expensi e expensively produced productions, but theyre really from peoples imaginations and yes, they might be scripted, but a lot of them are personality driven a lot of the most successful ones from bill simmons to Gwyneth Paltrow to mark marin to you name it are people using the power of their platform. I mean, at its core, Howard Sterns a podcast. So i think the way these things will grow is that they will become more involved and more production value will be attributed to them but i think look at whats happening at the daily the wnthe Washington Post just rolled one out i think where you have a demographic set, doesnt seem to be slowing down right now. Is the loser radio . Is this is a zero sum . I think radio is kind of the loser. It becomes this personal experience just like our news and just like our sports and our politics, you know, we dont watch broadly we watch our stuff and i think the experience spoken word at least in podcast is going to more and more, you know, narrow our give us more choices. And i think that terrestrial radio, think about it. People still have it as wallpaper in their car but now it really to me is the podcast fop me whether im on my bike or my phone i think thats absorbing more and more you know, we find it use it as an exscape and it becomes an addiction. How many of these get acquired or any one player you look at that you could see we could be sitting here at the nasdaq could be a publicly traded Podcast Company you know, i dont know if its that way yet, but i think there are a lot of players and gimlets acquisition by spotify was a smart move, i think, by them spotify has been getting into podcasts for about a year and a half now i think there will be a big audioled revolution yeah okay. Howard, maybe we should talk about a podcast. We should have that conversation its a longer one and i hope i have an opportunity to see you in person. I would love that thank you very much im a big fan thank you. Im actually going to kick it back to the west coast not in l. A. Where you are but over to pebble beach because thats where becky and joe are right now. Hey, andrew when we come back, were going to get into the state of media with the cofounder of redPoint Ventures geoff yang. Were going to jump into the trade war and how it may or may not be impacting his portfolio and plans he has for this new quk xilbeacd. Fun sawbo wl bk in a moment each day our planet awakens with signs of opportunity. But with opportunity comes risk. And to manage this risk, the world turns to cme group. We help farmers lock in future prices, banks manage Interest Rate changes and airlines hedge fuel costs. All so they can manage their risks and move forward. Its simply a matter of following the signs. They all lead here. Cme group how the world advances. The latest inisnt just a store. Ty its a save more with a new kind of Wireless Network store. Its a look what your wifi can do now store. A get your questions answered by awesome experts store. Its a now theres one store that connects your life like never before store. The xfinity store is here. And its simple, easy, awesome. Welcome back to squawk box, everybody. We are in pebble beach, california, this morning right now weve got an investors perspective on the media space, the Technology Space, and lots of other things too. Geoff yang is the cofounder of redPoint Ventures. Thanks for being here. Thanks for having me. Lets talk about the state of the Media Industry it seems theres content everywhere what shocked me is the statistics i saw in the notes you had put together that were using about 12 hours of media time right now how is that possible actually, in the past few years with the explosion of content, people are actually watching more media. You know, theyre just watching it differently most of the media is consumed on tv and mobile platforms and how you consume media depends on what demographic youre in but 12 hours. You start getting to that and theres only so much growth you can go from there. Like, how are people actually using 12 hours that includes facebook, twitter, everything yeah. Traditional and digital. But were probably pushing against the natural limits of sleep. People have to sleep i think the next big chunk of time that people will get, you dont sleep, but were pushing it to the natural limit. The next chunk of time is when we get to autonomous driving and people pick up more time were starting to reach the natural limits to the amount of consumpti consumption. That is a funny way of characterizing things. Its hard to get above 12 hours. Sleeping eating, and maybe a couple hours of work you think the history of humanity, this is a unique problem that we have really only about 50 years old and its really sort of not a one percenter problem. People used to have to do things to feed themselves and for shelter and everything i mean, is it a good thing, geoff . I dont think its a great thing. I think its people have choice and theres a lot of great content out there. Now you can watch it any way you want to watch it. Im a fat bundle guy. Right . Wheres the cutoff for the fat bundle guys . Well, the traditional bundles youre right. I dont want change. I dont want a skinny bundle i want my infinity and i want to watch, you know, 3,000 channels. Its hard to find something. I mean, if youre a 50plus person, youre not really those arent the people turning off right now and youre seeing subscriber losses from most of the subscribers are from the millennials and gen zs. One a cord cutters and one is cord nevers. Cord nevers. In about the low 20 millions of people growing at 30something pr. And those are people that are native first generation and they represent a big chunk of the population like 45 growing. And thats why theres a big concern that that population is going to become greater. But when you look at kind of people who are leaving a traditional paid tv service, you have to look at the demo the older people arent really leaving in any big number. The concern is that youre driving new habits and people are trying to figure out whats the new habit. How to get in there. From an investors perspective, who are the winners here who are the potential losers when you have americans already taking in 12 hours of media . The good news is because youre able to watch anything any time anywhere, people have adapted to that. Not only watching it on mobile platforms, but also in different lengths, right if you have a little period of time and you can watch shorter form content you have this you have meg whitman and jeffrey katzburgs company. Its not just user generated short form content youre starting to see new types of content fill the niches but i think viewing habits for treasural tv watchers, its going to be traditional first augmented by streaming for some of these new younger people who live off stream, its going to be streaming first, augmented by live and traditional. And i think youre going to see new bundles that are oriented that way youve got disney coming on, comcast coming on. Players all over the place that are trying to do this. Apple, amazon right there probably isnt. And i think the winners are going to be people who have enough good Quality Content augmented by other interest level content. You saw that if you look at the mobile app world as an analogy, you start it off when apps came out and had thousands of apps. Everybody had thousands of apps on their phone all of a sudden, people said i dont want to have to register for everything i dont want one app for the 90 Different Things i do. I want somebody to take care of that for me and put it all together i dont think bundling is going away in fact, i think youre going to see more aggregation and more points so i think its going to be a battle between the people that have enough Critical Mass and thats going to be, you know, disney, comcast, at t, apple, amazon certainly netflix is there already. Then the question for the specialty content networks is going to be do they provide enough value that you want a separate customer sflip or you as a customer, do you get to subscriber fatigue and say i dont want to subscribe to 20 o f or different ill do five a skinny bundle would have to be so much cheaper for me to even it couldnt be, you know, id have to save an awful lot of money for you were back to me again. Thats right. And when youre picking but ask your kids you could leave out disney, but i suggest when you mention comcast and at t while youre here would be a good which you did. Which was whos in danger of needing a partner or pairing up with someone or just being theres some that dont have the heft or the i think if you look at the specialty, more niche networks, you look at viacom you look at discovery. You probably look at cbs in the traditional linear world either theyre going to provide enough value or differentiation that people continue to have a single direct Customer Relationship or they will combine with each other or others you think they get bought . I would think so. And they probably would like to be on traditional linear and want to be included in these skinnier hybrid bundles that a lot of the larger distributors would create whos coming to you now for money . I mean, whats interesting that you see . Whats the coolest thing youve seen in the last six months, would you say, that redpoint might get involved with . You know, i think the market had flipped from consumer to enterprise because you went through all these ideas and things hadnt begun to explode what youre seeing a an aggregation on power so consumer is a little bit harder to do thats why i think you see more and more venture capitalists investing in enterprise type things and the themes there are cloud and sass and ai and Machine Learning you know, you see those things and the reason is its a little bit easier to invest right now the entry are still lower than that on the consumer side. Theres still some interesting Consumer Companies out there recently you know, where were talking to this company that does cannabis distribution you still see interesting new consumer plays geoff, want to thank you for today. Jerry has not been on jerry yang im willing to go with that until if he comes on well come on together, confuse everybody. That would be nice. Geoff yang again from redPoint Ventures. Great to see you coming up, another round of exclusive interviews live from pebble beach the ceos of cisco and chevron. Wall street legend jimmy dunne and golfing legend jimmy dunne and at t chief Randall Stephenson lets go from plans. To fullblown production. Lets go from being oncall. To being online. American express can help move your business forward with loans, vendor payments and buying power. Chat with one of our 4000 specialists and lets make it happen. The powerful backing of american express. Dont do business without it. Squawk box at pebble beach. Its a power hour. Interviews with more corporate leaders. This hour, chevron ceo michael werth, cisco ceo Chuck Robbins, and at t ceo Randall Stephenson. Energy, tech, the markets and more 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. Welcome to squawk box here on cnbc. Joe and becky are out at pebble beach at the at t pro am tournament well get to them in just one minute want to give you a quick check of the futures dow looks it would open down 135 points the s p off 16. 5 points. Then there is the big talker of the morning both in business circles and elsewhere. Amazon. Com founder jeff bezos accusing the publisher of the National Enquirer of blackmail in a blog post, bezos said a lawyer for the enquirer threatened to post actual pictures he text to his girlfriend bezos claims the American Media owner also wanted him to drop an investigation into how the publication contained the Text Messages bezos published emails he said are from the income to his attorney describing the photos we have reached out to amazon and ami. Ami declined to comment. Shares of amazon trading near premarket lows off about 2 but right now we want to send it back to pebble beach where joe and becky are standing by with a special guest and a series of special guests this hour great to start out right now in the 8 00 hour its 8 00 back there its not here. Most of the oil giants posted strong earnings in the last week or so including chevron. The Company Reported better than expected profit in the latest quarter. That stock is almost up 9 prst in 2019. And its been just about a year as ceo things are a good start. No doubt how long 37 years. 37 years at chevron in terms of operations, right . And not the upstream stuff youre much more frugal. If someone wants to go out and drill here, here, here you might say, okay. Lets make sure this is going to have a return on capital, right . Is that part of the way youre managing things . I did grow up in our downstream business and midstream business where typically margins have been tighter. Youve got to watch things closely. We work hard for every penny we earn. So youre careful about every dollar you invest and really focus on returns thats a good way to run a kmotty based business. You get any complaints from theguys that still got the wildcatter instinct . Or everybodys happy we have to have a little bit of that in the dna of the company. You have to do it with discipline would you say that did you predict the last five years in the golden age of, i dont know, im afraid to say those. The Energy Superpower in every dimension. Both supply, demand, conventional, and Renewable Energy sources its really innovation and an economy that will allow capital flow to good opportunities and good ideas thats been the history of our industry its rewriting itself. In terms of the industry, its easy to figure out where the oil is and gas is now than it used to be. Digital technologies have changed everything the interesting thing with unconventionals like the permian, weve known where that is for a long time its been locked in rock that is very, very hard and the molec e molecules simply wont flow through it the biggest breakthrough in Energy Technology in the last 30 years has not been in some of the things that have gotten a lot of attention its horizontal drilling, then the application of Digital Technologies to allow us to do a better job of unlocking the hydrocarbon in place there so it has changed everything you were an english major i was a Chemical Engineering major. I think in life it helps to have a bit of engineering in your background. In terms of how we should figure out the direction of lets say wti or brent or whatever it is, whats dictating that now . Because we used to think it was everyone, body language in the middle east wed see movement. Now it seems were more of the swing producer or its a global picture still its still a global picture the difference between supply and demand which are two very large numbers, a small shift can change market sentiment. We saw that last year with robust growth in china and opec having restrained prices gradually increased throughout the year really started to push prices up began to produce more. We had excess supply while the headlines may be different, the fundamental things that tend to drive our markets are more similar than they are different thats interesting. You point to china as the robust demand that they had there economists look at it and say, wow. The numbers are slipping still 6. 6 if you believe the headline numbers for growth. But how would you characterize china right now . Is the demand picture there really strong or are we seeing a slowing economy there . We still see good demand growth in china. Couldnt continue to grow the way it has for the last 20 years indefinitely were seeing the rate of growth slow but the absolutely growth in china continues to be something that in our markets we see and demand has been robust thats why we had record production last year you talked about my first year in the role. It was a very good year. It was our safest year ever. We had the highest production ever grew 7 on the prior year. And increased our dividend for the 32nd consecutive year. And were able to repurchase shares so all of that comes from a robust Global Economy and robust demand and we continue to see that this year we hear a lot about, i dont know if andrews listening, but we hear about social investing we know theres an enormous amount of pressure on the majors to either develop or move in a bigger way into renewables in whatever form you think of. Or do you embrace it if you can get natural gas and plentiful and so cheap, does it make economic sense to go into some of the other things that are ten times more expensive in some cases what should you do were always looking to invest in technology in advancing the company. When it began, we produced oil for lamp oil to produce whale oil for lighting it turned out that kerosene had a less smokey light. But we didnt produce gasoline for cars and airplanes because they didnt exist 140 years ago when our Company First began today we take natural gas and freeze it and liquefy it for Power Generation around the world. So we invest in these technologies as the world moves forward. We invested this last year in electric Vehicle Charging Technology and some new Battery Technologies and in a direct Carbon Capture technology from the air. So were looking for these things the challenge with energy, the Energy System is so enormous that the scale of it is its hard for most people to comprehend and we need to have solutions that are economic at scale and affordable at scale without subsidies. That continues to be the challenge. To meet growing demand and the expectations around the environment. He runs an oil company, but youre still nice youre not playing out here youre caddying basically. I am. And youre okay with that im not saying anything. I think thats great i do i think thats really nice you actually took credit for her great round yesterday. I try to practice the inclusion there and at home. Im married to a Division One College athlete. I feel like in life a caddie for my wife. As you should i do. Sort of just works that way. Economists, i dont know whether they know everything but they all talk about we need a carbon tax is that a way youd approach this the details matter on these things we generally favor marketbased mechanisms because they encourage innovation and efficiency as kor bonn pricing schemes are discussed, they engage in that but the policy details matter. And so we look to we look forward to the conversation with people whatst a good one look like well, you hear people talk about we return the money to the people so it doesnt just go into government budgets which matters. Again, the scale of the system, were talking a lot of money then the other thing is there is a complex web of existing regulations that have been promulgated in this country and around they ever world and the idea is that those would be retired in favor of marketbased mechanisms because theyre more efficient for the economy. Those are two big things that are not easy generally for politicians to agree to. If you were trying to take back the white house, would you run on this new Green New Deal thing . Have you seen this we do policy, not politics. Were supposed to be out of combustible engines. No more livestock. I just realized were going to have kale bacon. Which apparently you can make it crispy for andrew. Have you looked into the details of this . Im all for healthy food. You are just walking you know what . Youve gotten good at this really fast, hasnt he well, 37 years, it wasnt that fast, was it thank you. And good luck today to the team. To the team. Well be out there and ill try to give her the right club and grade the greens well. Look forward to seeing you out there. Thank you want to see you again back in new york as well looking forward to it andrew awe somewhere interview when we come back, just Getting Started with this big hour of squawk box. Still to come, the ceos of cisco and at t and wall street legend jimmy dunne. 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Welcome back to squawk box this morning take a quick look at futures we are in the red this morning a couple stocks to tell you about. Lets show you whats going on right now. S p 500 off about 14 points. As i mentioned a couple stocks on the move. Probably the two biggest and in divergent ways the top toy makers going in opposite ways. Mattel surging after an unexpected profit driven by good Sales Numbers for its barbie and hot wheels toys. Let me tell you whats going on there. Hasbro shares are tumble on the other side slumping gaming revenue and the liquidation of toys r us and other factors. Hasbro down 5 mattel up over 16 also, cos mettics maker coty beating on the top and bottom lines. And arconic up after beating on estimates. Plans to spin one of their two businesses off coming up when we return, were going to head back to pebble beach for our exclusive interview with cisco ceo Chuck Robbins one day after an announcement on a privacy law. That interview coming up in just a moment from pebble beach youre watching squawk box on cnbc who says our bank isnt tech enough . Everyone, look at your phones. The design thinking, the digital engineering, security, blockchain, and we will be first to market yes. When we do we launch . Unfortunately, in 2 or 3, hours. Why the delay . Cognizant is helping banks use Digital Technologies at scale to advance speed to market. His family. His steinway, which met a burst pipe. So grant met his insurance you are caller number 12. Which didnt quite cover the steinway. But what if hed met pure insurance . Owned by members. Hed have met lisa, your member advocate. Whod introduce him to gustav leave it to me. A temporary address, temporary ivory, and help him get tickets to the mozart festival. Excuse me, grant likes beethoven uh, the beethoven festival. Pure. Love your insurance. Welcome back to squawk box. Futures now are in the red lets show you whats going on its not terrible, but not great. Dow off about 120 points s p off about 14 points. Want to head out to pebble beach right now where joe and becky are standing by with our next big guest of the morning thank you, again. Obviously everybody saw the markets tumbling yesterday after disappointing news with a u. S. And china trade deal the tariffs could impact ciscos business if they actually jump to 25 joining us now is cisco ceo Chuck Robbins. Good to see you. Good to be here with you as always. We talked about in davos what those tariffs could mean if the tariffs go to 25 , what would that mean for your business we were able to manage through the 10 tariff situation, but our belief is that if we go to 25 , its going to become increasingly more difficult for us to pass that all through to our customers in order to remain competitive globally so at that point in order, we need to look at slashing pnl or cutting. I dont think this is an environment where we want to see u. S. Companies cutting r d in light of the 5g transition and Everything Else. Were still optimistic despite the rhetoric and the noise in the system, i think, that most of that could be construed as negotiation, were still optimistic that theyll make enough progress so that they find their way to a place where they dont have to do this just in terms of your r d spending, i think i read somewhere that you spent 4 billion a year in the u. S. Just in the u. S. Alone. Right. So that money goes towards things like 5g development what else are you working on were doing cybersecurity r d here were doing next generation platforms. People dont understand what we do, but everyone around the world looks at their cell phone and tries to actually initiate some sort of query, you know, a great deal of the infrastructure that makes that happen is our stuff. And as the video loads increases on the internet, the requirements are increasing on the internet so r d is done here as well. Cisco and other Technology Companies have applied to get exemptions from the tariffs. Have you received any of those exemptions or gotten any word on that we worked through that on the 10 and was not successful and up until recently there was some debate as to whether there was going to be an exemption process for the 25 . But i think we all saw lighthizer came out and said there would be well work through that assuming they start heading down that path i want to talk to you about a Big Initiative that cisco took on this week i think it was yesterday where youre actually out trying to get congress and other world legislatures trying to focus on privacy as a right for humans and work through legislation for that why did you take this on well, you know, we think first of all the Tech Industry has to actually play a role in so many of these critical policy issues and this is one thats important not only to the Technology Sector but also to, i think, the world taking advantage of what this technology can do theres so much positive that can be done whether were delivering, you know, broad band connectivity into rural parts of the world or the United States who have never had it before so we can connect people so they can become educated so they can actually participate in this global macro expansion weve seen or whether it helps us solve issues of hunger, water, homelessness if we dont get past some of these fundamental issues, well never be able to do that we think that all Tech Companies need to stand up and try to help solve this problem and get to a resolution and thats what we hopefully started yesterday. I just remembered tim cook was in a position to be very strident about this issue. Because a lot of his business didnt depend on it quite as much as the people who run business and i think kind of the same with you, chuck. Its a lot easier for you to be out in front on this because its not as important to your business model. I dont think were going to see some of those other Companies Come out and say, chuck, yeah, im with you 100 . Theyre like, this loud mouth. Right . Isnt it bifurcated in Technology People that benefit from not having this initiative go forward and people who where it doesnt really matter i would suggest that its not an issue thats not relevant to us and tim clearly thats not an issue. I understand. But as people that sell privacy but using i had devices, we would like to continue to trust the privacy is there i think thats one of the big principles he stood on which is great. In our case stealing peoples private information and selling it to advertisers. Exactly i can tell you going through the snowden situation for three or four years and going around the world and convincing other governments that we were not giving special access to our products and that privacy does matter and that their sovereign rights matter, its big to us. Snowden is several years ago. Now you have the huawei situation front and center it seems you could be in a situation where china and some asian nations are going to be siding with huawei and maybe western nations are going to be siding with u. S. Based companies. Is that really happening and how big of a risk is that at this point were in the early stages of all this discussion and what i know are the same things you see in the press and where countries have made certain statements you know, what i will say is that i dont believe that so many things we can do with this is to require us to maintain connectivity get the cybersecurity stuff right, the trust right you know, notwithstanding whatever different governments think about technology providers. I think thats the focus and we cant we have to find a way to solve for things like privacy, things like trust, things like security across borders. So that we can continue to move forward and find a way to turn this mass iive expansion into things that benefit everybody. Is this something we need to Work Together to do this or are you kind of out on your own . We have talked to several and lots of Tech Companies they all understand it because you cant build your Services Country by country and actually scale globally. Its just not going to work. Whats going to happen is this is why you saw the European Commission working so hard on a single digital market. Because if you get into a place where companies have to build out their services in a every country, the smaller countries just arent going to stay at the forefront of technology offerings. Because youre going to build out in the big countries and let everybody else just slide. I mean, you could make the case that maybe the laggards that its in their best interest to get on board before, you know, to be part of the process instead of let somebody else decide whats going to happen too. Is that part of your i think thats true for laggards, leaders, anybody else. Right get involved ourselves you should. And heres the other thing you have to think about. And have empathy for these regulatory groups, these politicians that are trying to set regulation in the Technology Space that is so fast. Frankly those of us living in it every day, we have to work hard to keep up with it now were asking people who arent natural technologists to understand it deeply and come up with the Financial Services inquiries where were in trouble. I cant even imagine with technology its incredibly difficult what weve tried to say is let us partner to some extent we dont have to define things for you, but let us do ourpart to try to educate you on the things we understand. They ultimately get to make the decisions. But i think we can do a better job to work with them. Is congress responsive to this not just congress, european is responsive. As long as you come in from a perspective of really trying to help them understand it. Sure. And is it selfserving not dictate, but understand right its selfserving from the perspective that we want all this technology to be deployed globally for the right reasons you think buybacks are okay i do think buybacks are okay. Im just watching from a political discourse. Do you think theyre okay yeah. I absolutely think theyre okay. I want to repatriate when it comes back it flows down hill to where its supposed to go maybe you know, i saw andrew actually said that maybe just incentivize some way for Capital Investment i guess its possible to do that some of the stuff were hearing from certain parts of the political spectrum are its pretty scary its almost like the regulatory discussion we just had. You have to really understand how corporations work and which corporations are capital intensive and which are not. We are not a capital intensive business so i have limited options for using capital on my Balance Sheet relative to m a, dividends, buybacks. I cant just flow it into my upper it would be a good start if certain people in the political arena would know most of the jobs come from private sector. The government ones, you need to tax money from the private sector to pay for the government ones, dont you . Corporations arent necessarily the enemy all the time we have an ecosystem around the world of 70,000 companies that work with us to deliver our solutions. Thats where the jobs get created. That are working inside our ecosystem. Got your rain gear ready . I do have my rain gear ready. Okay. Good bring it with you today. Climate change anyway, thank you. Great to see you. Andrew, back to you. A lot more coming up on squawk box from pebble beach including a very big interview with at t ceo Randall Stephenson as we head to a break, take a look at u. S. Equity futures at this hour. Were looking like the dow is going to open off about 112 points enreturn, Randall Stephenson of at t back in a moment in the country. You see so many people Walking Around here in their hundreds. So how do you stay financially well for all those extra years . Well, you have to start planning as early as possible. We all need to plan, for 18 years or more, of retirement. I dont have a whole lot saved up, but im working on it now. I will do whatever i need to do. Plan your Financial Life with prudential. Bring your challenges. Im not really a, i thought wall street guy. Ns. Whats the hesitation . Eh, it just feels too complicated, you know . Well sure, at first, but jj can help you with that. Jj, will you break it down for this gentleman . Hey, ian. You know, at Td Ameritrade, we can walk you through your options trades step by step until youre comfortable. I could be up for that. Thats taking options trading from wall st. To main st. Hey guys, wanna play some pool . Eh, im not really a pool guy. Whats the hesitation . Its just complicated. Stepbystep options trading support from Td Ameritrade good morning welcome back to squawk box here on cnbc its all about the music were live at the Nasdaq Market site in times square its raining out here. I think it may be raining in pebble beach as well well get to the west coast in a second where joe and becky are standing by with a special guest. But meantime, wells fargo is back online. They suffered a widespread outage yesterday due to a issue at a major Computer Center separately, apple says they will reward the teenager who discovered the bug it did not specifically say how much money its going to pay the 14yearold from arizona you might remember we had him on the show just a week ago or earlier this week. It was a great conversation. So were thrilled for them apple has now rolled out a Software Patch for the issue yesterday. Investors had a huge appetite for junk bonds over the past week pulled in nearly 3. Billion during the week. Its the largest one week total since july of 2016 meantime, as i said we were going to go back to pebble beach where joe and becky with standing by. Is it raining . You were talking about needing a rain suit. Im suli ingassuming the weathe better or worse than is behind me wind is picking up here wind is bad out here. When its good out here, its better than anywhere when its bad, its really bad our next guest is a wall street legend lets welcome jimmy dunne. You are a wall street legend oh, yeah. Im underdressed i apologize. The greatest ceo golfer in history, i would think, probably you break 70 you shot your age yet . Im 62, joe thats a ways off. I got eight years until im 70 it could be in a year though. Take it one at a time were okay you know the only way ill ever do it is with nine holes. Youre going to have a big day today. Pebble beach for you crying for you to do well. Something wicked this way comes, right they know this for sure . Well, its nothing like wind and sideways rain. I apologize for being underdressed by im running to spy glass. Im delighted to be here what did you think of that deal yesterday i think its a very good deal i think its really a tribute to what bbt has done. If you think about 15 years ago, i like to look at things where theyve been and where theyre going. And if you would have said suntrust and bb t, that would have been unlikely it would have been other potential candidates suntrust wouldnt have been in the formula. It shows how building a business m a or inorganic growth bb i think its a good deal for both shareholders its a good deal for the market too. What does it say about more dance partners, more consolidation. How is it going to play out . More money for sandler oneil. Hopefully but therell be a lot more discussion i think if you went four months ago and announced any deal and underperform the market anywhere from 10 to 20 , the whole thing was there would never be another deal then you had an incredibly bad december theres reasons for these stocks to come back a lot when you put together a deal like this that will make a lot of sense, it shows that size matters and that smart deals do make sense why is this a smart deal . Why does it make sense you look at a lot of things people arent looking at bb ts business. Suntrust has a good Investment Bank so you can have a situation where even if we do get into a less good economy, i dont think were going to be heading towards a recession. Theres a better diversification than what they can do. Theyre in probably the best Growth Market in the United States and theyve got power. They have invest in technology they can get good cost saves its a credit to bb t to evolving themselves over the last ten years or so to get there. I think its a smart deal for suntru suntrust have you been watching the 10year . 2. 63 or something whats happening there, jimmy . Well global . Interest rates. You know, im for less transparency from the fed, actually i like to hear less from them and id like to hear less of what theyre thinking. Less of what theyre doing then they should just do it and not get on and explain what theyve done and what this means and doesnt mean i think Interest Rates are going to stay lower for awhile and i happen to believe the economys in much better shape thats weird. The rest of the market was clamoring for jay powell to come out and say more dovish. He should say less. Thats what jay should do. He should you know, very smart guy. I think the saying something and explaining the next day, weve had enough of that youre a warsh guy. Big time. Would he have got more dovish i think he has the ability to look at things and then change his mienld i think people would have thought initially he would have been more hawkish. But then you saw what which is he understands markets and i think hed do it in a way where it would be more effective but we dont have him. Hes enjoying his life and mr. Powell is in there. Whos the last fed chief who understood markets, do you think . Thats a good question. Because you got to go back so far. I saw in your mind, youre thinking, not him, not her, not him. No. Not her. And not him. I dont know youre going back back to volcker yet . Well, volcker was he was different. You know, volcker was more decisive but if youre doing those things and youre not just using lagging data in the most important job in the world about thinking about the future, it makes no right . The markets are the only thing that can indicate whats about to happen instead of what already happened, right . Thats exactly right. And like i said, we should hear less from them let me ask what you see right now in the markets you said you dont see a recession coming, but i was very surprised by the price action in the Fourth Quarter. And i was as miserable as all our ceos were with the action in december so we got to recessionlike pricing. And it was just sort of this notion that its been ten years since the crisis, something bad has to happen. And, you know, its going to happen soon. And there was no Empirical Data to support that. I think youve seen stocks come back pretty good since the beginning of the year. I think deals like this will make it better i think the economys in decent shape. And i dont i think the market way overreacted in the Fourth Quarter i think the reason why you dont see loan demand they thought they would is because the tax really it helped the economy. It helps peoples Balance Sheet and they just borrow less. That will get factored in over time i happen to think loan demand will pick up you think theres such a thing as ceeos talking themselves into some crisis . No question about it. And theres a lot to be concerned about. All the trade jawboning back and forth. Were going to get to a deal well get to a deal that will probably be better for us over a point in time. Theres going to be a deal there has to be one. Well, thats interesting. Do you think that the effects of what you saw from the tax cut, or is it an annuity that will benefit the economy year after year well, my view was that people took that money. They i think its a positive thing. Ive talked to numerous ceos one of the things they did, they talked about how this they were able to do this for these people and had a great meeting it was a great thing for the organization and i think business owners, you know, came a little closer to shore. And i i dont think thats a bad thing. I think they wanted to make sure where they are and theyre going to look at opportunities in the future and theyre going to do it have you met maxine no, i have not. You have seen some of the policy proposals from certain parts of the Democratic Party i have. Are you no. No i didnt even ask you a question what do you mean no . I have to ask you a question before you say no. I heard a smart guy say a smart thing recently i had recently played golf with a democrat and he and the what, you got paired up with him . What happened . No, no. Im kidding with a famous democrat. And we had a fantastic talk. Did you have a hole in one . No. But and terry malts, very smart guy, he said we could take a democratic president , we could take a republican president , we just cant take a socialist president. And that is something that democrats and republicans ought to think about and both of them move a little more towards the middle before something really bad does happen. And it could happen. If we have im not going to go through the names but socialism does not work. No. It sounds good. Everybody raves, people yell its a dangerous thing im a ken langone best seller reader good. I answered someone on twitter today. I said i dont want to start eating zoo animals and i got flack for that venezuela. Theyre dining on i understand. I understand i just think its an important time and people ought to look lez at i hate republicans and i hate democrats this country needs a capitalistic system which we have done well for a long period of time. And that other nonsense benefits no one theres a lot of places to prove it. Tell me i shouldnt have begged him to come on . Absolutely. Hes got an early tee time great to see you. Great to see you. Managing director jimmy dunne. On the way out, right all right thank you. You got your rain gear too im all set andrew, back to you coming up when we return, another big interview from pebble beach on the other side of this break. This time its at t chairman and ceo Randall Stephenson talking about the debt load, the fight over tv viewers, and so much more. Stay tuned youre watching squawk box, a big interview just ahead when we return baby crying hold on, im comin hold on, im comin hold on dont you worry, im comin here we come, hold on were about to save you im comin, yeah hold on dont you worry, im comin so, servicenow put your workflows immhm. Cloud, huh . Your employees must love you. [ chuckles ] thank you. You could say that. I love you. Servicenow works for you. Onmillionth order. R. There goes our first big order. 44, 45, 46. How many of these did they order . Ooh, thats hot. You know, we could sell these. Nah. We dont bake. Opportunity. What we deliver by delivering. Welcome back to squawk box this morning take a quick look at the futures before we get back to pebble beach. We are in the red this morning dow would open off about a hundred points right now nasdaq off about 50 points, s p 500 off 12 points. Meantime, we want to get to the other side of the coast, pebble beach. Joe and becky are standing by with another big guest thank you, andrew that is true yeah, go ahead were both here joining us now is the host of the pebble beach pro am at t chairman and ceo Randall Stephenson thank you for being here thanks for having me. I was walking the course yesterday watching the at t signage. All the places its getting played and i started thinking about the super bowl and how its now 5 million for 30 seconds in the super bowl i dont know how much this costs, but is this a is this more or less than that how do you kind of look at this and say, this is what were spending and this is why weve never disclosed what we pay to sponsor this. I hope jay monahan is in bed because we negotiate the deals with him but this is the best roi of any advertising promotion that we do and were interacting with some of the biggest customers in the b 2 b world in the world its a great event it gets great carriage for the consumer and businesses. It just crosses the boundaries on multiple demographics just in terms of the pure golf fan, you know, theres only four majors. But id have trouble, you know, the next four this would probably be one of my and plus there was a major being played here later this year. So the venue here is so amazing. Then you throw in spy glass and monterrey. I think its the best nonmajor event of the year, dont you think . I obviously agree with that this is a its really a freakishly unique event. Youre playing with the best athletes in the world and amateurs are inside the thats the freakish part. Youre looking at me were out there in the same ropes. Theyre playing with live ammo youre inside the ropes playing the same game theyre playing and your shots matter. Its just its really strange. Think of what other sport exists where amateurs get into the live play with the real athletes and get to see them up close and in person and everybody shows up here i want to talk to you about the disappointment the street had with earnings last week. Stock was down and i think it was the surprise in decline of subscribers. Both at directv and directv now. There are people questioning on the street whether you can turn the tv business around there what do you say to them . The results were really right in line with what we told the street back in november. And we had said we expect to see continued declined in the traditional video business and what we are doing is now investing in a new streaming service. Its over in warner media. Now that you own a large scale media company, the idea that you can now build a subscription video on demand service that is premium, that is unique, its leveraged off the hbo content, Warner Brothers content, that is where the investment is going for streaming television the traditional linear, we expect it to continue to decline. We expected that when we bought directv. We generated a lot of synergies with that acquisition. It was a typical synergy deal. You extract a lot of cost synergies. People forget within 18 months we had generated a 3. 5 billion in this business still generating 4 billion of cash flow. That 4 billion is now being invested in the new platforms. So its being invested in fiber zploimt. The fiber zploideployment is go great. In fact, it was up 6 , 7 . Were investing in an advertising business we have stood this advertising business up. Its a unique business its a 2 billion a year business now and it grew 26 last quarter were investing in that. So youre seeing investment in the traditional linear goes down youll see subscribers continue to go down as we stand up the svod service, youll see Significant Growth over here thats where our excitement is, thats where were putting our focus in our investment. Would anything else be possible if you didnt do directv . Gave you a footprint to do this. Would have been really hard to execute this strategy had you not done directv you needed some basis to get content delivered to mobile. The world of mobile. Thats what were always trying to accomplish. We have been trying to do that for many, many years we actually got that done. We got all of the rights to begin distributing to mobile within months of closing directv. So now you do a media company, you own a media company, and you also have a great ip and you stand up a new svod service, video on demand service, now you have just built in distribution for this svod. Not traditional directv subscribers. Is there a shareholder class that just is wants more near term results the it wasnt identical to what comcast experienced with sky, but initially looks like a great asset. Comcast killed to get it and yet the stock, some people decide, look, the debt is going up too much, it is going to be the payoff will be down the road but if youre building something for the future, you see it the same way, who are the shareholders that decide im not going to be here so the stock goes down but longterm you say two or three years theyre very similar plays that were running we have put a significant amount of debt on to do the time warner thats what hits people. Thats what concerns people i recognize that i have said number one focus for 2019 is to address the debt situation. So think about what has happened here we put on 40 billion of debt to do time warner that was done in june. By the time we got to end of the year, we paid down 9 billion of the 40 billion. By the time we get to the end of the year this year, well have paid down 75 of that debt so the ability to service this debt is very, very achievable. We told the street straight up, you should expect us after some of the highest Capital Spending in the u. S. To generate 26 billion of Free Cash Flow this year we just did 7. 9 in the last quarter. 7. 9 billion in the one quarter there is 12 billion of cash that will go to debt paydown we have asset sales stacked up of 6 to 8 billion. Youll get to 75 of the debt paid off as we exit this year and imminent line to sight doing the rest in 2020. You did mention 14 billion a year in dividends. The yield is like 6. 9 and that has some people starting to wonder, i think the majority of analysts still believe that the dividend is completely safe. Is there any chance you would reduce or freeze the dividend for any point of time to pay down that debt faster . The reality is that we dont have to talk about that. When you generate 26 billion of Free Cash Flow and 14 billion dividend, it is not even in the equation you have 12 billion after paying the dividend. And that is while youre investing at the highest levels of anybody in the United States of america so the cash flow characteristics of this business are unique. They really are. Think about coming out of the first full quarter where we own time warner, and we have record cash flow, record operating cash flow, record Free Cash Flow, Free Cash Flow is up 77 over the quarter. As we exit 2019, i think people will be comfortable to manage their debt people talk about 170 billion debt what is a 60 billion ebitda company. Thats manageable. People get more secure with the dividend. Do you hear things about the time frame for finding out, you know, the latest challenge from the government on the deal it was supposed to be the end of this month, wasnt it . I think do you know. Our lawyers expectation is it should be this month. We should hear something. Any any body language about is there anything new because the last that judge was so definitive. There were oral arguments in front of the Circuit Court in december and we left those those arguments feeling very good about how the discussion went. But, you know, it is the courts, you dont know until you get the ruling from the judges were feeling comfortable right now. Andrew has a question randall, good to see you. I dont know if you saw this headline, but i did want to ask you about it, it is making news. Sprint filed a federal lawsuit yesterday against at t over your use of 5ge in your marketing this is this next generation 5g, what you call the 5g evolution in place of lte. Theyre saying that that is marketing fraud, that at t doesnt have a 5g Service Available to the public yet. How do you respond to that well, it will play itself out, obviously but we feel very comfortable with how we characterized the new service that were launching. What we do, andrew, we go into a market, and we turn up a significant block of spectrum, wireless air ways, that we own it is rather dramatic. And were deploying new technology that i wont go into the details of it, but when we go in a market, and we turn up this technology, and we light up this spectrum, our customers are seeing radical increases in speed and performance on the network. And this is a step this is a step that is required to get to ultimate 5g. An evolutionary step to 5g, a critical step. Youre characterizing this as 5ge, 5g evolution. We have done our homowoework. A lot of work around how we characterize this and being clear with our customers this is an evolutionary step this is a dramatic step change improvement in what the customers experience where we turn this up and i fully understand why our competitors might be upset with this it is not a play everybody can run. It is a play that we really like and a play that will differentiate us in the marketplace as we roll this out over the course of this year. Are you are you going to the oscars this year probably wont see me at the oscars this year. Who is the mogul . Your mogul representative . I always saw you moving out there and no, i didnt see that thanks good seeing you guys. Thank you for being here. Randall stephenson. Andrew, back to you. Thanks, guys. Great interview. Coming up in 30 minutes, the eng lln wall street, get you ready for the day when squawk returns in a moment y. Voya helps them to and through retirement. Dealing with todays expenses. While helping plan, invest and protect for the future. So theyll be okay . I think theyll be fine. Voya. Helping you to and through retirement. Has been excellent. They really appreciate the military family and it really shows. With all that usaa offers why go with anybody else . We know their rates are good, we know that theyre always going to take care of us. It was an instant savings and i should have changed a long time ago. It was funny because when we would call another insurance company, hey would say oh we cant beat usaa were the webber family. Were the tenneys were the hayles, and were usaa members for life. Get your usaa Auto Insurance quote today. Thank you to joe and becky for some great interviews this morning. It is not even 6 00 in the morning there. Thanks, andrew. 6 00. Not yet you get to take a nap, joe, before you play golf i got to go right out take the makeup off and out. Good luck, guys well see you next week. Squawk on the street begins right now. Good friday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer and david faber stocks composed their first threeday loss of the years if we close at these levels the president and xi will not meet by march and jeff bezos in the news with his bombshell allegation against ami europe is soft tenyear yield at 2. 64 road map begins with the bezos broadside hit on