Transcripts For CNBC Squawk On The Street 20180108

Record stock rally off to the best start, best yearly start in more than a decade. Apple addicts, billionaire share hoerlds urging the iphone maker to take action against the long term consequences of childrens smartphone overuse. Nvidia saes big bet on autonomous driving, teaming up with vw. The best start to a year since 06, closing the week at record highs and s p and nasdaq turning in the best week since december of 2016 and the street now beginning to look ahead to earnings season wells fargo coming out with results later in the week well get Inflation Numbers and retail sales and citi and Media Conference and Morgan Health care conference. You mentioned nvidia and wong going down to consumer conference tomorrow. Whats happening is an interesting opportunity, the futures are down for once. People can get in provided that the stocks themselves dont go up im talking about caterpillar, United Technologies and nvidia, they are ramping, maybe let them come in and get a chance the research is so everwemiovery positive other than someone coming out midday, this is all much ado about nothing, what we knew. We knew earnings would come up david, you have a fresh look you were away last week any skepticism here . Sure theres skepticism as you might expect and might rightly about the case, people sending around a few letters and i dont typically read the hedge funds letters with as much vig or as i was able to and sitting on the beach not that you want to spend all of your time doing that but there is jim people who believe were in the last leg here, thats sort the blowoff that was getting steam last week and what his names letters and couple of others. And my friend ken fisher who does a lot of money, wealthy individuals, saying listen, this quarter could be the blowoff focus on europe because europe hasnt had the blowoff yet. We are a little euphoric that said, when you speak to people as i did this morning, they are more focused on wh announcements will we get about the benefits they are going to near term from tax reform. And cash tax benefit and in excess of 200 million for fiscal year 18, talked about adjusted diluted net earnings better share of 30 to 35 cents. Those could have an impact off the bat and thats what people are last week walgreens reported and heres a onetwo punch they reported the number was okay but and the stock didnt do much but now youre going to get the cvs effect they did really great last week. Coles, not only were the numbers the comp sales much better but this domestic, it is still not in. Its going to cut both ways, lulu raises the guide but talks about tax liabilities because of forced repatriation and its going to make not only the earnings but guidance cloudy. The good news about l ulu, they are based in canada, in the end a lot of people were betting on a short fall for lulu they did not pan out they had a Great Holiday season. A lot of companies had a Great Holiday season. To the point you were making, see what we get out of jp morgan or ces, the jp Morgan Health care is an enormous conference its hard to overstate how many people attend that gathering. Youre so right and youll see if we get major news out of it but certainly there will be news. Celgene making that acquisition. Yes. That helps them. Private company but a large an awful lot of money for that company too 7 billion. Kroens disease current trial didnt do well, they need to have an iron in the fire but this is the kind of thing that comes out of this conference i think that people dont realize the conferences are playing a major role people are listening to the numbers and saying, wow, that didnt usually happen. Look, theres what do you do when youve got these situations where youve got a stock like kohls moved up 15 points from the bottom and turned out to be not enough. Is that overdone, up 8 i dont know. Im sort of surprised at the numbers. Thats the dynamic behind the caterpillar upgrade, we missed most of the run last year and still upside because of immediate expensing and the tax effect and the beginning of what she calls a 10year cycle in the resource business. It takes your breath away i remember when no one thought caterpillar could ever ever go back over 110. The Goldman Sachs downgrade a couple of years ago they thought that went to sell it and with the stock thinking it would go to 60. Had they said 160, could have been a home run, could have been a quarter pass. Is that sometimes though a sign that were nearing a top when you see the analysts playing catch up the target is 200 on cap. Geez, i know, it takes your breath away, you can still recommend stocks aappear and have it right. The depreciation, thats an accounting change that people didnt expect. One year so it pays to buy caterpillar equipment. Theres a change in the law that directly benefits them lets accept the fact that the law changed and it was positive. I think thats really important. Ive got a couple of stories regarding apple today. Two major apple investors calling out the company saying it must take a stronger stance on the Mental Health effects of excessive smartphone use, especially in children and teenagers. Jana partners control nearly 2 billion in combined stock and in an open letter the company under the headline think differently about your kids, Companies Say apple can play a defining role in signaling to the industry that paying special attention to the health and development of the next generation is Good Business and right thing to do shares under some selling pressure in the premarket. Theres a lot of other headlines affecting the company. Some involving users of the echo, using their smart phone less, surveys like that. Interesting things for a number of different things, social Impact Investing, maybe something that we hear a bit more about there have been attempts at it a few years back and may recall black rock gave it a shot and in europe its had a lot more currency than it has had in the u. S. Barry rosenstein often times we speak about the Successful Hedge Fund managers, many times their success is rooted in the ability to meet an unmet need in the marketplace, more so than their actual ability to pick stocks or do an incredible job for garnering returns for the holders and certainly mr. Rosenstein is always been able to position his business in an appropriate way. So i think it is interesting that hes moving into this area and good for him. He certainly sees an opportunity. Hell be with scott wapner and friends at noon. Geez, im on that show today. Youll be able to ask him when i come back to it as an opportunity or there arefy do you remember yfiduciary, pension fund, are you saying youre willing to accept a lesser return for a larger social return or is your fiduciary duty to find stocks and or make investments that maximize your return what a great point. One of the ways to do this, have a tobacco restriction, i would say the safety of having anyone have a cell phone is good. Now, just so you know, the prevailing wisdom in the Mental Health community, they have professors talking about the prevailing wisdom in this country is that the parents arent playing a big enough role it is not the institutions and not the kids but its the parents. I thought that was a very interesting lack of understanding about what the prevailing wisdom in Mental Health is right now, if the parents would play a role, that is i mean, unfortunately im close to this. And i said one of the biggest is really important to not minimize if the parents were to get involved but the parents have shown of the troubled youth, a definitive lack of commitment so i think this is in this case, in the long letter they cite obviously studies con ducked by the center on median and child health at the university of alberta and teachers comments in terms of the impact of excessive cell phone use. But again, 2 billion is a very were talking about a very small amount of percentage wise but apple has responded in the past when theyve had people say things carl icon comes to mind and the willingness to engage there. Interesting to note wal greens in the news, i can remember when jana was pushing walgreens to move out of the country, no, were not going to do that and now they are a beneficiary of tax reform here. Meanwhile, apple keeps all of its intellectual property in ireland. You could argue theres maybe more of a social good coming back here. I was surprised they didnt say, why doesnt apple set up a program the 100 largest institutions that are currently dealing with this in our country. You can fund them. They need scholarships typically cost between 30 and 50,000 for the best ones per month. I was surprised they did not ask directly for apple to do what the Mental Health communityhas determined to be the most important thing, which is to get the parents involved is that tim cooks job to get the parents involved i dont think so i dont know. And in this case by the way we should point out they did own the equity and you could make the argument therefore they simply own it because they think its attractive. But theres certainly an opportunity here for hedge funds. I know were not going to be hearing the last of this in terms of this social Impact Investing because when these guys see an opportunity, they typically will move towards its great. At the should go after the coal stocks and oil stocks and should right. Reducing the Carbon Footprint is one of the key things if you can perhaps find an independent power producer or things like that, to reduce the Carbon Footprint. Maybe you could argue it is better for the business as well. Conflatting the two is interesting, can you bring those two together in a way that works. I think you should diabetes is a National Epidemic would you go after coke . Would you go after mcdonalds . Apple is a convenient target except for the fact theres a user issue and the user is the parent the kids do not go to verizon and buy the device, maybe should they go after verizon and at t, we dont devices sold no anyone under 11 what happens there, you talk to the parent and say is this going to be used someone 11, heres a pamphlet im saying the Mental Health community should have spoken to them because the Mental Health community is so determined to get the parents involved but that wouldnt hip. That would not be my wife came back from the Verizon Store yesterday after trying to get a new phone for two housrs she needed a Mental Health expert. That a lowell i dont know, it was half the day spent there. I see this thing and it would be absolutely great and everybody wants this and everybody wants cant we all get along. While were talking, go ks pro is cutting view on revenue, 80 million on what they are calling price protection for the hero 6 black and other models. Woodman taking his comp down to a dollar and cutting the workforce from about 1250 to less than 1,000 employees worldwide. Yeah, that was suboptimal and i think they are one of the few companies that didnt do the number because theres a lot of gaming pieces today that talk about the gaming pieces doing the number gopro is a particular situation, i think the problem is the dogs wont eat it people dont want the product as much, even the drone product ill tell you one of the things thats incredible, is that what you can do to link yourself to get a stock up, like seagate does today, talking about they own 4 of ripple, which you know is a yes, i do. We had the ceo the week you were out. I know. A know a lot about ripple. You have these things where companies can keep issuing releases and people get excited. Sea gate is suddenly a cryptocurrency. Gopro ceo departing and not yet resumed trade. Michael raises his price target best buy 33 to 38 i dont know, best buy split its a little late you buy the stuff at best buy. 68. 87. Hes anticipating a split there. 30 bucks below. You know, what can you do a man much conviction though. Tremendous conviction always been. And one of the problems about trying to be negative here is that the facts keep overrunning the negativity but you know what, maybe everyone says at one point, okay, enough we have bought stocks high enough lets wait for a pullback. Right . I mean, why dont we make the stock market great again and take a look at the valuations . Youre nodding. Im back to nodding. Weve got to go that took 15 minutes. When we come back, the nvidia rally rolls on, the company teaming up with uber and volkswagen on autonomous cars. Well get the calls on utx and pan dora and cat and a lot more. See thats funny, i thought you traded options. Im not really a wall street guy. 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 you myour joints. Thing for your heart. Or your digestion. So why wouldnt you take something for the most important part of you. Your brain. With an ingredient originally found in jellyfish, prevagen is now the number one selling brain Health Supplement in drug stores nationwide. Prevagen. The name to remember. Partnering with uber and vokz wagon, vw will use the companys drive nine platform which includes features like facial recognition and gesture controls and nvidia ceo spoke last night in las vegas. Also delighted to announce that uber the company that put mobility as a service on the map, has chosen Nvidia Technology and were partnered together to create future autonomous selfdriving ubers. Weve built pcs, laptops and game consoles and Super Computers and i can tell you without exception, building a computer for Autonomous Vehicles is at a level of complexity the world has never known. Number of customers here for these chips now in the hundreds. Yeah, 320 Car Companies what i think actually understated, they have a chip a system on the chip that can do 30 trillion operations per second it has nine billion transistors on it and they are sampling it it only uses 30 watts of power and trying to get it to be cost of a regular car and talking about trucks too but this man is a genius hes a genius, no one seems to ever talk about him. His parents mistakingly sent him to a private school in kentucky that didnt realize was not a for advanced kids, it was for kids who were troubled oregon state, stan ford mba, this man is different. What hes proved is identifying the areas properly that should be focused on down the road so this company has been so well positioned and weve talked so often about it given the incredible performance of the stock price over the last couple of years but he continues to be in the right place. Exactly, we know that Brian Krzanich speaks today and hes affiliated with waymo because of this israeli purchase. But what a battle this is between krzanich and waymo, they have the best car. Then volkswagen is the second largest builder of cars. Who would be better to team up than uber. This is going to be a battle royal and i think jen sen is ahead. Ive spoken to brian and brian is saying whats the love affair with nvidia for me i want to see what brian has to say. He will not be confined the car is an enormous battleground the chips and screen that will basically control so much in what will be the back seat because you wont really have much of a front seat because youre not going to have have you been into a waymo car . Greatest thing, you say to the car, take me to the best pizza parlor and it takes you. Based on its zagot rating yeah, and dominos tweeted a picture of their own selfdriving car. Ban nan that pepper, no cheese pizza thats to die for. Amds lisa suh, well talk to nick woodman of gopro as well and the opening bell in about eight and a half minutes what we do every night is like something out of a strange dream. Except that the next morning. It all makes sense. Fedex powers Global Commerce with vast, farreaching networks. Deep knowledge of industries. And, yes. Maybe a little magic. At ally, we offer lowcost trades and highyield savings. But if thats not enough, we offer innovative investing tools to prepare you for the future. 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Squawk on street, its a mad dash for a monday as we count you down to the opening bell a little less than six minutes before we start trading on wall street where do you want to go today . United technologies, goldman upgrades, this is really interesting. 173 price target david, defense and market accelerating but the gt the gte, the its a tur bow fan, gtf they say its no longer to lose money, its going to be fabulous this is the engine that is better than other engines regarded as being less pollution and thats going to be important. The gear turbo fan has stimied debt. I think this is the year that greg has no issues and hayes, independent do you get concerned by seeing a stock thats gone parabolic . No because otis is doing well and h vak better than expected this company is on fire. Really . Every Single Division will have up numbers, thats extraordinary. But the gear turbo fan, thats it thats their big they sell it and then they get years of service revenue, hes a competitive guy. Im aware of that. Aint going to happen honeywell also benefit here too . I would say that honeywell is splitting, its much more in the camp of what youre going to get not splitting the main parts, they are aerospace is so strong. Incredibly strong. I like the way you move since you come back. Thank you. We have opening bell a few minutes from now well keep an eye on other moves the stocks will be making after this mom and dad got a new car. With the extra third row of seats. They think its theirs. Look at them, they have no idea its not theirs. Its mine. Mine. Mine. Mine. The new lexus rx 350l with three rows for seven passengers. Are you excited about your baby sister coming . Experience space for the unexpected with the rx l, part of the rx family. Experience amazing at your lexus dealer. When it might be time to buy or sell . With fidelitys realtime analytics, youll get clear, actionable alerts about potential Investment Opportunities in real time. Fidelity. Open an account today. Youre watching cnbc quauk on the street. Going to be a busy week as earnings season kicks off with lenar and deaend delta and bank friday you mentioned the upgrades of caterpillar, second upgrade for utx in a week and second downgrade for snap in a week as well. Wow, a lot of the snap is playing right into the hands of instagram, where instagram clearly beat snap at its own game, zuckerberg is really i mean, you missed it david, he wants to fix facebook. Where would he trade if he fixes it its the first i knew it was broken facebook is killing, killing snap lets get to the opening bell and s p at the bottom of the screen at the big board it is medical Technology Company and celebrating its acquisition of cr bard. Nasdaq, heritage financial, based in washington state, celebrating its 20th listing anniversary. To your point on facebook, jpm, best idea, target 2. 30 now. This is a race. We also by the way, its kind of a fang day. We do have a couple of Research Notes on amazon raising price targets there because of the Great Holiday season i think that when youre theres a note about netflix saying they had better signups. So all of this is playing in the hands of the people who stay in the high growth and cyclical stocks, not by the way health care we need out of meg terrell, shes going to have health care announcements im sure. Humana did cut the guide again, a reduction in earnings based on the jobs tax when you come in today, it takes your breath away because childrens place, which has been one of the Great Stories probably the best story in retail what do they do . They say they are even doing better than expected they have same store sales off the charts great business for retail because of cold weather and a lot of it i think was just plain out consumers doing better than expected. Consumers it was as strong as theyve been in 10, 15 years. I think so. Which is why this guidance out of dave and busters made absolutely no sense thats surprising i talk positive about dust and busters last week look at this pushback. You have stocks reacting to dave and busters as opposed to childrens place if retail comes down not unlike what macys did, youre getting more of an opportunity i think that at a certain point, look, people are going to say, i cant keep paying up for the same thing, but i do think that people are anxious for the group to come down so they can start buying retail. Right weve talked a lot about the tax law this morning already and the expectations that companies will continue to give guidance either the short term charges they are taking to allow them to bring the cash back because remember starting to pay taxes or the benefits of course of having that much lower tax rate at 21 it does figure into an upgrade today from moffett on charter. They go to better late than never, price target 436 a share. The stock like a lot of other like our own Parent Company after the september sort of guide down if you want to call it that from comcast, a lot of these names, sort of took it on the chin for a bit and then had a bit of a rebound as the year ended. Moffett saying they will still be a beneficiary tax reform even if they dont have a lot of cash earnings at the moment at charter because they are not a significant cash taxpayer. It doesnt mean they wont be over time and wont be a beneficiary in that cut of the federal tax rate to 21 . That and number of other reasons behind the upgrade and you can see it is benefitting the stock price today. Even though comcast is down. Well, look, i think that thats a great call because you remember when they downgraded comcast, that was the top. They have a lot of impact. Good firm. Speaking of Just Research not necessarily from a firm, this morning just so people know it, this is an area candidly i do not know and saying seagate is an investor in ripple, talking about it being worth 8 billion and i dont know whether this is the kind of note i put credence in. I dont know what to make of this ripple and the xrp, the currency that is associated with it, the Digital Currency its very hard to fully grasp. Isnt it . I think all of us are struggling here with the value. The value of the currency they have at ripple itself is worth an enormous amount except its not really worth that because you cant its not worth it until you sell it. Look, crypto currency, i dont know a lot about cryptocurrency accuse me of being honest but the idea this one division could be worth x, i dont know but it is moving seagate. It is, taking it back to levels we saw in the spring but its an article about a Research Piece about the potential ownership that they have. Theres a very its derivative nature i want people to know why seagate is fine, i dont ascrib to the idea, its a disk drive company flat on its butt companies have invested in various forms of cryptocurrency that if we started talking about we would get excited and i dont want people to be excited like that thats a mistake we are getting headlines from reuters and others about the saudi aramco process inviting banks to make pitches in the coming weeks, including citi and goldman and deutsche, according to reuters and that train continues to chug along. I cant understate the size and scope and importance of this deal and ive said it many times, not like taking a Company Public and more like taking a country public and as you might expect, any number of investment banks are going to be want to be there, not just for the ipo but for the long term relationship that will come along with it for the advisory capacity that might it might bring in the future for the opportunity to sell future stock and do all sorts of other capital related transactions for what is going to be the Largest Market Cap Company in the world when it comes public there doesnt seem to be much doubt about that unless apple were to go up 100 from here. Im glad you brought it up, how did oil get above 60 the Conspiracy Theory is the saudis have really cut back and that drove the oil price, the nonConspiracy Theory is that theres that the glut in oil has been diminished radically by the fact that the big budgets for drilling, for the Big International countries hasnt advanced yet so the depletion is great. I dont know whether the conspiracy saudi theory has a lot of graph tas, but its working. Finally, you mentioned to fang record highs for google and amazon and facebook today. The amazon front we did see jeff bezos last night at the Golden Globes where they along with netflix and hulu take some of the major awards. Im glad you mentioned that because as long the more they are associated with the original content, the more people stop worrying about what happens if disney cuts them off. If disney cuts them off, its more what it would mean. Original content can drive things for these companies and thats i mean, theres so many shows on netflix at this point, nobody even knows what most of them are and yet netflix knows what youre watching and all it really takes netflix knows i watch punisher dont let anyone know i watched it. All it takes is one show you like and wing to pay 9. 99 a month. Did you binge on vacation we didnt have any tv actually it was really was that because of health care excuse me. Mental health it was a Mental Health break, yes. Staying away from anything did janice not to make light of it but honestly, david is a parent and ill belt you control what your kids watch. My kids read books on vacation actual books can you imagine that i had my son read shoe dog, it was great book. She couldnt quite take emma, tried to get her to read emma, couldnt quite get there. They read books did you bring books . We brought actual books. On paper, bound i read two novels that were sent to me nice of them. Who sent to you, jana thats not true. Yeah, they did, i read both of of the books they cents me. All getting conflated. I dont know even know what to say. Im stunned. Speechless on speechless, i come back after one week and alibaba is up 10 . It traz like fang, triple a and not talking about bogus you know, mortgages and im not talking about you guys remember aaa its so great. I do notice ge up 6 . Did you read the note today. I saw you made a note of it. Hidden within idiots and fools was a positive mention about they are a bit of an oil company and then the turbine business might be better i know people think its produce announ pronounced turbine, ge accounting or trying to figure out their pension, they dont pronounce it the way we do. Even though its a target cut to 16. A lot people thought would get to 15 and might suggest 100 million Share Offering not as negative. Thats a big deal. Yeah, he was a bull in bears clothing. It is hard to be more negative than he has been or more right. Thats true well put all right, 6 all ge is going to get this year is the question, jim. Well, there are some cash flow issues. I meaning the essence, its hard to believe theres an industrial down 50 given the United Technologies. The Steel Companies you know what, ge does things differently. The best dow stock so far this year ge as negative as people are, now its a real enterprise the oil is up so much, this is the flannery gift because you know how much the business is oil related. Dont forget about pension, forget about the long term liabilities, focus on what isnt hidden, which is the oil price and how great that is for if he wanted to get rid of baker hughes. Youre right, there are beneficiary of it as they have of course been a victim of it. The gear tur bow fan United Technology directly against ge. Ge engines, yes ge, 6 gain for the year. Dow did set a quick record high. Lets get to bob pisani. Happy monday. Were modestly in the red. Lets look at the sectors today. Retail is a little bit kohls is helping them overall we see the industrials doing say little better but not greatly show banks and semiconductors which were market leaders, they are in the red right now as you can see here im going to remind everyone despite the slow start, were at historic highs and everything is working and that was my theme last week and its my theme again this week. You look at small cap, mid cap, big cap, s p 500 working equal weights working, not just market cap weight. The ftse, biggest etf you can buy, thats at a historic high sick lickals like industrial materials and low volatility is lagging a little bit but not by much guys listening were mentioning ge, but were seeing energy which was the big sector lagger last year also do well this year, some of the oil services and Exploration Production and refiners had a pretty good year but even they are beating the s p 500 right now. Elsewhere, mentioned the retailers and kohls had good general sales and raised guide and overall, macys all up the important thing is the number of companies that are raising the guidance in retail is pretty small. We hear all about reports better than expected sales, jp penny and macys were better and barnes noble was worse its still positive but its a small group. Not everybody is said everything, they are going to wait until we get the numbers out in the beginning of february look at the xrt. We had a horrible year going into december and turned out to be a respectable year because they heard sales were better than expected. Well see if it translates into a higher numbers this year right now its pretty modest were going into earnings season, one of the big issues whats going to happen with buybacks, you know how important buybacks has been. Its been hard to quantify but heres a little bit of a problem. There may not be enough stock around and this may be moving the market look back at 2006, there was about 307 billion shares in the s p 500, total amount of shares. By 2010 it increased dramatically because everyone in the wake of the financial crisis, a lot of people set out or put out news stock. Particularly the big Financial Companies and big banks. They started aggressively buying back stock very quickly. The amount of Stock Available went down very quickly now were back 2017 in 306 billion. Thats exactly where we were 12 years ago. The world is completely different. The demand is higher for stock than it was 12 years ago the prices have doubled. Look at the price of the average s p stock. Today it is 107 you think thats demand pressure there. I think so so we keep asking this question, how much do stock buybacks help the market i dont put a percentage on it when you look at things that move the market, i think it is very fair to put buybacks into one of the reasons the stock market is at new high in addition to the usual big 3 explanations Global Economic expansion and record earnings and low rates. Thats a very fair observation to make. We want to know, what are the companies doing with buybacks for First Quarter of this year meantime, you heard the guys talking about apple and activist letter talking about trying to get more investment or more interest in research on developing software to make it easy for parents to control access to iphones this is part of the whole wave of i think youll hear more about esgs, environmental social and governance issues. This is one little tent kel of that there hasnt been a lot of interest in investing this heres the biggest etf, called dsi owns 400 companies and apple is not one of them but they look for companies with good social and environmental records. Thats fair. This is got less about 1 billion in investment, thats not an awful lot and far away the biggest ones there are other ones out there i shares thats one called the esg select and only got a few hundred Million Dollars in it. My point is its certainly a good idea to look for companies that might have different ways of being valued based on environmental and social issues but investors have not shown that much interest in it maybe this is the year its going to happen and this is one little tentacle from this letter thats part of that social and environmental aspect of this but again, i keep waiting for this to blow up. This is one of the big issues last year and etfs, when will they start buying this millennials fascinated by this and were still not seeing big dollars. Maybe this will be the year that changes. The dow is down 33 points. Back to you. See you in a bit. Lets check in with rick san telli in chicago as well. Good morning, carl. All of the treasuries are basically down two points, parallel shift, no real curve implications, Still Holding tough. One week of tens shows we keep bouncing across the 2. 40 area. One week of bunds show its deteriorating a little bit whats fascinating where they are deteriorating to and where we are drifting upwards too, all 10year yields have been higher than 2. 40. A bund yield closes been higher than 2. 42. As we look at a december first start to 10year, you can see what im talking about, career crowning above that level significant, all traders using a pivot if we should break under 2. 40 and start trading in the 2. 30s. If you look at bunds since december, you can see even though it looks deteriorated to some extent today maybe well get the low yields close for the year you can clearly see it has like tens escalated since the end of 2017 in terms of the level of those yields if we switch to dollar indlex having a pretty good day, if you look at one week of dollar index, you can see the upward drift. But if you look at a july start to the dollar index, it gives you the real reading, 92 seems to be an area that the dollar index is fighting a constant war and any victories or defeats seem to be small as we go either side if you look at whats going on euro versus the dollar, its all about the 1. 20 level which is kind of like the 92 level and dipped back below it how signature is 1. 20, its what youre supposed to Pay Attention to to know the euro is the most significant percentage of that evaluation 10year chart shows that you defend 1. 20 from both directions, this is a big level especially considering that investors have big plans for European Capital to flow from many different points on the globe. They are ee namerred with the european economy and uk economy, even though both have glaring issues and the u. S. Of course has a central bank that seems to be really pulling the other two Central Banks more in its own direction. Back to you. Rick, thank you very much when we return, an exclusive with amds lisa su, what she has to say about chips and security flaws. Now settling back, dow is down 36 s p down almost three points approximately 10 on the various exchanges we follow. Some news this morning regulators inspecting local banks. This time, south korea that offer bitcoin. Seems like every country has a day where they have headlines about regulators inspecting it i think regulators are also at a loss about what to do because the whole process is about not being regulated. Unfortunately, the lack of knowledge about who owns what and whos important, its almost like a netherworld, and i find the more netherworld it is, the more liked it is its very opaque im trying to find experts i really am. Experts who are not, lets say, who are neutral to things. When i read my twitter file, i talk about this this morning in real money, when i read my twitter file, everyone who talks about it, obviously, has a lot to gain from it. Theres not a lot of people who come out and say heres the pros and cons cryptocurrency is really hard for us to cover. Im with you. Were just not of that Digital Generation somehow that maybe it just intrinsically gets it i know how to get music good. And messaging look, you got interesting texts here stop it while youre talking, gopro has resumed trade on the warning for the quarter. And those workforce reductions down 23. 5 theyre not a hero. Not today m aomt. T to stop trading with jiin men dow down 26. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. Time for jim and stop trading. I know its a cliche at this point to talk faang, but alibaba, i wanted to point out, we talk about that trades with faang. Ill tell you an interesting alphabet if anything, nvidia is negative for alphabet because they do not team with wamo doesnt seem to matter and what im saying is that this group, apple obviously hobbled, which is interesting you take a position and then youre negative on it. But just be aware that the group, i think, needs to pull back because its been etfd my travel trust owns alphabet. This group has gotten a little too hot. Im just concerned there will be some sellers because the volume is very low in whats being bid up im just urging people to wait until better prices. Thats talking against my book youre going to get a chance, i think. Youre on tomorrow by the way, not today oh, its tomorrow anything that brings peoples attention to this is fabulous. Anything i just want people to know that its not like tim cook is out there saying, you know what. We got to get these in the hands of underage. The reason i put this is doesnt mcdonalds in their commercials want to put it in underage you cant dismiss this as an increasing issue were dealing with its an important issue overall as a society. And it extends to video games and everything else. To cite apple, theyre one of the weaker people. Samsung sells more phones worldwide. Its just i think its wrong that theyre targeted. If it raises awareness, im totally in favor of it sure. Whats on mad tonight . We have exact sciences, which is the colon cancer drug they had great numbers, but the bears just simply dont like it. And we have alchemies, which is saying great things but the bears have been very vociferous. Two Companies Really battling the bears. Amazing that there are still some bears, that theyre not extinct. Theyre there. Jim, well see you tonight. Oh, my god, yes mad money, 6 00 p. M. Eastern. And david back. Hes not as septical as i thought. Give me time. I have to go. Eli lillys david ricks find out whats in his companys peneitthdodo 27. Do you want the ss and seamless experience across web and tablet . Do you want 4. 95 commissions for stocks, 0. 50 options contracts . 1. 50 futures contracts . What about a dedicated service team of trading specialists . Did you say yes . Good, then its time for power e trade. The platform, price and service that gives you the edge you need. Looks like we have a couple seconds left. Lets do some card twirling twirling cards e trade. The original place to invest online. Good monday morning. Welcome back to squawk on the street. Im Carl Quintanilla with david faber. Michelle carusocabrera is here. Sara is off today. Markets opened up with a record high for the dow and nasdaq, but settling down despite upgrades for high profile dow names on a busy week for earnings and conferences. Our road map begins with shares of gopro slammed after issuing weak guidance. Were going to talk exclusively with the companys ceo and addicted to apple two major investors urging the tech giant to take action against iphone addiction amongst kids well tell you why nvidia making a big bet on driverless cars. Teaming up with uber and vw. We have the details. Markets mixed after hitting record highs in the first week of the year. Will 2018 continue the record run we saw in 17. Brian jacobson is wells fargo multiasset strategist. Peter is a chief strategist. Good to see you both it sounds like you have been paying attention to some of these names trading well above their 200day trading averages markets and trading is a disciplined type of business and if youre so far above your 200day move in average and you had a lot of success, perhaps its time to take a little off the table. The hardest thing in the world for people to do is to take some gains. Everybody wants to buy the dip, but you have to rebalance your portfolio on both sides. Doesnt mean youre negative or anything its just smart risk management. Does it mean you miss out on whatever euphoric gains you might get in the late stages of a bull we all mark our personal portfolio to the top tick. Sometimes we regret the fact we get out, but discipline is survival in this business. Discipline before vision brian, it sounds like peter is advocating discipline right now because of the gains we have seen would you do the same thing here well, what we were thinking as far as going into the end of the year is people would sort of be waiting until the turn of the calendar to take a few profits because of the changes in the tax code, more clarity there, and you get a little rebalancing in the beginning of the year for the most part, our clients want to take the longer view as far as investing over three to 30year investment horizons. Over that horizon, were very constructive on adding equity exposure really fundament elwhat we like to do is take a look at what are some of the macro drivers you want to get exposure to and what are the assets you want to be in to get that type of exposure when you look atgrowth outlook people are stuck in the secular stagnation mindset, thinking tax reform is going to bring a little growth boost, but it may be a pop as opposed to a permanent change in the trajectory why you might see shortterm selling here or there, stuff just happens, but generally speaking, were still constructive on credit and then also equity exposure over the long term. So stick with the market here basically . Do everything the same that you did last year . Well, what were really looking at as far as with the growth outlook, what could be changing is i think thats where a lot of the disagreement is, is whether or not the growth boost i want to know what you think. Is the market expensive here or not, do you add to equities or dont you . We have been adding to equities were still overweight equities with client portfolios its still a good environment. If youre looking at the valuation metrics that suggest the market is overvalued, last time i was on, i suggested that type of basis, you went from maybe nose bleed levels to eye watering levels. If you move out of this 2 to 2. 5 gdp growth range closer to 2. 5 to 3, maybe during some quarters 3. 5 range, suddenly, valuations look a little more neutral and valuations are merely kind of a longer term guide, and so to the other guests point, as far as the discipline versus the vision, if youre using valuation, thats morewhats your vision for the future the discipline is you want to make sure youre not getting overweight too significantly to certain areas of the market. To the degree youre being disciplined in what areas are you, and do you disagree with the notion that were maybe headed for a sea change in the way the economy works . Im an economic historian, my job and role as a strategist is to get people to think think out of the box just dont do more of the same so in this case, were looking at sort of visa, mastercard as sort of the new brokers. Whether youre shopping on your coach or whether youre going to the store, thats who youre using. Theyre near record highs right now. We dont advocate were going to look at that as signs of weakness when they sell off. Were saying in the market, were just afraid when you look at history, if everybody talks about tax reform, oh, i love it. I love it. Okay, after 86, what happened nine months later . After the 2001 tax cuts, what happened in 2002 it was down 25 . We all know what happened in october of 87 be careful what you ask for. Its discipline. Thinking out of the box. Everybody regrets a dollar lost more than the opportunity cost of what they could have made on a dollar gains are you tried to price in the probability of an 87like scenario absolutely not. Outliers, you cant price that in its just a question of discipline i look at gopro today big moves happen from oversold conditions trying to pick tops when youre overbought is a very dangerous game we want to be disciplined. When it starts to go down and if the technical indicators are there combined with fundamentals well take a. M. Action right now, fundamentals might be stretched. Economic historian. Last year was historic, wasnt it got to blow your mind whats happened 14 months in a row without a down month records are meant to be broken you go broke trying to bet against records being broken and you go broke betting they will be broken because you cant time them a tough business broke a lot of ways there a tough business. It is very hard to do well brian, peter, thanks, guys speaking of visa, were getting news on that Kayla Tausche has more were going to add that name to the list of companies that are making investments in response to the tax reform bill that passed. A memo i obtained, the company is announcing a potentially lucrative increase to its 401 k match program. They had a policy of contributing 2 for every 1 that employees save, but the cap is being raised. Lets use the example of an employee making 100,000 if they saved 3,000, visa would pay 6,000 now, that level is raised to 5 , so if an employee saves 5,000, visa will add 10,000 to that savings. In year one alone, that would be an increase of 4,000. A visa spokesperson tells me the change is intended to be permanent and the company is, quote, actively exploring a range of options with a focus on longterm Sustainable Investments versus onetime actions. So certainly, this is something that for employees who participate in 401 k plans, could mean a very big windfall for them over time back to you. Increased 401 k matching good for them. Thanks so much apple under fire from two of its investors. Jana partners and kousers are urging the tech giant to take action against growing smartphone addiction in children josh lipton joins us now with more on that story michelle, Jana Partners and kousers collectively own about 2 billion of apple shares but now they say theyre concerned about the impact of apples flagship product on children the shareholders sent a letter to apple saying as one of the most Innovative Companies in the history of technology, apple can play a defining role in signaling to the industry that paying special attention to the health and development of the next generation is both Good Business and the right thing to do specifically, the shareholders want apple to start offering parents more choices and tools to help them insure that young consumers are using apples products in what they call an optimal manner they say citing research that u. S. Teenagers who spend three hours a day or more on Electronic Devices are 35 more likely and those who spend five hours or more are 71 more likely to have a risk factor for suicide than those who spend less than one hour they want a panel of experts to study the issue, to partner with experts to conduct more research, and offer parents new tools and options. Bottom line, they say theres a growing unease about whether some people, specifically kids, are getting too much of a good thing when it comes to iphones an important point to remember apple does already offer parents ways in which to restrict the apps, content and Services Kids use on these devices, but these shareholders seem to want apple to do more when it comes to usage. Some could counter thats a question not for necessarily Device Manufacturers but for parents and that these shareholders are concerned about usage, maybe their real gripe could be with the apps these kids spend so much time on, like snapchat and facebook. Back to you. Michelle is shaking her head, josh what apple is supposed to be a parent now i mean, give me a break. How many conversations are we going to have about video games, about television i wasnt around for the invention of radio, but maybe there were concerned about that, too. Why dont you kids go outside and play i mean, give me a break. I think they would say, listen, our letter is specifically saying we want you to give options to parents to allow them to Better Police the usage. As opposed to you being the parent, apple. How about you being really stern and saying, im going to look at everything on your phone . I mean its an interesting area. Yeah. Kind of the inverse of the ad campaign they now have going regarding the watch where they show all these athletes and people who have changed their lives for the better because theyre able to monitor fitness, right . In the end, theyre just a big target theyre a big company, big target just the way mcdonalds has been for years. Without a doubt as i said earlier, i think well see if there is momentum behind this particular area of investing now. Bob pisani mentioned it as well. It hasnt really been something of focus here, in part because you do wonder about can you pick stocks that both maximize the value youre trying to create as a fiduciary whether youre a pension fund or a hedge fund, or not. And do you go down that road anyway if you can raise the money against it jana certainly thinks theres an opportunity here call me a cynic you really think jana is super concerned about childrens phone addiction . I just dont believe it. Um, many hedge funds that have proved successful have proved successful in not necessarily being great stock pickers but meeting unmet needs in the marcus place, moving their businesses to meet those needs and therefore raising assets against them because thats the way you really make money. As i pointed out many times. Marketing is a very important part of the hedge fund business. Certainly okay, tomorrow on the halftime report, dont miss Jana Partners managing partner Barry Rosenstein hes going to talk about the letter sent to apple over the weekend, and im sure hell try to counter the cynicism. Thats tomorrow in the meantime, when we come back, the ceo of eli lilly, david ricks, is going to join us from the Largest Health care investing event of the year. Plus, gopro announcing its cutting its workforce by 20 stock down almost 27 on the weak guidance. Well talk exclusively with nick woodman th hr ensqwk t street continues ies are reporting today. And, hows it looking . I dont know. Theres so many opinions out there, its hard to make sense of it all. Well, victor, do you have something for him . Check this out. Td ameritrade aggregates thousands of earnings estimates into a single data point. That way you can keep your eyes on the big picture. Huh. Feel better . Much better. Yeah, me too. Wow, you really did a number on this thing. Sorry about that. Thats alright. I got a box of em. Thousands of opinions. One estimate. The earnings tool from Td Ameritrade. Health care conference kicking off this morning our meg is right there in San Francisco. She joins us now with a special guest. Meg. Hey, david. Joining us now is the ceo of eli lilly, dave ricks. This is really the week that sets the stage for the rest of the year in health care investing. Of course, it was at this conference last year that president elect donald trump said that the industry was getting away with murder when it comes to its drug prices how has the year been for your industry and what are you looking at for the year ahead . Well, it was certainly a busy year in the industry i think that looking back, the one thing we would have to say is its a tremendous year for innovation the first gene therapy, the Record Number of innovative and generic approvals. Medicines are getting to the market for patients to solve their problems thats what we have to step back and reflect on a great time for science in the sector for lilley as well, we had a successful year. Several drug approvals and readouts. The science is there what we need to do is work on a system where people can afford medications and we can reach all the patients who need these medications. How do you look at that situation really with drug prices and the language coming from the administration, but not a whole lot of action . Are you expecting to see some more Government Action on drug prices this year yes i think there should beaction from all sides on the issue of affordability for patients at the counter. Thats, i think, the fundamental problem. And there was some action. And particularly at the fda. Gottlieb came in, he said im going to approve more generics he did we didnt have an epipen situation last year. Thats a good thing for the industry those arent our businesses but we get painted with that same brush. What didnt happen is very much change at the affordability at the pharmacy counter if im a part d senior or in a commercial plan, we see a continued rise in out of pocket costs patients while total spending on medications is pretty low the growth rate is, i saw a study recently, 1. 3 in 2016 growth thats much lower than medical inflation. So the system isnt paying more, but people are and we have to do something about that and individual manufacturers can do something about that. We offered a Program Last Year where people could get 40 discount on lilly insulinat the counter if they didnt have insurance or a highdeductible copay, but we need plans to step up and make changes. Michelle, you have a question thanks so much for joining us while were talking about Government Actions, can we talk about the tax cut that just went through . Whats the impact on eli lilly we heard from visa, theyre going to increase 401 k matching do you think its going to prevent inversions which was happening a lot in the drug industry well, i do think it would prevent inversions we were net interested in that, but were worried about the lopsided nature of foreign competitors who had better tax environments than we did thats now addressed i think strategically, thats the most important thing that came out of the tax reform as americanbased Companies Like eli lilly, 140 years based in indianapolis, can roll up our sleeves and compete on a global basis with a strong Corporate Tax rate it will allow usulse to invest without thinking about the tax rate so much but rather put plants and labs where it makes the most sense, where the talent is and where the markets were serving are. So overall, it was a successful package from a pharmaceutical sector no big fundamental changes in how we allocate capital or how we think about fnlsing the company. But i think it does level the global playing field, and thats a good thing i also want to ask you, of course, about alex azar, who was an eli lilly executive now the Trump Nominee for secretary of health and Human Services expected to have a confirmation hearing i believe this week. What can you tell us about him having worked with him alex worked for us for a decade or so he worked for me for quite some time hes a talented guy and had a successful career at the company. He also had a successful career at hhs prior to coming to lilly. As a private citizen, i would say hes well qualified. He gets stuff done hes smart theres different views across the political spectrum, but i think knowing him, he would represent the needs of all americans in their health needs pretty well. And well see what happens tomorrow in the hearing. But you know, hes a good person he believes in a Strong Health care system in america, and i think hes a talented manager. Some of the criticisms hes received have been about the price of insulin at eli lilly. What does lily do to make sure that patients can afford their drugs, that theres nothing going without. You hear these terrible stories of patients running into huge Health Problems because they cant afford insulin we have taken list price increases on insulin, as have most other medications, but the net price is basically the same as 2009. Whats happening list prices are going up, rebates are expanding dramatically, payers, the biggest customers, are getting a better and better deal, including state medicaid, which pays almost nothing for insulin. And people who have to pay out of pocket are paying more and more we want to address that. One way were addressing that is through this program we announced last year, which gives a 40 discount at the point of sale so alleviating a large part of that growth in price we need more programs like that. Were interested in partnerships with payers to pass through rebates in our own health plan, for my employees, were passing through rebates in highdeductible setup so that the rebates that are negotiated get to the patient i think thats a basic issue and we can do more we have a program out there now, so anyone whos feeling like theyre being pinched at the pharmacy counter can get a 40 discount today thats important. Another of Course National issue for the drug industry and for everyone really from a public standpoint is the opioid crisis. Eli lilly has late stage pain program thats not an opioid in partnership with pfizer. Whats your evaluation of how the industry has responded to the opioid crisis, and can it do more we have responded well. We can do more lilly is not it, we dont make opioids, but were working on a next generation therapy with pfizer that is a nonopioid and could alleviate the need to use those medications. We know that a huge percentage of patients who have an inpatient procedure, are prescribed opioids, and some fixed number, 1 in 15, go on to become addicted. Interrupting opioid use is key todays program with pfizer, it could be one option. We also have new migraine medications coming and believe it or not, one in four migraine users are prescribed opioids we also need to do other things on the Public Health side. So pharma stepped up and supported the cdc recommendation for a fiveday prescription limit on all opioids, and i think education is a key piece as well. We need to educate the public and physicians that there are other alternatives in many cases, they dont even work that well to alleviate the pain i think we have stepped up we can continue to do more the biggest thing we can do, what we i think society expects us to do, is innovate and create something new and better thats what were working on one of the biggest stories of 2017 was amazon. We dont even know what theyre going to do. Have you had conversations with them about them potentially coming into the industry were not commenting on that, but we would welcome competition in the supply chain. The pharmaceutical supply chain is very concentrated sometimes that reduces choice and perhaps ships valiant away thats not in the best interest of more r d dollars and lower patient costs. Competition could help thereat, and we certainly welcome competition in the supply chain. Dave, well leave it there. Thank you so much. Carl, back to you, and of course, coming up on squawk alley, tune in for our interview with emma wamsley. As were watching biote biotech have its worst day since october, we want to get to dominic chu. What we have is ripple, the second biggest crypto currency out there by market cap dropping by about 30 in the past 24 hours. According to our quotes on cnbc. Com right now, ripple trading at 2. 32 per token thats a 15 drop over the last close, if you want to call it that but were also watching whats happening with bitcoin, with either, with lightcoin theres something well keep a close eye on were also watching the same price action on bitcoin vufutur. Volumes light in the markets, but something to keep an eye on. If anybody out there has interest in what the prices are doing, the kinds of volumes associated with them, go to cnbc. Com cryptocurrency. We have a dashboard showing all those prices in one spot back over to you there are reports online, dom, that the Chinese Government has ordered, a quote, orderly exit from Bitcoin Mining unconfirmed by us, but on all the bitcoin sites. I wouldnt be surprised if thats part of whats pushing all these currencies lower if china, where we know the biggest Mining Operations are, are telling them they have to stop we have seen a lot of that volatility happen because of the way governments have gone through and tried to regulate or at least go through and impose their will, if you will. The last time we saw a massive drop in bitcoin prices was when we saw that Chinese Government intervention maybe shutting down some of the exchanges and what not. So these types of things will be a source of volatility something a lot of people out there, traders, novice or expert, have to be aware of. All right, dom, thanks for that when we come back, stocks continuing their record run, but will this be the greatest of all time a look at where you can put your money if youre banking on calm markets in 2018. Dow is down 48 pntois. S p down almost two. Back after this. But if thats not enough, we offer our price match guarantee too. And if thats not enough. We should move. Our home team will help you every step of the way. Still not enough . Its smaller than id like. Well help you finance your dream home. Its perfect. Oh, was this built on an ancient Burial Ground . Okay. Then well have her cleanse your house of evil spirits. Well do anything, spiritual chatter seriously anything to help you get your home. Ally. Do it right. Welcome back to squawk on the street. Stocks coming off their best start to the year since 06. This morning, dow and nasdaq hit new record highs but reversed. Dow down nearly 50 points. For our etf spotlight, mike s santoli joins us with where investors are betting on continued calm and strong markets. This has been sort of the dominant trade of 2017 was to bet on this very calm low volatility climb and the etf world gives you very focused instruments to bet on this this is etns, Exchange Traded notes that vote on the vix or against the vix. Essentially, the vxx is on a way to on a daily basis bet on the vix going higher the xiv is its counterpart they only bet on vix futures and theres a kind of builtin structural reason why one will go down over time and one will go up, but coming into this year, the big question was can we expect volatility to pick up from historically low levels, even if it doesnt get to be an ugly market, will volatility pick up . Right now, the Way Investors are set up is theyre more leaning on the direction of were going to stay calm if you look at the asset levels in each of these, when these first came out, people would bet on the vix going up as a hedge to their stock portfolios. As it happens, more assets in the fund that bets on a low vix than a high vix. Its an interesting trade going into this year one thing im watching is even if the market stays strong, if it has more energy to it, if it goes up in bigger bites and jumps which we didnt see last year, you could see the volatility index go up even if the market is not on the decline, and that would be a little more of a kind of a late cycle type market that gets a little bit jumpy before a turn mike, thank you for that. A lot to digest this morning regarding various cross kurnlts. In the meantime, lets get to sue herera good morning, carl. Good morning, everybody. Heres whats happening at this hour new York City Fire Officials Say a fire in trump towers heating and air conditioning system caused smoke to billow from the roof and two people were injured. The fire started at about 7 00 a. M. This morning at the building that contained president trumps home and business offices syrian activists and a War Monitoring Group say at least 25 people have been killed by a car bomb blast in idlib last night its the countrys largest rebelheld city. No group has claimed responsibility so far. The u. S. Navy has joined the search for 32 crew members missing from an Iranian Oil Tanker that caught fire after colliding with a bulk freighter off chinas east coast over the weekend. None of the missing crew has been found no word on what caused that collision. And it might be bitter cold in large parts of the u. S. , but theres a dangerous heat wave in australia. The temperature in sydney hitting a high of 117 degrees on sunday just one degree shy of the record set way back in 1939. Thoub thousands have been left without power. Youre up to date. Thats the news update this hour carl, back downtown to you sue, well see you in about an hour. When we come back, gopros Ceo Nick Woodman is with us, after announcing his company is cutting the rkrce wofoby 20 squawk on the street will be right back shares of gopro sijing on a new round of announced job cuts, restructuring plans, weak q4 guidance well send it out to josh lipton out west with the ceo of gopro, nick woodman thanks, carl. Nick, thank you for joining us we appreciate it thanks for having me. A tough report this morning you see the stock is nosediving. Investors reacting big restructuring, significant layoffs. Whole business lines are getting killed off youre getting out of the drone business a miss on that allimportant holiday quarter. Walk me through, nick, just what went wrong here. Well, lets start with what went right the launch of our hero 6 black camera, our new flagship, went extremely well and as planned and hero 6 black was selling to forecast so were really happy with its sell through the problem was more in our oneyearold legacy product hero 5 black, and as we shared on our Earnings Call back in november, hero 5 black was soft in terms of sell through. And we were hoping that Marketing Programs and promotions we had planned for it would lift sell through, but it didnt and as a result, we missed the Fourth Quarter because that hero 5 black was a very important product for us but all of our data indicated that a price drop of 100 on both hero 5 black and hero 5 session would have Significant Impact on sell through and thats what we have seen happen since lowering the price 100 on both of those products, we have seen more than a two times sell through lift on hero 5 black, and more than three times on hero 5 session there is significant demand for gopro at the right price when you talk about hero 6, thats the new flagship camera introduced in late september you already had to knock 100 off the new flagship device, right . We just lowered the price on hero 6 black yesterday, on sunday to align with our 199, 299, 399 pricing strategy. But hero 6 black was already selling very strong at its original 499 pricing, but given the other price moves, every indication was that our business would improve if we lowered the price of hero 6 black as well. But that flagship was succeeding at 499. Let me ask you, a big part of the release is significant off of this company. You had about 1,200 employees. Now youll have fewer than 1,000. When we spoke in april, i asked you at that point, was that the end of the layoffs you said, listen, you expected the end of the layoffs here we are, another big round what happened there, nick . Well, as you noted, at the beginning of the interview, we shuttered our drone business karma was successful in its category it was the number two selling drone at 1,000 and up, but as we looked forward, when we considered the Regulatory Environment for drones, when we considered the amount of investment in the category relative to the Profit Margins that are possible in that category, we determined that it just wasnt going to continue to be a sound Business Investment for us the majority of our customers, more than 4 million a year, of our customers are looking for us to make great cameras with a great app experience, and theyre subscribing to our Subscription Program thats what they want from us, not a drone, so were investing accordly, and that resulted in job cuts michelle, i think you had a question for nick. Thank you for joining us. Should gopro be a Standalone Company . Would it help if you had a Bigger Company that helped you with marketing and distribution instead of relying on just one product . Have you thought about it . Has anybody approached you think about going private so you dont have to deal with Public Markets . Thats a very good point. And i think whats very strong at gopro is we have an incredible brand we have historically proven that we built a terrific product. Were always best in class in each category that we enter. If there are opportunities for us to scale awareness of gopro globally by being part of a Bigger Company, that something we would entertain but of course, we need to run the business as though were going to be independent. And were planning accordingly and looking forward to benefitting from the improved sell through were seeing on all of our products at their new pricing and were looking forward to profitability in the second half of 2018. If theres opportunities for us to unite with a bigger Parent Company to scale gopro even bigger, thats something we would look at. I want to ask you im sorry, go ahead. I was going to ask, do you regret going public when you see how punishing the markets have been no, i dont regret going public at all. The markets arent punishing theyre actually accurate. As a public company, we are rewarded or punished, as you say, for our execution as a business as a Consumer Product company, were doing extremely well, as i mentioned, with the strength of our brand and the strength of our products as a public company, its our job to translate that consumer success into profitability thats what were focused on 2018 the markets are fair and i am still glad we took gopro public otherwise, we would have far less visibility globally about the drone, you said in the release, that business is going away youre killing off the drone business you mentioned some of the reasons. Listen, theres a lot of competition, Regulatory Risk here and overseas. Those risks were well known. Why were you blindsided by those, exactly we werent blindsided but the world has changed since we began our drone business. Gopro has changed. And we have recognized that theres more opportunity for us to focus on our cameras, our app, and our subscription business thats where gopros core business is, thats where our growth is, and thats where were investing. As you move forward now, i have been covering the Company Since 2014 to me, it does feel like the story kind of shifts when i first started covering you guys its we have a camera, and we cant be disrupted by smartphones. You used to hold up a smartphone and say you cant attach this to a surfboard. Now, the narrative is, do pro has a camera, and you want to integrate with smartphones, rely on smartphones why should investors believe thats the right narrative, thats the storyline thats going to work for gopro . Well, when gopro first became successful, people were buying a gopro and tethering it to their computer to offload their footage and share it to facebook and youtube. Now the phone is a computer in your pocket. Now people use a gopro to capture and share their lives in exciting ways. They dont need a computer anymore when they have their phone. The gopro offloads to your phone, and the app creates a video you can share. What we have seen since we went public is gopro has become far more convenient, far more mobile, and its not a story, its reality and we still think that we have a very large Market Opportunity globally because the world is only becoming more social, and gopro is how you capture and share your live on the go. David, you have a question . Yeah, thank you, josh mr. Woodman, just on this pricing issue, im curious, in terms of understanding the Price Sensitivity of your potential consumer, what did you assume that perhaps was not right previously that you now feel as though you have gotten right i want to try to understand that a bit more giving the pricing reductions you have taken. Well, we have new data that helps us understand we have more repeat customers than we thought we did and that is really important to understand as we price our products we understand that our customers demand either a significant upgrade from year to year on our models or they demand a price reduction in our Older Technology and we achieved the significant upgrade aspect of our Value Proposition to consumers with hero 6 black its been selling really well at its previous 499 price point, and we expect it to sell even better at 399, but we missed the mark with our hero 5 line of products they were a year old we priced them at the same price as a year prior because demand was strong going into the Holiday Season but once you recognize you have a significant number of repeat customers in the second year of a products life cycle, many of your customers either own that product or theyre waiting for a price reduction, and we didnt provide that to them all right nick, thank you so much for joining us we appreciate it thank you very much carl, back to you guys. Josh, we appreciate it. When we come back, invideo striking a big deal on driverless cars. Take a look at shares of snap. Downgraded for the second time in a week. This time saying fundamental execution needs to be shown before they can be more positive on the name. Shares down almost 6 . At fidelity, trades are now just 4. 95. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. Stocks all around the world have been surging, so where is the best place to put your money right now . America, someplace else . Adnd out at tringnation. Cnbc. Com more squawk on the street coming up. The Worlds Largest Consumer Electronics show, ces, is under way in las vegas nvidia kicked it off with a Big Partnership announcement in driverless cars. Jon fortt is in San Francisco with details morning, jon morning, carl yeah, nvidia is up a healthy 2. 5 after announcing a partnership with both uber and volkswagen for selfdriving cars uber planning to use their chips for its Artificial Intelligence computing system, while volkswagen is going to use their drive nine platform and facial recognition and gesture controls in its selfdriving efforts. They spoke at ces last night about the deal im also delighted to announce that uber, the company that put mobility as a service on the map, has chosen Nvidia Technology and were partnering together to create future autonomous selfdriving ubers. Now, we have built pcs, laptops, game consoles, Super Computers, and i can tell you without exception, building a computer for Autonomous Vehicles is at a level of complexity the world has never known. Also announced big format gaming displays called bfgds, and a beta launch of their cloud based Game Streaming Service be sure to stick around. Squawk alley is going to have amd ceo lisa su here with me at one marked in the cnbc exclusive. Well talk about the chip Industry Security headaches, details on the chip collaboration with intel, and a lot more thank you, jon fortt. On a day when bitcoin and other crypto currencies are falling, venezuelas leader over the weekend ordered the creation of 100 Million Units of a new cryptocurrency called the petro. He says it will be backed by the countrys Oil Production michelle has been digging into this it combines two of your areas of coverage in a very interesting way. Venezuela and crypto what is he trying to do here this started out with how will this work now the story is most people think it will not work a lot of block chain and crypto experts are extremely skeptical what venezuela is trying to do is actually going to materialize. Lets show you the video here is venezuelas resident, nicolas maduro, late on friday, making the announcement of a creation of 100 million crypto currency units that will be backed by the fuel key reason expertsexperts are skeptical is lack of rule of law in venezuela ultimately to have trust in a unit of exchange backed by an asset, regardless real or crypto, you have to believe you can actually redeem it for the underlying asset can you redeem this for a barrel of oil in a country like venezuela, how do you know they are going to deliver, and if you dont, whats your Legal Recourse theres an enormous amount of counterparty risk. Experts are also technically skeptical. Venezuela hasnt announced what they are going to use or create their own, in other words, if its going to be based on ethereum or Something Else they make up. Experts dont doubt there will be a lot of assetbacked cryptocurrencies in the future, they are just doubtful this one will work. By the way, a number of countries evaluating this, sweden, estonia, canada, singapore, china, also russia. If you think cnbc covers cryptocurrencies a lot, we have nothing on venezuelan state television it is a constant topic there have been several hourlong specials dedicated to explaining it, many ministers go on tv to advance it. The head of the project is featured weekly on maduros talk show, this is the guy on the left in charge of the project showing off the Mining Machines that theyve brought in to do this they are going to have a meeting january 14th where they are going to announce the protocol and have all the registered miners meet. So if i can learn spanish, i can listen and finally learn about bitcoin and everything else, cryptocurrency, right . The more interesting is the assetbacked currencies. If the world works out the way these experts think it is, you can tokenize a lot of different assets, create new syndication models, and not have to worry about use blockchain to deliver exactly turning large institutions obsolete in some cases, right . Like which ones i cant imagine which were talking about. Fascinating, michelle. Reminder that its being driven by parts of the world that are exu. S for sure. Absolutely. Get a check on stocks, dow is down 33 nasdaq hdiolng on to a small gain back in a minute nobodys putting their money into equities. Theyre not investing in commodities or fixed income. What people are really putting their money into is what they hope to get out of life. But helping them get there requires a real refusal to settle for average. Because when you approach investing with a tireless desire to beat the status quo, Something Wonderful can happen. Those people might just get what they wanted out of life. Or maybe even more. Welcome back to squawk on the street, im dominic chu stocks are falling to start the week Health Care Stocks in focus this week at the jpMorgan Health care conference kicks off its the most important week of the year for bio tech investors, but health care is still the worst performer in the s p 500 today. Watch a number of these names leading the downside, all down by 2 in early trading some big stocks to watch, guys back to you, carl. Thank you very much hollywoods golden night getting a lot of buzz this morning. Our Julia Boorstin joins with us headlines from the Golden Globes last night hey, julia hi, carl. Women and issues of Sexual Harassment and discrimination were in the spotlight, both in the femaleoriented films and tv series that won and across the speeches and host seth meyers opening monologue. Oprah winfrey made a nineminute speech about change, sparking a call for her to run for president. The ballroom was a sea of black gowns and both men and women wearing times up pins, looking to end inequality in hollywood and beyond the studio with the most wins, fox with seven, including four for three billboards outside of ebbing, missouri, including best drama. The films were about women and issues of abuse. Hbo dominated the tv category as usual with four awards for big little lies, including best drama. Hulu brought in its first two Golden Globes ever for handmaids tale, while amazon won two awards, on par with its wins last year netflix brought home just one award for aziz anzari. Another winner was a24, it had three wins for lady bird. Also a win for barry diller, who financed the movie its going to be interesting to see how this affected ratings. Third year increase in viewing back to you. Thanks for that when we come back, lisa su is going to join us. You dont ntwa to miss this. Squawk alley starts in a minute its time now for your business of the week californiabased ozobot says kids dont have to be just passive consumers of electronic toys, they should be creators. So he makes programmable robots to get kids to learn to code now his business is taking offment for mooff. Sponsored by American Express open helping you get business done. Good morning, it is 8 00 a. M. At apple headquarters in ku cupertino, california, 11 00 a. M. On wall street, and squawk alley is live