In the bowl of a stand mixer fitted with the paddle attachment cream together the butter, cream cheese, and flour until the mixture resembles pie dough. Turn the dough out of the bowl onto a piece of plastic wrap. Wrap the dough and press it into a disk. Chill for a minimum of 2 hours, or until firm. The dough will keep in the fridge for up to a week.
Remove the dough from the refrigerator and let it come to room temp. When the dough has warmed up, divide it into quarters. On a well-floured surface, roll 1/4 of the dough out into a 12” x 8” inch rectangle and spread the 1/4 C of the jam over the dough. Cover all but the furthest 1/4 inch away from you. Roll the dough up from the 12” inch side facing you, into a log. Repeat with the 3 remaining pieces of dough.
Place the logs in the freezer for 10-15 minutes to firm up before cutting.
Trim a sliver off each end and cut each log into 10-12 even slices. Arrange the rugelach on a parchment-lined sheet pan, about 2 inches apart.
In a bowl combine the egg and water and whisk to combine. Brush the tops of each piece with the egg wash and the sanding sugar. Bake in a 350˚F oven for 20-25 minutes, until golden brown. Cool for about 5 minutes on the sheet pan, then remove them to a cooling rack.
Cooled cookies keep in a container at room temperature for up to a week, and in the freezer for up to a month.