tv Worldwide Exchange CNBC March 30, 2017 5:00am-6:01am EDT
good morning. u.s. equity futures pointing to a mixed open on wall street. new this morning, a federal judge extending a court order blocking the enforcement of president trump's revised travel ban. plus lululemon shares are getting slammed today. we'll tell you why a lack of bold colors could be to blame. it's thursday, march 30, 2017, "worldwide exchange" begins right now. ♪ good morning. welcome to "worldwide exchange." i'm sara eisen. >> i'm wilfred frost. very good morning to you from me as well. it is throwback thursday, this
week we're throwing it back with a punk theme. there we go. >> '90s. early 2000s. >> i'm not the one to ask. >> let's check in on the global markets, show you what's happening with the u.s. futures after a mixed close on wall street. the s&p did nothing. we're approaching the end of the quarter. best quarter for global stocks in years, ending on a sluggish note here. dow futures down 12 points. s&p down less than 2. nasdaq again shines. that was the story of yesterday. tech was a stand out led by apple and amazon. the nasdaq actually finished higher while the dow finished lower. >> yeah. in general, of course, it wasn't huge moves either way. it wasn't a day where we were worrying about big declines or big falls. in the sector performance, the slight surprise we were discussing on "squawk alley" yesterday, driven yields we've seen, banks and utilities actually moved in the same direction. we've seen big moves in opposite
directions when the yield curve has been a factor. but the yield curve didn't move much yesterday. >> energy was a strong performer yesterday on a bounce in crude. then the ten-year note yield. 2.38 is the yield. backing up a bit. we saw that yesterday in terms of buying. the fed speak is coming fast and furiously. it does appear that the washington news, the fiscal policy has taken a front see the to the fed in terms of market moves. >> in terms of u.s. markets, looking at gains for the week, albeit less than 1%, losses for the month more than 1 % a good gauge of where we stand with two trading days left for the month and for the quarter and for the week. >> yes. >> all end on the same day. let's look around the rest of the world. asian equities seeing a decline in china today. around 1%. stories out there of more possible tightening from the central bank, also some stories about possible tariffs in terms of trade with the u.s.
nothing really factorial or data driven today. 1% decline for china. as sarah mentioned, decent quarter for international equities. china is up 3.4% this quarter. so, again, just broft taprofit for a positive quarter for global equities. european trade, decent after invoking article 50. one reason for the gains yesterday was a slight softening of the euro. the dollar rallying against the euro in light of a report coming from reuters that an unnamed central bank source, ecb source, saying the market overinterpreted mario draghi's comments at the last meeting that we could see the end of loosening policy -- loose policy sooner rather than later. he said those comments were overinterpreted by investors. >> maybe they got spooked by the dig jump in yields. >> we saw yields come down off the back of that. that's one reason we saw a half percent of gains.
>> also softer inflation numbers in spain, parts of germany. the broader market picture, mentioned oil a big gainer yesterday. that sent energy stocks higher, giving a little back this morning. wti cried sude sitting still be $50 a barrel. 49.36. brent, 52.14. it's down half a percent. nat gas also down 0.4%. the u.s. dollar perked up a bit yesterday. let's show you what's happening now. >> slightly stronger today. for the week as a whole it's up a little bit. >> there it is. >> the month and the quarter quite noticeably down. >> going in opposite directions. firmer against the euro, 1.0733, flat against the yen, and stronger against the british pound, on the back of article 50 we're waiting to see what the strategy will be from the uk, from the europeans when it comes to trade which will be the key for the markets.
fl >> the pound itself rallied yesterday when theresa may was speaking, it softened by the end of the day. in general, it was a buy the rumor sell the fact moment. and the pound had been rallying the prior two weeks once the bill passed parliament. so yesterday was much more ceremonial, setting out how the next two years will go. i find her tone, prime minister theresa may's tone in the letter and the speech was forward looking and optimistic and conciliatory. that's what most people took away apart from one key part, one key line which compared sharing security information with getting a trade deal moving forward as if plausibly that could be a threat from the british not to keep sharing security information if they don't get a trade deal. a lot of people pointing scorn on that area saying you can't play with peoples lives. that shouldn't be on the table. either way, a firm message from the prime minister, in general quite a forward looking and
optimistic one. >> i would say the set up into this, it's interesting to see the british pound flat for the year. if anything, it's up about a percent. a lot of the losses came last year as a result of the vote, and into the vote. the pound on a trade weighted basis is actually 4% below it's average. so, it has weakened substantially into this. one reason why the ftse 100 has been one of the best performers, that stock market in the uk, also mick data has held up well. going forward, reading all the research notes into these article 50 divorce talks what will be important to watch is financials. because london, the city, the financial sector, such a big part of the economy. such a big issue over passporting and the common market, already getting some news like lloyds moving one of its main headquarters to brussels. >> lloyds of london insurance, as opposed to lloyds banking group. >> aig might be next, they say. >> lots of banks already looking
around. and we'll continue to focus on that. the final decision, we need to get what the agreements are. on the pound, the other factor that supported the pound the last couple of weeks is when inflation jumped for february, 2.3% above the bank of england's forecast. the tone has been loose since brexit, will it be forced to tighten for the wrong reasons, ie inflation picking up without high growth. >> i saw this firsthand. that -- i was trying to arbitrage the currency rate when i was there and shopping, they can't possibly raise prices enough to match the slide in the rate, but they have tried to raise prices. >> your market source is what? >> just designer stores, where i can compare what it costs there to what it costs here. a splu weekly jobless claim
the final read on q4 gdp is out. cleveland fed president, loretta mester, john williams, rod kaplan and bill dudley speaking throughout the day. deltech nl technologies reportse the open. interesting new data factoid showing margin debt climbed to a record high of a $528.2 billion, up nearly 3% from january. higher levels of margin debt suggest stronger investor confidence, but it can be a warning because margin debt has historically peaked before financial collapses. the data coming from the new york stock exchange showing brokers are putting up more debt against their securities, borrowing more to get into the market, potentially a level of conviction in the market that we'll monitor. >> but also potential worry.
washington news, a federal judge in hawaii has extended an order blocking president trump's travel ban. it restricts entry from six predominantly muslim countries. a court in maryland blocked the order affecting visas. president trump's administration plans to unveil a $1 trillion infrastructure plan later this year. transportation secretary elaine chao says the program would be done over ten years. cover transportation, energy, water and potentially broadband and veteran hospitals. chao says the administration plans to offer incentives for public/private partnerships but no word on how much federal funding will be proposed. that's the key to see whether democrats will be on board with this. this, of all the trump agenda items over tax reform, over healthcare, infrastructure is the one that holds the most promise for bipartisan support. it's something the democrats have wanted.
the question is how they'll work out the payment. >> exactly. also the question is how much will that affect markets depending on how its financed. we have deere's ceo on squawk on the street later, that's a question for him. elsewhere on capitol hill, the senate intelligence committee will hold its first public hearing on the russian investigation. the committee called 20 wincs witnesses, including jared kushner and paul man that for t today geoff cutmore will be live from the international arctic
forum at 6:30 today with president putin and the president of finland. >> never hear from putin, never putin being grilled by a foreign journalist either. >> we'll be taking it live on "squawk box," setting the agenda for the day. >> former treasury secretary speaking out at an event in new york last night. jack lew, tim geithner, robert rubin and michael bloomenthal addressing economic issues with a specific focus on the u.s. relationship with china. lieu ta lew sharing his thoughts on the current administration's decision to pum out ll out of t. >> the standards of tpp reflected american values and would have made our products and services more effective. i see nothing good pulling on tpp. leaving a void is a bad thing. somebody will move in i chi
china chii think china is moving in. >> robert rubin warning about a potential currency crisis. if china had an economic crisis and as a consequence the currency plummeted that would put friend doutremendous pressu markets around the world. >> noteworthy comments from former treasury secretaries who are all democrats. it is interesting to note president trump has not made good on his campaign promise to label china a currency manipulator. a lot of economists and experts and investors say that's appropriate because that was a few years ago story. they are not manipulating the currency, or if they are intervening they are doing so to prop it up and not to -- >> they fix it, we know that for sure. but the understanding behind that debate -- it's not as key a political issue for him to follow through on. >> we'll see. we also know that president xi
will be in mar-a-lago next week. >> a massive meeting. stocks to watch today, lululemon's fourth quarter profit missed forecasts. results were hurt by the stronger than expected canadian dollar. the retailer expects weak same-store sales in the fourth quarter. th on a programming note, lululemon's ceo will be on "mad money" tonight with jim cramer at 6:00 p.m. one to watch. the stock down 1%. >> i spoke to the ceo on the phone about some of the missteps and execution props that led to a big surprise. the surprise was in the guidance, which is their first quarter which is happening now. they saw a slow start for traffic in february, which continued in march. he is disappointed with the q1 results. he says he is not surprised to
see the stock market reaction. he's used to an emotional reaction when it comes to lululemon shares. but he did say that the problems are driven by the fact that they missed out on merchandising and colors. they didn't go into spring with bright enough colors. he said -- >> i'm worried about our own colors this morning. >> he said we own this problem and we have control over it. he did say a lot of weakness in the first quarter that they were seeing had to do with online. a point of strength for them. that's something he says will be fastest to fix. >> lululemon down 18%. should we expect nike to be down today? >> could be down in sympathy. the question is has athleisure peaked? is this a further sign that as a category it's not hot and trendy. i asked limb about that last night. he said i have no concern about the category or the competition. this is something we own. we had the problem. he said the macro environment is what it is. people are still expressing the fact that they want an active lifestyle. he said look at the fourth quarter results during a
sluggish retail environment they had better than expected comp store sales. they're comping bra category is about 20%. you're not seeing that in retail. he said that's a sign that athleisure is still strong. he has confidence this can turn around. >> if you're considering turning off because we're not wearing bright enough spring colors, we'll rectify that tomorrow. >> con cophillips is selling some oil sands in canada to cenovus for $30 billion. h & m's first quarter profit fell by 5%. they say conditions remain tough but they will launch a new brand in the second half of the year. it's down 5% in swedish trade. when we come back, european political leaders are gathering in malta today. brexit talks are the talk of the town. we'll take you there live next.
first, as we head to break, check out the currency trade this morning a firmer dollar against the euro. just ticking higher against the yen which could set the tone for trade. it's been a strong dollar, strong stocks trading environment. you're watching "worldwide exchange." exchange."was built with passion... but i keep it growing by making every dollar count. that's why i have the spark cash card from capital one. with it, i earn unlimited 2% cash back on all of my purchasing. and that unlimited 2% cash back from spark means thousands of dollars each year going back into my business... which adds fuel to my bottom line. what's in your wallet?
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get you up to speed on market action. u.s. equity futures just below flat across the screen. but less than.1% of declines at the start of the open. yesterday for once it wasn't the yield story that drove markets. it wasn't the banks that were leading the charge, either up or down. it was energy. energy really propped up the overall market performance. oil gained about 2.3%. it meant energy was the best performing s&p sector to the upside. oil prices just falling a bit today. down 0.2%. oil has significantly stabilized over the course of the last week and a half or so. we're now sitting just below $50 on wti. 49.4. now, another big story yesterday was the invoking of article 50, and the brexit starting gun being fired. the european peoples party held a convention today in malta. 25 2500 participants have been
invited. many talking about brexit. willem marx is there to give us an outline of what people are saying. good morning. >> good morning. what is interest being this pan-european party is that it wasn't long ago that the british conservative party was a member of it. they withdrew a few years ago. dave davis was responsible for that. he has been defending the wording of theresa may's letter yesterday that triggered article 50. some critics saying that really it threatened security cooperation between the uk and the european union. he said that's nonsense. that's not at all the case. one of the challenges people are talking about is the two-year team line. the ticking clock has begun on the negotiations. someone i spoke to about that was the former prime minister of sweden, carl bilt. here's what he said about the negotiations. >> i think it's going to be virtually impossible to do everything in two years.
the details of that free trade arrangement and agreement will take some time. we need to have, i think, some sort of interim arrangement until everything is in place. hopefully within two years we'll have the divorce settlement there. and we will know the principles, the main outlines of the long-term relationships. >> that's carl bildt, the former prime minister of sweden. represented the eu on the peace accords. he was heavily involved in the balkans and peace agreements there. theresa may will clearly face an uphill challenge. seeing that with the messaging already. back to you guys in new york. >> thank you very much for the color and the commentary, willem marx in malta. a special event on cnbc today from that part of the world, live from the arctic forum we'll hear from vladimir putin along with the presidents of finland and iceland.
geoff cutmore will moderate. you can catch that live on "squawk box" at 6:30 a.m. >> i'm excited about that. >> huge. >> a little nervous for geoff. >> it's always tricky. you know, there's so much politics to talk about, not to mention the u.s. elections, european elections. energy. going to be great. >> good luck, geoff. stories at the intersection of politics and investing, including the trump administration's plans to pursue a $5 billion sale of f-16 fighter jets to bahrain.hr n.
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...to 45 days. breathe happy with new febreze. welcome back to "worldwide exchange." u.s. futures pointing to another mixed start here. looking for some direction. nasdaq stays positive. that was a trend we saw yesterday where the nasdaq outperformed all three major averages, thanks to strength in tech names like amazon and apple. dow futures down 15. s&p is down 2. heading into the final two trading days of march. positive month is still a possibility for the s&p, within 2.5 points of break even. nasdaq positive for the month. the dow down more than 150 points to the down side for the month. we'll see if we can get another positive month. it would be the fifth in a row. global stocks looks to wrap up their best quarter since 2013. early currency market reaction, the dollar has been a big tell
for stocks. strong dollar, higher yields, better stocks, that's sort of been the trump trade and unwinding a bit lately. it is firmer against the euro 167 1.0733. the pound at 1.2440. >> the trump administration has reportedly told congress it plans to pursue a $5 billion sale of f-16 fighter jets to bahrain. the deal was held up last year on concerns about human rights. reports say the white house has separated those issues from the sale. the deal includes the aircraft, engines, radars and other equipment. lockheed martin has declined to comment. stock up slightly in the premarket today. lawmakers in north carolina announcing last night they reached a deal to repeal the bathroom bill. that bill restricted restrooms transgender people can use. the new proposal would repeal the bill but leave state legislators in charge of policy on public restrooms.
the legislation led to business boycotts and hurt the state's economy. a vote to repeal the bill expected today. snap is teaming up with nbc universal to make snapchat the home for olympics content for the 2018 winter games. the deal expands on a similar partnership for the 2016 games in rio. snapchat will be allowed to share clips of nbc's coverage. the deal will let nbc universal sell games related filters and lenses to advertisers for the first time. nbc is an investor in snap. this is very interesting. >> maybe we should go to the olympics and test it out. >> i'm up for that. good place to cover it from. when we come back, the top stories and a round up of global markets. we'll be joined by simon derrick from bny mellon. mellon.
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good morning. economic data and more fed speak set to dominate the day ahead. stocks to watch, lululemon on top getting slammed after results fall short. the athleisure story straight ahead. and doodling while you drive? we'll tell you all about the new tesla feature that has everyone talking. it's thursday, march 30, 2017. "worldwide exchange" continues. ♪ good morning. welcome back to "worldwide exchange" on cnbc.
i'm sara eisen. >> i'm wilfred frost. good morning to you from me as well. it's throwback thursday, we're throwing it back with a punk theme, which -- >> i don't know. >> our producers take it to heart, but almost always the music choice we praise. we don't love it today. >> next webbing we shouek, we s elton john show. >> the nasdaq yesterday closed higher, the dow closed lower. the s&p flat. the nasdaq up a point. dow futures down 16. s&p down 2 1/2. as for the overnight action, selloff in china overnight dominated the talk. down 1% for the shanghai composite. as for hong kong, down 0.4. the nikkei closed lower by 0.8.
energy stocks outperformed overall. we saw that in the u.s. yesterday. saw that in asia and european trading. as for early action in europe. a mixed picture. ftse 100 flat. german dax flat to positive. not a lot of movement. overall, if you look at global stocks, having a very strong quarter. heading into the final two days here. it's been the best for global stocks since back in 2013. almost a 7% gain. >> a strong quarter and a better month as well. paying catch up to the reflation trade aspects that the u.s. had moved ahead on. now the u.s. is pulling back on. so, that's the kind of the explainers. >> better global economic data. better market tone overall. some hopes of u.s. fiscal stimulus. >> europe yesterday was up by a half percent. one of the reasons for that was the euro. the oil prices, they were a big factor yesterday. the s&p energy sector had a 2%
gain for wti crude. a significant recovery in oil prices plateauing now and holding near the 50 level. 49.4 for wti. ten-year treasury note, taking the focus off the likes of the banks in terms of sector performance. 2.38 the level today. to compare it to last friday, 2.4%. the movement in yields this week much less pronounced than the prior two. dollar board, the dollar bounced back a bit the past couple of days. the trend of recent weaks has been a softening of the dollar after that run up of the election. yesterday it was stronger, particularly against the likes of the euro. the reuters story, saying an unnamed source at the central bank had said the comments from mario draghi the last meeting had been overinterpreted in terms of how quickly we could see an end to the loose policy. so we saw yields in europe react to the down side yesterday.
the euro came off with it. that just helped stocks. it's continuing today. the euro is down about 0.3%. no real move for the dollar against the yen and pound. >> the big story of the quarter is the dollar really went lower. it's near the lowest level since back in november is that a tell for the overall trump/reflation trade? it was one of the first assets to jump higher after the election with yields, sending stocks higher. will stocks follow suit or are they beating to a different drum? >> the brot ebroader dollar indn 1% for the month. 2.2% for the quarter. joining us from london is simon derek, chief currency strategist at bny mellon. let's talk about the short-term of the dollar before we move on to that medium term outlook. particularly yesterday we did see a bounce back, the dollar a bit stronger. euro weaker. what was driving that? >> well, the euro story is the easy bit in this because, as you
said, you have the ecb seemingly rolling back on some of those hawkish comments, at least the interpretation of hawkish comments. here in the uk we had the brexit, article 50 being triggered. so plenty of uncertainty around that. from other currencies perspective, clearly the dollar was looking relatively better. i think for me the really interesting bit is how muted the response was over the weekend to the healthcare reform or lack of healthcare reform going through. we spent all last week discussing what that might mean, the constraints that might put on the new administration. the market didn't care. i think that that is the key when we look now, if that's not registering with the market what is? i think it's two simple things, a wall of money out there looking for high yields a quarter of caution, maybe now those yields are starting to settle in, people will get say
let's take what we can. >> let's talk about the surprise winner in the month of march, the mexican peso, up almost 6%, one of the best performing currencies. i don't know if it's tracking the trump approval ratings or rumors and speculation about a renegotiation of nafta, the border adjustment tax, it feels like a lot of strategists and investors hate this currency even though it's had a strong run up since the election. >> i've been careful more generally about emerging market currencies right now. i happen to think actually we could see a return of the strong dollar. and clearly that is going to have a fairly direct impact on the wide range of currencies. i suppose given how far we have come, i think it was always inevitably going to be a bounceback. there were comments out earlier in the month that said maybe the worst thing the u.s. administration would wanted to
see is a weaker mexican peso. those things play in. but i would be cautious about the sector in general. it does not like a strong dollar. i think that could be an issue. interesting that actually we had mr. ruben last night touching on that in some of those comments when he was talking about china. >> simon, dollar/yen your latest views on that? >> the problem is it's gone nowhere fast for several weeks now. i have to say, i think the real story there is we're getting to the end of the fiscal year, we know investors have been bringing money back home from overseas bond markets, there may be a variety of reasons for that i have to see what happens going into the new year, but boj is not shifting on policy any time soon. the fed is. if you're searching for yields, there's only one place other than the em space that you will find it, that's in the u.s. i tend to think we could see a
revival not only in the dollar against the yen but in volatility against the yen as well. >> bullish on the dollar. >> simon, thank you very much. today's top corporate story has to be lululemon. the company's fourth quarter profit missed forecasts. results hurt a bit by the stronger than expected canadian dollar. the real estate tailor expe ret same-store sales. on a programming note, this will be key, the ceo will sit down on "mad money" with jim cramer tonight at 6:00 p.m. eastern with the shares down about 18% in the premarket. i spoke to laurent last night, i've covered lululemon for a while now. he said not a surprise to see a sharp reaction. it's an emotionally charged stock. he blamed the current quarter guidance, the weakness for the decline in same-store sales on
these problems with colors. he said we just didn't go into the spring bold enough on colors. he said the good thing about that is we can fix it it's a problem of our making. he said you saw it more online, which means we can adapt faster, as soon as next week you will see the colors changing in the stores. it's going to be a process. he said when it comes to innovation and supply chain, he's more excited about 2017 than he has been over the last few years. investors are not buying it. he's pointing to strength. he will continue to do so, i'm sure, on millimeter. >> i'm sure mr. cramer will don bold colored abcs. >> the men's business has been working well. laurent called it the best kept secret. as soon as a man buys a lululemon pant, they are addictive. the problem is they have to get the word out to men. >> not a secret to us here. >> not here. everybody knows on "worldwide exchange." more stocks to look at.
sin no synovus buying cabela's. they will keep the deposits by the unit and sell the credit card portfolio to capital one. toshiba's shareholders are paving the way for a sale of majority stake for the whole business. reports say there are ten potential bidders. toshiba up 4%. worthington industries, third quarter profit rose 20% driven by sales growth and higher steel prices. they missed analysts forecasts. down 6%. time for top trending stories. uber releasing a list of the strangest things people left behind while using the ridesharing service. we can all relate to this. >> i can't relate to most items. >> not the strange things, but leaving behind things in uber. we picked out some more unique
items on the list. a valuable nordic walking pole. a paycheck, engagement ring, a pool stick. >> maybe it was intentional. maybe they had an argument. i'm done with this. >> doubtful. >> a smoke machine. a back massage device, and elf cutout. an elf cutout? what? uber said the index is meant to prepare riders for mercury falling to retrograde in just over a week. >> how often do you leave things in the car? >> mostly my phone. >> these are big items. a elf cutout. >> i wonder if people got their stuff back. >> that's got to be the bonus, you know who has been in the car at what time, they can check. >> right. you just have to trust that no one else will pick it up or the driver. >> engagement ring, you might be like, well, not sure i'll send that one back. i would, of course. i'm totally honest.
>> what will you do with an engagement ring? >> i'll keep it until 2039. you heard the warning about not texting and driving, but what about doodling while driving? tesla has an update with improvements to the autopilot and interface, there's a new app that allows you to draw on the screen if you're board and stuck in traffic. if you're extra proud of your artwork, you can publish it. elon musk publishing two user sketches last night. i lost my thought in the middle of there. you can't do this whilst driving? surely you can't. >> i bet you can't -- >> you. >> you can do this whilst driving? >> while on autopilot. sounds like there may be safety concerns. so far users are loving it. >> i'm not very good at drawing. i'm not sure it's something i'll be using. >> if you're in traffic, waiting
around. >> are you an artist? >> not so much. >> you can write out your currency charts. >> forget buying a sketch pad, just buy a tess lachla. kcoming up, a special event live from the article forum we'll hear from russian president vladimir putin as well as the presidents of iceland and finland. geoff cutmore will moderate that. very rare we hear from putin in front of a western journalist. more "worldwide exchange" coming up. up.
time for our must read stories in the papers. mine is in the "new york times" ignoring diplomacy's past and its furt cho its future promise. going after the budget that cuts foreign aid and state department funds in favor of military spending. diplomacy is important and you have to fund it a health program begun by george w. bush checked the spread of aids in subsaharan africa and was used to stop the ebola epidemic in the obama administration. other programs aid refugees,
finance improvements in sanitation and water, primary education, energy and counterterroism. so putting he'real life examplen diplomacy and doing good around the world gives another perspecti perspective. >> one thing is how efficient that money is being spent. >> they do say there's room for improvement on that front. rex tillerson has been on board with president trump, though mitch mcconnell has said the cuts to state department are not appropriate. >> my read is in the "the financial times" called theresa may pulls the article 50 trigger gently but firmly. the paper writes the absence of menace was a welcomed departure from the previous strident rhetoric. there was one regrettable exception, her letter unmistakably suggested the
continuing or deep ing the current level of uk/eu security cooperation depends on reaching an exit agreement. i think fair enough, sit out, you won't concede on important points ahead of negotiations. that won't be the conclusion, but a lot of tough things to be negotiated. >> i say wait for the details. there's so much when it comes to immigration, trade, just to pay the bill to get out of the eu for budgetary reasons. it will be complicated. a lot to zero in on when it comes to tone, and who is giving enough to who. >> for people obsessed with this t topic, check a.f. neils interview from last night with theresa may. >> we are approaching the top of
the hour. that means the team is getting ready for "squawk box." melissa lee is in new york with a look at what is coming up. you guys have the guest to top them all this morning. >> there's some teases that you never think you'll be able to make in life. this is one of them. we'll speak to russian president vladimir putin. can you believe that? we're going live to the international arctic forum where geoff cutmore will be speaking live to the russian president. that could be a market mover, and that could shed light on the relationships, sometimes strained these days between the trump administration and russia. also related to rush sharks we'll speak to evelyn barkas, former senior adviser to the supreme allied commander. they talked about her personal knowledge of obama national security officials preserving as much intelligence as they could before trump took office. this should be an interesting and revealing interview.
we'll have a folarry somers, ges take on tax reform and comments made by steven mnuchin on the valuation of stocks. >> and he shot back against mnuchin on the claim that the artificial intelligence, threatening jobs is a 50 to 100 year away story. >> that's a fascinating comment given we can see the changes happening before our eyes when it comes to automation and jobs. >> sounds like good stuff. coming up on "worldwide exchange," a final read on q4 gdp on the agenda later today. we'll get you ready for the trading session with our own president michael gapen of barclays. he's the president on this topic of u.s. economics. onomics.
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the dow and s&p in yesterday's trade. with us now is michael gapen, chief u.s. economist from barclays. michael what did we learn in the first quarter as it relates to the trump trade, the failure of the healthcare bill and what it means for some pro growth policies going forward. >> i think we learned that it's going to be more difficult for sure. so, the short line -- short answer is trump's not an establishment republican, establishment republicans are not tea party republicans. the road will be more difficult. equity markets have come off a bit. there's been a little retracement in the trump trade over the last two, three weeks. we think that's the right move. we think likely you'll get tax cuts, not tax reform, the overall size of the package is likely to be lower. we still think it's coming. it's still going to be mainly a 2018 effect, not a 2017 issue. >> though they're talking about infrastructure this year. how as an economist do you
adjust your forecast on that idea of tax cuts and not reform? >> so, it's mainly an aggregate demand story. it's about the demand side of the economy, not necessarily the supply side if you thought reform would maybe improve rates of capital deepening and productivity growth. that's mainly a supply side issue. if it's tax cuts, that's just about business spending and household spending. it's more about is it the demand side of the economy, the supply side. the key point on infrastructure is to remember that there's a long delay between when these items would get appropriated and when they would get spent. so any kind of fiscal year 2018 budget that has infrastructure may not start having economic impacts until 2019 or really 2020. >> what about financial deregulation. how big of an impact can that have? >> there i'm actually -- i think you could get your biggest gain through regulation. it's hard to prove these things, but i think it's clear that a tight regulatory environment has
been a significant factor restrict productivity, restricting rates of investment. so, a reversal of that process could be growth enhancing, but again, i'm not sure that hits this year or next year. it's something that would phase in over time. we're just looking for a modest boost that would extend the cycle for maybe four to five quarters, beginning in 2018, but then we're down playing the other components. >> let's talk about the fed for a moment. >> sure. >> they're talking endlessly, all the fed presidents, seems like it's peak time in the cycle when they speak. everyone saying they expect two, three, four rate hikes. rosengren yesterday said four. i realize he's not a voting member. you are surprised to see that yields have barely budged and the dollar is weaker on the quarter despite this talk from the fed members themselves about further hikes this year? >> i would say not necessarily. if you talk to our treasury
rates team, they would say they expect flattening. we do expect the front end to go higher. the fed can start to push front end rates higher more consistently, but not thinking that takes the long end of the yield curve that much higher. on the dollar story, the marginal news has come from abroad, whether the boe will be moving, right now most people say no. but the ecb is looking to raise rates, at least in 2018 so we're not on a monetary policy diverge jent sto anymore. >> michael gapen, thank you very much. 20 seconds left. i'm certainly watching vladimir putin on "squawk box," extraordinary, extraordinary to have him on live, moderated by
capitol hill. it's thursday, march 30, 2017, "squawk box" begins right now. live from new york where business never sleeps, this is "squawk box." ♪ good morning. welcome to "squawk box" right here on cnbc live at the nasdaq market site in times square. i'm andrew ross sorkin along with joe kernen. melissa lee is with us. becky quick is off. look at u.s. equity futures at this hour. dow looks like it would open down, off about 10 points. nasdaq up about 2 1/2 points higher. the s&p 500 looking to open off by two points. in asia, looking at red arrows across the board. shanghai composite down a full percent. also flying over to europe for a quick moment. show you what happened or what is happening over there. dax is up. what you are looking at? >> you'll have some problems taking off and