tv Squawk Box CNBC March 30, 2017 6:00am-9:01am EDT
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 landing with your
ears, i can hear, with the pressure. you're sick. the nose spray -- >> clear. >> your sugar -- >> i thought i was sounding pretty -- >> you sound up. you're trying. you're trying. i can hear it. maybe it's the end. it gets worse towards the end. you don't feel as bad, but you sound worse. >> thank you. the european markets were mixed. >> let's not fly over there. i'm telling you, your ears will pop. >> probably will. if you're buying wti, buy the barrel. a barrel will cost you 49.41. >> it's touching joe has for your health. >> melissa, save me. >> here are the stories we're watching. saudi aramco has selected jpmorgan, morgan stanley and hbsc as financial advisers for its ipo. saudi aramco's offering is expected to be the largest equity scale ever. the weekly jobless claims and the final read of q4 gdp out
at 8:30 a.m. grow cleveland fed president, loretta mester, john williams, rod kaplan and bill dudley speaking throughout the day. jack lew, tim geithner, robert rubin, michael bloomenthal last night address the economic issues. with a specific focus on the u.s. relationship with china. lew sharing his thoughts on the current administration's decision to pull out of tpp. >> the standards of tpp reflected american values and would have made our products and services more competitive. i see nothing good about pulling the plug on tpp. i think leaving a void is a bad thing. somebody will move in i think china is moving in with the regional cooperation agreement which will have lower standards than tpp. >> robert rubin warning about a potential currency crisis.
>> if china really had an economic crisis, and as a consequence the currency plummeted that would put tremendous pressure on markets around the world to deprecate their currencies. >> rubin saying we shouldn't try to exercise leverage on china but work with china to further common interests. lululemon's noufourth quart profits missed forecasts. the retailer expects weak same-store sales in the first quarter blaming a disappointing lineup that led to lower online sales, fewer shoppers in stores. we'll hear from an analyst in a couple minutes. lululemon's ceo will be on "mad money" with jim cramer tonight at 6:00 p.m. eastern. that would be enough to watch. i think if jim were to model different things from lululemon, from the latest inventory, would that -- would that add to the
ratings? i'm just -- >> lulu shorts? cargo shorts? >> they have the new men's bottoms, don't they? the abc -- >> right. yes. yes. have you heard about that? >> uh -- >> we talked about t haven't we? already put the abc -- >> just a more free pant structure for men. >> does it stand for anything? >> i'm not sure. >> i think it does. >> i think she knows. >> i think i know what the "b" stands for. i'm not sure. >> anti-something crushing. >> yeah. yeah. you are right. it's not chewed gum or anything. abc gum, already been chewed. >> right. >> they will a problem with women's bottoms also. women's bottoms, the comps on that was bad. color selection wasn't good. >> do you think if jim -- >> would help jim? >> no, help ratings if jim was to wear different lululemon
items. walk back and forth, turn around? no? >> will they be hit by the border adjustment tax? >> how about the canadian dollar? >> that's what i was thinking about. >> where do they manufacture this stuff. >> i'm not sure. i would imagine overseas. >> i don't know about the border adjustment tax at this point. he's kind of right. it might be a bold thing to do. but you saw what happened with when you try to do anything, it gets bogged down. try to do that, that's a big move when you have such a divided government. conocophillips is selling some oil sands and natural gas assets in western canada to cenovus. cenovus, not the bank. for more than $13 billion. the divestment is the conoco's history. h & m's first quarter profit fell less than expected.
stock is not looking too good on that chart. conditions remain tough in many european markets. it plans to launch a new up market brand in the second half of the year. >> besides amazon s there any retailer working right now? >> i don't know. >> by the way, did you see jeff bezos is the second -- >> home gee depot. >> the second wealthiest person in the world. >> he is? >> yeah. number one is still gates i want to say. oddly enough. >> i don't think we know how much putin is worth. we'll have him on. >> we'll ask him. >> maybe geoff cutmore will ask the question. >> lawmakers in north carolina announcing late last night that they have reached a deal to repeal the controversial 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. the ncaa said make the changes or lose sports championships from 2002. the nba was supposed to have the all-star game in that state mast month and did not. geoff cutmore is in russia this morning. he's moderating a panel at the arctic forum with the presidents of finland, iceland and most importantly russia. russian president vladimir putin. we'll begin that discussion live at "squawk" at 6:30. >> i think the iceland guy might be more news worthy, no? >> as opposed to the finland guy? >> i think you nailed it. i think putin's probably the headliner. >> you think? >> right? >> how do you think everybody else feels about being on the panel? >> right. c cutmore will be like -- hurry up. hurry up.
yes and no answers good from you, iceland. >> we do have our own headliner right now. we'll get to washington for the top political stories. our good friend eamon javers has some new polling data to bring us. mr. headliner, eamon? >> good morning. so we know we have new nbc news survey monkey online poll here to bring you some information on. this is the approval rating for the president as of right now. 42% approve, 56% disapprove. that is a slight worsening from last month, which was 43% approval, 54% disapproval. and then look at this number. this is the right direction, wrong direction. this is the question that pollsters rely on so often to get a general sense of where things are going in the country. 37% say right direction. 61% say the country is headed in the wrong direction right now. that is also a slight worsening from the last month which was 40% right direction, 57% wrong direction.
guys, this is a little bit better news in this poll, this is a survey monkey nbc 6 new nel out this morning. in the gallup poll they have the president at 35% approval. the gallup poll organization is suggesting that that is among the worst performances of any president in their first year comparing it to bill bill who was down to 37% in june of 1993. and barack obama who was at 49%, his worst point of his first year in november of 2009. gallup saying that the president starting his term with a job approval rating below majority. and the president has already received the all-time lowest approval ratings of any president in his first year. in this nbc news survey monkey, the picture a bit brighter. the approval rating there, 42%, disapprove 56%. back over to you guys. >> everything i read said reagan was actually lower at one point. >> the distinction is at one
point than in their first year. ronald reagan -- i have it here. his low point is -- his low point is 35%. >> what year? >> towards the -- i don't have the year here. towards the end of the first term. so he starts at 51%, goes down to 35, ronald reagan by the end was up to 63%. he ended strong. obama started at 68, dipped to 38% in the first and second terms, obama ended at 59%. >> um -- what else were you saying? i was going to ask you about something else. i already forgot. right track wrong track. so we're still on the wrong track, we were on the wrong track, now we're still on the wrong track. still headed in the wrong direction. >> right. this is a pessimistic country. 61% wrong direction. >> i think we're worse than that a year ago. we were 70% wrong direction a year ago. so we were in the wrong
direction before the election -- in the last couple of years, now still in the wrong direction. >> maybe slightly less in the wrong direction. that's the good news. going off track, but only a little bit less or something. >> all right. all right. >> thank you, sir. >> i'm in a bad mood. stock market is going in the right direction. maybe not in the last nine sessions. let's get to the markets. dow down nine of the past ten sessions. still up slightly for the week. joining us is charles campbell, keith parker also joining us. all along the narrative has been -- two of them, it's the trump trade, the other is that it was going to happen any way because things were improving. if the latter is true, and so obamacare doesn't get repealed, if things were improving any way, maybe this doesn't get rerailed. >> our view remains a
synchronized turn up -- >> globally. >> globally, has underpinned this rally and roughly half from an increase in earnings the second half of last year and half a re-rating of the multiple. valuations are closer to fair. so the key full fulcrum is the tax propose the aal and what do include? we value that at 75 points, and target 25 and 25 for the end of the year, assuming a proposal is out there. >> for being down 9 out of 10 days, this hasn't been much of a pull back in terms of being able to buy into it. even at the lows, it wasn't 2% from the highs. >> yeah. one of the worries coming out of healthcare, the nonability to pass that, a worry that tax
reform would get priced out of market. the messaging out of the administration kept that fiscal put option alive and well. the market messaging, i think, didn't allow that laernrger pullback. >> some people have said it's been synchronized growth but also deregulation. deregulation is not dependent on congress as. . not dependent on passing a law, and maybe that's just as powerful to keep this going. >> good morning. thank you for having me. deregulation is difficult to integrate and model in your analyst forecast. analysts are expecting about 130 earnings per share on the s&p 500, up about 10% 11% over 16. that would be the first increase in a number of years. since january those expectations have come in fractionally, less than 1%, the first time in years as well. that doesn't include, i don't think, the changes to deregulation across american
industry. stock market prices do reflect that. we see that in the banking industry, since november 9 banks have outperformed. even though the ten-year treasury went from 1.85 on the ten-year cash to 2.60 yield mid-december. now back below 2.40, dollar/yen going from 1.18 mid-december back down. part of a recalibration. but deregulation is a significant driver. it will add, if he's able to do this effectively, a number of dollars per share to eps for the s&p 500. >> you say the markets already factored that in? >> they have not yet factored that in. >> so if it's 1.30, what's the multiple? the multiple -- if it's 1.30, the multiple stayed the same. >> markets were expecting 1.30 before deregulation, if you add deregulation in, it's closer to
1.36. >> so what would the multiple be? >> it's 22 now. >> not everyone thinks it's 22. they're looking it forward. >> some people will say that, you know, the market is at a historic high. if nothing is accomplished, the markets may be at a very high valuation. but the likelihood that the administration gets a fail on deregulation, gets a fail on infrastructure spending, gets a fail on tax policy, gets a fail on obama care repeal and replace is pretty low. i think most people would agree with that. >> can i ask a question -- i don't know about that. the question is you say get to fail. >> meaning -- >> if i told you that the corporate tax rate that there is some form of corporate tax reform but the rate is 28%, i'm not saying that's necessarily a fail per se, but it's hardly what i think the market was expecting two weeks ago. >> those things are not binary. it's not pass or fail, right? it's degrees of impact.
>> that's true, but certain tax moves they could make right now are not controversial. the repatriation. 2.6 trillion held by u.s. companies overseas, most dollar denominated. let's say you offary holider a f 10%, they bring back 50% of that. 1.3 trillion. you take 10% of that -- that's 130 billion. >> i think that is controversial these days, a holiday is, if you're talking about creating a territorial system and it's part of it, there's a one-time bring back with a go forward, sure. but however getting there is complicated. >> how controversial is on a relative basis compared to obamacare, repeal and replace. >> you can't guarantee that you're going to high a certain number of people, he won't go for it. you have to hire people even if
you don't need them. fix a couple of bridges. >> they could use that 130 billion for bridges, roads, infrastructure. you do a public private partnership that becomes 260 billion. >> you keep it in the system, you can keep taxing it. >> i got you. i know how much you like to pay taxes. i don't know if that is -- on the other side to say, okay, you can bring it back, but you have to fix the bridges. it's the corporation's money in the first place. why do they have to do anything when they bring it back? >> will trump and the administration show they can adapt and learn what they saw in this obamacare experience. >> now the articles are being written that maybe the fed -- maybe they have to go faster than people are anticipating. that's one stumbling block. maybe, i don't know, brexit, italy, who knows what happens in france, is that on the radar?
>> our view is that the rates markets will be relatively behaved while the fomc and chair told us at the last meeting that long-run eke was lquailibrium r that's where the treasury curve is trading. it will take a bit to move that. i think rates are somewhat of a worry, but cash rates getting to a much higher level before i think the equity market takes pause. on brexit, i do think it is becoming more talked about. but it's a risk that will play out over years. more folks are asking about china as well heading into the cpc in the fall, as to what may transfipire there. >> there are a lot of wildcards out there. are investors rightfully complacent or is their level of complacency as measured by record high margin debt and the vix and the still intact bid for bonds, is that worry some? >> i think investors are sensing
that fiscal policy is replacing monetary policy as one of the key critical variables. >> that's what i was going to say. the ten-year should be at 2.38. we will never do anything fiscally. >> chair yellen -- >> now i'm on the other side. i don't think we'll get anything done. because of a lot of your people. >> my people. >> yeah. the freedom caucus. >> they said we were allowing 2% as a target, not a ceiling. she mentioned that in october, backtracked in december, now back on as a target. that allows it to run hotter and allows the fed to be running loser. u.s. dollar weaker on that. i think in terms of concerns, there's concerns about geopolitical risk, what will happen in france, the election. that's simmered down since the state election in germany on sunday. french/german ten-year spread, less than 60 bips now. concern about what happens with
inco north korea and other provocateurs out there, rogue nations, but i think markets shrug that off until they see a problem they continue take notice. >> we'll find out if there's problems in iceland. >> or if finland. >> that could be a hot spot. >> anything brewing there, sorkin. take notes. thank you, keith. >> thank you. >> i think -- if i'm saying you people s that okay? can i say your side? >> we're on the same side, joseph. we're all here for the american people. >> all right. okay. all right. >> the eagles. we're the eagles flying. >> i never call him before the show. >> he called me before the show. >> wondering the reaction when you saw joe kernen on your cell phone. did you pick up? >> i didn't, not because i didn't see it on the phone. >> i called like three times. >> he called three times. >> he thought you were in the shower, asleep. what i was really calling for,
so you pushed the tease off, the promo off on melissa? you can't be here on your tease week? >> i was ill. >> i'm glad you're here. i personally am glad you're here. >> and melissa does such a great job doing the tease. >> please. >> she does. she actually does. that, i agree with. >> thanks, guys. coming up, shares of lululemon getting slammed after fourth quarter earnings slightly missed. reaction from an analyst is next. and we're moments away from the newsmaker of the moment. geoff cutmore will interview russian president vladimir putin live in russia at 6:30 a.m. if you have your second screen handy, catch the arctic forum that starts in a few minutes streaming on cnbc.com. squawk is rebuilding america tomorrow brick by brick with some of the biggest names in infrastructure. we will nail down
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slammed. the athleisure retailer reporting profits of 1.01 a share. it was the guidance for the first quarter that came in far below expectations. that's pushing the shares down by 19% this morning. joining us now is susan anderson of fbr capital, covering specialty retail and apparel. is this a forgivable miss? >> no, clearly not with the stock down premarket the way it is. negative comps in the quarter was a surprise. i had expected it to be light, just given what we had seen out there with the tax refund shifts, but negative low single digits is a prize. >> how much work does the ceo have in front of him in terms of stemming the declines in store traffic, in fixing some of the -- some of the executions on the conference call yesterday
were bizarre. we didn't have a good enough color selection. we didn't have a jacket modeled right. when we modeled it right there was a pick up in sales. these sound like missteps. >> when we look at clearance racks, typically what is on clearance is everything with color. it's interesting they want to infuse more color into the line. i think we're going to be watching sales to see if he can improve them throughout the year. that's what the plan is. when you look around the industry is going through fluctuations. nike called that out, the athletic category is under pressure now, a lot from the sports retailer bankruptcies and retailers also shutting down doors. the bigger problem could be that is adding pricing pressure and more competition to the category. >> 2016 as good as it gets for athleisure? i'm trying to get a sense of what's going on with the industry? did we hit peak athleisure? is the pie getting smaller?
what's going on? >> i think our view is that we somewhat peaked out. not that the consumer doesn't want to wear athleisure anymore, but i think her closet is full. it's become more of a replenishment category. so those black yoga pants people were stocking up on before, they're only buying a couple now to replenish. that could be part of the problem for lululemon, also the competition has increased. there's more competitors in the market. pretty much every specialty retailer has their own athletic line, and higher proem yemium b also coming online. >> we were talking about the border adjustment tax in the last segment and thinking about lululemon. where do they manufacture their goods? >> most of it over in asia. >> they own their own stores in the united states. they would get hit. >> they would get hit similar to most of the other retailers in the u.s. you know, they have a similar break out with 10% or so sales
in canada, another few percent internationally. the majority of sales in the u.s. >> have you modeled out the implications? >> we're still waiting to see what happens. we believe that if there is a border adjustment tax, there's probably going to be some price limit or phase in for retailers because a lot of these retailers will get killed if that happens. if there's a $50 price limit or $100 price limit, a lot of retailers fall under that and would not be impacted. >> you won't be a tech analyst? do you leave retail? do you think it's likely? in a self-serving way do you think there's no -- are you arguing against is to retail remains a decent -- >> no, no. i think there's a high possibility that there's a border tax. there could be restrictions around that where the price limit on cost of goods coming
into the u.s., if it's under $50, i may not have to pay the border tax. a lot of the costs of goods of retailers fall in that category. >> then it would be -- then i'd start arguing against it. so it would just be for german cars or something? those would be the only thing -- >> german cars, maybe consumers will buy less tvs. >> everybody has a -- as long as it's 100 or 50, some of these retailers won't matter. >> correct. >> that would be disruptive. if you seen how many bmws are on the road? everybody has a bmw. would it be that much more expensive, if the dollar didn't rise t would be, wouldn't it? that would hurt. >> yes. yes. but i guess if you want a bmw, you're willing to pay a few thousand more. >> can we go back to the price limit you talked about, you said $50, $100 what is the conversation you're hearing in terms of what that number would be? what product would count?
>> i think it could be either way. i asked around retailers, even the $50 price limit, even if it as low as that, a lot of them coming in to the u.s., the cost per article is under $3 $50. even at that low limit, they could slide under. >> would a border adjustment tax make impossible a turnaround at a lululemon or any other companies within your coverage universe? >> yes. it's obviously been a difficult environment even without a border adjustment tax. if there is one t could put a lot of companies in the red. it would definitely add to the difficult structural shifts we're seeing going on out there. that's why i think it will make it hard for congress to pass through a border adjustment tax, especially when you have walmart in arkansas and so forth that is heavily rallying against it. >> what's the right pe for
lululemon? it sounds like people are not going out and buying all those additional yoga pants, it's become a commodity, a lot of competition. i don't know how strong the brand is. even if that brand base is devoted in terms of customers, they may not still buy that extra pair of yoeg ga pants. how should we think about this valuation? >> we have a 59 price target. they do deserve a premium multiple given that they have a premium brand. it is a little bit higher growth right now even with the lower numbers versus some other retailers we're seeing out there. we'll be keeping an eye on sales to see if they can turn around as expected throughout the rest of 2017. >> susan, thank you. appreciate it. >> thank you. we have a programming note. lululemon's ceo will be on "mad money" with jim cramer tonight at 6:00 p.m. eastern time. coming up, the newsmaker of the morning, geoff cutmore's interview with vladimir putin is moments away.
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welcome back. you're watching "squawk box" live from the mnasdaq marketplae in times square. >> u.s. equity futures at this hour, a ret mixd mixed picture. dow would open down about 15 points. s&p would open down about 2 1/2 points. the tech-heavy nasdaq looking marginally in the green. >> this would be our fifth straight session of gains on the nasdaq if they can hold this through the session. >> give them some credit. >> nasdaq, yeah. >> we had amazon, apple, intraday record highs yesterday. >> the day that -- one day we were down 50 points or so the nasdaq was up 11. the nasdaq has been -- i looked for one or two stocks that did it. it was really across the board. >> do you think there's a correlation with "squawk" having moved here now?
>> at the nasdaq. if we charted that. >> are you taking credit for this nasdaq rally as a measure of your performance? >> she's going to get unhappy because fm fm h"fast money" was the whole time. i think you're right. >> i don't care. >> let's check the global markets. a quick look at europe. europe, you know, flat to red. germany is up a little. france. everything else is down fractionally. in asia this morning, a quick look. asia is negative this morning. we have the nikkei down almost a percentage point. 0.8%. hang seng is down a third. shanghai down a full percent. oil was good yesterday, back to
49. ten-year, last we looked around 2.40. just slightly above or slightly below. now 2.37. 2.37 now. the dollar, dollar trade is not evident in terms of people that were bullish. the euro holding up well as brexit became official yesterday. there is the pound, 1.24. gold is on a mini run since -- in 2017. in washington news a federal judge in hawaii extended and order blocking trump's travel pl ban. the ban restricts entry of people from six predon't namina muslim countries. president trump's administration plans to unveil a $1 trillion infrastructure plan later this year. transtaportation secretary alai
elaine chau sao says it would b 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. paul ryan says he does not wanted the president to work with democrats, he says he fears the republican party is pushing the president to the other side of the aisle so he can make good on xhcampaign promises to redo obamacare what do you think about that? >> i think trump is paying back the right with some body language that i don't think -- >> i don't think the democrats are prepared to play ball either. it's not like this is happening any time soon. >> we've never seen a -- max semaxine waters, all she wants do is impeach trump. that's her entire goal in life
right now. she says it openly. this is a democratic party that -- or a divided country now. i remember dubya, people hated him, but now that seems like a love relationship -- >> it's all relative. >> under obama, the republicans -- >> that's true. though you could not have been this nasty with -- you know,ed media is always going to be on one side. they love the president. the republicans could have hated obama, but you won't get the type of coverage you're getting in cahoots with the hating party at this point. >> i'm not going to agree with that. >> all right. >> we have more trump news. ivanka trump now an official employee of the united states government. the president's eldest daughter will serve as assistant to the president but not take pay. it subjects her to the same rules as other government workers. her attorney said she would file
financial december closure forms. she had taken up an office about a week ago, agreed to voluntarily participate in the -- in the ethical disclosures, but under this, there will be a bit more significant. she was in that interview with "60 minutes" originally after he won the president and said i just want to be -- i will be the president's daughter. i'm not going to be in the white house. a lot of people were skeptical about that. perhaps they had reason to be. >> yeah. all right. as a professional anchor -- see -- >> professional anchor. >> you see how hom anymores hom don't know. small business has been -- have there been tears or has it been on a tear? this is what's really going on in the show. they'll think it's scripted now. >> so you think that amateur
anchor might say on a tear -- >> okay. they corrected it to make clear what you're supposed to say. >> i would have. if it had been andrew during the obama administration, small business there are tears in all the owners of small businesses because of the regulation. so i would have known whether it was tear or tear in this case. it's been on a tear this year. poor kate is like, i thought i was supposed to hit at 6:42. any way, much of this -- we're coming, kate. much of this sunny outlook hung on two key campaign promises from president trump, regulatory reform and repeopaling and replacing obamacare. here we go. could we see a change next month? kate rogers joins us from the headquarters, waiting patiently with that story. you knew it was a tear, right? would have nailed it. >> i knew it you'tchlit. you're a pro, joe, you nailed it as well.
it's ban stro it's been a strong quarter for main street. the largest month over month increase in the survey's history at 105.8 in december that was reported in january. in february that ticked higher to 105.9. this trend held in last month's report with a slight dip to 105.3, all of those numbers well above the historical average of 98. this positive sentiment was hit in quarterly data from wells fargo. much of this on the hopes of deregulation and more business friendly policies for main street. each month the optimism has yet to translate into progress in the way of hiring and spending. in the latest drama out of washington, that won't help with the american healthcare act pulled before the scheduled vote last week putting healthcare reform on hold for the time being. healthcare costs were the number one issue for small business owners in 2016. so this will likely show up in confidence numbers in april and potentially in march.
last month if you remember the nfib called out lawmakers and the administration saying economic growth will depend on washington's ability to deliver on the agenda small business owners voted for. that delivery will impact next quarter forever sma small busin owners. we'll keep an eye on that. back over to you. >> appreciate it. coming up, the newsmaker of the morning stillgeoff cutmore cutmore interviewing the newsmaker of the morning, vladimir putin and the other two gentlemen as well tagging along. stay tuned, you're watching "squawk box" on cnbc. ♪ ♪
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>> any way, we digress again, synovus doing this with cabela's. about $5 billion in loan. they will keep the deposits held by the unit and sell the credit card portfolio to capital one. and toshiba is set to spin off the memory chip unit paving a way for the sale of the whole business. toshiba hopes to raise 9 billion. reports say there are at least ten potential bidders. and worthington industries, third quarter profit rose 20%. this was driven by sales growth in higher steel prices. results for this maker of propane oxygen and scuba tanks missed analyst forecasts. let's talk brexit. the brexit process officially underway. joining us with a look at reaction and the markets is wilfred frost joining us from cnbc headquarters. good morning. >> yesterday as we know, theresa
may officially fired the brexit starting gun by april 2019 the uk will be out of the european union. let's, as you say, have a look at the market reaction, which was fairly muted. yesterday the ftse 100 closed up a half percent. down a bit today because the pound was down slightly yesterday. it's down a little bit more -- it's recovered in the last half hour since "worldwide exchange" ended. essentially flat today. the invoking of article 50 was well telegraphed. on march 13th the brexit bill passed all stages of the legislative process in the uk and thereby allowed theresa may the choice of when to invoke article 50. the interesting response in sterling since then is a move to the upside. suggesting that brexit related factors on their own are already priced in. that is a longer-term chart, but in terms of the reaction, as you
can see, at the end there in early march we've seen the pound rally. as for the tone and content of theresa may's letter and speech yesterday, for the most part it's being seen as firm but positive. and forward looking. apart from one much positive an forward looking, apart from one focused mainly on line saying "our security arrangements would obviously lapse if we left the deal," many taking it as a threat that they would cease to offer security should the eu play hard ball on a future trade deal. the government fiercely denied they're playing with people's lives this morning on that particular talking point. yesterday we also saw a dollar strength broadly against the euro as well softer yesterday. guys? >> will, thank you for that. always helping us understand a little bit better -- >> first day of the rest of your life, will.
first day of the rest of your life. you should be floating on air. floating -- >> you could say the first day of 730 of negotiations, then the first day of the rest of our lives. >> all right. but the u.k./great britain has always resisted. historically they've been people with moxie and courage. they've always resisted. >> always resisted or always persevered and survived. >> yes. now they're going to flourish because now they're going to no longer be under the eurocrats. churchill, thatcher. go ahead and think about it, shakespeare. >> all great names, i agree. i agree. david beckham. >> that's a big gap in time.
>> will, thank you for that. when we come back, a lot more to bring you on "squawk box." russian president vladimir putin will be live from the arctic forum right here on "squawk box." back in just a moment. in just . and thousands of miles away. with the help of at&t, red bull racing can share critical information about every inch of the car from virtually anywhere. "brakes are getting warm." "confirmed. daniel you need to cool your brakes." "understood. brake bias back 2 clicks." giving them the agility to have speed & precision. because no one knows & like at&t. it's been over 100 years since the first stock index was created, as a benchmark for average.
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welcome back to "squawk box" this morning. we go to russia this morning. a panel has been slightly delayed a little bit this morning. if you have your second screen ready, you can watch the opening remarks streaming right now on cnbc.com and we're going to bring you the discussion live right here on "squawk box" in just a couple of minutes only on cnbc. >> coming up at 8:00 a.m. eastern, former treasury secretary larry summers weighs in on the global economy. "squawk box" will be right back. . ready to help if you need it. it's like having the power of a trading floor, wherever you are. it's your trade. e*trade various: (shouting) heigh! ho! ( ♪ )
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welcome back to "squawk box" right here on cnbc. we are live from the nasdaq market site in times square. joe kernan is over there. becky quick is out. we are awaiting vladimir putin's comments live. the presidents of finland and iceland are also there. we will bring you the question-and-answer session live on "squawk box" as it happens. >> what part of russia is this in? could we sao that again? what town? we had it up there before. >> in the meantime -- >> what town is it? >> you know what, joe -- >> it's in russia, right? i think viewers would like to have an idea which town it's in.
>> you can see it as well as andrew can, joe. >> why don't you pronounce it. >> arkagelus. >> we're only undermining ourselves. >> we'll have immediate reaction from senator george mitchell. evelyn farkus will join us as well. in the meantime, take a quick check on futures on this hour. we're looking like we're in the red on the dow and s&p. dow would open up about 20 points down, s&p 500 looking to open down a little over 2, almost 3 points now. at 8 p.m. eastern, the government issuing its weekly jobless claims and economists expecting gdp to come in at an
annual rate of 2%, up very slightly from the 1.9% i reported just a month ago and jobless claims are expected to fall. shares of yoga wear maker lululemon is getting slammed this morning with a much larger shortfall in its quarter forecast. they're saying they're simply not colorful enough. now all those black and gray pants are going to get a little more color. its ceo will be on "mad money" tonight. >> andrew, let's get to the markets right now. joining us is chris heisey,
chief investment officer of merrill lynch and bank of america. >> and also could you handle two like him? are you as good to be able to do that you think? >> i'm a portfolio manager, too. i manage money. >> okay. but just to start out, let's start out like this. what is the maximum equity exposure domestically that you would carry in what you do and where are you right now? >> in a centralized model, max would be 60, 65%. >> where are you now? >> we like both the u.s. if you had to put money today, more non-u.s. than u.s. >> we could talk for an hour and just you saying that is probably
a good sign of how you feel about the markets the merrill lynch and u.s. trust, right? >> that's right. >> there are enough positive things happening that the risk side of things does not cause you to pull in your horns at all? >> well, yeah. i would look at it this way. you can come up always with an excuse about what's wrong and there's a lot of uber bulls out there. i would characterize this market as a bunch of wolves around. >> a bunch of wolves? >> a bunch of wolves howling around about everything that's wrong and forgetting the fact that there's three major positives out there that we haven't had in a while and they're a little bit dismissed right now. the biggest thing is capex x energy on a year over year quarter live growth basis year over year it's up 12%. we hadn't had that for a lorch ti -- long time. you could argue about and mill spirits but the base, you still
need a business and the base is capex confidence claims and that's feeding into productivity, which we haven't seen in a long time. >> do you have any similar? is there a maximum amount of exposure that you'll have at voya? >> all clients aren't alike but the base unite we're at full allocation, at 60%. we're in large cap, small cap, emerging markets. emerging markets are at almost triple return, you have to be more risky. i see the growth in reflation trade is still in tact and we're seeing signs corporate profits, q1 is about to start. something like 9%. you need to be in the market right now. manufacturing, broadening manufacturing, not just the u.s. but all around the world.
the consumer, i call them the game changer, everything is the tail wind for the consumer, you add tax cuts to that and game on. emerging markets. i just saw an article that said india just passed legislative tax reform, the biggest since india went independent. this growth and reform pro-growth economic is starting to catch fire around the world and that's going to help global growth. >> you guys both sound like uber bulls. does that worry you when we're 7% off all-time highs. does that worry you? >> it's a good point, melissa. when you talk to investors, they're still very skeptical, still very nervous, there's still a large pool of money out there that's underinvested, in the sovereign wealth funs and institution and pension funds,
they're overallocated and i would caution the more you wait, the more you have a drag on your portfol portfolio. even at these valuation levels, i would still say that the down side of waiting for a correction is you don't actually get the up side. >> you're talking u.s. market or -- >> i would say overall. >> we've had a number of people come in over the past couple of weeks who say if you have cash on the sideline, u.s. market is one side and maybe there's some marginal up side, maybe but europe is much more interesting. >> the interesting part about europe is the bounce is bigger because of what the expectations originally were. the caution there is still the political landscape, which is a caution we're going to have for quite some time. the u.s. is at 18 times earnings so it's hard to argue that the
u.s. has a better return potential. but when you look across the board, look at allocations across the board, cash is still very omni present and it's still waiting for that correction. that's hard to come at a time when optimism is as high as it is. >> so you both have year-end targets for the s&p or not? >> i'll tell you, i'm impressed so far. i'm at 2,400 -- >> 2,400? >> 2,400 and it could be definitely -- i mean, we almost hit that. >> that doesn't sound very bullish. you're being safe? every time it gets there you raise it another 20 points? you'd probably be within 20 points of your -- >> you have to look at other markets. i'm in a broadly diversified portfolio. >> you don't sound very bullish on u.s. equities then.
>> i think they've had a run. it's been a narrow market in the s&p 500. i would advise -- >> narrow in what way? >> in just the s&p 500. it's been one of the best performing equity markets out there, international, emerging markets have lagged. you need to rotate into that because it looks like they're going to have their day. i would always say make sure you're broadly diversified. most investors are too u.s. centric. that's why i think the s&p 500 valuation is higher and there's a lot of cheap, high growth. and i think a main point is everyone's too pessimistic because of the political drama. if you look at the economic facts, the fundamentals and the confidence and you talked about the small business, that's well underprice. >> it's fascinating you guys both say there' wolves out there
and yet we have a market that doesn't want to pull back by more than 1%. and we have margin debt at record highs at this point. we've got the vix at 11.5 and we're saying people are pessimistic and i don't get it. we're not seeing that in the markets. >> it's something that's basically hard to fathom when you see these dips that are bought right away. a lot of it has to do with the hedge fund community is over overhedged. that's number one. when you look at the options market and you look at other areas and up see the big pools of money come in, which is very different today than ever before, when you think about sovereign wealth funds years ago, today it's five times that amount. when you're looking for dollar assets and much of the world is based upon dollar liabilities, that uber money comes in on the
normal prescriptive investor, think of the mill ennialmillenn. when we're -- we were first investing, 401(k)s, that's what we were doing. that's what they are doing. we could see significant escape velocity to the up side in the next ten years. >> there was a big switch. so president trump gets elected, the growth, trade interest rates pop, very important but the consumers had been in a fetal position, very defensive, overdefensive and i've been on the road and my clients have been saying finally starting to feel more confident that this is going to be sustainable but they haven't positioned that way yet. >> at a time when monetary policy has to pass the baton to fiscal policy in a seamless way.
that's the troubling thing, you were finally getting comfortable with the optimism in the country at time when things might be teetering a little bit. >> that's enormously positive that the fed a couple weeks ago raised rates. so the fed is seeing the same thing. initial claims coming out, it's at a 40-wreer lyear low. we're going to have to have some wage participation and wage reflation, which is good inflation. when reflation goes up, risky asset classes like equities do well in a reflationary environment. >> at the top of 8:00 hour,
former treasury secretary larry summers has been critical of current treasury secretary steven mnuchin. he'll be our guest. ♪ it's been over 100 years since the first stock index was created, as a benchmark for average. yet a lot of people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? why invest in average?
sharp internal division. this is according to the latest nbc news survey monkey poll. eamon javers joins us with more. whatever i say that, it's like "nbc news" and "survey monkey." is it always going to be called that? is that okay? >> i'm not in charge of survey monkey branding, joe, so we'll wait and see. >> all right. >> but this is some interesting numbers here this morning. i'm give you the quake hiick highlights. the president's approval, slightly worse than it was. disapproval 56%, that is slightly worse than last month where he was at 43 approval and 54% disapproval and so an erosion there for the president.
in terms of the major number that a lot of pollsters look at in terms of right track, wrong track, 37% say the country is headed in the right direction, 61% say wrong direction and that is slightly worse than last month where 40% said right direction and just 57% said wrong direction. that 61% number is a big one and that is an indication of some of the political problems that donald trump is having right now nationally. even saying all that, this is better than the gallup poll, which was one of the worst performances of a president in modern history, even worse than bill clinton, who was at 37% in june of 1993, he is first year in office. barack obama, his worst performance in his first year was 49% in november of 2009 according to gallup. so he's numbers a little bit
better than gallup but still not great for the president. that's going to cause him some political trouble. when you're trying to push a big, ambitious legislative agenda, it helps to have approval numbers up in the 40s. it will give you some momentum on capitol hill, give lawmakers a reason to buy into your agenda. now the president will be wrestling with these low poll numbers, trying to push this agenda that doesn't give him a whole lot of wiggle room politically. >> i guess it would be nice to have great poll numbers to get the other party feeling like they have to do something but that's not even the problem. the freedom caucus, those guys didn't fear him, which we'll see whether that was well -- whether that was wise at this point. but some of them, they come from such conservative districts that it's almost impossible to be as conservative as the district where some of them are from. so --
>> you can't be as conservative nationally, right? those guys are running in very small congressional districts that have been jerry mannedered over the years that have extremely strong bases of support, nationally you have to lead a whole country. >> if you can just get the republicans. he doesn't need a 65% approval rating to bring in 10, 15 democrats. look at gorsuch. will he get one? can anyone break with the ranks over there for gorsuch? >> the lower the president's approval ratings are, the less likely it is the democrats do anything. >> they weren't counting on democrats anyway. >> right. >> but they were counting on a unified republican party which we know they don't have or they didn't get anyway. >> paul ryan has been talking about wanting to get this conference united up on capitol hill but he's been talking about that for the better part of a
year and hasn't been able to do it. john boehner couldn't do it. i imagine john boehner is off somewhere smoking cigarettes and saying this looks awful familiar. >> playing golf. tanning. or at least using a cream or something. >> it's not his natural color? >> if you use that cream, eamon, your hand turn all orange. you'd be better to not be tan. >> i never used it. we used to see boehner at the capital grill on pennsylvania avenue. even though he was speaker of the house, they wouldn't let him smoke inside the restaurant. he'd go inside and have his steak but then he'd have to stand out on the sidewalk with everyone else to have his cigarettes. pa paul ryan, not a smoker. you'll have to get him at the gym. >> you're few and far, unless you're over in europe.
the guy, the ticket agent over in paris, the ashes are dropping on your boarding pass. >> that's not paul ryan. >> thank you, eamon, for both the political and health update. >> you don't smoke, do you? >> i do not. do not. >> do you get enough sleep? >> have i been getting enough? not recently. >> but you've been traveling around. >> you're in a little metal tube filled with germs. >> i'm worried. because you tried a lot of stuff yesterday. >> because i have a cold you're saying. i tried mucinex-d, i tried motrin for the -- that side of it and i tried emergen-c and i
tried tea. >> i'm glad you're hear todre t because we have some tough interviews. >> coming up, president putin speaks and we'll have that coming up and larry summers is critical of steven mnuchin. ♪ nah. what else? what if we hire more sales reps? ♪ nah. what else? what if we digitize the whole supply chain? so people can customize their bike before they buy it. that worked better than expected. i'll dial it back. yeah, dial it back. just a little. live business, powered by sap. when you run live, you run simple.
stocks to watch today, lululemon's fourth quarter, the profit misforecast because they were hurt by a stronger-than-expected canadian dollar. stocks not acting like that's the only thing, though. they blame a disappointing product line. that might be more representative of what's happening. they're down almost 20%. that led to lower online sales, fewer shoppers in stores we'll hear from an analyst in a fumes. and lululemon's ceo will be on
with jim cramer tonight. and h & m's first quarter profit, the company says conditions remain tough in many european markets and the u.s. p but plans to launch a new market plan. >> and growth is forecast to be revised slightly higher to 2%. cleveland fed president and san francisco fed president and dallas and new york fed presidents are all speaking throughout the day. so of course their words will be watched carefully. >> coming up, president vladimir putin's remarks live from the
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german's deutsche boerse. and legg mason laying off 3%, cutting positions from a variety of departments due to what it calls disruption in the industry. we saw that at black rock earlier this week. it was a little bit different because they're also going to be bringing in the robots. >> but they do acknowledge the chang in the money management industry, which has got to be a trend toward passive. >> warren buffett says buy the index. that's the deal. >> let's bring in boris schlossberg, managing direct r director -- i was thinking about a lot of the popular trades and
a lot of people got those wrong. when it comes to bonds, to do the lar. where does it stand now? >> clearly those trade have stalled, pretty much peaked middle of december and have been drifting lower. the dollar is not a buy and until the yen goes above 3.15. we found the bottom at around 110 this week. i think the market is very much in a wait and see mode. again, the issues are political, not economic. economically the conditions are basically just a-okay. there's nothing here to move the needle one way or another. we're at steady growth, getting
0.02%. but the juice the market was looking for, the incredible uptake from tax reform or infrastructure spend is just not happening. the market is waiting for the next act to happen. >> do you think we overvalued at this point? we have bond yields and we've had a flat yield curve. the ten-year, 2.4%, that helps valuations, doesn't it? >> i will keep saying it forever and ever and ever because the bond market is the smartest market in the world. it always tells you the real truth. the bond market has not been biography the whole reflation story for a while. until u see the ten-year comfortably above 2.5 -- >> why do you think the bond market is the smartest? >> it's the most sensitive to macro economic news because their money is really on line
and it's very definitive. stocks can be varied on a million things where is bonds are valued exactly on the economy. i tend to take what they say -- >> but it's not just based on our economy anymore, bonds. >> right. >> stocks are based more on domestic economy and bonds are influenced by central bankers around the world and differential yields around the world. >> to your point, which is a very good one, one of the things that's been happening that's interesting is that european yields continue to kind of drift lower. the ecb is actually kind of upset. they're not getting the reflation trade they want. today german inflation came in lower than expected and they're not happy. >> can you not have a reflation trade in europe and have a reflation trade in the united states? >> i think it's hard.
the idea with the central bank is trhey're trying to coordinat everything. because they can't get the picture in sinync -- >> it sounds like you've been a buyer of bonds. >> i've been a buyer of bond but i've been a seller of the trades. i am not a buyer of stocks. i really think equities are due for a correction. joe's been making fun of me because i've been saying this for a while. maybe the broken clock -- >> how big a correction in. >> i think at least 5, 10%. we're just too comfortable here, too complacent. it's going to be a political factor, not economic one. >> do you think there is a 5% or 10% premium in the market right now? >> the market ran way ahead of
itself -- >> but we've had lots of people come in recently and suggest that actually the economy -- the real economy has changed for the better over the past couple of months. >> it has. but not at a pace that justifies the huge premium -- >> you still think there's a 5% to 10% premium based on what you might describe as trumpian expectations? >> yes. that could change, if something really happens positive on capitol hill, if it looks like they could do something by august, all that goes off the table and equities get swept up again. oil change my mind in a heart beat if i see progress in washington, d.c. >> not believing in a reflation trade in the u.s. because of the lack of ability to take hold in europe, that alone makes you bearish. >> it looks like the populist
impulse is moderating with europe. but they have the problem with brexit now. if there is a lot of tension, they can't get oged there. that's a big demand that comes out of europe. so internal problems around the world, it's not in sync. that's why the market seems to be in this wait-and-see mode. >> okay, boris, thank you. boris schlossberg. >> coming up, president vladimir putin's comments live from the arctic forum taking place in russia. "squawk box" is coming right back. squawk is rebuilding america tomorrow, brick by brick.
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president vladimir putin answering questions about russia and the united states at the arctic forum moderated by jim cutmore. >> translator: american political agendas. the anti-russian card is played by different political forces inside the united states to trade on that and consolidate their positions inside the eu. and i mention it here to mr. ambassador of the united states and he has been can communicating with representatives of the government and major russian companies who don't interfere. we on the contrary help and try to assist them.
meanwhile the conteacts of our ambassador are limited and a negative response and reaction to any possible meeting of his, but he's there in order to be able to maintain contacts with people, the political elites, with senate and congress, with the government administration. otherwise why had he come there, which is global diplomacy, common practices or like the meetings of our bankers and businessmen are cited every now and then but american businessmen also come to talk to russian counterparts and cabinet members. it not in the interest of the majority of the american people to make bilateral relationship trying to favor the warmongers and today we have over 20
billion of dollars of trade and previously we had 27 billion of mutual trade which is negligible for countries and want to go to extremes and come back to the cube and crisis. this is irresponsible behavior of some people. what are they leading us to? i believe it's a huge mistake and i hope that in due time, the earlier the better, things will straighten out. now with respect to ukraine, we know for sure there is an opinion that the worse the relationship for russian/ukraine the better for them, it will make russia weaker and let russia be submerseed into border
issues. this is a mistake. no one will benefit from that because if someone uses such hazardous means as original conflicts to deter or restrain someone else, it will lead to global conflicts, which we should do our best to resolve different types of cooperation and now with respect to the arctic zone, we've been caught operating here in this region with our american partners within the arctic council and now it presided by united states together with the united states, the russian federation worked on
an agreement that is to be passed shortly, if i'm not mistaken will happen in the last -- it's about using the joint research from the arctic zone and carrying out joint research from the arctic zone, which is very important bil bilaterally. we still keep on border issues like the residents -- we do have the visa-free regime for those border area residents so that they can visit their families and relatives on both sides of the strait, which is very good foundation for expanding that in the future. we also have specific regional issues that both parties want to
seem semented like the barings straight so the russian federation and the state want safe navigation in this area as well both of of us want to preserve the population of the polar bears and want to organize and that was mentioned by the icelandic president to count are illegal fishery, which is now common interests, to say nothing about the huge potential of tapping the mineral reserves of the region and hydrocarbons. it has huge prospects for the
russian federation and other countries of the world as well. and i hope that we will be able to adopt the two-way relationship for benefit of our people of our nations and people in all the world, the rest of the world. >> so, mr. president, i just want to be very clear about this. you and the russian government did never try to influence the outcome of the u.s. presidential election and there will be no evidence found. >> translator: ronald reagan once debating about taxes and addressing the americans said, "new yo "no, watch my lips." watch my lips, no. >> i just want to ask one more
question before i move on but please forgive me for this but i think it's very important for the international audience to see you apes these questions. so let me just follow up here. we have seen very prominent businessman olek offer him p himself up to the committee because there are things that have been said about him that are wrong and inappropriate. would there be any way russia would make people available to appear on those committees just to clear up this business? >> translator: we hear infinite groundless al fwagss of alleged
interference. talking cyber security. but do you know that us proposed to the american side that an agreement should be elaborated and signed on cyber security? it was our proposals, the americans rejected. turned it down. why? probably because they just benefit from accusing us to match their political cycles. why? so as regard speaking in congress or russian parliament, the state duma, i know for sure our mps turn to the u.s. congress and senate inviting them to come to moscow and saying that they were ready to come to washington, d.c. to have meetings and frank talks and discuss relevant things about a
national agenda. but they received no response and they made these propose as two or three times. but if a business okay, it's up to him, it's his right, let him do that. as far as i know, he has been banned access to the united states. i don't know why. no one explains why. no one accounts for that. let them explain it to us. let him come to the united states and speak before congress if law enforcement there, the special services set forth claims and accusations against him that are not unfounded, okay. doing business is a complex sphere. there may be some breaches if they have some of it to let them a very good signals in this
senators and congressmen and we'll be always glad to see. >> president niinisto. >> i go back to a couple minutes ago when you describe tensions are growing. i do not agree with you totally because what we have seen, specifically in europe, that the need of dialogue has been widely confessed and i see now very many of my european union colleagues visiting moscow, even our neighbor, foreign minister of sweden met her counterpart in
moscow. the dialogue is increasing and that's not tension, that's getting rid of tensions. we have this kind of a very positive development going on in warsaw, the nato countries at a meeting last summer and every member underlined the importance of dialogue with russia. but there is a question and that is the question dealing with relation between united states and russia. . we don't know actually at the moment which -- how it will develop and turly it's the case of russia and united states to go forward but it is of huge interest also in countries like finland. i remember even the years of goldwater, we are not nearby those but nevertheless we understood then that washington
and moscow certainly well, edidn't gra -- quite a clear pitch of what the other one is anying. and this is a positive thing, even if you don't agree. and now we are waiting how this relationship is going to develop and we wish the these things are all connected to be honest with you. >> go what would be a better surrounding than a cool arctic to solve thos tngss? everybody stays cool. >> president johannesson, do you want to come in?
>> translator: the guys tell us about this, we should listen to their advice. >> iceland is also very cool. evenland for that matter. [ applause ] >> i think it would be hard to find seated next to each other presidents of countries more dissimilar in size and power. russia, the greatest land mass on earth, iceland a small island in the north atlantic, we don't even have a military. we have sovereignty, though. sorry. how much? >> need help? >> sometimes. sometimes being small can help you. i do not want to belittle the seriousness of the issue,
accusations. we have a presidential election in iceland as well and nobody has ever asked us about outside interference of any kind. we, however, survive as an independent sovereign state because respect for international law has grown in the 20th century and the beginning of the 21st century. we need to hold ton on to that correct hold on to respect for international law, international treaties and we were talking about the paris agreement. and if i'm not mistaken, even a company like exxon mobil actually will encourage the u.s. administration to maintain adherence to the paris agreement. so respect for international law, respect for international treaties and also like the president of finland mentioned, trust, and you were where the other player was in the cold
war. but do you remember another remark of ronald reagan during the cold war years? it was a russian saying trust -- that we, the mall but we cannot possibly assist temperature and it a sim p symposium like this where we meet and discuss is all the better for us and therefore we a miss patriot. >> thank you very much. the warmth come off you three and let me come back to this. you are and your security is
technical of in. so this is not me making this up. >> translator: well, like -- we develop our defense and military capabilities on russian soil, which is the territory of russian federation and we assume that like any other countries, for example, the united states, which is our arctic neighbor divided by -- to have aole have our road military facilities and they develop their own, which is a sudden threat us. becau
and our emergency mip sfich some services prehaven'ting possible oil spills and this -- in my irnally sensitive region of the world. and these infrastructures will our scientists and researchers that -- and it was will also help from infrastructure, it's a complicated infrastructure, including the military and i believe it is the correct thing to do and i'd say that we are fully open and invite everybody to cooperate, including our american partners.
>> unfortunately the shared military exercises that used to take place in the arctic have now stopped. again, to get that cooperation, how do we get to that point, given the difficult relationship and the sanctions? >> translator: well, i know during my visit to finland last year president niinisto voiced finland's concern about the fact that russian war jets fly with transponders off over the baltic sea and these are devices that send signal to air controllers saying that a plane is flying, a military jet or some other jet
and i've been promised to the finnish president that the russian federation would come up with a way to the fact that all the countries that have military equipment would have transspo transponders and turn them off. it turns out some steps should have been made to harmonize those signals. and we stated we were ready. we heard no, nato members will not do so and just ask them why they are reluctant. their activity is much higher than ours, several times higher, multi-fold. just look the number of russian
jets and nato jets flying over the baltics is. and someone tries to accuse us of aggressive behavior afterwards. it's idle talk it's just suitable for media only. same refers to the, a technical region. we're n -- arctic region. we're not going to wage war or compete with the united states here. everybody knows that the united states spends more on defense than all other countries of the world together, taken together, put together. now they will increase their military spending once again by 40 or another 60 billion but still the russian federation and united states are major nuclear powers and we're vested with special responsibility before the international and global
community and the quicker we reestablish our military cooperation the better. and, by the way, with some sense at the issues, for example, syrian corporation despite external statements we have within having retangible kw cooperation improving and we can see our partners developing that interaction and hope it will encompass other regions of the globe including the arctic regions. >> did you want to come in, president niinisto? >> first of all, i go to baltic sea airspace and transsponders. first of all, vladimir, i didn't say that only russians are flying without transponders. i said to you last time that there are planes flying without
transponders. it is -- how i saw that question is it's a minor step surely. one piece of globe, the baltic sea airspace, just question of transponders, technical equipment, but it might be a small step to build up co-understanding. and i thank you, vladimir, for supporting and pushing forward. i know that you have done a great job in russia in developing technically your place but i don't see that we have actually missed the case because i remember in -- a couple of months ago in security
conference, both minister lavrov and the secretary, they're very positive and now there's a group of experts, the international organization that are studying the case and they have promised to take up also transponders in their discussion and that is a military question. so we haven't lost the case but i think the most important, it's a small step but if you can take a small step, that is an indication that you can make even a bigger step someday. and that is the whole idea. >> and i think to president putin's point about the cooperation that is taking place in syria with forces very close
to each other, it is clear there is operationally a requirement for both american and russian forces to talk to each other. president trump believes he's going to launch a new campaign against isis. he talks about wiping them off the face of the earth. would this be something that you would, if mr. trump, president trump reaches out to you, is this something where you could find common ground and work together early on? >> translator: we definitely have the common ground, which is fighting national terrorism and the fact that president trump has this as himself firm goal is a right thing and we definitely support these efforts. when i spoke back in new york at
the united nations i said that only by joining hands we can combat terrorism efficiently. and it's not about the location on our planet. it's a global issue. and the saudi king told me back in the past that the first victims are islam be states and it true and it on nats several years ago with it happening now and then and pow we're having one of these up surges in terrorism and these are treasury developments and the united states and europe sufficient from and they all recall t the 9/11 and russian federation is target of attacks and if we at least try to use our forc
forces -- if we try to struggle and to eliminate terrorism if we are guided by some political designs of ours and the fact that trump wants to have. >> o could i ask, is this something that will row flekt to plp kill areson when he goes o moscow? abo about. >> and i've met him on two or three occasions by and you foe
better than myself, however, that not have the without constructive work with our colleagues and tease agencies will nthis area of sovereignty and security by addressing russia's claims in the, a technical. because as we know, there are beyond 200 maroon meals temperatures it it a low-level discussion. how do we.
>> it's very hard to set his fire -- trade-offs are a m of f probably in '08 or in 2010 of a. after many years, we've been able to reach a limb tag and i've beenable to dlan and define the state board to the sat foobs and on oo left, my count are part, and himself country has what mall away pmt and we will
not be guided by such ideas and concepts, is have and we assume that such beous will be and if we base on these presents will we be able to come to terms with denmark and others welfare reform. >> of ry. >> are you ready to be dissatisfied? >> no. but we live in a. we lef in a world of options and you do not get wa. and we have done well in the arctic region, within the arctic council.
we have had satisfactory methods to resolve disputes. true we disagree, especially when it comes to meetings between russia andes landic be but if we approach the problem in a non-provocative manner and respect the other opponent's view and furthermore believe in we have discussed many things to do been stop by that shn p should concern us is.
i dare to say decreased respect forrine federal budget wear us. if we lose the respect for o i don't see and we have done okay. when it comes to fishery ps. . we have had sign 'tis on m these are the undeniable facts. and if we do not agree, if we do not agree on how to divide the catch, then both of us will lose. so in in spirit, i am confident that we frm so specific. >> let move on and talk about
prchl. >> she served as deputy assistant -- russia ukraine under president obama. a and. and he is prts oof prchl folks, you heard from president putin. at ff almost thos thanksgiving are fictional nn and the andy russia card is played by different fofrzs inside the united states and trade on that and consolidate their positions inside. evelyn, do you believe that? >> no, first of all, he was quoting the wrong president. the read your lips quote was george h.w. bush about taxes,
not ronald reagan. look, we have our entire intelligence community unanimously with high confidence, which is a big deal for them, high confidence, saying that vladimir putin in 2016 directed an information operation against the u.s. elections and in order to reduce americans' confidence in their democracy and in elections. so, you know, i believe our intelligence community, our intelligence experts, i don't believe president put be. >> let me ask you also about what he described as common practices in terms of the communications and conversations and meetings that took place between americans, potentially mention in a were part of the trump administration in this case, and their russian counter pats there are members peld held by members of campaigns, foreign policy officials with foreigners, but they are not
done very frequently. certainly db done are on, given, a very onand russia, aside from attacking our elections, in and off itself, the mugs government when prutin talks about international law and order. they've been invading their neighbors, annexing areas illegally. we know they've been violating they violated the international is are.
he talks about question racial but he's not talking inwhen comes to the information related to russia's interference with our election? >> ephs in but knowing and hearing that our intelligence community nchg understanding the relation siep between wikileaks and the russian government, i would even without having any inside information. >> want to get fop relating to all this on none and kwn.
when you saed related to getting this information out. the censure o'. and if the trump fox, how they fond out how we knew about meth meaning we no who. -- in technical when you talked about if they fond f what ephs getting at was the fact a woorp having. and if endeed there was an zegs investigation on fwpg sfrmt i wand to make sure that congress
knew about it about concern in washington about what was going o on with regard to mission actioning on new hampshire because ephs afraid in a somehow there might be. >> actually halem not enoughs was can x and said that's why you have all the leaking to make sure we get it out. people are accusing you, evelyn, of admitting that. there or urging people or at least saying that intelligent
leaking, would be even. >> reporter: so i was referring to the pa fchg and i was trying to but in because this were afraid a cover hp up. i absolutely no hot can condition. why pop might be vote vated to do that? based on what was coming out of the press from the leaks and from official sources that newspapers were quoting people that my government probably has a pretty go f. >> do you know the oat of or f
so when you say you're concerned about information disappearing, did you actually know what sorts of information? . did no. (knowing what i know about our intelligence community, they' they'renrmt that whaef information our administration was being passed not just to the hill where they havemer mission to have fallf if they said when we found out this you knew that was there surveillance going on. >> no, no, et considerate and people could get hurt if they
were giving us information. >> and there want a great dal from a still it it. about what nam i look at what my sense is a there. in and the clinton cam pap. in that mapt. and they were really blind sided by the russia threat. >> thank you for helping clear that up at least for now. i want to move on to the former treasury secretary, larry summers. in particular, do you believe him when he says there was no
interference. >> there can be deference of what constitute interference but certainly as our kplj would i this it much more roar, as very troubling opinion now. in or the trump campaign, which remains to be investigated. and i think we all have to hope for an honest, thorough, bipartisan investigation. >> you think that's happening now? >> foot to oo the. >>who is hardly a fiery florida and he said this is the most important thing he was going to do in his public career and i
hope that the senate will fill the space. this isn't what i do, evaluate investigations, make judgments about russians. this isn't where i have expertise, but as a citizen watching the house investigation, it felt neither objective nor professional. >> on both sides, though. adam schiff is also aly bit hyperbolic. senator burns as well -- >> they appear committed to doing -- we'll have see what happens. i don't -- i don't -- look, politicians use strong language, but i don't -- i think we'll be disupon honest and disingeneral ubs even by the standard of your right-wing advocacy, joe, to somehow suggest that congressman schiff's sins, whatever they are and i think they're small, are remotely connell prabl to what
the house of the intelligence chairman has made repeatedly. >> he seems more interested in the process -- >> he's very interested in the substance dpsh. >> they don't know what the substance is yet. >> when they have been universally acknowledged and apologized for, egej it is to be expected that there lab desir to discuss those process issues to make sure those kinds of process errors are not repeated. but we would agree. >> you'd like to know the information -- >> of course we would like to know. no, the process -- >> it's a process is an extraordinary process failure that would make anybody suspicion -- >> he wasn't meeting a white house official.
>> came from that source. >> and trey groudy said i don't care if you got this from the white house or the waffle house, i'm interested in the content, not process. >> that's exact the kind of means justifies the end that was behind watergate. in many of the entirely secure facilities maintained on an apolitical basis in washington. look, joe, i've been in government. i don't think you have. >> no, no. >> there are a variety of norms and expectations in dealing with classified information and sensitive matters about how one basis to isolate politics. >> you should have helped hillary with that. >> we have seen examples -- >> you should have talked to her about that. >> where those things have been violated. i'm not talking about means of communication. i'm talking about investigations of sensitive questions which are
done carefully with extensive lawyering with a view to protecting everyone's rights. not with a view to getting on television as rapidly as possible and currying political favor. >> we need to thank -- >> can we please get back to the economy in. >> i want to thank you for joining us for your perspective and your candor in discussing some of those issues because i hope that helped to clear stuff up. i want to turn back to larry for a moment and ask you about the economy, but in relation to this which is to say so much of where the markets are or where they may be going has been about what the trump administration may or may not be able to do and accomplish. and to the extent that this is a cloud or not offver that, that
me is a central question right now. >> there's a variety of cloud, the failure with the united house, senate, president of one party to be able to pass legislation with the filibuster avoidable and the house of representatives where party discipline is generally strongest, the failure of the party with universal control to be able to pass legislation embodying what its seicentral political priority has been for seven years, that is a stunning political development which i can't think of something like that which has to call into question their ability to carry through on any other part of their agenda and the fact that you see them having announced on friday that they're out of health care and then discussing going back to health care, the fact that you see the president
talking about cooperating with the democrats and the chairman of the house saying that's not going to happen and it's a bad idea and the fact that you have a dilemma around planned parenthood coming up, which is hardly the most consequential issue facing the nation which could shut down the government because the house republicans won't pass a bill that doesn't cut it off and the senate wouldn't pass a bill that passes it so we're at risk of a government shutdown, i think there's a huge set of leadership issues around the president's ability to lead in the way presidents do that goes -- comes before and is separate from whatever add-on russian investigations and that's not my
field. >> what about the idea of a self-fulfilling prophecy, meaning people felt better and therefore they bought more. >> it's hard to believe that any of what i just described is good and it's hard to believe that adding the russian overlay doesn't make it worse. i've been worried for some time. i've said it on your show that we may be seeing a kind of sugar high and that sugar highs tend to be followed by much less happy periods. >> sugar high in the market or are in the economy? >> well, it isn't clear that we're going to get a sugar high beyond the market because you have seen for some time highly optimistic sentiment. the gdp figures for the first quarter, most people don't think they're going to be very good. on the other hand there's something screwed up because the first quarter's always week so i
don't knowite -- know quite what to make of that but if you use the standard of what the administration has held out hope for, there is nothing in any data suggesting that we're moving toward that 3% to 4% growth standard. >> when you hear optimism at 16-year highs and ceo jamie diamond talking about a real pick up in business and you factor in the idea that a demand for credit usually comes about nine months after you see these readings hit highs, which means there could be demand in the pipeline, you think there's a sugar high, that this won't be born out by real activity? >> that's why i said the market was up, there have been real movements in sentiment. i think the evidence is that sentiment is often not always a
signal of what's going to happen and it depends on how long that sentiment persists. my sense would be that if you continue to have the degree of division, confusion, rancor and uncertainty in washington that we've seen, we may not see those sentiment changes lasting as long as many people thought they would a couple months ago. so i think we'll have to watch the data going forward. but just as -- this is the most famous joke on wall street that stock market and the sentiment have predicted ten of the last five recessions. something like that's true on the up side as well. so i would be cautious about any big revision to the up side in forecasts and if you look at forecasts -- if you have look at most hard core economic
forecasters, they differ in what's going to happen but very few of them are predicting some big break to the up side. in part because i think they think the fed is sort of controlling the thermostat here and if we get more of that boomy stuff, we're going to get higher interest rates and if we get less of that boomy stuff, we're going to get lower interest rates so i don't think there's room for a big rally. >> in terms of boomy stuff, don't you think president trump is going to put a win quickly on the board and that would come in the form of tax cuts, in terms of corporate tax cuts separated from everything else and do it so there's something there? >> it's possible. and then the question will be without doing them in a balanced budget way, will he be able to pass them? how much pressure there will be for reform along the way, how
far he'll be able to reduce the corporate tax rate. i think if i had to bet, i'd bet that we -- i'd bet with moderate confidence that we will not see a corporate tax cut before the end of the summer. and i think there's a real risk that there won't be any change -- any big change in tax policy that will take effect for the 2017 tax year and that was i think a surprise relative to what people expected a couple months agriculture and i think it's going to have to be a bit of a disappointment. >> we want to slip in a quick break and continue this conferring with larry summers when we return. plus this morning's big economic data including 2 quarter gdb revir -- gdp revised higher.
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sentiment? >> of course it does. i have spoken often of the importance of animal spirits. i said many times that stimulus is the cheapest form of confidence. how much those regulatory changes are going to go into effect and how large they're going to be i think's open to question. a very powerful story in today's "times" making a point that in coal it's not regulation at all. >> the -- >> no, the "new york times." >> it could be "the financial times." >> you're very selective in what you read, joe. it turns out the main reason coal has gone down is natural gas is cheaper and you don't need guys with shovel anymore, there are different technolo technologies. so the idea that's going to
bring back a lot of coal jobs is basically nonsense. and i think it isn't clear that there really is a thoughtful change regulation strategy that will create jobs. the look of things right now is that relative to what many people in the industry thought a couple months ago, dodd-frank reform looks to be something that's going to take place much more slowly. so i don't know how much this is going to produce increased employment but, yeah, i think it's good to be encouraging business confidence but not to be encouraging business confidence at any price in terms of the environment, at any price in terms of financial stability and part of what i have to say is very troubling about this administration is it's not so much as the questions of ideology, though they're obviously big issues there but just the questions of competence and thoughtfulness.
i watched the reagan administration, the two bush administrations, they did many things that i would not have agreed with but their officials explained them in rational terms with serious arguments. what's disappointing about this administration so far is it's all policy by tweet, policy from the gut and with profound questions of conflict of interest, the idea that carl icahn should have major investments in the refinery sector and at the say time have major input quasi input in regulatory policy, that kind of thing should make one very, very
cautious. i think that we did need a period of regulatory adjustment after the last eight years but we needed a carefully considered and thoughtful period of regulatory adjustment. >> i'm wondering if we could pivot to the fed. >> it's where you always want to pivot to, steve. >> the feds seem ton using the rise in the market as the kof to oo. >> -- look, i think watching the data and be responsive to the daetia data is right.
i think the risks of overheating are substantially overrated, that was fighting a war of a much different kind and deflationary era and a domestic target means one should be accepting one risk of inflation a little above 2%. so my general concerns about the fed policy would come from the dovish side rather than from the behind the curve side. i think it's hard to get excited about given how slow the increase in rates have been so far, but i think there is some risk that the fed will overplay its hand and that we'll see a situation where we raise rates into the des paegs of the sugar high and tip the economy too far downward and if we do that,
we're going to be in a very difficult situation because the fed has le room to move than it has going into any previous slowdown since 1950. and that is a substantial bid bit of brittleness that we have in the economy. i don't think the fed has recognized that. i think janet yellen's speech in august claiming that the fed had plenty room to move mead it, frankly, implausible arguments. so that would be where my concern would be but the carefully telegraphed, very dovish 25 basis point increase in rates, i don't know whether i would have held about a raet
increase on a day when the ten-year index bond yield fall, if there is such an feng this evening as an, opinions right when you see them a couple percentage points away from record highs, does this concern you or give you hope -- how do you view that, as the glass half full or half empty? and as a former treasury secretary, did you ever view the stock market as any sort of report card on the policies of the administration or how you were doing your job? >> no, becky, very early on in the clinton administration when people in the white house would get very, very excited about what was happening in the stock market, bob rubin, who had watched markets for a long time would say to them markets go up, markets go down and we've got to stay focused on the fundamentals. i think if you look at the best
ceos, the best ceos and best companies and living for their day's best stock price. as tresh i didn't secretary, i always tried to stay away rewarding some pao i think if you manage to the that's a trap that can be very dangerous and that's yet another concern with an administration that is -- that has its employees -- it has its leaders be so much selected from one walk of american life that there's going to be a tendency to overjudge things on the basis of what's happening in markets. president clinton never, you know, we had the -- during the eight clinton years, markets
went up faster than virtually during any other presidency. there were plenty of milestones when the markets coulded 8,000 and 9,000 and those were never things the president went out of his way to celebrate because we wreck important and i'm disappointed that's not something that the current team seems to recognize. >> by the way, larry, you gave me one of the highest compliments you can give a female anchor by calling me becky. >> excuse me. >> no problem. i had to get that out there. >> in the meantime -- >> to the new york stock exchange. let's get down to the -- >> we're going to wait for jim. >> we'll continue on with -- >> we're not going to the break. i don't know. i would take a business guy that's actually made decisions in the business world over just a career politician any day. i mean, i don't know if the day will come back when you come
back and have to revise a lot of the -- you'll be ready to and you'll be with us a year from now or two years from now. it will -- we'll know by then who's right, who's wrong about whether think of these things were kept, but it will be interesting. >> it will be interesting to see what happens, joe. but i'd be surprised if you really wanted to be defending the way in which these arguments have been -- these arguments have been made. the use of data or lack of use of data. the elementary dissent into high fallacy that's behind the statements of key officials that trade deficits are bad because every dollar of trade deficit reduces gdp when any economist knows that it's much better to live in a country that capital is trying to get into. and you can't have capital on net -- invested in your country without running a trade deficit.
these kinds of things coming from the secretary of commerce have to undermine confidence that policy is being managed in a sense -- >> the guys that sit with the cabinet, sit with the president, the jack welchs, the all-star ceos that are in the room -- >> carefully selected -- >> whatever. they come out universally and talk about, wow, i'm glad wilbur ross is commerce secretary, tillerson will make a great secretary, jamie dimon is there to tell me about dodd/frank. trump is asking questions. time will tell. but someone with some private sector experience versus 8% government appointees of the last eight years i don't see how we can do any worse. >> joe, joe, i think you have to make a judgment and is it more
important that the president of the united states be winning the approval of the ceos of the fortune 500 which were the first -- which in the first two months of his administration he did or more important he be winning the approval of the american people which he's not odoi doing -- which he's not doing as president -- >> he did that in -- you have to get over. he did that on november 8th. >> to an unprecedented degree. he's our president. i'm rooting for him to succeed. >> come on. come on. >> i am. >> really? >> very important for the economy to succeed. >> one of the comments you made recently on our set, post election, was the expectation that the peso would drop. do you remember we had a long conversation about the discount of how it would become more attractive to do business for example in mexico because there would be a discount, right? and the peso has risen
remarkably so. >> no, let's be fair. what i said was that the peso had dropped and that was a serious issue. if you read today's papers, you'll see that the trump administration has backed way off donald trump's claims as to what he was going to do in terms of revising nafta. and has backed off to a very minimal set of adjustments to the peso. so to nafta and it's in response to the trump administration's backing off the very dangerous policies that i was criticizing that the peso has risen. that's really a confirmation of what i was saying. >> i will take that to the bank. i'm glad you clarified that so thank you. >> cramer, are we -- >> yes. >> let's get down to jim cramer. he joins us now. i don't know if i need to ask you anything, jim. >> first let's say hi to larry. i miss him. i miss him from the academic
days. >> good to see you, jim. >> thank you. thank you. i love that peso discussion just now. it's true. the nafta backoff was rather shocking. like on page 18 of the papers and larry, this is a reason to think that the peso can continue to climb. >> we'll see, we'll see. there was no reason why the peso needed to collapse except for their extremist rhetoric. they are backing off their extremist rhetoric if once it's recognized that they're backing off the extremist rhetoric, they stay with that policy. i suspect the peso may continue to climb and that will be good for the american economy. good for the competitiveness of north america. but let's not confuse retreat from your campaign promises that were dangerous with successful
economic leadership. >> are you as negative about the prospects for the type of economy that the trump administration is going to be able to manage as larry? you heard the comments. >> i know, i'm less negative than larry. and i -- a lot has to do with the people you mentioned, joe, that i do have confidence in. wherever they were, whatever walk of life. it's still up in the air. so far, so good, deregulation. not so good working with congress. >> all right. >> let me say, jim, things may work out but they may work out like they're giving evidence of working out with the peso. they may see the light and back off the policy by tweet. back off the crazy campaign promises. and if so, things may work out well. so the question isn't how things are going to work out. that is obviously what we all care most about. but it may well be that things work out better precisely because policy moves back
towards the mainstream. but i don't think we have any evidence that the original trump ideas are -- have anything sound about them. >> okay. thanks, jim. we will see you at the top of the hour. stay tuned. you're watching "squawk box" on cnbc. it's great to finally meet you. your parents have been talking about you for years. they're all about me saving for a house, or starting a college fund for my son. actually, i want to know what you're thinking. knowing that the most important goals are yours. it's how edward jones makes sense of investing.
we want to thank our very special guest host, larry summers and also we had president putin on. pretty incredible. great to see you as always, thank you for giving hip a hain time. melissa, thank you. "squawk on the street" starts right now. ♪ good morning, welcome to "squawk on the street." i'm david faber with jim cramer. we're live from the new york stock exchange. carl quintanilla is still off. you can see where we stand and of course european markets have been opened for quite some time. not getting into italy or spain anymore. >> and spain in major comeback mode. ital t