tv Squawk Box CNBC February 13, 2019 6:00am-9:00am EST
"squawk box" begins right now. zbliefrmt live from new york where business never sleeps. this is "squawk box. >> really? we are live from the nasdaq market site in times square. let's take a look at the up by 5.5. the nasdaq up by 25, and, of course, this comes after the gains from yesterday when the dow was up by 372 poins for a gain of 1.5% the s&p was up by 1.3% almost, and, by the way, the s&p actually closing above its 200 day average. 200 moving day average for the first time since the december 3rd of last year
you also are looking at the nasdaq, which was up yesterday by about 1 .5%, pushing it out of correction territory. right now it's only the russell 2,000 and the dow transports that are still 10% below -- 10% or more below the highs that they had seen from last year >> the s&p is 2744 >> is that significant >> six points below every analyst that comes on here >> 2,750 for the whole year. >> february. mid-february >> that could happen >> the first half of february. >> you could see some volatility, some ups and downs >> i know it could be anywhere >> they all paired their expectation from what we saw last year, and now we have a strong start to the -- >> 2018 they thought 3,000 then -- >> nope. never mind >> 2,750 >> in my view the market for 2018 seemed like it should be at 3,000 for the s&p, but now for 2019 just because of what's happened i now think the fair
value is 2,750 they have no idea. there are metrics and models whatever it is >> market confound most people >> just like the weathermen. they look outside, that's how they forecast. they look outside the window, andrew that's how anyway -- >> that's how we tell to see if they're right. >> that's how stock market analysts decide whether it's up and down the futures are up they think it's going up if it's down -- >> we'll see if anybody changes their guidance based on the action we've seen the last seven weeks. take a look at what happened overnight in asia. you are going to see in just a moment that the nikkei was actually up by 1.25% the hang seng and shanghai composite up as well muted gabz at this point it looks like the ftse is the biggest gainer it's up by half a percent. stocks are also strong in italy. finally, take a look at treasury
yields the ten-year at this point is yielding 2.682%. a slightly lower yield crude prices right now, by the way. you can buy a barrel of wti at $63.69 the story of the day shutdown showdown. lawmakers urging president trump to sign that deal that would keep the government open the president says he is not unhappy with the agreement, but he -- he is unhappy with the agreement, but he didn't reject it outright. a house vote could come as early as today unclear, put that politely, about what he means that it's being built while we speak because i don't believe it's being built as we speak. >> i thought there was some
places where they were putting -- i don't know. >> there has been construction and reconstruction in places, but not any new meaningful wall. we'll talk a lot more about this in just a little bit we've got a live report. >> you're an expert on what is being done down there. you know what's happening down there now? >> i have read a lot i have read about -- >> about the reagan years too. >> the fact checking >> yes, fact checking. >> has been great. >> we need fact checkers >> fact checkers would tell you that that was an inaccurate statement. i thought i would add to that. >> usually you don't separately, president trump says he may not stick to the march deadline on china tariffs. he softened his stance onthe trade battle saying if the two sides can reach a deal soon, then he would consider postponing the march 2nd deadline which tariffs are tossed increase, and new this morning, chinese media reports say that president xi could meet with secretary mnuchin and secretary lightheizer on friday.
that got people less positive saying no one was going to meet with xi before march 1st >> he has also said that he could postpone the deadline. that's been the latest thing he doesn't really want to. >> before that it was like there's no meeting with xi until the march 1st deadline nothing can really happen. president xi is going to meet, and who knows? >> by the way, trump is the decider in this situation. no matter what the decision on the ground is, this is a case where he really is the decider i know it's a bush-ism, but it's a good word.
>> i said it at the top of the show he said it >> if that's the case -- >> rolls off the tongue. it's like kicking the can down the road >> both ends in down if you think that it's really ultimately left to him, i think whether it happens or not, if it doesn't happen, rather, then he would get blamed >> i think it's an ugly situation when you have government employees not getting paid i think both sides do bear the blame. if you can't find an agreement, if you bram both sides, there may be one side that takes more of the blame last time i this i both sides looked pretty bad by the end of the many weeks that trump is sitting there. >> trump after the state of the union is his approval rating went up eight points in nine days at least on rasmussen.
52 he should quit while is he ahead with this because he didn't get -- what you are saying is correct. both sides took it on the chin it became clear what was happening. at this point, he is being -- you heard what ann coulter called this deal the -- >> wait. >> you know did. >> i didn't hear i remember what she called him a week ago >> i see stuff on twitter from hannity. >> that's why he is -- >> don't let this drive your decisions. i think he is going to stand up at some point and say forget it. >> if you want somebody to compromise and get what you want, you need to use that word after someone compromises. do you think buckle is good to stick it in your face after you get what you want? is that a gracious winner? is that a good word for you.
is he buckling this time if you want to do that to the other side -- you know, we're trying -- you're going to talk about howard schultz who wants everyone to get together now we want to get together and not grow apart that's 41. >> i would like to see him stuff it to a lot of these pundits >> we'll get a live report from beijing at 6:30. u.s. employers posted the most open jobs in december since the jolt records began in 2000 job openings jumped 2.4% in december to 7.3 million. that's greater than the number of unemployed that stood at 6.3 million that month. that could signal stronger wage gains are on the way unless you are following the stock market as businesses could be forced pay more to attract the workers that they need the national debt surpassing $22 trillion for the first time ever that's a jump of more than $30 billion just in the last month the national debt has been rising at a faster pace since the passage of president trump's
$1.5 trillion tax cut package, an action by congress last year to increase spending on domestic and military programs. the trump administration contends that the tax cuts will eventually pay for themselves by generating faster economic growth the real issue has been that spending has climbed pretty rapidly and has outpaced the slight gains we've seen in the treasuries tag >> you talk about people going to homeless shelters and standing in sooup lines you call it buckling instead of -- >> we did the right thing. >> by reopening the government >> i think you missed what i was suggesting i was saying that he buckled initially to the pundits >> oh. oh okay okay oh, okay you're right that's great okay, good then we're good. then we're good. yeah, because i -- >> that's probably -- there's some merit to that >> i think, absolutely >> those are the same people that supposedly his 35% that's never going to abandon it, i
think he feels an afint towards -- >> if tear never going to abandon, it he can do what he wants to in terms of reopening the government >> there might have been if he doesn't build a wall >> that's what ann coulter has >> is it new yellow deal, or yellow new deal? what's -- >> the new green deal. i think it's a new green deal. >> the new green deal. this is new yellow deal. >> cowardly to not take her up and say forget it. step off >> there were some people celebrating. i mean, pelosi and schumer were gloating about the other types -- the other buckling. activision blizzard stock, the company's full year profit and revenue coming in below analyst estimates. the video game maker also cutting about 800 jobs, but shares are higher after earnings beat by a penny, and activision
announced a new $1.5 buy back. are we allowed to do that? >> for the moment. >> they had a volatile start to the week zroo that's interesting because it was down after hours. turned around during the conference call while they were making some of the comments on that >> and trip advisor is lower this morning forty kwaurt fourth quarter adjusted profits. hotel revenue, though, fell 2% non-hotel revenue, which includes restaurants and experiences, jumped 38%. what is four square? sorkin >> what is four square >> it was on jeopardy last night. that was actually the answer was "what is four square?" >> we had the ceo of four square on before. >> could i use it to find the best restaurants >> there are two diepz of businesses that four square is basically running now. one is a commercial application that someone like yourself or all of us could use as a user. we could walk here and say we're here, and that would tell our friends that we're here.
>> why would i want to do that >> because maybe you would want them to meet you at the bar or the restaurant or wherever it is >> my life is greater than yours? look at me >> that's one of the features. >> that could bring some actual face-to-face social interaction. >> the bigger business for them, though, now is basically using data from all of the different places that effectively they're selling to each other. it's a big data collection program. >> can it get me a table at the best restaurant in paris >> that's open table, and that probably -- >> not you >> all right >> what about groupon? >> i've never used that either i don't think very many people are using it let me see where the stock is. >> i used to use it. >> i used it years ago, and i haven't used in a while. >> see, three people are using it $3 groupon is down more than 10% today. the company reporting the 12th straight quarterly decline in revenue. going the wrong way. that's, like -- that's, like, three years.
adjusted profit -- >> you're good >> aus judged profit also fell short of analyst estimates groupon claiming lower customer traffic. that's what we were saying when do we like to get out now in this first block? >> i think right about now >> right about now let's do it then coming up, shutdown. >> far be it from you. >> shutdown showdown shutdown showdown. shutdown -- thank you. oh, you can do it. negotiators have a deal to keep the government open, but lawmakers have to approve it president trump then has to sign it we're going to get the -- here's a great signature, by the way, sorkin not for nothing. of all the other things you don't like, he has a great signature. >> he uses a sharpy too, and that's a little -- >> it's from being a famous person for a long time latest from washington next, as we head to break, here's a look at the biggest premarket winners and losers in the dow.
oh, wow. you two are going to have such a great trip. thanks to you, we will. this is why voya helps reach today's goals... all while helping you to and through retirement. can you help with these? we're more of the plan, invest and protect kind of help... voya. helping you to and through retirement.
for each family member? so with xfinity mobile i can customize each line yup. and since it comes with your internet, you can switch wireless carriers and save hundreds of dollars a year. are you pullin' my leg? nope. you sure you're not pullin' my leg? i think it's your dog. oh it's him. good call. get the data options you need and still save hundreds of dollars... do you guys sell other dogs? ...now that's simple, easy, awesome. customize each line by paying for data by the gig or get unlimited. and now get $200 back when you buy and eligible smartphone. click, call, or visit a store today. ♪ >> lawmakers urging president trump to go ahead and support the border funding compromise that would keep the government
running. we are joined now from washington we still don't know, though, i guess, do we >> we still don't know, joe, but if you want to know about the shutdown showdown, i'm here to tell you what is going to happen we are waiting for the official text of the deal with top lawmakers saying a vote in the house could happen as early as tonight. now, both democratic and republican leadership now urging the president to support the compromise that they've hashed out and signed what congress sends him. he talked to president trump over the phone last night, and he said the white house will have to weigh in soon. >> i think that we're off to a good start with a lot of people, especially the congress, and hope that they'll sign this bill and debate it and vote for it and send it to the president and let him evaluate it in the context that this is only a down payment. this is not a panacea. >> after their conversation, president trump tweeted that he is looking at all aspects of this deal, knowing that this will be hooked up with lots of
money from other sources he also wrote that he will be getting a total of almost $23 billion for border security regardless of wall money it is being built as we speak. conservatives are calling on trump to take executive action to pay for more border barriers, even if he does agree to this deal right now on capitol hill, guys, the priority is just to keep the government open. back to you. >> yes >> is the wall being built is that a fabrication too? >> they have built proto types of the wall, and i think beyond that it depends on what your definition of wall is. within this agreement, you know, democrats say that there is money for fencing. the money that would be included in this agreement democrats say would allow them to build in the steel slats, and they've posted pictures of on twitter
now you are saying we need to define wall to decide who is lying and who is not that's -- i mean, that's just washington, right? >> sem abbotics is important the rhetoric is important around this as you heard shelby saying and what he wha we heard a lot is this is just the beginning of what they hope to do, and i think it's also going to be important the semantics and rhetoric saying if the president does take executive action, maybe a step short of declaring a national emergency, maybe transferring funding, looking at some military spending that was previously designated for roads and construction, those types of semantics will be really important. >> yeah. this is 55 miles he wanted 200, but how long is the border that doesn't have a wall
>> this is around the rio grande and one of the places where apparently sheriffs are down there saying we get a lot of activity right? >> right >> all right thanks, ylan keep us updated. coming up when we return, wait until you hear how much and which companies are investing in electric pickup trucks we're going to tell you about that right after the break plus, new twists in the carlos ghosn saga this time an overhaul in his legal team we will tell you what has happened as the soap opera continues. we'll life soap opera. back in a moment endless fields of grain....
a wealth of oil.... and riches beyond your wildest dreams. there's a place where you can find all of this. in a suite of commodities-based etfs from aberdeen standard investments. everything from field crops to livestock, and precious metals to energy. all of which may help you diversify your portfolio. it's a big, beautiful world out there. why not invest in it? learn more about the commodity-based etfs... from aberdeen standard investments.
welcome back, everybody. two new twists in the carlos ghosn saga reuters reporting that the automaker renauld plans to scrap as much as $34 million in severance to carlos ghosn. the nissan chairman has hired a new defense attorney after his former chief attorney resigned no reason was given, but a second member of ghosn's defense team from the same firm also quit japanese media reports described
g ghosn's new chief -- i've read multiple reports one suggesting his previous lawyer quit, and another one suggesting that carlos ghosn was looking for somebody who might be more effect ti than what he has gotten to this point all of his attempts to try and get released to this point has been shut down >> do these lawyers work for him, or do they work for the government >> that was my question.
>> the other report called this new report the razor because he is -- okay >> he cuts pretty -- >> what do you refer to as a did. >> hot shot. >> prominent >> prominent, effective. >> legal eagle >> well known. i don't know >> he is high profile. >> high profile. that might be better than hot shot >> prominent or high profile >> i like razor. that's what you need sometimes a surgeon with a razor sometimes you need a surgeon in situations like that who can cut deepry a rly and cleanly >> he is still in jail, right? >> still in jail >> has been since november >> a japanese jail >> a very long time. >> i don't know what that means. >> there's other places where i hear from you are in there, it's
much worse >> part of the complaints that his team has put forth is that he was cold, he wasn't given extra blankets, he wasn't -- >> it's all bad. it's all bad i just, you know -- somewhere in south america might conger up worse -- >> prison is not a fun place >> no, it's not. >> no matter where you are when we come back, we have a new report this morning. something that says from china that president xi may actually meet with the u.s. trade delegation this week we'll get a live report from beijing after where. >> on friday a "squawk box" exclusive with berkshire hcharlr we have a sitdown we'll bring to you friday morning as we head to a break, let's take a look at yesterday's s&p 500's winners and losers who says our bank isn't tech enough?
welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning welcome back to "squawk box. take a look at u.s. equity futures ahead of the market open just about three hours from now. the dow looks like it would open 72 points high are nasdaq up about 28 points. the s&p 500 up about six and a half, seven points right now among the stories that are front and center, the iea out with its monthly oil markets report that happened overnight. the group saying it will swamp demand u.s. sakes on venezuela and iran crude prices right now, wti crude at 53.82 also, lawmakers urging president trump to sign that deal that
would keep the government open the president says he is unhappy with the agreement, but didn't reject it outright we're going to have to see where that heads next. joe. >> thanks. new this morning a report from china says that president xi may meet with the u.s. trade delegation this week, and uenice is fine and with us today. joins us now from beijing with more i think it would be great if president trump -- or the tread delegation could mean with the honorable and distinguished president xi if that were to happen that would be a big honor, i think, right how am i doing >> yeah, yeah, yeah. you're doing very well >> okay. >> you're doing very well. we're still on >> let's keep it -- >> a hong kong -- let's keep it. yeah let me get back. the south china morning post is a hong kong newspaper and has been quoting sources as saying that president xi jing ping plans to meet with treasury secretary steven mnuchin and trade representative robert
lightheizer possibly on friday as a goodwill gesture for the trade talks. mnuchin, and lightheizer are here and preparing for discussions tomorrow as well as on friday with the chinese vice premier. today secretary mnuchin had told reporters outside of his hotel that he was encouraged and hopeful that conversations would be productive. the "wall street journal" has been reporting that the talks are probably going to focus on a draft of an agreement that could be later signed by president trump and president xi at a later date it's still unclear, though, whether or not the two sides have been able to narrow their differences. today, though, the markets rallied, and that was on news that president trump was open to the idea of extending the march 1st deadline, and from the chinese perspective, an extended deadline would be wonderful for them because it would mean that they would be able to continue
to keep the conversation going, though the argument within the american business community would likely be that the talking would continue, but perhaps without a whole lot of action. guys >> yeah. it's a fine line, i guess. it's not a hard deadline it was made up becky was mentioning that like george w. bush, president trump is the decider he can decide. he can change that, right? it's -- there's nothing set in stone about march 1st if you are getting close to a deal. >> if you feel like you're making progress. >> there's nothing set in stone about a deadline, and it would make sense when you consider that there is a lot on the table. these are very complex issues. that would make sense if washington feels that enough is being done for the two sides to strike a deal. however, president trump himself had said that he didn't want to get into these long protracted
discussions that his predecessors had gotten into previously from a chinese perspective, the chinese have had a history of trying to -- well, some people would call it a delaying tactic, and into conversations, keeping the conversation going, and then hoping that something breaks their way. really the trap, i think, and the danger is that the trump administration could get into the same situation that it's been criticizing its predecessors for >> although i would anticipate, at least, given what this administration has already done, that even if they move that deadline, they're not saying infinitely, okay, we can continue these talks for forever. my guess would be that there would be a limit to the patience, and it would be based on the idea that progress is being made, things are actually changing that's just my guess bisd on what they've already done to this point >> yeah. that would be, but i think that another danger is that you still keep that level of uncertainty going in the markets, because if you -- because you could always
say that, okay, well, we are not going to hit you with tariffs right now, but if you haven't made enough progress, then we'll hit you with tariffs in six months >> although, the most -- >> the problem is that it's difficult to say how do you measure the progress for, say, ip theft >> especially when the chinese say they aren't doing any ip theft to begin with. if you are not admitting that any of those things are happening, how do you say you're changing the practice. the one thing that most people we've talked to who i think really understand the situation do say that this uncertainty in the market is going to be there no matter what happens even if there is a deal that's reached, there would be something like making sure the protocol is that you can check and verify to make sure these things are actually happening. that uncertainty will be around for quite some time to come. >> yeah. >> all right eunice, thank you. thank you for coming on today again. good to see you. >> yep >> we'll see you again soon. all right. for more on what the markets
expect from trade talks and the potential government shutdown, let's bring in hans olson, chief investment officer at fiduciary trust company. also, yurian timer from global macro -- the director of global macrofor fidelity investments global asset allocation division welcome to both of you we've watched the markets really take off over the last seven weeks or so, and continue to perform even based on yesterday's numbers. i saw really interesting tweet this morning, though it had a bull running down the street and kind of up ending a car. somebody said this is a live view of the markets right now. what could possibly go wrong what do you think? what could go wrong here >> you know, usually after a very sharp v-bottom like we had in december, you know, s&p down 20% very briefly, and now up about 16% from there, you do generally tend to see some sort of retest. not a complete retest, but maybe a 50% retracement or something like that. that's a fairly common technical
development. the question is what would drive that it could be disappointment over trade. you know, my policy is sort of to have low expectations and, therefore, i'm not likely to get disappointed it could be also concern about earnings earnings growth estimates are falling very quickly you know, we're down to about 5% for 2019 at this rate we're lucky to get anything positive really you know, thirdly, it could be about worries about the fed that even though it has pivoted from raising rates further to being on hold, maybe even for the entire cycle, but certainly for the next six months or so, mayb the fed needs to be easing i don't believe it does, but maybe that's something that the market could worry about when i look at that bottom in december, you know, it was met -- it met the four criteria for what i look at earnings, liquidity, valuation, sentiment, and investors locked in $83 billion worth of losses in december, which is very
unfortunate, but it also creates bottoms, and the fed has pivoted, and there's no sign of a recession. at least not in the u.s. it's really earnings, i think, that will drive the bus going forward, and we need the estimates to start stabilizing here, but so far they're not i think that could be the thing that keeps people worried. >> hans, let me turn that on its head and ask you what could go right from here. >> well, what could go right is we get the earnings that the market is hoping to get so you get a very set stabilization of earnings fed doesn't do anything, which i think will not be the case and you get a continuation of this alleviation of uncertainty around the government shutdown, trade, perhaps even brexit we get resolution one way or not there. it will be messy those are the things that i think could go right i still think at the end of the
year we're going to be up somewhere on the order of 8%, 9%, 10% total return, and that's kind of where we are right now that means that we're in for a period of a pretty tough sledding between now and the end of the year. >> so you would be telling people to lock in these gains and kind of hold out and wait for volatility before you jump back in? >> what i would be telling people right now is if you have new capital to commit, drag your feet, number one number two, if you have invested capital at this point, you should start combing through your portfolio to see -- to look at those marginal holdings that perhaps this snapback has given you. profits, again, and things that you had on deck for sale now is a good time to take those gains if you have them >> you agree with that >> you know, for long-term investors you basically do what you always do, which is basically nothing other than ek county on your plan. again, you know, i think that
correction we had last quarter should have been a 10% to 15% correction, but, you know, a confluence of circumstances will cause it to be a 20% correction in part because of liquidation in the crowded momentum trades, but also a lack of liquidity going into year-end. now we've reversed about 75% of that, or about 70% of that, and so the market corrects, you know, all the time, and it's still dlelivering a good return. if you are a long-term investor, you basically stick to your plan and make sure you're not one of those people who in december locked in a 20% loss if you are more tactical, we have rallied a lot a retest usually happens over the next few months. if you are looking to buy, it probably -- you'll probably get a better shot at it in the next six to eight weeks or so zh >> hans, i'll give you the last quick word, okay, time to jump back in. >> well, if we had a bit of a
sell-off here if we had the correction that yuri is talking about as a retest in the lows, that would make me very interested to jump back in >> all right hans, it's great to see both of you. >> thank you coming up, we're going to hear what howard schultz said last night at a cnn town hall in houston about his potential presidential bid and about taxing wealth and, later, we're going to talk to new york state -- to a new york state senator who represents a district where amazon's hq2 would be he will tell us why he opposes the retail giant's new headquarters newark would be awesome, i think. anyway, you're watching "squawk box" on cnbc woman: friction points, those obstacles that limit a company's growth. i try to find companies that turn these challenges into opportunities. it's these unique companies with creative business models that will generate value for our investors.
welcome back to "squawk box. if you didn't stay up late last night, former star bauks ceo howard schultz addressed questions from a live audience in his cnn town hall in houston, it extext, last night. schultz exploring a presidential run as an independent candidate. here's what he had to say about the wealth tax that everybody has been talking about >> i should be paying more taxes, and people who make this kind of revenue of means should pay more taxes >> are you talking about you
should pay 2% higher, 10% higher, 20% higher federal income tax >> i don't -- i don't know what the number is. i think what i'm saying is we need comprehensive tax reform. >> ballpark it for people because it makes a difference. would it go up to the rate under president clinton, or are we talking about significantly higher >> i think is what's being proposed at 70% is a punitive number, and i think there are better ways to do that >> so what's not punitive? >> i don't know what the number is, but what i'm suggesting is i should be paying higher taxes. i think people across the country are willing to pay higher taxes, but there's a kafrat there, and the cavat is this >> is it higher than 2% more, for example? >> i think it is >> schultz was also asked whether he would sell his starbucks shares if elected, and here's his response. >> i will do nothing whatsoever to have any conflict of interest between my investments overall or my interest in the company that i love because i will put
the role and responsibility and the accountability for results first if i run for president and i'm fortunate enough to win. that is a promise i make to the american people. >> have you not decided if you would sell all of your shares? >> i don't think that's the question i think there are multiple ways to do this no, i'm not evading the question there's multiple ways to do this to set up a blind trust, to do lots of things to remove any conflict of interest >> there was a number of other questions that he answered the response i think -- well, we'll see. obviously, the first two weeks out of the gate the response has been tepid would be the polite term i think it would be probably much less than that. the question is at what point, you know -- what does it take for him to continue on in terms of trying to win people over, or, on the other hand, do you decide to pack it in you know, he has been on this book tour.
he says he is going to be on the book tour for three months cnn, by the way, got a lot of grief for giving him an hour because he hasn't come out and publicly said that he is a candidate. >> although, what's wrong with having the conversation, especially when it's howard schultz, who is an interesting person >> it's a worthy conversation. he did say -- i will say he did say that he would make his tax returns public >> if he ran >> if he ran it's curious what you think you should do with his starbucks stake. i don't know what you think the right answer is. >> i think the bigger question is will he have a constituency what decision does he make at the end of this three months democrats have been outraged that he would be doing some of these things, but those are the public faces what does he really hear from people on the ground does he feel like there would be enough support >> i thought this was one of his best outings, but the question is whether that is good enough, ultimately >> it's so much money, i don't think there's a question that he would somehow use his office to benefit himself personally i think it's a weird question,
to be honest with you. people immediately want to know, but i don't care what he does. put it in a blind trust. keep it. he built it up >> people immediately will say a huge part of the starbucks business is china. >> i know what they'll say, but i just don't think that would be his his motivation i trust that -- >> you're a trusting soul. at&t provides edge-to-edge intelligence, covering virtually every part of your retail business. so that if your customer needs shoes, & he's got wide feet. & with edge-to-edge intelligence you've got near real time inventory updates. & he'll find the same shoes in your store that he found online he'll be one happy, very forgetful wide footed customer. at&t provides edge to edge intelligence. it can do so much for your business, the list goes on and on. that's the power of &. & if your customer also forgets socks! & you could send him a coupon for that item.
the company who invented car vending machines and buying a car 100% online. now we've created a brand new way for you to sell your car. whether it's a few years old or dinosaur old, we want to buy your car. so go to carvana and enter your license plate, answer a few questions, and our techno-wizardry calculates your car's value and gives you a real offer in seconds. when you're ready, we'll come to you, pay you on the spot, and pick up your car. that's it. so ditch the old way of selling your car and say hello to the new way... at carvana. you should be mad they gave this guy a promotion. you should be mad at forced camaraderie. and you should be mad at tech that makes things worse. but you're not mad, because you have e*trade, who's tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. don't get mad. get e*trade's simplified technical analysis.
when you retire will you or will you just be you, without the constraints of a full time job? you can grow your retirement savings with pacific life and create the future that's most meaningful to you. which means you can retire, without retiring from life. having the flexibility to retire on your terms. that's the power of pacific. ask your financial professional about pacific life today.
what does that mean for oil prices i guess, you know, a lot of times markets are ahead of when the data becomes official. we're already -- we're not at 70 or 80. so is this dynamic already in the marketplace? >> it seems that way, joe. that's why for wti here, we're in the low 50s even though there are a number of seemingly bullish reasons for the market to rally from here as you mentioned with venezuela there, we've got the sanctions in play. we've got sanctions with iran as well we've got the opec production cuts kicking in as well. but at the same time here, prices just can't seem to rally. for brent as well, we stuck around that 63 mark. it's really kind of like a magnet and so until we get further clarity going forward, it seems that prices just don't want to rally at this point. >> who has an interest in higher oil prices and what can they do about it is it possible to further --
could it be in opec? do they want prices higher can they orchestrate that or they can't do it anymore >> i believe that they can, joe. what we're seeing at the moment is saudi production in october was 11 million barrels a day their report came out yesterday. and so the production has dropped to 10.2 million barrels a day. they're signaling they're going to drop. so the signs there, we know from the saudi energy minister he's built up this credibility over the last few years he's signalled to the market what's going to happen and then they're followed through with their flows. one thing we are seeing particularly with the u.s. is saudi flows to the u.s we've seen them drop to about 1.5 million barrels a day in october down to about 650,000 barrels a day in january the reason this is key is because that's a drop of 500,000 barrels a day. you see that stretched over a six-month period that's going to reduce u.s. oil
inventories by about 90 million barrels. that's how saudi believes it can raise prices here. and so that's what they're doing. >> every year at the end of the year, we go back and say we're wrong about oil prices what would the surprise be this year by the end of 2019? what is your view on what the high and low will be for the year >> well, the consensus seems to be that the opec production cuts are going to kick in through this year. the economy is going through this wobbly patch. hope springs eternal there is this expectation second half of the year prices should be considerably higher from where they are now therefore from that perspective, it seems the counterargument to that is that prices are going to remain low because of economic concerns on a global basis we're seeing from europe as well so does that angle -- there's
that angle with u.s. production increasing as well, even though it isn't the right type of crude really to offset the sour crude we're seeing dropping from venezuela and iran, that could keep prices in check here. so lower prices is potentially the less likely case but potentially the one that could happen >> sour. how do we know it's sour >> sour crude? >> you taste it. yeah >> you can taste it? not a good idea, matt. >> no. you try it, joe. see if it's sweet or sour. >> okay. you're right thank you, matt. matt smith of clipper data >> i think he's pulling your leg. when we come back, futuring pusher higher. dow futures up 77 points the future of technology investing
lies beyond the tech sector. it's about technology transforming every sector. ♪ at pgim, our bottom-up approach uses a technology lens to identify long-term winners. from energy... to real estate... to retail. finding such opportunities for alpha is the true value of active investing. and around the world, you have a partner in that pursuit. pgim: the global investment management businesses of prudential.
trade talk optimism. u.s. and chinese officials meet. and now there are reports president xi himself could meet with the u.s. delegation check out the markets are reacting >> will they stay or go? the big question for amazon and new york city as the company meets local resistance for its hq2 plans. and tax and wealth the debate rages on about how uncle sam should be collecting we tap into both sides as the
second hour of "squawk box" begins right now ♪ live from the beating heart of business, new york, this is "squawk box. >> good morning, everybody welcome back to "squawk box" here on cnbc i'm becky quick along with joe kernen and andrew ross sorkin. u.s. equity futures have been stronger this morning with the dow up 1.5% and the nasdaq two you can see this morning adding to those gains dow futures indicated up by about 80 points. s&p futures indicated up by 7.5. and the nasdaq up by 31 points here's what's making headlines at this hour the house may vote as early as tonight on the deal struck to fund the government and avoid another shutdown president trump has said he does not love the deal. but doesn't want to see another
government shutdown. we will see whether he will sign whatever they potentially vote on also, new college poll showing a majority of voters in new york city and new york state favor the deal to build a new amazon headquarters in queens they've run into a lot of vocal opposition from lawmakers. we're going to talk to one of them in a couple of minutes. plus one kpik number on today's calendar, going to be getting january consumer price index numbers in about 90 minutes. economists there looking for increase of 0.1% with the ex-food and energy rate up 0.2%. few stocks on the move this morning. blizzard shares are higher in premarket trading. the video game publisher did beat bottom line estimates, but its revenue and forward guidance are weaker than expected while boosting its developer
ranks by 20% and teva pharmaceuticals earned 53 cents a share for the fourth quarter. that was a penny below expectations revenue was above forecasts, but the stock is now lower as you can see following the report down 7%. treasury secretary steven mnuchin and robert lighthizer are in beijing right now trying to hammer out a trade deal with china. kayla tausche joins us with more last hour we heard about the perspective from beijing on this, but what's the perspective from here in washington? >> well, the goal of washington is to put together the framework for an agreement with china that president trump and president xi would formalize at a future meeting between the leaders. earlier in the week they tried too hammer out the fine print. now the south china morning post is reporting that president xi could meet with secretary
mnuchin according to their sources. up until now, there had been no text for a potential deal. the date for a meeting between trump and xi remain between what the u.s. has said publicly it would accept and what china has said it will offer but at a cabinet meeting yesterday, president trump said he wanted a deal he believed china does too he'd be willing to extend the truce if talks are still going well >> the 10% or $200 million goes up on march 1st. so far i've said don't do that if we're close to a deal where we think we can make a real deal, i could see myself letting that slide for a little while. but generally speaking i'm not inclined to do that. >> there is still questions about how the administration plans to crack down specifically on chinese telecom companies and specifically huawei. sources say there are currently disputes over a executive order.
that executive order which had been expected as soon as this week, that could be delayed. but all signs as of now seemed that signs are pointing towards a deal although it still remains unclear what exactly the final details of that deal will be >> yeah. if there is a deal, the trade turmoil thing is not going to be anymore, right have you seen our other one? shutdown showdown. >> we have the two that go either direction about how companies are benefitting or -- >> that's good >> trade offs. get a double play on that. >> joe, even if we make a deal, my sources say there's the potential that some of the enforcement mechanisms could be structured so that if china doesn't follow through, then tariffs could be put back. so maybe a turmoil could get some use in the future but we'll see.
>> what if we have nothing to worry about? can we go back to the fed maybe? maybe we can go back to thefed they've got nothing to worry about. then they're back in raising mode, right? i'm trying to think of something to worry about i don't want to ever be happy really and not worried >> you said that, not me >> i'm happy all the time. seriously, i am. >> this is you happy >> this is me happy. thank you, kayla happy to see kayla happy she's back moments ago, reuters said treasury secretary mnuchin was asked about trade talks and trade turmoil. he said so far -- i think they're late he said so far sogood. let's talk about the impact of all this on the markets. joining us now is doug ramsay from leuthold. do you tell paulsen what to think? >> no. he's chief investment
strategist there's a chinese wall between us >> really? are there tariffs between? >> it's complicated. >> do you steal his intellectual property >> property. probably >> sarat sethi is also here. off the december lows, it's been a tradeable rise did you miss it completely >> not completely. we actually did and jim played a role in the decision we did cover some lows -- we covered some shorts right at the lows on christmas eve. obviously with benefit of hindsight, we could have covered them all and looked a lot better but i think what's going to go on here, joe, is that fourth quarter stock market weakness was anticipating weakness in earnings and economic reports that is still to come. and i think the more you think about this, i think that's why you tend to have these "w"
bottoms in the market. the first leg down is sort of out of the blue when the news is still good then there's a relief rally for whatever reason. get oversold fed chairman blinks. but then on the second leg down, that's when you finally see the weakness in the economics and earnings reports that's coming. >> one of your points is that maybe we've seen the best in terms of earnings. now, are you seeing that growth is decelerating or we're going to have declining earnings which? >> it's interesting you mentioned jim paulsen's bullish viewpoint. he thinks s&p certainings are going to be down 5% this year. i would not disagree with that >> declining earnings. >> yes down 5%, 10% this year on the s&p. >> you wouldn't be surprised if the s&p hit what level not even just this year. see, there are some people that think we don't go back below 2300 ever. where could we go? >> boy, i tell you what.
if you went down to the trailing pe that existed at an historic market top in october of '07, you'd go back to about 2200. if you went back to the price to sales ratio, i know an antiquated value measure, but you go down to about 2,000 to an old market peak in valuation. so i mean, we have this estimate on the downside exercise we run in our research each month. but to get scary downside estimates, we don't even have to assume a reversion to the mean or a reversion to old bear market lows. but even to get back to an old bull market top on some measures would entail 25%, 30% down from here >> okay. i'll get back to you in a second because steven has a beard too and paulsen. >> it's cold up there. it's a seasonal thing. >> that's not a statement. it's staying warm.
that makes sense clean shaven, sarat. this guy's bearish >> you could be bearish. >> you're less bullish than you were >> in december i was pretty bullish when i thought things were just sold off completely. but where you look at where the markets are and i don't disagree you might test or might not. if you look at valuations where they are from beginning of last year, they were 18 times earnings and within that sector like industrials and financials, trading at probably nine to eleven times earnings with really markets telling you they're not going to grow at all. solid balance sheets and i think you get any positive news out of china. that's where the hurt came because a lot of them talked down their earnings from this year that will happen and you can get a positive surprise looking 12 to 18 months interest rates have come down. the 10-year is back to 2.7%. a lot of discounting method that stocks are using and companies are using, the bond market, credit market is tightened too that's been a positive if you look at the last three weeks
>> we had somebody tell us in the last hour that we've come back and bounced back and now we're looking a little expensive again. he would be buying but you're making it sound like you may not see an opportunity to buy again they may be in a position to buy now. >> train's leaving the station >> i don't know if the train is leaving the station, but i think there will be select areas you can still buy now. they might be up from the december lows. but compared to where they were a year ago, take building products, multiples from 20 to 11 that's -- >> looking at 10% gains for the year you don't think that's necessarily the end. >> no. it'll be choppy along the way. but it will tell me along specific sectors that things are not that expensive technology is still way back that's expensive again you've got to be selective there. as we go through the economic numbers and especially it was big on industrials and financials those will rally along with it
because they'll be able to see >> you don't have s&p targets you publish. >> no. >> you're less bullish now than at the beginning of '18? >> beginning of '18 the markets were more than fairly valued multiples were higher than they had been -- >> this isn't in hindsight this is actually how you were? >> yes >> okay. so you would think the upside on the s&p this year is -- >> i think we could be, you know, another 5% to 10% from here which by the way would just get you back to a little bit above >> we could be above 3,000 then? >> could be close to 3,000 if things happen the way that, you know, interest rates stay where they are, the fed doesn't get too involved, inflation is subdued as we see now and you get positive trade >> you don't see another leg down specifically unless something goes awry in either
the trade turmoil or the shutdown >> i don't see any reason for that to happen if those things go >> what's the next thing we're going to worry about >> you hit it there. the fed coming in again saying, hey, things now -- >> because they don't have anything to worry about. >> if oil starts going back to $70, we get inflationary pressure and economic growth ticks up i think that's going to be hard for all of those to happen you could get a slow -- like you had a melt up in '17 the market went up and people were kind of calling it to go down '18 we had the quick meltdown in february but that kind of bounced back pretty quickly then december was hurtful. >> doug, did you watch the -- i don't know if we have the debt clock. it's going up. there it is. i want to just -- hold on! pause! it's not pausing we hit $22 trillion. isn't that something we could worry about?
why aren't interest rates more sensitive to trying to fund that debt >> i don't know. you bring up rates that's an interesting thing in terms of short-term here rates are all below the levels they hit at the christmas eve lows and a lot of commodity prices are lower. in terms of the longer term, i'm concerned. it's interesting i wonder if the markets just sensing now that we've used qe as a tool, it will just always be in the quiver but, i mean, i think going to a 10% deficit during the next downturn is a slam dunk. that being said, i suspect bonds across the maturity spectrum will do pretty well. you could be back to having a one handle on the yields i just mentioned. so i don't think it's a bad
place to park of stocks. >> i always think of leuthold as bearish. does he tell you to be bearish steven, i mean >> our mantra is making it and keeping t. >> been pretty bearish over the years on the market. >> he certainly was in the late '90s we had never seen valuations like in the late '90s. >> got to go back 25 years to when he was right? >> it's interesting. steve leuthold is known as superbull in the late '70s and early '80s >> all right thank you. what's up, andrew? >> coming up, we have a big conversation coming up corporations versus individuals under the trump tax plan this is the first one under the new tax code we're going to spark up that tax debate and how it's impacting all americans. a new poll saying most new yorkers are okay with amazon setting up headquarters in long island city.
we're going to talk to one local politician, though, who doesn't want any part of amazon primetime. we will have that debate in just a moment could switching to geico really save you fifteen percent or more on car insurance? did the little piggy cry wee wee wee all the way home? weeeeeeeee! we we weeeee! weeeeeeee! weeeeeeee! weeeeeeee! max. maxwell! yeah? you're home. oh, cool. thanks mrs. a. geico. fifteen minutes could save you fifteen percent or more.
for each family member? so with xfinity mobile i can customize each line yup. and since it comes with your internet, you can switch wireless carriers and save hundreds of dollars a year. are you pullin' my leg? nope. you sure you're not pullin' my leg? i think it's your dog. oh it's him. good call. get the data options you need and still save hundreds of dollars... do you guys sell other dogs? ...now that's simple, easy, awesome. customize each line by paying for data by the gig or get unlimited. and now get $200 back when you buy and eligible smartphone. click, call, or visit a store today. welcome back to "squawk box," everybody.
we've been watching the futures this morning they have been climbing all morning long even after the gains we saw right now futures indicated up 90 points above fair value s&p futures up by 8.5. the nasdaq up by 35. the iea is out with its monthly oil report overnight global supply will swamp demand this year despite production cuts and u.s. sanctions on venezuela and iran checking crude oil prices this morning. wti up by 1.2% this comes after a decline for crude oil prices coming up, unbanked americans. fed chairman jay powell shining a spotlight on the millions of u.s. households that don't have bank accounts. he went to one of the poorest sections of the country to address that problem that story coming up next.
people know aflac... aflac! ...but not what they do. so we're answering their questions. aflac is auto insurance, right? no. uh uh. is it homeowner's insurance? no... uhuhuhuh! is it duck insurance? nope. ahhh! do they pay me money directly when i get sick or injured? yeah. aflac! you got it. you know aflac! boom! get help with expenses health insurance doesn't cover. get to know us at... aflac dot com. ♪ don't fence me in. ♪ let me be by myself ♪ in the evenin' breeze,
getting to patients in record time. we see harnessing natural gas unleashing the promise of clean energy. we see engineers simulating the future to improve today. at emerson, when issues become inspiration, focusing core strengths to create a better world isn't just a result, it's a responsibility. emerson. consider it solved.
fed chairman jay powell made a historic trip to the mississippi delta on tuesday putting a spotlight on the unbanked and senior economics reporter steve liesman joins us with more on the lack of access that people have to financial services steve liesman, how are you this morning? >> doing well, thanks. nationally they estimate one in four americans is under unbanked or underbanked meaning they don't have access to banking services. some live in banking deserts and some think they're too poor to open an account. >> reporter: two fires in homes in the mississippi delta left farrah and her four girls destitute and in bankruptcy. >> we have to pray and we prayed in unison because i didn't want to lose another home and one of my girls said, mom, it's going to be all right god got us that this too shall pass
>> reporter: and along literally came hope. a credit union focused on economically distressed areas in the south that brings basic banking services to the nation's poorest. >> the rate of poverty here is three times what you see in the nation as a whole. even greater for the region's african-american residents if you look at level of banking services, three times the level of people who don't have a banking account. almost 60% and 70% of the members who joined our credit union were outside the banking system or on the edge of the financial system paying high rates or did not have basic tools to support their families and stabilize their financial lives. >> reporter: tuesday jerome powell made a tlip to the delta speaking to students and attending a conference with community activists to shine a spotlight. >> access to banking services is vital especially among families with limited with elt. whether they're looking to invest in education, start a
business, or manage the ups and downs of life. >> reporter: bank access was such a problem down here, that hope opened the town's first bank atm >> when hope came in, they -- that was the first thing they did. they knocked a hole in the wall and put an atm machine there there was very little business that you could conduct here many morehead >> reporter: the counseling in hope means she should be out of bankruptcy by november >> once i get out of bankruptcy, i know it may not be the fattest account, but i'm looking to have enough money in hope me and my girls will still make it so i had to learn to stay small to get to big. >> reporter: guys, it's a vicious circle banks aren't here because people are poor and people are poor in part because the banks aren't here. hopefully now there's some effort and a spotlight on trying to stop vicious circle >> that's a great story, steve
am i wrong in thinking it's unusual to see a fed chairman taking an activist role in this? or has this happened in the past and i didn't notice it >> reporter: it's a big deal he came down here you're right as far as we can tell, he's the first chairman to come through the mississippi delta. but you're right and one of the things that really hits what we talk about all day and all week long is the issue of bank mergers. also the technology. it's kind of crazy that money travels around the world at the speed of light we all have banking apps on our iphones. and folks here don't have basic banking services as these banks close, that really exacerbates the problem of access of poor people to services >> okay. steve liesman, great to see you, sir. thank you. when we come back, amazon getting pushback the retail and tech giant's
decision to make new york city its hq2 meeting resistance from lawmakers here now amazon may be considering a different city we'll speak to one who is not a fan of this plan and friday, a "squawk" exclusive with berkshire hathaway's charlie munger he never pulls punches we'll have that and much more coming on friday "squawk box" will be right back. so with xfinity mobile i can customize each line
for each family member? yup. and since it comes with your internet, you can switch wireless carriers and save hundreds of dollars a year. are you pullin' my leg? nope. you sure you're not pullin' my leg? i think it's your dog. oh it's him. good call. get the data options you need and still save hundreds of dollars... do you guys sell other dogs? ...now that's simple, easy, awesome. customize each line by paying for data by the gig or get unlimited. and now get $200 back when you buy and eligible smartphone. click, call, or visit a store today.
♪ still to come on "squawk box," the battle over amazon hq2. a new poll saying new yorkers are okay with jeff bezos moving in we're going to talk to a local official, though, who is just saying no to amazon. also, tax season is upon us once again. 2018, the first full year under the trump tax plan time for us to fire up another debate on taxing wealth. and later, it looks like another government shutdown will be averted and a u.s./china trade deal, well, at least the talks are underway right now big issues for capitol hill. senator david perdue of virginia will be our special guest at 8:00 a.m. -- >> georgia, georgia, georgia >> "squawk box" returns in just a moment sfx: [phone ringing]
you still have service? call the insurance company it's them, calling us. it's going to be a week before they can get through on these roads shhh, sorry, i didn't catch that. i said ask how soon they can be here not you. right now? what's now? he says they're surveying our property now they're probably at the wrong house i don't see any hovering his name is hovering?
which didn't quite cover the steinway. but what if he'd met pure insurance? owned by members. he'd have met: lisa, your member advocate. who'd introduce him to gustav: leave it to me. a temporary address, temporary ivory, and help him get tickets to the mozart festival. excuse me, grant likes beethoven! uh, the beethoven festival. pure. love your insurance. >> kwelcome back, everybody.
amazon's decision to move hq2 to new york has been a contentious one. a study showed that 58% of new york city residents support the project while 35% are opposed. our next guest has been one of the move's fiercest opponents. joining us now is democratic new york state senator thanks for being here today. >> thanks for having me. >> let's just get down to the real story on this do you not want them to come or do you want a better deal? >> well, look. the deal that's before us is so bad right now that i can't fathom that that's going to form the foundation of a productive negotiation. and we're sitting here and rather than try and show that they can be responsible neighbors that would help the community they want to join which is already over-developed. everyone that knows long island city knows the cranes are on every corner building and building they're doing the typical thing they did in seattle.
to suggest they might want to contribute to the homelessness crisis they contributed. and they flexed their muscle, threatened to leave seattle or stop the growth in seattle they were creating. and the city council rolled back the tax. this is their typical tactic under the terms of the deal before us, sbult >> if i handed you $3 billion and i gave -- and you gave me -- i'm sorry. if you gave me $3 billion andi handed you back $25 billion, you don't think that's a good deal >> the $25 billion number is inflated it's assuming something would happen on this land if amazon wasn't there there was already a plan to build there before amazon rolled in that idea all the local shops and business would not exist is false. >> you think amazon's not there, the same amount of activity would happen >> no but it's not an accurate depiction of what's going on out
there. >> call it half. if i got a return of -- if i paid out $3 billion and you gave me back $10 billion, i'd say that's a good deal. >> why not give them $10 billion? at what point do you stop? because they don't need the subsidizatio subsidization. >> which is the -- which at the moment happens to be the more attractive place to be the argument about putting a amazon on long island city is to create an anchor to create an ecosystem around it. >> long island city is doing just fine. it is growing by leaps and bounds it is growing by too much, in fact subways can't handle it. this will only exacerbate those problems instead of talking about what they want to do to help the local community, amazon is trying to take, take, take >> the quality of life issues in your view, they would be harmed more than the benefit of the additional jobs? >> absolutely. i think so
>> so there's not -- >> the jobs are significant and i don't want todemin -- deminnish that >> now, the types of jobs you create at this facility, you'd need a lot of training but the people that need the employment in that community are not the one who is would be getting it here. >> i think a lot of the jobs on average the jobs they promised have about $100,000 as the average salary >> they cited numbers in excess of that. i don't know all i know they're going to count jeff bezos and really inflate it >> there are examples in this country of subsidized businesses that have gone horribly wrong. the way this transaction seems to be structured at least as i
understand it and i apologize if i'm missing it, the subsidy's only getting paid out if amazon is actually producing real jobs that are producing real revenue. it does seem to have teeth in it in a meaningful a. that's the part i don't understand what the objection is here's an opportunity to bring somebody to long island city not manhattan. and that's a huge distinction. to me, just again as an observer, it seems like everybody's feathers got ruffled because the mayor and the governor made a deal without bringing everybody into it i think in large part because it would have been very complicated to do that to try to keep this process confidential which is what they wanted to do at the time once that happened, everybody got upset about it >> but the process is a problem only because the suctibstance tt resulted was a problem it was the economic development leaders, the agencies of the state and city that did this without any discussion of or notion of what that community
needs or what new york sneeds. >> so the alternative plan which is to say long island city builds on its own, gets you where you think? if i told you i'd bring you $25 billion, right for the $3 billion of subsidies. let's say that doesn't happen. you say it's a strong economy, strong environment there what kind of numbers are you looking at without amazon? >> i haven't conducted an economic study >> don't you think that -- >> i can tell you that -- >> but it's a binary situation you're either going to have this or this. if you don't have any idea what the alternative is, doesn't that seem irresponsible too >> there was a site that would have included a mix of retail and residential which would have been a different outcome >> but create a lot less revenue to the area, correct >> less. less but i don't know how much less and i don't also know to what degree -- >> if the area is going to be used for affordable housing, explain how that's creating additional revenue beyond the
construction costs and whatever's built around that area restaurants are not bringing the same kind of tax revenue at all relative to what amazon would? >> because the people who live there make money so those people would also spend money in the surrounding community. they would actually -- and i would dare say they would use the local businesses more than the campus model that these tech companies had been using where everything was internal. the calf fear y-- calfeterias ae on the campus. >> i can't figure out his position rather than -- >> is that what you've heard from constituents? >> i just immediately assume anybody would want it. but you represent the people there. you don't seem crazy you know what the numbers are. >> i appreciate you saying that. >> and newark could definitely use this >> and you'd be happy to subsidize them to come >> yes >> there's two things going on there's a local community concern that is undeniable
but there's a bigger discussion going on there's a reason the european union banned subsidies like this let's get $25 billion maybe and it'll be a net positive. >> net positive? >> where does it end why doesn't google and facebook and everyone else say i'm not coming here unless i'm getting my share of your money >> you can make a philosophical argument and i'm happy to have that conversation about subsidies in america i would love to rid subsidies. >> wait a minute not for tesla. >> excuse me i'm no fan of subsidies across the board. >> renewable energy? come on. >> we agree. >> unfortunately, we live in reality and the reality is that states and cities are all competing for these different businesses and are providing subsidies. so the question is if you didn't provide -- mayor bloomberg had interesting comments which i think -- i'm afraid to say you may have distorted it a lit. he said new york is great.
they just want to come for that reason having said that, he's in favor of providing the subsidy to get them here. >> i don't believe he is maybe we disagree about that i've spoken to people very close to him in the last week who agrees we should not have provided the subsidy in this case new york has a unique role to play because we're new york. amazon is not bigger than new york at least not yet i know they're trying to become as big as they can new york has the ability to drew a line maybe some people will notice these things shouldn't be happening. >> we just talked about a poll that came out yesterday that said 58% of new york city residents are in favor of this i don't know what the percentage of long island city residents is but what have you heard back from your constituents >> there are some people in support, obviously but everyone i speak to on the street overwhelmingly is concerned. they're afraid they're going to get dricven out of their homes
which is already happening one small business was up on the lease and the landlord pulled the lease because they think they can get more now that amazon is coming the subways everybody knows is on crisis. >> don't you need the revenue to -- that would come from something like this to then invest in the subway system. >> right and we've been doing well in new york city in the last ten years and we haven't been able to do that because we have misplaced priorities among decision makers this is just another one of those misplaced priorities in my opinion. they said we need the money to invest wisely. i said we made money in the last decade and we haven't invested any of it in the subways what's going to change when they come here other than the wealthy getting wealthier and the people there getting run out of town. >> thank you for standing up for the people that actually live there. can you believe this that we're -- i just -- we cannot -- >> it's funny. most instances i completely and
utterly disagree with subsidies. >> and you hate corporations >> it's not that i think it's a well done plan. >> you're a public sector guy. here we are on opposite sides again and you're the corporate shell. it's unbelievable. senator, thank you for doing what you're doing. newark, i'm working for you, by >> that's what's happening >> no! that's not it! ch day our planets with signs of opportunity. but with opportunity comes risk. and to manage this risk, the world turns to cme group. we help farmers lock in future prices, banks manage interest rate changes and airlines hedge fuel costs. all so they can manage their risks and move forward. it's simply a matter of following the signs. they all lead here. cme group - how the world advances.
want more from your entejust say teach me more. into your xfinity voice remote to discover all sorts of tips and tricks in x1. can i find my wifi password? just ask. [ ding ] show me my wifi password. hey now! [ ding ] you can even troubleshoot, learn new voice commands and much more. clean my daughter's room. [ ding ] oh, it won't do that. welp, someone should. just say "teach me more" into your voice remote and see how you can have an even better x1 experience. simple. easy. awesome.
welcome back to "squawk box. we are looking at how the trump tax plan is affecting individuals when they file -- >> did you hear me >> what'd you say? >> trump intends to sign the deal >> breaking news >> right that's why i broke in. you're welcome trump intends to sign it >> you've heard that -- >> the shutdown showdown >> why don't we look at futures right now? >> up 90 >> should we pop the futures right now? >> literally just crossing as we speak. >> although the market was up sharply on the trump comments. i'm not sure there was any doubt. >> i don't think so either actually, reuters is citing cnn. >> what i will say is you know what this illustrates. the secret to a good marriage. >> is compromise >> deafness. >> that's why you two --
>> cultures all over the world, that's the one thing people married the longest, they lost their hearing that may happen to us. we'll stay married >> robert frank is here. we began or we're about to begin a conversation about trump, the tax plan, and a year later here you are >> look. a lot of headlines over the past week about lower refunds for individuals, a tax on all those corporate buybacks democrats saying the wealthy should pay more. many argued the benefit have all flowed to companies and shareholders but that could change. now, while last year may have been the year for companies, the coming years could be better for individuals. here's why individual tax filers were expected to receive a benefit of about $75 billion from the new tax law last year. companies expected to receive about $129 billion so companies last year clearly the winner but by 2020, those benefits will actually flip. individual wills get about $172
billion benefits while companies will receive only around $112 billion. because many of the benefits kick in more in 2019 than 2018 of course companies take a lot of those gains like immediate expensing in the first year. but here's the catch much of the gains going forward to individuals will be toward those at the top the top 1% we'll see a rise the first year. the bottom 80% will see a rise of only about 1%, 2% joint committee on taxation says those making a million or more will get the most tax cut of $37 billion in 2018. the point here is that you can't take any one year of a ten-year plan and say therefore it's bad or therefore companies are -- >> that's interesting. i had not thought through the implications of that >> over the ten years, the benefits to individuals will decline. so they kind of go up then they
go down. that's why there's the push to make them permanent for individuals rather than companies. >> too bad your beloved amazon won't get as many tax breaks as before, andrew i've got people writing in have you invested in real estate in long island city? you don't own any prot >> no. i wish i did >> if he did, he would be for amazon >> he is for it. >> i am. i genuinely am for it. i think it seems like a rational choice i'm surprised you don't agree. want to bring in some guests to continue this conversation robert frank is going to stick around as well joining us right now is barney frank. he served as chairman of the house financial committee. great to see you also adam is here. good morning to you. barney, i'm going to start with you. it feels like there has been a lur lurch to the left with the taxes
and about whether it's about the new green deal or some of the other programs around buybacks that have been announced over the past couple of weeks are you in favor of what you're seeing happening right now >> i am. because this lurch to the left and i am for some movement to the left in some barriers, but it's been greatly exaggerated. nancy pelosi was very neutral on the green new deal only a minority of democrats have been supportive of it even in its vague outline the extent to which a lot who won republican seats most of the democrats who took seats from the republicans are not in that sector although they are clearly to the left of the republicans on a whole range of issues i think there is room not only room but a good argument for increasing the top rate. it's gone up you know, i voted to raise the
top rate under bill clinton. we had a great economy there's one other point i'd like to make if i could i thought you had a very good point when you asked state senator what's the alternative as you know, my mantra is compared to what when asked how's your wife my problem is this one of the things we are not going to get now is any significant increase and spending for infrastructure which is one of trump's promises he's not close to keeping. the major reason for that is the revenue that would have been used for infrastructure went to the size of the tax cut. and the problem is i'll just close with this. when you were talking about increasing productivity in america, i think a well-done infrastructure program is the single best use of federal revenue and so in that sense in particular, i was very critical of the overall size of the tax cut. >> right let's go to the heritage
foundation in washington what's i'm very curious about is just the polling you know, one of the things that's so fascinating about this is there does seem to be a sense of bipartisan support for more progressive taxation in america especially on the wealthy in a way that it didn't seem to be the case even 12 months ago, adam >> yeah. i think that has a lot to do with how these policies are being sold it sounds nice to just tax the rich and fund all the things we want whether it'll be infrastructure or medicare for all or the green new deal. but the reality is there's not enough money at the top to tax a way to fund all of these priorities a wealth tax, elizabeth warren has proposed raises a couple trillion dollars. that's well shy of the $30 trillion, $40 trillion you need for the sort of other progressive priorities these aren't really proposals to
tax just the wealthy they ultimately have to be proposals to tax the middle class americans. if you look at europe, this is what they do the rates of 50%, 60%, fall down to those earning $50,000 a year. >> adam, do you agree there's a sense of mistrust or distrust about the tax system broadly in the united states today and that's what's underlying so much of this angst? >> there is a great misunderstanding about how taxes work you see that in the news today or yesterday when all these stories about people's refunds not being as big as they expected them to be and it's a fundamental misunderstanding of how taxes work your refund has nothing to do with how big your tax cut was. most americans got a significant tax cut because of the tax cuts and jobs act and you got that over the course of the whole year. so how your withholding changes has nothing to do with how much money you have in your pocket
over the whole year. >> amen. i agree with that. >> it comes down to a fundamental misunderstanding of who pays the taxes and how they're ultimately paid. and that's a problem >> congressman frank, the infrastructure point you made, the amount of revenue the government brought in was still up 1% from where it was. we didn't lose the revenue for us to have spent that money the corporate tax money on -- or the tax reform act money on infrastructure, we would have had to not spend it. so maybe that's the point we make we should not spend it on defense. >> we certainly -- look. on defense, i'm puzzled by donald trump i agree with him i have for a long time that our allies are getting a free ride on us. but the paradox is the only way to get them to spend more is for us to say we're spending less. he does the other. he says to them you should spend more then he spends anyway. so they don't feel they have to.
but as far as the revenue is concerned, i just heard a paradoxical argument first, there was a strong attack on the european tax system whatever you think about the tax system in europe, germany seems to be doing pretty well. some others, not got nothing to do with what the democrats are proposing. secondly, yes, it is true. if you funded every ideal that every liberal has, it would cost us more than we could spend. same with the conservatives. the fact is that if you were to get a couple trillion dollars whether from a wealth tax or more likely i think from the administrative standpoint from significant increases in the rate at the top level. maybe you don't get a couple of trillion it funds some of this. the notion you fund all of this and all of the issues you have to raise all that. you don't. but if you can raise significant amounts of money by raising taxes on the very rich and i by
the way do not -- there is no evidence that raising that top marginal rate to a reasonable level is going to diminish economic activity. >> barney, we've got to run. what's a reasonable level? >> oh, i think getting into the high 40s >> high 40s. okay barney frank, thank you. adam michel, thank you >> but we'll get a tax cut if it goes down to the high 40s. when we come back, senator david perdue -- >> of georgia. >> "squawk box" back in a quick moment ♪ just hold on, i'm comin' ♪ hold on, i'm comin' ♪ hold on ♪ don't you worry, i'm comin' ♪ here i come
hashing out a deal top u.s. trade officials are on the ground in beijing. here in the u.s., lawmakers looking to reach their own deal to fund the government without one, washington might see a second shutdown in two months initial vote could come in just hours. >> and what should the rich in america be paying in taxes we debate the issue for americans with tax reform and jared bernstein. the final hour of "squawk box" begins right now live from the most powerful city in the world, new york, this is "squawk box.
>> all right good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square i'm joe kernen along with becky quick and the pro-corporate andrew ross sorkin loves, loves corporations. just kind of -- it -- huh? >> amazon hq2 deal i think is a worthy deal. >> i just can't believe how much you shield for that company. someone said the last time we disagreed on something like this was the locked iphone. remember that? >> i do remember that. >> i was on andrew's side on that one >> stop the presses. our guest right now is peter krauss looking fine today how you doing, peter welcome. good to have you here. >> good to be here it's on a day where the markets are up firm. 78 points now. we're hearing that trump through sources to avoid a shutdown showdown
all right. treasury -- they saw me do that. >> they got ready for it >> they did. then i heard another one anyway, treasury yields almost to 2.70% a hair below 2.68% on the 10-year shares of teva pharmaceutical are down sharply this morning you're looking at that stock down. it did come in above forecast. also gave a weaker than expected forecast 79 cents per share beat forecasts by 10 cents also an upbeat current quarter forecast that stock up a little over 2% right now ahead of the market open bank of america, merrill lynch downgraded from neutral to buy
because of the risk profile more balanced following performance call coming ahead of deere's quarterly earnings due friday morning. off that report this morning, that stock off a little over 1%. u.s. negotiators are in china trying to hammer out a deal on trade ahead of tariff increases on march 1st kayla tausche joins us now with more on that front good morning again >> good morning. talks are going so far so good according to treasury secretary steven mnuchin who along with bob lighthizer will join negotiations on thursday though goal is to assemble a framework for a deal that presidents trump and i could finalize at a future meeting xi will meet with the u.s. team in beijing trump said he very much wanted a deal and he believed china did too. he'd be willing to extend the truce if talks continue to go well
>> the 10% goes up to 25% on march 1st. and so far i've said don't do that now, if we're close to a deal where we think we can make a real deal and it's going to get done, i could see myself letting that slide for a little while. generally speaking, i'm not inclined to do that. >> it is that optimism that lifted stocks yesterday. until this week, there had been no text for a potential deal the date for a potential presidential meeting had been pushed off and wide gaps still remain between what the u.s. has said publicly it will accept and what china has said it can offer. we should note, though, secretary mnuchin called the meetings productive so we will wait to see what comes out of them and whether these talks going on has a quieting effect on some of the administration's other efforts as it relates to china and specifically national security issues on chinese telecom companies. >> a lot of different facets for
you to focus on there. thank you, kayla let's bring in our guests to talk about other big potential deal this week related to another potential government shutdown joining us now, senator david perdue he just returned from a trip to the u.s./mexico border thanks for joining us this morning. i think the latest is and i don't know whether you can shed light on this, do you expect president trump i think now said he's going to sign the deal that was arrived at between bipartisan group of guys in washington >> well, i hope so good morning, guys this has been a long time coming i mean wo, we're in our fifth month. i'm hopeful what's on both sides of the table will get us to an agreement. we got to get on next year's budget or we're going to be right back here the end of september doing the same thing >> this -- i mean, we understand how important border security is
to president trump let's say once we do get things moving, we start building a wall 55 miles of it now, whatever it is anything else to try to do in your view in 2019. we just had barney frank on talking about infrastructure anybody talk about anything besides china and government shutdowns? >> we have over 300 presidential nominations we got to get confirmed. we can do that without the senate and house but you mentioned the trip to the border i went to the hottest part of the border and i was overwhelmed with the growth in the drug traffic. it's a fortune 500 equivalent business down there between these two mexican cartels. and they found the soft spot in that sector. i was shocked. we went out in the field overnight. we saw the apprehension of a couple of honduran illegal immigrants i will tell you the border patrol people are doing quite a
job. we need to get them help in addition to the wall the last presidents that put walls decreased by about 95% it's something to take serious 55 miles this year will keep the momentum going of the last four presidents this listen an ongoing topic right now i think infrastructure, immigration, trade are the top things on the agenda >> so the area that you visited, is that covered by the 55 miles? >> they would get some, yes. but the issue, in 2006 they actually built a modern day type barrier down there the problem is it's ineffective because they're a gate that never actually been put in they funnel their business right through there. look, this is a human tragedy but it's bigger than just the human element. the human element, every person from central america has to pay an $8,000 toll to these cartels
just to cross the border that's about a $1.6 billion enterprise for the cartels we think the drug traffic through that sector alone is over $20 billion, guys this is a dramatic growth. mostly methamphetamine is about a 600% increase. i was not prepared for that. >> senator, i remember watching president obama talk about some of the things that needed to be done on the border it just seems to me, if you took nancy and chuck and others down there to -- you know, not a 2,000 mile border wall but if you took them down to where you went why can't reasonable people decide this is something we need to do? i mean, i saw beto yesterday say that walls kill people day before, whatever it was. it was a quote that they don't help, they don't save people they kill people they're just so far apart in the two parties. >> to be fair, president trump is the one who first started using this at rallies saying build that wall and politicizing it i think reasonable sides can sit
down and find places -- >> well, we're not close right now. if one person says walls kill people and david perdue says there's drugs coming in. it's a chasm >> when you're there and see it personally in an overnight patrol, we were out in the patrol vehicles at night in the fields watching the apprehension of these people and watching drugs come across. listening to scouts in our ears talking about where they're at this is a big business both sides have agreed there's an issue down there. i hope this deal on the table today that we're only hours away from getting past this particular impasse >> do you think trump emphasizing it undercut obama's -- >> i think he turned it into a talking point first. into a political rally cry he was using it at rallies in such a big way that's when they turned it into a political football and said we're just going to say no >> because he addresses what
everybody thought was a problem all along in a high-profile way doesn't make it not worthy of doing it >> i don't either. >> i think it became politicized and then the demonization of people of mexico i think all of that was put into this sort of very politicized soup and it made it very difficult for all sides to -- >> doesn't mean there aren't trafficking. >> by the way, there are arguments for walls. digital walls, all sorts of things how do you do it >> for sure we need the border security and the senator makes very interesting points. we ought to actually get to an answer but i want to come back to the senator if he's still there and say you mentioned infrastructure and joe referred to it, i think infrastructure is important for the country. i'd be curious to get your input on what you think will happen in 2019 or at least in your opinion what you would support for infrastructure >> well, last year the omb actually for the first time in 20 years fully funded some of
our port deepening and instruction. the oil investments that we've made in the last two years and are making us a net exporter of energy we've got roads, rail bridges, et cetera we've got to get serious about. the idea of federal government funding all of this out of a $20 trillion debt situation situation is not workable. we've got to put revenue streams on some of these projects to get it in a private partnership. >> the new green deal, just being totally honest, i think it's the gift that keeps on giving to republicans. i watched amy klobuchar last night. she said i'm going to vote for it because i want a clean environment. i guess they're all probably going to say is that it'ses a tragsal but the details of it are bonkers if you look at some of it mcconnell wants to bring it up
for a vote you know, last time they did that, it didn't work it was a bernie sanders medicare for all. and you got 57 nays have republicans and manchin and others then you got no one voting against it they're going to do the same thing on whether they want to pay for people that are unwilling to work and free college and free child care. no meat, no air travel they'll just vote present. you won't be able to pin them down >> the real issue in your prior secme sec -- it would take a 50% increase in taxes alone just to pay for the shortfall we already have then you add on that this green deal they're talking about and then by the way a $3 trillion price tag on medicare for all. all of a sudden this gets to be silly math, guys
i'm saying you can't cut your way out of here, spin your way out of here, tax your way out of here the bigger issue, frankly, is what are we going to do with social security, medicare, and medicaid those programs have to be saved and nobody's really talking about that today those are the 800 pound gorillas in this conversation >> do you think taxes are going up on anybody in the next three, four years you think there's a ground swell in the country >> i hope not. we just gave the tax cut i don't think we need a further cut, frankly, because of the fact that over half of households pay no federal income tax today. what we've got is a settling out period we haven't really seen the full benefit of the tax deal from last year. the regulatory work we did provided a lot of enthusiasm out there and freed up capital right now we need to let that run a little while i'm hoping these trade conversations will give us something to be optimistic
about. >> just to come back to that point on taxes, you also i think have been quite supportive of trying to adjust the deficit the current deficit is, of course, expanding faster than had been projected and looking into next year, that seems to be the same closing in on a trillion dollars. if you don't increase taxes, let's say you don't. what expenses do you reduce? how do you control that deficit? >> first of all, we have a dod audit for the first time in history thanks to president trump. we can get at the wasted spending i think the biggest issue right now is what are we going too to continue to do to grow the economy. what we've done is proven if the economy grows over a hundred basis points that that produces about $300 billion in new tax revenue. even though the scar is still going up, wed it
it turned $22 trillion yesterday. >> we got to run but do you think there's any value given to the conversation in this country including what's happening on the left about taxing the wealthy to try to close any of the loopholes that do exist. would you be involved in closing what i think is a glaring and obvious one in carried interest, for example. just on the base si of the others feeling like the system is unfair. >> oh, i totally agree look, i argued -- we cleaned up some of the corporate deductions last year in the tax bill. there's more work to be done there to make it equitable for all. the tax bill also took about 40% of taxpayers off the role last year it's so antiquated it really needs to be reworked >> you had great jobs.
representing the people of virginia -- i'm sorry. georgia. >> georgia the great state of georgia >> georgia, georgia, georgia all right. you missed that earlier. >> coming up, we are going to talk markets with our guest host peter krauss including the idea that what the market is expecting right now might be just a little too perfect. i hate to say that we're going to explain when "squawk box" returns right after this
welcome back to "squawk box. futures right now up 77 or so on the dow. up another seven on the s&p which would put us at 2750 so everybody can go home. all the money managers that said that would be the high for the year, that's all they have to do and it's not even valentine's day. nasdaq up about 29 points. want to get to our guest host at this hour. we're thrilled to have you back at the table we teased it before the break. i don't know if it's sad or scary. you think that we're sort of priced for perfection right now. >> i do. >> things are not going to get get better any time soon >> we're going to have stable growth, no contraction in
growth i think the market thinks the fed is not going to increase interest rates i think they think the fed is going to be very stable. i think the market is basically feeling it's not going to hurt the growth in the united states around the world and i think there's no political uncertainty or there's no more concern for political uncertainty. so the market is very peaceful right here having said that, i think it's important to note that over the last four months, the market is down significant volatility over the last four months if any of these things were to change and there would be political uncertainty, i think the china deal would work out to be positive. great to the upside. but i think the market is already pricing that in. i think that's built in. but if, in fact, we have growth that's slowed down
if there's political uncertainty. if the fed does increase rates, if in fact the earnings growth actually starts to slow down where it goes negative, i think that's going to really hurt the market >> okay. so that's the negative side. is there anything you say there could be a handful of breaks that's not being factored in as a potential? >> i have a hard time with that. i think the market feels pretty strong right now europe is not going to break to the upside we could see in china a reacceleration of growth attempting to stimulate growth but those things are unlikely. would like to believe that europe would be flat and struggles, doesn't have a lot of fire power to grow the economy. >> maybe the four-month weakness
you pointed out was because of what you're pointing out >> it could be but it could also continue >> right that's why we're trying to figure it out. >> so four months is a short period of time for weakness to resolve itself >> in terms of just pure valuation, we're much cheaper than we were a year ago. >> no. you're cheaper than you were -- you're cheaper than you were at the peak of the market at 2900 but you're not much cheaper than you were >> since earnings went up 20% or whatever it was. >> actually one year ago the market is 2% higher than it was exactly one year ago. >> go back to the beginning of 2018 what were multiples? because earnings have gone up while the prices have come down. or go back to the lows on christmas eve. the market is only up 2.2% the the beginning of 2018.
>> or go -- okay so we sold -- we had a good january. but then we went nowhere for all of 2018. so from the peak to -- i mean, there were probably five multil points on christmas eve. probably five multiple points cheaper. >> but that's why i looked at four months. >> right so i just wondered whether that's reflecting. we went nowhere in 2000. already had a year of no growth under our belt so maybe you should have said this on january 2018 >> i wasn't here in january 2018 >> peter krauss is going to be sticking with us for the rest of the hour a lot from him just ahead. when we return, the debate on what the wealthy should pay in taxes we'll be joined by jared bernstein and grover norquist who is the president for americans for tax reform and don't miss a special interview on friday right here on "squawk box." we'll be sitting down with charlie munger to talk markets, the ecomony, and everything in between.
stay tuned "squawk box" back in just a moment ♪ hold on, i'm comin' ♪ hold on ♪ don't you worry, i'm comin' ♪ here i come ♪ ♪ move to the enterprise-grade cloud that's built to handle all your apps. ♪ ♪ the ibm cloud. the cloud for smarter business. sleep number 360 smart bed. it senses your movement and automatically adjusts to keep you both comfortable. save 50% on the sleep number 360 limited edition smart bed. plus, 24-month financing on all smart beds. only for a limited time. and everyone i've ever opioloved away from me.thing everything. i blew my ankle out and i got prescribed pain pills by my doctor. if making my detox public is gonna help somebody
i'm all for it. i just wish i would've had a warning. when yowhat do you see?itical issues facing our world, we see a billion more people breathing free. we see access to fresh food being the global norm, not the exception. we see homes staying cooler, without the planet getting warmer. at emerson, when issues become inspiration, focusing core strengths to create a better world isn't just a result, it's a responsibility. emerson. consider it solved.
welcome back to "squawk box. take a quick look at the futures right now. it looks like we might avoid a shutdown and the markets are up about 74 points right now on the dow. nasdaq up about 28 points. s&p 500 up close to seven points when we return, we are minutes away from the cpi data we'll have those numbers for you. "squawk box" back after a quick break. had a coach in high school. really helped me up my game. i had a coach. math. ooh. so, why don't traders have coaches? who says they don't? coach mcadoo! you know, at td ameritrade, we offer free access to coaches and a full education curriculum- just to help you improve your skills. boom! mad skills. education to take your trading to the next level. only with td ameritrade. a cfp professional is trained, knowledgeable,
at letsmakeaplan.org. now you can, with shipsticks.com! no more lugging your clubs through the airport or risk having your clubs lost or damaged by the airlines. sending your own clubs ahead with shipsticks.com makes it fast & easy to get to your golf destination. with just a few clicks or a phone call we'll pick up and deliver your clubs on-time, guaranteed, for as low as $39.99. shipsticks.com saves you time and money. make it simple. make it ship sticks.
♪ we are one minute away from january cpi data the futures right now up about 73 points. and the nasdaq, i'm talking about the dow. nasdaq up 28 s&p up seven points or so. we'll take a look at the 10-year note which is 2.70% even somewhere around there but still conspicuously below where we thought it would be jim iuorio is down at the cme in chicago. i don't know what expecting.
i guess we would be ready for -- no one's worried about it. i guess it would be in the cards at some point. certainly a new angle into what jay powell is thinking >> no doubt about it i think the cpi is the biggest deal that's the one thing that could spoil the party. we want to believe the data's pretty good. there's not very much inflation, and the fed could stay out of it for ancillary reasons. here it comes. month over month, we were expecting a plus point one we got a zero. ex-food and energy we expected plus 0.2%, we got that a little higher than expected as well basically i'd call it tame the market, the s&p lost about a tick or two. so i think the initial reaction to that was oh, gosh, a couple different things there's a little more inflation. realize it's probably not a good idea at all. so the story doesn't change.
stays at 2.69. i don't see anything that's going to get in the unbelievable stock run we've had. back to you. >> okay. thank you for that want to get back to our guest host peter krauss the chairman and ceo of apiture ventures. want to talk to you about hedge funds and what your take is on their performance or lack of performance last year. by the way, i don't know if you saw the story. bill ackman who had some great performance even more recently than that which is now up 24%. we talk a lot about active management and whether you think people can actually truly out-perform. by the way, david einhorn on the other end, you know, would probably cancel out whatever performance bill ackman had last year >> so look i think people can perform i think humans can perform
i think can be effective but there are two big issues one is how much money do you run? the more money you run, the more challenging it is to produce performance. and what is the incentive structure under which you run that money and the challenge with hedge funds is the fee structures are very heavy when you pay 1.5% plus the 20% on the total return, that's a very big number. and it's challenging to produce return on that and it also inventivizes hedge fund managers. >> do you have any money in hedge funds right now? >> i don't >> personally? none for clients >> none personally >> and could you imagine a time when that changes? >> i could if the fee structures were to change >> is there ever an environment where you say i'd prefer in this particular environment to be in a hedge fund than in an index world? >> sno
because i think the structure of hedge funds has passed its youthfulness we all have a lot of exposure to beta so what i want from my best investors is to find alpha and create returns in excess of the market and hedge funds aren't necessarily structured to do that to produce returns on some percentage of the market exposure and that's not really what i need i have lots of market exposure i want more return than the market >> okay. put hedge funds aside. any actively managed funds at all that you want to put money in >> sure. there are active funds i would put money in >> like? who do you like right now? >> any particular investor >> because that's what you're ultimately doing you're backing an individual we're talking about bill ackman and his performance. >> i like the managers that i've selected at apiture.
they're only paid based on creating performance and i'm willing to back people who have that incentive structure. >> and what percentage of the money you're putting with the active managers versus the passive stuff? >> i put no money in passive >> you put no money in passive >> only in active. >> and what's the fee structure on the active stuff you're putting money into >> the fee structures i want to put money in are all low-based fees plus performance >> doesn't need a return anymore. i'm surprised you care about fees even. i'm surprised you care about anything are you even in a money market >> you're too much of course i care about fees. >> why do you care about a return at all? >> of course i do. >> what do you mean? he's running through with money. >> i don't even know why you're doing that either. i'd be in the islands somewhere. >> "the wall street journal" just wrote a piece about commissions for online brokers
what do you think that's going to do for some of the bigger guys that going to pull all the fee structure down >> i think the fee structure and distribution system is too high. can we talk about fees for asset managers and the fees are also quite significant? part of that fee sometimes goes to the distributor and while it's disclosed, it's not very clear if you pay an asset manager 65 basis points sometimes that goes to the distributor. on top of the advice the distributors get there's quite a bit of expense in that channel. i think over time that gets squeezed down. >> what are your fees now? >> our fees are now etf plus 30% of performance. >> do you have anybody balk at the 30% number >> no. it's actually a completely
industry convention? >> fair enough peter krauss going to continue to be with us this morning >> thank you when we return, taxing wealth in america. it seems like leaders want everything on the table as the u.s. reckons with a growing wealth gap big deficits and the new milestone that just reached yesterday. $22 trillion in national debt. when we come back, we'll debate how the wealthy are taxed in america with grover norquist and ayn.d bernstei st tuned you are watching "squawk box" on cnbc
what do advisors look for in an etf? don't just track an index, help me meet a client's need. is the fund built to sell or built to last? etfs are only part of a portfolio. so make it easy to explain. give me a quality fund that helps me get clients closer to their goals. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully.
a place with one of the highest life expectancies in the country. you see so many people walking around here in their hundreds. so how do you stay financially well for all those extra years? well, you have to start planning as early as possible. we all need to plan, for 18 years or more, of retirement. i don't have a whole lot saved up, but i'm working on it now. i will do whatever i need to do. plan your financial life with prudential. bring your challenges.
more likely i think from the administrative standpoint from increases in the rate at the top level and maybe get a couple of trillion it funds some of this. >> what i'm saying is you can't cut your way out ofhere. you can't spend your way out of here you can't tax your way out of here this has got to be an all of the above conversation >> that was former congressman barney frank and current senator david perdue talking taxes this morning we've been talking all about taxes on the wealthy in this country. now one of the world's richest people is weighing in on that debate bill gates spoke on a podcast produced by the verge. in it he said the u.s. tax rates could be more progressive but he also criticized what he called extreme politicians. gates said the irs shows the statistics for the top 400 people of the highest income and they pay the rate they pay it's about a 20% rate so it has nothing to do with the 39.6%
marginal ordinary income rate. so it's a misfocus let's welcome in grover norquist and jared bernstein. he's now a senior fellow with the center on budget and policy priorities also a cnbc contributor. gentlemen, welcome to both of you. grover, taxes are a constant debate in this country but it seems the rhetoric and the proposals from the politicians have ratcheted up. what do you think the odds are that any of these proposals that have been put forth to this point actually pick up >> well, zero in the next two years we have a republican senate that isn't going to raise the corporate income tax which is one of the things the democrats are talking about. they made it clear that 21% is not going to go up and there's a lot more tax reform tax reduction we could do but the democrats would have to seize control of the house, the senate, and the presidency to raise taxes.
the only time taxes have been raised in this country going back to clinton were the two years when clinton had a completely democratic congress and then 16 years later, the two years when obama had complete control. they raised taxes and almost got thrown out it's odd the democrats are ahead of time talking about tax increases because they could end up losing the 2020 election not because they raise taxes, but because they threaten to so often. >> jared, you think that's the case or is there a different sentiment in the country today >> i think there's a different sentiment particularly as regards taxing the extreme wealth concentration at the top of the scale under ronald reagan, conservatives like larry kudlow like to make this point. taxes went up 11 times when it comes to the kinds of taxes the democrats are talking about right now, they typically
poll extremely well in part because they're very narrowly targeted and they're targeted simultaneously solving two big problems one is the vast extent of wealth concentration. that is as bad as it's ever been since the late 1920s i hope we all agree that ended badly. secondly, the extent of government debt. just like you heard the commentator saying earlier, these ideas raise significant revenue. so they push back both on our government endebtedness and our unacceptable high levels of wealth concentration >> grover, that's a good point nobody likes paying higher taxes, but i'm not sure the people mind all that much when it's taking somebody else's money. when they feel it's never going to effect or touch them. >> people can answer that question, but if you ask them do you think this will solve the problem, do you think that if they raise taxes on higher income people they'll also come for you, the answer is yes they will come for me that's how we defeated the tax increase that obama was pushing because people said sure he
talks about taxing the rich. but we know that people tell the pollsters that they'll come for us remember the income tax was only supposed to be a 7% rate on people who made more than a million dollars a year in today. it didn't take very long for the lowest income person in the country to be paying 7%. so what the left does is they have a trickle down taxation they bring in a tax on rich people income tax only a few people will pay it. and they say the same thing about the tax on wealth or the 70% or 90% rate. and then they drive those rates down the difference between the united states and denmark and the united states and sweden is not how they tax rich people, it's the heavy tax marge gnat tax rates on middle income people and the 20% value added tax, the sales tax hitting middle income people they say we're going to tax high
income people and then go after the middle and across the world >> grover, let me ask you a question we were talking about loopholes around the estate tax. seems like the lowest hanging fruit around for example, the idea that you can -- most wealthy people try to die with as much capital gains as humanly possible because we allow you to step it up and there's no tax. that's $650 billion in revenue right off the bat. people use trusts and generation skipping trusts that i have no social utility as far as i can tell we're all sending each other letters to each other from our husbands and wives that it's just paper pushing why do we allow these things do you agree that this is supable? >> two things. i don't think we should have a death tax. and i think if people earn money, they should be able to hold onto it we should not be thinking of new and different ways of stealing
people's money the question is what are the legitimate needs of the government and how can you fund those. right now the government is doing a whole bunch of things it ought not to be doing. make a list of those stop doing those and bring taxes down for all people i mean, this is -- the other question on the wealth tax is 12 european country hs a tax on wealth in the 1990s. 8 of the 12 got rid of them the leftists should be over there asking why did they get rid of wealth taxes and why does elizabeth warren who talks about a wealth tax say we're going to have an exit tax like the republic in germany in the 1930s, if you have to be putting exit taxes there's something wrong with your tax structure. >> what do you think about that, jared? >> i mean, what i hear from grover is the same thing i hear from a lot of people who oppose these ideas. and it's sort of like almost kind of a fear factor. like they kind of smell that
the -- this new group of progressive politicians are kind of onto their game and so they're throwing out lots of names about europe and the republic in fact, we have a long history of a much more progressive tax system precisely for, by the way, the very reason that grover got down to. which is that most americans and i think grover is unrepresentative in this regard. actually want to robustly fund social security, medicare, and pushing back on climate change and we're not going to do that without raising more revenues and the correct place to start that revenue project -- >> start >> -- is at the very top of the scale which you heard, by the way, from no less than bill gates who's a very wealthy person himself he pointed out that the effective tax rate for those at the top of the scale is around 20%, 25% now, it is extremely unjust in the view again of most
americans. i'm not talking about this panel. i'm talking about the people who are actually going to pull the levers when these kind of things come to votes. that that's just a basic unfa unfairness sbilt into our taxes. and the estate tax is an egregious example of what i'm talking about. more than half of the wealth of the inherited class goes untaxed. while paychecks are taxed every day. so that kind of unfairness is moving out of the building and it makes people like grover understandably nervous >> grover, let's go back to that point that the tax rate the riches americans pay it's a reason for why the tax system is so unfair. 20% or more than that in terms of what those 400 americans are paying, it's because most of their wealth is not coming from ordinary income. most is at capital gains levels. the argument like marco rubio put out yesterday saying he would like to raise some of the taxes that are put on some of those other ways of getting
money. if you don't get it through and you're not charged by your w-2, if you're not paying ordinary rates, is there argument to say they should be leveled >> people pay taxes on income they earned and then they save it and invest it you're talking about the second, third, and fourth time you're taxing something the death tax hits you after you've paid taxes when you earned it, when you've saved it. they tax it again and again. if you put it in a corporation, they tax it at the corporate level. there are many levels of taxation to look at one of them and say this is a low one, point of fact you're saying the dollars being taxed more than once and i'm not in favor of -- i think we should tax consumed income one time at one rate. i'm from massachusetts progressive massachusetts. we have a flat rate income tax by constitution. and therefore when the politicians want to raise your taxes, they have to look everybody in the eyes and say we're raising all the taxes. the point of the graduated income tax is to provide people
in different groups and mug them and tell the others this isn't you. this isn't you that's not the rule of law that's not a just way to run thinki things you treat everyone the same. don't then mug them one at a time on taxes. >> jared, i hope that you're right. i mean, you really did say that the new wave of the left, the aocs, and the elizabeth warrens, they got people like grover on the run. so they're, like, bringing up -- i -- >> i couldn't be happier >> i want you to run the 2020 campaign for president i want you to have all their ideas front and center. >> it is true that my former -- it is true -- it is true that my former boss joe biden said that i couldn't get elected dogcatcher. >> keep emphasizing those new ideas. i love it. >> i recommend that both of you look at the polls to which i'm referencing. >> get people to tax other people
>> hold on, joe. let me push back a little bit. one of the reasons these ideas are popular is -- >> with who? with you and your crazy loony friends? they're not popular. >> see, this is -- >> they're bonkers >> hold on let's have a conversation. >> clinton did it and obama hav without, a, interrupting, and, b, name calling. >> i can't believe what i'm hearing. >> crazy, rhodesia. >> that is a fact. >> when i hear you guys screaming interruptions with looney and crazy, i know you're on the run i know you're on the run and here's the fact, the reason you're on the run is because you recognize the new voices are tapping something that the american electorate is responding to. and one of the reasons they're responding to that, a factual point, one of the -- let me correct a misstatement by grover, in fact, if you go up to the top -- if you go up to the top 1%, you'll find more than
half of their wealth, 55%, is untaxed. it is not taxed once, twice or three -- it is untaxed and that's because these are accumulated gains that avoid taxation that's what they're going after. >> grover, your ten seconds. >> couple of things here the politicians under obama and clinton, when they came and made the same announcements, american people love our progressive tax policy, this is great, everybody is for it and got thrown out of office as soon as they put in taxes, not even as high as are being talked about now so we have seen what really happens when politicians really do this, in europe and here. >> we shall see. >> we got to leave it there. we had to wrap three minutes ago. >> my yellow vest is ready >> guys, we appreciate your time >> to new york stock exchange. where jame crame e jim cramer jw we're hearing about a meeting between president xi, that is sort of new, new info, but the market is up a little bit. do you think a china deal is
already in the markets do you think, jim >> no, still not in the same way that i thought a government shutdown being averted was not in the market and then, boom, we got just an incredible gain. so i think that we're going on the way toward a trade deal that would be very, very good for our country, that will recognize that the chinese were on the run. people don't want to say that, because there is substantial number of people in the media who believe the chinese, prc is all powerful you and boii both know that i find it a great insult to our country. >> will there be -- will there be something else on the horizon that will hold -- that will temper the market gains or off to the races after that? >> the problem is that unfortunately the -- now that the government has come back, we're going to get every single one of these deals is going to happen, uber, lyft, and then we're going to have that whole second wave of every company that delivers food to your house, but they're all going to
get big valuations and i think that air bnb will become public. that's a wave of deals we're going have to sell faang to be able to buy. >> so 2019, when we look back on it, is another transition year in the averages, you think, jim, or -- >> i think it is a good year i think we had bear market in 2018 at the end from october 3rd to christmas because people wanted to get ahead of the great bear market of 2019. those people have done their damage now i think there are a lot of people who do not share your and my impression, joe, that things are actual things he's worried about i think we saw already sort of reflected in what happened on christmas eve or culminated on -- >> i got in trouble the other day, i went to an event where i said employment is good. and it was, like, can you tell me when it is -- oh, yeah, really, you're one of them what am i? i'm one of those people. >> all right. >> i guess i am. i'm one of those people who favors employment.
sorry. >> all right. >> don't make that mistake you'll be on the red hot griddle. >> i know it i won't do that. anyway, thank you, jim we'll see you in a couple of minutes and a programming note, don't miss an exclusive interview today on closing bell with goldman sachs ceo david solomon. stn meomes your way at 3:15 p.m. eaerti stay tuned "squawk box" will be right back. sometimes, they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group - how the world advances. ♪
welcome back to "squawk box," everybody. want to let you know, not to miss is a special interview coming up friday here on "squawk box. we'll be sitting downing with berkshire hathaway vice chairman charlie munger, talking markets, the economy and lots of other things tune in to see that. >> i have a very special message, i'm very excited today. because i need to wish a very happy birthday to my grandmother, lilly sorkin, who turned 100 today she is 100 years young she is an amazing woman. of course, mother to my father, larry sorkin and steve sorkin, who is a schoolteacher, down at landis school she was a schoolteacher in merrick, long island, where she is now we had a big birthday party for her over the weekend she wants no celebration, no birthday at all, but 100 years
old is really a remarkable thing. grandma, we love you so much and so proud of you. >> do you know a lifestyle secret to pass along to us other than obviously your great genes? >> she's hopefully given me the great genes. >> has she ever have a drink, does she not have a drink? anything >> she's taken care of herself. >> food? exercise >> everything in moderation, joe. everything in moderation >> there you go. >> just a great spirit and disposition towards life that's what i would say more than anything else and she's hopefully given that to everybody in the sorkin family grandma, love you, thank you and congratulations on 100 years. >> happy birthday, mrs. sorkin. >> anyway, back to peter, for a final quick moment is there anything you can say that is positive at all? you've been so negative. positive birthday party here. >> you're not very positive.
>> i think that -- i don't think the market is going to crash i don't think we're going to have an '08. i think the market will struggle with earnings growth and that will get resolved and i think the economy is pretty strong and, you know, we're not going to have a big crisis so -- >> and just real quick, as an investor, though, what are you doing about all of this? with this negative sentiment you seem to have >> i said three, four months ago, i wouldn't put money in the market i still wouldn't commit -- i still wouldn't put more cash in the market but i think in the course of this year that will resolve itself and we'll find appropriate time to invest. >> did you put any maoney in th market in december >> i did not. >> do you wish you had >> no, i don't. >> really? >> it would have been nice to have done that but i'm not smart enough to figure out december '24. >> how do you know when to do it later this year? >> i think it will be obvious. >> when it is obvious, it is usually not obvious, is the
problem. >> like in december. >> i think that earnings will start to grow. they'll come to a point where they'll stabilize, they'll start to grow. and market will start to go up and it will be -- you'll have two multiple year run and be able to -- >> thank you, sir. great to see you. >> thank you so much. make sure you join us tomorrow right now time for "squawk on the street." ♪ because i'm happy clap along if you feel like a room without a roof ♪ ♪ clap along >> good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber. stocks look to build on yesterday's move as the s&p closes above the 200 day first time since december 3rd. treasury secretary says so far so good on china trade talks europe is green, january cpi up 16 year on year. ten year at 27 we get more fed speak on the way today. road map begins with political progress, a budget deal and