Transcripts For CNBC Squawk Box 20180227

Where theres you know, theyre used to a lot of cold weather. Theres a lot of soul searching going on inside the ioc. We have curling we have curling i watched that in person. It was very tense really tense once it was the eighth frame, they went up five points you sort of knew what was going on we had a guy sitting next to us doing his own play by play which helped in terms of some of the rules. Did you edit the Cross Country tape were you okay on this . I didnt fall so its like downhill kind of did you go up any hills its more like ice skating. All right welcome back. Lets check the markets after yesterdays 400point rally for the dow. The blue chips are up 10 since the lows of february 9th the nasdaq up more, its recovered all of its losses. Nasdaq 1 from its high that it hit back on january 29th the dow is still off by 3. 5 from the january 26th highs. Look at whats been happening this morning in the u. S. Equity futures. At this point, you can see where we are the nasdaq off by 1 this morning it looks like the dow syndicated up by 45 points s p up by 2 points nasdaq up by 2 points as well. In asia, the nikkei up by over a percent. Hang seng is down. In europe, things are relatively flat slightly positive for the ftse in london. The cac and dax slightly negative the tenyear yield sitting below 2. 9 thats been a key level. As yields have remained lower, you have continued to see these gains in equities. Breaking deal this morning. A big one involving our Parent Company, comcast making a 31 billion cash offer for british broadcaster sky. Sky shares shooting higher on the news comcasts bit for sky rivals a current offer from fox in a statement comcasts ceo said this transaction would expand our International Footprint and position to us more effectively compete in the rapidly changing and intensely competitive entertainment and Communications Landscape so theres been lots of speculation about whether comcast would come in over the top with the topping bid over disney for 21st century fox. So they get that no that they wouldnt want 21st century fox, but regulators probably wouldnt allow that the piece that they wanted was always the sky piece so that gets you most of the way there. The complication is does fox come back. In the uk regulators have been tepid about allowing fox to buy this asset will they look more favorably upon comcast does disney think, look, we think this asset is strategic to us, we need to buy it. Does this become a bidding contra contrast does the fact that disney is involved change the dynamic with regulators also the various bedfellows involved in hulu, theyre all connected. And if comcast were to be successful, could they squeeze out 21st century fox and disney. If youre the majority holder, you do things, if youre the minority holder, youre unhappy just sitting there if they can get regulatory stuff in line, well make a bid . No, this is a bid but you read the way its phrased. Now theres going to be in the uk theres all sorts of rules and regulations about lou these takeover proposals go forward. Now theres a period with which you will hear back from regulators, and then well see then this could morph into a s secret double bid. Sky shares are already surging ahead. In the uk you have to disclose very early your bidding intentions interesting its a big deal. I think foreign revenue for comcast, 9 now. This would go to 25 diversify the business. You wonder how they grow here because theres so much antitrust stuff. We have one of the biggest regulators on our air now. Lets get to jon fortt at the mobile World Congress in barcelona. He has that special regulatory guest. Jon . Thanks. Yes, im here with the chairman of the fcc, were in barcelona welcome. Nice to be with you i want to talk about sky, i know its not your problem, european regulators, but global m a in the space has become a big deal tell me how that changes the way you look at companies and the types of remedies that might need to be in place to protect consumers. Ive long been of the view and i cant express an opinion about this transaction, i just heard about it today ive long been of the view that regulators should focus on facts prevesented presented, different whether or not the deal is in the Public Interest, if not you take the appropriate action thats the general view i have applied to any m a in the economy. Is there any piece of this has impacts the way you look at comcast as a player in the u. S. Market or at the u. S. Market in general as a regulator im afraid i have not had a chance to study the transaction. Frnts on. Once you do, are there elements that could come into play in your thinking . Im not quite sure how the transaction might affect u. S. Markets. What i can say is that any deal before the fcc will receive Public Interest scrutiny as it always should under the Communications Act another aspect of this show thats affecting players like comcast and sky is 5g. Its what everybody is talking about here you were one of the people talking about it you said you want the u. S. To lead in 5g that will require spectrum, midrange spectrum. You are looking at open up 3. 7 to 5. 2 gigahertz spectrum for commercial use how could do you that as quickly as possible . This is a global race i said yesterday in and many times i want the United States to be the leader in terms of 5g innovation yesterday i was pleased to announce well hold in november an option of 28 gigahertz and 24 gigahertz spectrum this is going to be at forefront of 5g. In the coming months, well look at 3. 7 band, and the 6 gigahertz band i believe if we push enough spectrum into the marketplace, consumers will benefit in terms of better, faster, cheaper wireless experience. On the infrastructure side, we recognize the architecture of the future will be different Wireless Networks will need more small cells, less 200foot cell towers so were trying to match the framework with the infrastructure needed in order to produce 5g networks that are world class. Andrew ross sorkin has a question for you quick question for you, ajit. There was a report out that the internal watchdog in the fcc was investigating the role of the fcc and the sinclair tribune tlans transaction, and whether you were aware of that transaction or whether it wyou were aware ia taking place did you know that transaction was coming before it was announced when you made that rule absolutely not. I said that these allegations are absurd anybody who has seen my views on media ownership and other regulations know ive been extremely consistent going back to my first days at the commission i think my record speaks for itself fair enough go ahead, jon. Net neutrality continues to be something that people are not talking about, ityouve defende your position on title 2 saying it will increase investment and be better for everyone clearly consumers dont trust the providers of broadband to do the right thing. How is that knowledge of how passionate people are influencing the way youre attacking this issue and youre going to reassure the public that this will work out to their benefit . There are two parts of the answer the first is focusing on the facts of what we did some people said we should wipe the slate clean, have none whatsoever we chartered the middle course, we said Internet Service providers will have to disclose business practices, backed up by federal trade Commission Enforcement so consume e and competition are protected. Thats the careful approach that gave us the internet economy in the United States. The second piece is countering some misinformation out there. When we made our decision, there were headlines, the end of the internet as we know it 2 1 2 months later people are still using the internet the internet still works the online experience will continue to get better as time moves on, some of the fear mongering will be proven to be baseless. And everybody i think wants an open internet and more Infrastructure Investment across the United States and around the world. Ajit, one other question. Also in the news, how do you as a regulator think about some of these ott services, and common carrier obligations if you think theyre obligations. Theres a protest online about amazon and apple and others who effectively broadcast or allow streaming of this network, nratv, and theres a boycott going on people saying they shouldnt allow streaming of these things or make it as easily available its different than a regulated piece of the business. Do you think you should be regulating that piece of the business as well traditionally the s. E. C. Has taken a marketbased approach to those services we dont regulate the way in which amazon and other companies stream content unless theres an anticompetitive problem, i dont anticipate regulation in that regard. Perhaps its strange to ask the regulator about changes to the stated mission of the fcc, but it seems like this broadband revolution over the top and the power of certain providers like netflix, like amazon, like apple raises the question of does the fcc need to look into whether diversity is being maintained . Whether theres so much power to fund certain types of content that these players are amazing that it amassing that its affecting americans. I set up a Diversity Committee last year to study issues about diversity in Silicon Valley in some cases the Employee Base is not as diverse as the overall population we asked the committee to look at ways in which thats happening, and if there are strategies we can deploy to change that. Its an important issue to talk about. Is Congress Moving ahead in ways that youre comfortable with to update the rules of the road in media, in access for this era you talk about how there are certain very specific boundaries that youre given to operate and youre determined not to go outside those boundaries its not clear those boundaries were built for this era. Thats the central problem were facing so the industry is dynamic but the lawyer is static the law reflects a snapshot and moment in time im grateful to leaders in both sides of the aisle looking at ways to update the rules and make it easier to remove barriers and deliver dimg tagit opportunity. I hope notwithstanding the overall political environment this is an area where we can come together. Infrastructure and investment in next Generation Networks is something that should be available to all people, not just one particular party. We all, it will be watching literally and on our devices thanks for being with us no problem. Jon, thank you very much. Hes very good. I like him very smart guy jon and ajit. Thats what im saying ajit, i think, approaches this stuff with a very a lot of people have been theres been critics on all sides, i think he approaches the stuff with thought. Lets get back to the media story of the media our Parent Company, comcast, looking to outbid fox for british broadcaster sky. Geoff cutmore is in london there was a Conference Call already this morning yeah. I think the interesting thing about this story, here in the uk nobody actually has heard of comcast. As surprising as that may seem to your audience in north america. One analyst this morning that we spoke to described comcast as the biggest Media Company you have never heard of in europe. Thats why this is such a delicious bid and opportunistic bid but one that ultimately the regulators here will look favorably upon they have come in at 12 pounds 50, a significant premium to the bid on the table from Rupert Murdoch. In dollar terms that values sky at 31 billion, which is a 16 uplift on the previous bid the markets have run the share price through the bid price. So there is an expectation in the markets that there will be a competing bid. Whether that comes from the murdochs or whether that comes from disney, well have to see the murdochs bid for sky, they have 39 of the business, has been on the table for some time. The politicians who scrutinized it have said they dislike it because they think it concentrates tooen ne much medi power in the hands of Rupert Murdoch in the uk. And remedies could have included Rupert Murdoch spinning out the News Business and running it as a separate entity for ten years, to demonstrate a commitment to impartial News Coverage by the sky brand. So theres a lot of issues with the murdoch bid. But you know how tenacious the Murdoch Family are and you know how bob iger has a vested interest in seeing the existing bid go through. It will be interesting at this stage to see what they can come back with here clearly Brian Roberts has put an attractive bid on the table for existing sky shareholders. Just one other point to make, four people who are not so familiar with what sky does, they create entertainment content. They are a digital and satellite platform here in the iuk they provide Internet Services over the phone and via satellite. They have a News Business. In many ways they would be a natural fit for comcast at this point. They have just won a bid for the main chunk of power lunch rigremiere League Rights in the uk and that would give comcast access to a globally attractive football franchise when i say football, i mean that in the english sense of the word rather than the american sense of the word. Geoff, its early on this, but the question will be what the 61 of shareholders who are not Rupert Murdoch, what those other shareholders think about this deal. That will be the trick of the whole thing. Absolutely. I think theyll be happy to see the price rising weve already heard from shareholders who said this significantly undervalues the business at the 1075 p being offered. So i think theyll be pleased to see the additional money put on the table. I think they will hope this bid goes higher and they feel it is worth more if comcast were to win at this point, the closing pe would be 22 times for sky, which doesnt look particularly stretched when you talk about a media asset that generates content and content in a world of amazon and netflix is a very important addition to any Media Companys arsenal. At this point those who have the shares will be tempted to accept the offer but many will want to hold out for a higher price. Bob iger said sky was the crown jewel in this entire tie up with 21st century fox so i think youre right with people anticipating Something Else is coming comcast and Brian Roberts have a bit of history with disney if you go back to that bid back in2004 which was not successful. I dont know whether there will be a settling of scores going on as far as the Roberts Family are concerned. I think thats where the challenge would come from at this point we are thin on the ground as far as significant comment from sky is concerned i suspect given the bid from the Murdoch Family has been on the table for such a long time, theyre scrambling to come up with an answer and a response. I think they will have been surprised by the timing and also the premium that the Roberts Family have put on the table yeah. Thats insulting by the way, geoff. What is . People over there never heard of comcast really ive seen your tv offerings over there, whether in the uk, davos, you could use a little comcast content over there, geoff. Watches when you say i work for comcast. Who are you . Really, they dont know comcast . Beyond the cnbc franchise, joe, more recently euro news, comcast has not existed as a media brand. Youll know us. Theyll get to know us all right. Thanks, geoff. See you later. And football soccer soccer is a big deal. Call it soccer. Its soccer. We have football your favorite show, downton abbey. I know. But in general, davos youre just thinking davos. Thats all i could watch what is that jay powell set to give his first testimony and you have stockholm syndrome youve been over there so long right . You have to get back and assimilate youre back home now back home. Embrace it in the saddle jay powells testimony as fed chair. What it could mean for equity and bonds. I hope youre not using the excuse that you didnt buy into the correction did you in gonow that you got your correction . Are you on the train you know whats awesome . Gigspeed internet. You know whats not awesome . When only certain people can get it. Lets fix that. Lets give this guy gig really . And these kids, and these guys, him, ah. Oh hello. That lady, these houses yes, yes and yes. And dont forget about them. Uh huh, sure. Still yes xfinity delivers gig speed to more homes than anyone. Now you can get it, too. Welcome to the party. Welcome back jay powell set to testify before Congress Later this morning. Joining us to talk markets is kamar and brett. Well have a bit of dueling economists here. Over the years people who have watched you have seen how you never really thought rates would head higher in a big way im not shire whether we can say you were wrong i dont think you can say i was wrong at all you thought we might go back below 2. We went to 284. I know. I think were still headed over 2 why would that happen recession . Not necessarily a recession i dont think youll get the 3 growth which we have had for a couple of quarters, i dont think it will persist. Second it goes down because these inflationary fears will not get born out either. If you dont have inflation or growth pick up, those are the two components of the bond yelled yield. Even if the fed does three or two basis points, you have it headed in the opposite direction. If you look at the probability of going below 2 , youre probably the only person in the world who thinks thats possible look at what happened when the first rate hike happened in december of 2015 after the 2008 crisis everybody thought that immediately the yield curve would steepen. I was one of the few who said it would flatten. By june of 2016 the yields had come down rather than rise as a result of the fed rate hike. Maybe with the new administration, tax reform, deregulation, Consumer Confidence, animal spirits, sink k synchronous global growth, you need to move into the future i will move it if it happens, but the rain reason for moving is if growth picks up. It hasnt already i dont think so. Globally . If you look at the Warren Buffett broadcast you did yesterday, it was all in terms of the benefits coming to the equity market, the benefits of Holding Equity over the longer term, how the tax plan is benefiting it. You did not ask much on the economy side, where the fed needs to work. If that changes, i will come to you and tell you it changed. But now is not the time to do tha that. What do you think about what he just said do you think well go below 2 absent a shock, i dont think so earthquakes can happen north korea things like that there could be accidents, japan can make a Monetary Policy mistake. Wars so it would have to be selfinflicted, a black swan type of event. Yes, something the market does not anticipate. Powell will have an upbeat message today. Why shouldnt he with 1 trillion in fiscal stimulus in terms of gdp growth, the feds outlook is positive. In december they were looking for 2. 5 growth. Our forecast is closer to 3 for this year. That will level off. Less growth in 2020. This is a short boost, but for now theres going to be higher growth thats the message he wants to send to congress were achieving our mandate, close to inflation goal, firing on all cylinders at this point all right well listen to powell closely how much of it is what powell says and does and how much is what other Central Banks do. Were priced for three ray hik rate hikes for the past month. All weve done in the large rate selloff is price in another rate hike it seems were keying off what we see with other Interest Rates and other countries. Thats determining our equities moves. Well get more clarity from the ecb later this year and their expectations to start moving rates and mario draghi was in front of europe and Parliament Yesterday talking about the low inflation in the eurozone, even though growth picked up. So the ecb message also continues to be dovish to the extent that persists, youre spot on, the fed cannot go on a raising rampage. In that case you talk about the dollar strengthening, which neither trump or mnuchin wants as long as we have such a spread between their treasuries and ours, investors will flock le here thats why tenyear at 2. 96 last yeweek was a buy and continues to be a buy at the current yield. Thanks. When we come back, its a busy week for retail reports from macys, jpmorgan, tjx, nordstrom and kohls. Comes up, well talk to steve sadove about big changes in the Retail Sector and trying to come pete with amazon right now a look at yesterdays winners and losers at holiday inn express, we cant guarantee that youll be able to contain yourself at our breakfast bar. Morning, egg white omelet. Sup lady bacon fruit, there it is but we can guarantee that youll get the best price when you book with us. Holiday inn express. Be the readiest. Take a deeeep breath in. And. Exhale. Aflac and a gentle wavelike motion. Liberate your spine. Aflac and reach, toes blossoming. Not that great at yoga ya but when i slipped a disc, he paid my claim in just one day. So he had your back . Yup in just one day, we process, approve and pay. One day pay. Only from aflac well come back to squawk box good morning welcome back to squawk box. Surprise surprise, were on television dow looks like they would open up higher, marginally, only about 6 points were on the red on the nasdaq recapping the top story, comcast making a 31 billion takeover offer of sky sky shares shooting higher on the news comcasts bid for sky rivals a current offer from Rupert Murdoch and fox. We are gearing up for a big week in retail joining us ahead of the quarterly numbers being released this week is jay sadove, former chairman and seo of saks Consumer Confidence is high. How is that translating to the Stores Retail sales are up about 4 . Probably the best Holiday Season weve seen in a number of years, probably since before the recession. And the consumer is feeling good and the retailers are feeling good the stocks have rebounded enormously, 50 off lows wasnt quite as bad as people thought in the prefall period and not quite as good as people are getting euphoric about now thinking about to where we are a year ago a year a go, we were talking about amazon what they were doing, what Online Shopping was doing, and then the border adjustment tax everything has changed since then except for the piece of whats happening with peoples shopping habits. That was enough to eat into walmart when they came out and talked about what it means for them, some of the changes online, and how they were not quite as successful in the Fourth Quarter as online the fundamentals have not changed. The consumer is changing you have a new world relative to how consumers are shopping the border adjustment tax is a fundamental change we have gone from the worst scenario to the best scenario for retailers in terms of the ratereduction. And thats giving breathing room for retailers to be able to make the changes that they need to make i worry about complacency. Now you have this freedom to make rach ppid changes in busin models the consumer wants convenience, value, experience. I thought the walmart numbers disappointed some people, but they beat a year ago t, the com did women, theyre still forecasting 40 growth in 19 but getting clobbered by 10 a share. It shows how High Expectations are relative to performance. I was going to ask you, the tax cuts do you think the tax cuts gets passed on in the form of savings to consumers or not . I think the consumer clearly youre getting more spending power for the consumer at all price points and wam leve wa wage levels. The highend consumer depending where they live is getting more in their pocket but the question is does a Strong Player say our tax rate is going down to 22 well pass that on thats a separate question. In terms of consumers getting more dollars, for the retailer or the corporation, there was a good article in the times this morning relative to large pieces going to share buybacks. Thats going to help the shareholders thats not necessarily going to the employees. Walmart is a good example relative to showing wage increases. That will put pressure on other retailers. In the companies im involved with, i am seeing wage increases. The reason i ask this, january kniffen talked about this if youre a Strong Player, maybe you do try to pass on the savings. Lower the prices and put pressure on weaker players it becomes Company Specific some of them thats why i saw you have this breathing room the fact that the quarter was good wasnt a blowout quarter it was less bad, pretty good gives all the companies an opportunity to invest. Some will do it in wages, some will do it in capital. You have to change your business model. I worry some wont move fast enough to make the changes you have to make you said what walmart is doing is the right thing who else is doing a good job a lot of companies are doing a good job macys will report earnings in the next hour or so. My guess is theyll have a good quarter. Theyre making changes the question is whether or not theyre going fast enough. Nordstrom is making changes. I dont know that theyll go private, but i think theyll make the changes faster. A lot of companies are making changes in whether its omni channel, investment in their store base youve seen 7,000 stores close last year. Everybody is looking at it saying well make changes. Some think theyre moving quickly but theyre not. Thats the real quisissue. Is it investment in wages, lower prices, in technology . Now you have to figure out how i invest in that retail is tough. You have a changing consumer, changing technology, amazon out there killing everybody. Its hard to say its two steps forward, one step back walmart may be doing well but not hitting on everything. Thats the concern you have. Steve, thanks coming up, vanity fairs bethany mclean, she has a new article on Sexual Harassment on wall street. And then jeb hensarling, his committee will hear testimony from jay powell that will be later this morning. And then ed lazear is out with a new oped warning that high Government Spending could derail Economic Growth he will join us at 8 30 a. M. Stay tuned, youre watching squawk on cnbc ron somethings going on at schwab. Oh really . Thank you clients . Well jd power did just rank them highest in Investor Satisfaction with full Service Brokerage firms. Again. And online equity trades are only 4. 95. I mean you cant have low cost and be full service. Its impossible. Its like having your cake and eating it too. Ask your broker if they offer awardwinning full service and low costs. How am i going to explain this . If you dont like their answer, ask again at schwab. Schwab, a modern approach to wealth management. Gglobal bonds, and highdividend strategies. Sure, these are investments. But theyre not what people really invest in. What people really invest in, is what they hope to get out of life. But helping them get there takes a pure focus. Because when you invest their money without distraction, hidden agenda or competing interests, Something Wonderful can happen. They might just get what they want out of life, and maybe even more. Time for the executive edge. Well start with some stocks to watch in todays trading a u. S. Regulatory panel has looked into broadcoms plan to ball qualcomm. There could be problems if there are National Security issues broadcoms Corporate Headquarters are in singapore. Reuters say republican senator john cornyn is urging Steve Mnuchin to have a panel review the deal before a key share holder vote. Microchip technology is in talks to buy micro semi, the largest u. S. Supplier of chip equipment to the military and Aerospace Industries the potential deal would value micro semi into the 60 range. The deal could happen as early as this week fitbits Fourth Quarter results missed forecasts weak sales over the Holiday Shopping season is to blame. The company also expects lower revenue from new products. Coming up, the me too movement exposed predators in hollywood and the sporting world, but its been relatively quiet on wall street vanity fairs bethany mcclelen has a new article about this thats coming up next. First a quick check of whats happening in the european markets. When this bell rings. It starts a chain reaction. Thats heard throughout the connected business world. At t Network Security helps protect business, from the largest Financial Markets to the smallest transactions, by sensing cyberattacks in near real time and automatically deploying countermeasures. Keeping the world of business connected and protected. Thats the power of and. 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If you cant afford your medication, astrazeneca may be able to help. Wow record time. S. At cognizant, were helping todays leading Life Sciences companies go beyond developing prescriptions to offering subscriptions with personalized, realtime advice for lifelong, healthy living. Honey . You almost done . Nope. Get ready, because were helping leading companies see it and see it throughwith digital. You myour joints. Thing for your heart. Or your digestion. So why wouldnt you take something for the most important part of you. Your brain. With an ingredient originally found in jellyfish, prevagen is now the number one selling brain Health Supplement in drug stores nationwide. Prevagen. The name to remember. Welcome back to squawk box, the me too movement has up ended hollywood and its spreading to other industries. So far its been quiet on wall street but maybe not expect that to last. Bethany mcclain is here. She is the vanity fair contributing editor called me too movement and wall street launching this morning shes also a cnbc contributor. Lets talk about this. Its a personal piece. Its not just about whats gone on on wall street and your own experience when you were at goldman sachs. Its got a little bit of a component. I, too, worked on wall street years ago. Before we get to your own personal experience, there has been lots of questions, i get it people say, when is it going to come to wall street . Is there a wall street ceo, h k hedge fund ceo that will get entangled. Why hasnt it . Its a very good story and a very painful story, and what i mean by that is that i think overt Sexual Harassment on wall street is far less than most people would expect. I think the industry has cleaned up a lawsuit started there 30 years ago. Wall street, especially the big firms, theyre now bureaucracies, with hr processes, rules, regulations, diversity training i think on the surface things are much better, yet if you look at the representation of women in finance its not improved much at all. You look at the heads of the big firms, the upper ranks of the big firms, still mostly white male and i think on wall street Sexual Harassment and economic discrimination have gone hand in hand. Do we think theres harassment thats gone on that is being covered up as a function of you talk about arbitration in your article, you talk about the vast amount of money thats available thats different than maybe other industries i think there might be at lower levels id be shocked if there were a harvey wine streen of wall street. Really . By that you mean a ceo. I mean a ceo that has engaged in acts that egregious. You talk about your own personal story and a number of incidents where you felt you were harassed. Another married Senior Vice President tried to get into my hotel room you called it a soul crushing moment. Right. What happened well, for me it was i always felt that i set myself up, right . I think theres also a component of women, especially of an earlier generation, who felt whatever happened they brought on ourselves by our own behavior and failure to protect ourselves. I was very young when i worked at goldman what i felt was if i had been more protective, if i had known better how to defend myself that situation would not have come about. So thats i think theres a strong component of take care of yourself. Bethy, i agree with that 1 100 not having worked on wall street but any industry in city, almost any one of my friends would have said the same thing. If something happens, why did i agree to go to drinks . How did i put myself in this situation . And until this fall when the movement started i would have just looked at my experience and said 100 my fault and it was interesting to see it through a different lens im still not sure i can make that shift in perspective, but its interesting to see it through a different perspective. What do you think the lesson is, maybe less for women, more for men out there, about the interaction and relationships. One of the reasons i ask is ive talked to men. In this environment im going to have a meeting with a female executive, doing it with the door open. If we were going to go out in a group, grab a drink, if were on the road i may not want to do that anymore i dont know if thats a good thing or a bad thing i think its a bad thing. In some ways its an understandable thing people are worried that me too will have a huge backlash for them this is a Network Oriented industry if you are excluded from that network, if you cant get the face time with people, the closed door conversations where the real conversations happen you are locked out i think this movement could be used unconsciously by menace protecting women in a way that is going to further womens exclusion and it could be used consciously by some menace a way to exclude women in a way thats not going to be healthy. The articles in vanity fair. Its out today a very important piece thank you. Great to see you. When we come back. Much more on the big media news of the morning our Parent Company comcast is challenging fox to buy british broadcaster sky. Tas d alisigdeilananys rht ahead. Squawk box will be right back. Starting with advanced manufacturing that brings big ideas to life. And cuttingedge Transportation Development to connect those ideas to the world. Along with urban redevelopment projects worthy of the worlds top talent. All across new york state, were building the new new york. To grow your business with us in new york state visit esd. Ny. Gov. When it might be time to buy or sell . With fidelitys realtime analytics, youll get clear, actionable alerts about potential Investment Opportunities in real time. Fidelity. Open an account today. Fidelity. Hey, sir losealot thou hast the patchy beard of a prepubescent squire thy armor was forged by a feeblefingered peasant woman. Your mom as long as hecklers love to heckle, you can count on geico saving folks money. Boring fifteen minutes could save you fifteen percent or more on car insurance. Breaking news. Cnbc parent comcast making a 31 billion cash offer for british broadcaster sky. Well have the full details coming up. The great comeback wall street roars back to life putting the dow and the s p 500 within a stones throw for recovering and would you fly buffet air . The billionaire investor not ruling out buying an airline his thoughts on the sector and reaction straight ahead as the second hour of squawk box takes off right now. Live from the beating heart of business, new york city this is squawk box. Good morning, Everyone Welcome back to squawk box here on cnbc we are live from the Nasdaq Market site in times square. Im becky quick along with joe kernen and Andrew Ross Sorkin. Take a look at the u. S. Equity futures which are relatively flat this comes after a big day yesterday where we saw a 400 point gain for the dow nasdaq is only at this point sitting at 1 below its alltime highs. The dow and s p 500 just under 3 yeah, came back quickly cnbc parent comcast making a 31 billion cash offer for british broadcaster sky. Sky shares shooting higher on the news comcast shares a little bit lower on the news. This is a conflicting offer with Rupert Mourdocks fox. We have two reporters with us. He just met with comcast ceo i want to start with you watching Brian Roberts and watching his history, people have said that ive heard him im not we work for comcast, but hes not afraid of big deals at all and thats why comcast is the size that it is right now and this probably isnt that surprising how aggressive Brian Roberts can be if he sees something that makes sense. Absolutely. And its definitely not surprising, but its fair to say its disruptive. Weve just had brian in our offices for a long sitdown we talked extensively about the rationale for the deal and why theyre pursuing it now. His thinking is very clear Rupert Mourdock in the sort of something we covered intensively at the Financial Times became a seller, when Rupert Mourdock became a seller of assets that up ended a lot of logic in the u. S. Media and telecom and globally given that as you know comcast pursued fox and ultimately failed and fox decided to do a deal with disney, comcast spent a bit of time thinking of what sky did. Brian explained his admiration for sky, how much hes followed the Company Since it was started in 1990 by Rupert Mourdock how much he admires the content they have in the u. S. Market and now he wants it for comcast. Ill let andrew in in a second i know youre excited. Ive got a million questions. I know you do but with brett, brett, at gabelli, do you like this fit for comcast . The stocks you cant really attribute it to anything that its down 1 supposedly would be a creative rightofway, at least in the first year, but is it a great fit for comcast . Comcast said they would be a creative cash flow that seems to be a positive for shareholders from comcast. Sky is a great asset. Its very much like comcast, vertically integrated with both direct to Consumer Products as well as some content creativity associated with it the markets there 23 Million Consumers across europe and then i also say that their position as a paid tv provider is probably a little bit better than in the u. S sky doesnt quite have the same level of competition against over the top providers they did a great job getting into on demand products earlier than some of their u. S. Peers so theyre in a little bit better position from a valuation perspective theyre buying at 12 times ebida which is on the high end of reasonable but certainly a reasonable Acquisition Price especially considering their largest cost, the English Premier League are likely going to step down in the coming years based off of the most recent contract over all we think it could be a good deal. Brett, just to clarify, i know gabelli owns some whats the excuse me, whats the ownership . For Gabelli Funds are you owners of sky, comcast we own both sky and comcast hey, brett, real quick. In terms of foxs ability to come back with a higher offer, would you anticipate them doing that would you encourage them to do that how does the dynamic change with disney behind them or not . Well, i think at this point we have to remember that its not really fox, its disney. Its all about what disney wants to do. The way that the disney fox deal is structured is theres a sliding scale. So if fox ends up increasing its bid for sky, disney ends up paying for that through this mechanism in their acquisition of fox its really what does disney want to do i think disney for the same reason comcast wants sky, disney wants sky. Theyre trying to get into the consumer over the top with their launch of disney over the top as well as espn over the top service. I think they would look at sky in the same way that comcast would. Is disney at a big disadvantage with the regulators if theyre using fox as their vehicle for trying to get into this or not . Again, i think both disney and comcast arent going to have the same sort of regulatory hurdles that fox does. There is a possibility i was going to ask you, are you in the same place on the regulatory issue because that is the next question in all of this, which is how will comcast be viewed in the u. K. , how will disney fox be viewed in the u. K. And, actually, we asked brian specifically this question just now. Why did you move now its february 27th why was the decision to move now . The answer was because he wants to go hes begun today the preregulatory process and the regulatory process so that when sky shareholders sit down to decide between the offer they have on the table from fox and the offer they have from comcast, they will be looking at them side by side and he believes that in a shootout they will win and thats why hes moved now. He wants them to have the cash offer available and in their heads starting now so that the regulatory clock can begin, the work can begin for comcast to win over regulators here in europe importantly, comcast doesnt have the same legacy that Rupert Mourdock has in the u. K. It is core to every discussion about the Media Business here for the last four decades. He is a figure that is both phantom and larger than life in this market so if the psychology of mourdock played heavily in the sort of process of fox attempting to close its deal for sky which began december 2016 and still going. You quote Brian Roberts as saying he became convinced of the merits of this deal in november he was on a trip in london when he was with a cab driver who told him in great detail about the differences between sky and virgin media and he saw the demonstration of sky cube, the set top box, in a shopping mall. Tell us about that yeah, its extraordinairyext. David had revealed that disney had approached fox at some point in that period and comcast was beginning to do its work in wrapping its head around that. Brian came to london, got to know the sky product in person by asking a cab driver about that he said he was blown away by how well the cab driver knew the difference between what was available in the sky offering and virtual offering he remarked how much the product was similar in many ways to the x1 product they have in the u. S. He said he was blown away. He realized there would be asyn. The approach to sky was very similar to comcast while different bits of technology and different parts of processes and executives, he said theres a lot of fundamental logic to the way both companies approach the industry were going to have to get that cabby a finders fee, bankers fee for making this happen one other question for brett if comcast were to be successful, could you imagine disney fox owning what might be described as the minority or wrong portion of the company or do you think they, therefore, have to then sell out their stake back to comcast . Well, comcast certainly on their call left open the possibility of maintaining some sort of Strategic Partner in sky. One thing id like to point out on the regulatory perspective is disney could on its own come in with an over bid it doesnt have to come through fox. Disney, like comcast, would have a much easier regulatory process than fox would just given the history that mourdock has in the u. K. If they did that, would that mean undoing the deal that exists right now with 21st century fox . Would that be an instead of . No. I think it would be easy for them to, one, make an over bid for the minority or, sorry, the 60 of sky that fox doesnt own as well as continue to buy the proposed foxs stake in sky as well as foxs assets foxs u. S. Cable assets. You guys dont know who is going to prevail, brett . Brett . Whos going to prevail in your view yes who knows. Weve got two large wellfunded players who want to own sky. Its anybodys guess who wins. Its not gulf oil do you remember the old days, sorkin could that happen again . I mean a really great just like step wise fashion where people keep bidding because they want it so badly . Could that ever happen look, this is as i okay. Go ahead, ayesh okay. Yeah i mean, look, this is day one. I think what were going to see is a tremendous sort of dont have the crystal ball, but were going to see a tremendous change and everything will shift and i think comcast is prepared based on what we understood at the Financial Times about brians thinking hes mapped out a number of scenarios and hes really prepared to engage in a battle i dont think the dynamics are the same i think everything is up in the air now and will be crucial and interesting to see what plays out in the next few weeks. Gentlemen, thank you. I hope it does theres no love lost, sorkin, between disney and comcast at all. Theres a lot of little competitive. We tried to buy them. Thats what i mean. You say we that was long before we was we. Yeah. Yeah, kind of kind of. But do you think it could be really interesting that way . I dont think that disneys just going to let this go. Thats what i mean. The question is how far does it go. You have to figure that thats something that comcast was planning on going into this. Yes. You dont make a move like this if the beginning of the war. The beginning of the battle. First shot across the bow. Meantime, lets talk stocks. Mike santoli is here the correction low has race the to 3 4 of a percent. It shows the bull market is here mike santoli has that story. Were not clear were going to vault over that, but its clear how the rebound has gone in the speed and the angle of the recovery the rally has been impressive in part because it really was a volatility shock it wasnt a credit event it wasnt about downgrading earnings expectations. You would have to say the rap so far while impressive is not flawless essentially its a little bit narrower to the run up in january up to those old highs. Youve seen good leadership in terms of cyclical sectors. The volatility index has been sticking near the highs. Thats not necessarily kind of fatal for this rally, but it definitely shows you the environment is different than that pure up, up and away melt up that we had in january. What does it mean from here . If we go up another 3. 5 in the s p 500, that means were back to the old highs which was back one month ago yesterday. I think the question then will be what does Investor Sentiment look like . Are we still giddy i would argue probably not whats the opinion going to be about bonds . Are bond yields still below their lows will that give a little bit more cushion for stocks there and what that all means for the valuation of the overall market. All of that stuff filters in well hear from the new fed chairman that will be part of the mix, too i do think you have to keep one thing in mind, which is this rally looks just the way it would if it goes back to the highs and fail as if it is going to kind of essentially keep going up to alltime highs. Nobody knows. If you look back to 2015 to 2016, right, the low in after the august dump kind of had this recovery it took about two months and there you go it took about two months we thought we were in the clear. We had a Double Bottom we were going into here thinking it was all done and then you fold it over again now a lot bad was happening there. Oil was crashing the junk bond market was in disarray we dont have those other macro factors now. It goes to show you the market behavior itself isnt necessarily going to indicate whether this one has legs. A little bit early to wipe our brow. Its early. You still want that little bit of caution. People dump the stocks. Thats what i was implying. All right joes mind no, not my mind its early its a family show mike, thank you stay right here. Since the february lows the dow is up 10 . The s p is up by 9 and 9. 75 and nasdaq up by 12 weve almost made back all of those losses joining us is gabrielle asontos and tom lee. Welcome to both of you gabrielle, lets talk about what mike said. A little early to be wiping your brow where are you leaning . Whats your gut tell you were still constructive. Nothing fundamentally changed. Rates are rising inflation is rising but again after a period of disinflation so the expansion continues its picking up steam. Thats still very, very constructive backdrop. Something that mike said thats interesting in terms of volatility, we do not think that volatility is going to go back to such low levels as we had witnessed for two years because there are still some lingering questions here and thats normal when we think about later cycles. The lingering questions being what, where are rates headed where are rates headed . Where is inflation headed . Ultimately how long the cycle lasts. It is a slightly volatile environment. That doesnt mean the vix stays at 3050 but it doesnt mean it goes back to the arm of 11 constructive but higher volatility. Tom, youre still positive in this market . Yeah. I think the fundamentals are positive i think whats changed is the trajectory of Interest Rates isnt lower anymore. I think investors have to price in how Wage Inflation affects overall inflation. I dont think those are equity killers but it necessitates repositioning. Were talking higher rates higher rates historically is higher p. E. What does this mean for jay powell speaking today . Its going to be our first view of what he says. Its important. Communication channel is probably the biggest channel now for the fed. He does speak wall street. In some ways i think hes going to be constructive because i think in an environment like where you have to worry about inflation, you do want a fed that understands how wall street thinks. Whats constructive you think hes going to be saying things that wall street likes to say things that arent going to spook investors well, i think its necessary to get off low Interest Rates. I think globally Central Banks moving towards normalization is a positive thing. Whats normalization . Are we talking 5 to 6 or is there a new normal thats 3 to 3. 5 to 4 . If youre talking about the ten year, you know, i think it should look like nominal gdp in a few years. You know, if thats 3 to 4, its closer to 4, i think thats where the ten year should be in 18 months. Tom, whats your s p target nowadays were looking for 3,025 by the end of the year. You are yeah. Would it surprise you if we ended at 2800 . Yeah. That wouldnt really make sense. We have improving growth theres no reason for pes to necessarily shrink and i think, you know, this correction because it wasnt followed by the bond market, the bond market kind of stood still, i think it tells us that we should have a vshaped balance i would be in the camp that we have new highs by the end of the month. End of the month is tomorrow. Okay, maybe by the end of next month. Youre my crypto guy, bitcoin, where are you at now . We should tell you what bitcoin is trading now did you catch the low . Well, yeah. I mean, we didnt necessarily catch the low, but i think bitcoin like if you think about this year, things are really positive in terms of fundamentals and crypto including yesterdays announcement. We talked to you about this being a 20,000, 25,000 yeah, i think 20,000 by june is very reasonable. By june yeah. And then 25,000 by the end of the year because that would look that would make bitcoin look like past 50 corrections would actually be the recovery is 1. 7 times the fall that would take you to new highs by june. Do you have a target . An s p not on paperwork. Im not your bitcoin gal. Its not like a faang stock sorkin, the whole market is a faang stock . What are we at, 200 bitcoin is 200, crypto is closer to 500. Would you rather have all crypto or Berkshire Hathaway. Thats what i was talking about. Do you publish a target . We do not gabriela from the beginning of the year, not from the lows. From the beginning of the year. Thats what 2850. Calendar year. Close to 300. Let me ask you very quickly we know that Interest Rates are key. Were listening to jay powell. How much of this is outside of our hands. How much is going to be determined by other central bankers because if rates are low over seas, europe, japan, other places its still going to look like a huge bargain if you can get a ten year thats around 2. 8 if more buyers come into that market inevitably what will keep rates down ultimately we would agree with tom that ultimately ten year yields should look like nominal gdp. The issue is there are some very, very heavy anchors on the long end of the term thats a lot of foreign demand we do think that anchor is slowly lifting though because we cant compare ten year yields to a ten year german boon in absolute terms, right . A lot of those investors hedging that purchase. When you take in that hedging cost into account that gap is not that wide honestly but there is still plenty of healthy demand so we do think the ten year yield moves higher but it doesnt shoot higher to meet nominal gdp. Gabriela, thank you tom, thank you. Thanks. Im not buying bitcoin until it gets to a trillion. Yeah. Like you with the market. Youre not buying the market until it gets to like 3500 on the s p. I told you. I caught the bottom just a month ago. I know you did. For the kids 529s theyre going to thank me when theyre in college. Thats part of the rebound. Back to november levels of last year. You moving in i remember that day. We were up like 800 that day when we come back, were going to talk about demystifying Blockchain Technology. Paul vignea is going to join us to talk about his new book, the truth machine, the blockchain and the future of everything. Plus we have more on the megamedia offer from comcast to sky. It would challenge Rupert Mourdocks deatouyherol b t gup outright details straight ahead stay uned, you are watching squiek b squawk box right here on cnbc. Welcome back to squawk box this morning our next guest writes in a new book that Blockchain Technology could revolutionize our Technology Want to bring in paul vignea and hes the author of the truth machine, the blockchain and the future of everything. Good morning. Good to see you we talk about this all the time, blockchain, blockchain, blockchain people say, by the way, blockchain is the next big thing, maybe its not bitcoin. Sometimes you hear that. Right. Tell us why blockchain is not over behind. Well, i think i think there are a couple of things you have to keep in mind before you even start having this conversation one is that there is a tremendous amount of hype in this this is right now something thats in very, very early days. Its kind of all unrealized potential. Its all pie in the sky. Its all i mean, its almost like theres that great book landing a sketch you have two people in a great story, throw a bird on it. Throw a bird on it youre at an early point where people say, throw a blockchain on it, throw a blockchain on it. We dont know where this is going to do the best good and where it will work best mp this is very much a software being built and optimized. When we hear about Companies Investing in blockchain and then investors out there watching us now say i want to be invested in blockchain, where do you go . Which has the greatest likelihood of working . What doesnt right well, oh, my gosh, if i could answer that question id be a billionaire, right right now youre at a situation where, yes, this is being tested out in a lot of places basically every industry now is experimenting with this on some level, and i know that because reporters from every beat at the journal started coming to me saying, wow, im hearing about this i need to know more about it can you tell me about it so youre starting to see this be tested and used i mean, look, where does it have the most potential obviously in banking i think it has a lot of potential the banks have to figure out a lot of the logistics of how do you implement a system that is all about transparency without giving up too much transparency. I think of this being the next version of the cloud. When we talk about the cloud, the cloud, the cloud, and how important it was, and it wasnt until a long time that Amazon Web Services is a big winner. Right this is a Software Program when we talk about Blockchain Technology, what we are talking about is a Software Program. Can that Software Program help companies, businesses, entrepreneurs. The thing im grappling with the loser is the middleman. Right banks could be the winners to some degree because it would take out a lot of the middlemen in some of the charges. And a lot of their own back office operations. The banks come out of this, too, because you could have an amazon or somebody and not have to transact, that changes everything. Yes but at the software level, is there a winner in this is there somebody in the middle . There are people Offering Services like ibm, lots of folks who can charge by the hour or by the project. I mean, what i would like to think is that the big winner in this will be the consumer, the individual, the citizen. I mean, the idea is youre right. The idea of this program is that the validating theres a process of validating a transaction. The process of sort of coming up with an objective version of the truth will be handled by this program, by this software. Everybody whos using the product on whatever level, whether it was in an industry, whether its a general purpose, Blockchain Based system. The people who will benefit the most are the users of it, not necessarily the company. Right some companies will benefit from it. How sure are we that the security is perfected . Meaning there seems to be the sort of remarkable trust that blockchain has sort of realized its utopia security. Right thats really important. You said a couple of words that are really important there, trust and utopia this is not a utopian product. A lot of people try to hype it up again this is not a utopian product. This is hopefully a better product. It takes a lot of the trust that we now sort of put into third parties and put into banks, weve put into accountants it takes that and it puts it in a program that hopefully, if it works, will validate everything so that that sort of trust that weve put into third parties, into middlemen, is handled by the program and we dont have to worry about that so much. Final question. How much skepticism should we have when a Company Changes their name, im thinking of Riot Blockchain being one a lot. Cnbc doing this investigation, this is back to the 90s with people adding dotcom to their names. You should have a lot any time you have an investing mania, money being made youre going to have carpet baggers people come on and want to make the quick buck sorry, Riot Blockchain i think that was a great example of that. They changed their name to get it in the name right. You have to have a lot of skepticism you are looking for people who are really trying to build product on top of it. Paul, the book is called the truth machine. Great thanks a lot. Among the stories front and center this morning, new fed chairman jay powell will be making his first congressional appearance since taking that job. Hell be appearing to give the semiannual report on the testimony. Hell be repeating his performance before a senate panel on thursday. Key economic reports out with the latest numbers on durable goods in just about an hours time the kay shchiller price index. Palo alto beats the strength of fire wall software sales. The results were helped by strong gains the stock is up by 6. 5 . President trump has not yet announced a decision on hes considering accepting the harshest recommendations and theyre talking about retaliation overseas Kayla Tausche has the story. Reporter the white house has not made a final decision yet. Hes considering that option for global tariffs on all imported steel and aluminum thats an option that peeks the concern of the dod they say the block would act quickly and appropriately in case our exports are affected by any restrictive trade measures from the u. S. , end quote brussels would target strategically traditional imports like harleydavidson kentucky bourbon exports were up 20 according to the International Trade commission this is going to be a very Interesting Development because china is already retaliating against u. S. Tariffs on solar panels and washing machine theyre investigating sorgum that is used to feed livestock and they could target soy beans. It would hit deep in Trump Country if pursued a key consideration of those arguing against the steel and aluminum tariff. They would hit back quickly and most likely in industries that hurts the u. S. Most. Kayla tausche when we come back, congressma n en henserling. We have the full details coming up. As we head to a break, take a look at the u. S. Equity futures. Dow up by 26 s p futures barely positive and the nasdaq down by 4. 5 well be right back. No. Is it good . Good . At cognizant, were helping todays leading banks make better lending decisions with new sources of data so, multiply that by her followers, speaking engagements, work experience. Credit history. That more accurately assess a business chances of success. This is a good investment. Shes a good investment. Get ready, because were helping leading companies see it and see it throughwith digital. Jerome powell delivering jay powell, his first testimony as fed chairman of the financial area en henserling. Congressman, chairman, thank you. Great to see you good morning. I can make a case, i swear, maybe im maybe im like a sociopath or something, but i could make a case that we stayed low way too long and weve hurt savers and banks have benefitted and that they need to get this under control as far as the Balance Sheet. I could make that case then i could also make the case that you guys better tread very, very lightly because, you know, the things are good but you could you dont want to over shoot in terms of how quickly you do this to cut off what is a pretty good economy. So thats the fine line he has to walk. I think you come down on the normalize these rates. Weve been low for too long. Is that where you are . Well, i would say in some respects to rephrase maybe what you just said is chairman powell, dont blow it. Weve got good growth after eight years of 1. 6 gdp growth all of a sudden we have the tax cut and jobs act weve stopped the regulatory beatings 3 growth is back which makes a huge difference in the lives of the working people we know we did have almost a decade of ridiculously low artificial Interest Rates. So if youre going to normalize the Balance Sheet, which i think you need to, now is a good time to do it as we have strong earnings report. So what im hoping today in the Humphrey Hawkins hearing is that the chairman will lay out, again, a path to normalization obviously it does need to be gradual, but we have to debate exactly, you know, how fast that needs to be done but really what the fed needs to do is articulate precisely what their path to normalization is and is there a new normal it appears that were on path for a larger Balance Sheet im not sure this is a good thing. The composition of the Balance Sheet, will it still be heavy on mortgagebacked securities theres a lot of questions to be asked. Do you think the underlying inflation has hit the targets that are appropriate that the fed has outlined since they have a dual mandate you can argue whether thats smart or not, but do you think weve actually made it to where theyre not under shooting, were not under shooting inflation . Is it back to 2 well, listen, its an excellent question, whether or not a central bank ought to have an inflation target in the first place. Right so we know the fed has never hit their 2 inflation target. You know, theres something counter intuitive about having a statutory mandate for price stability and then adopting an inflation target, but at least at 2 you have a linear function and now theres talk about having a range, and im not really sure how a variable inflation target is commensurate with price stability by the way, you know a modest amount of deflation that comes from inflation, higher productivity, stretching the family paycheck a little further is not necessarily a bad thing so, again, i really question whether or not, number one, we need an inflation target to begin with much less whether we should move to a very low inflation target then as you look at the minutes of the fmoc from six minutes ago, again, there is a discussion of turning that into a range, i guess from the stationary target to the moving target if you cant hit a stationary target, i dont know how youre going to hit a moving target we know that some commentators are calling for even higher levels of inflation. I do not think this to be a good thing and those decisions, frankly, ultimately need to be made by congress we want to make sure that there is Monetary Policy independence but there has to be oversight as well thats a major change if this inflation target is going to move somewhere north of 2 . If powell decides to lecture maybe lecture is not the right word lets say powell tends to point out to republicans to say the deficit approach has gone out the window in terms of tax cuts, the new budget, infrastructure and everything else. Is there any merit to that do you think the fed is worried that weve got to 20 trillion and now were headed to 21, 22 and upwards from there do you think thats something that should be on their mind frankly, it ought to be on the mind of every american citizen, and unfor ttunately wee seeing 20 million deficits and they are structural. Number one, with respect to the tax cut and jobs act, if we hit three Economic Growth, thats a tax cut. Go back to the ragan tax cut, kennedy tax cut, heck, go all the way back to the coolidge tax cut, they produced either 5 or 4 gdp growth. I think this tax cut can produce the same, but we also know that Congress Just voted to get rid of the last vestiges of fiscal responsibilities and that was in the budget caps and debt ceiling reforms. I voted against it im very much concerned that ultimately the deficits can drag down the economy i dont know when, and so at some point we could see bond markets head a different direction now. Is that five years, ten years, is that a generation away. What i do know is my ad pad is saying this is not sustainable we should all worry about it theres one and only one answer and that is reform current entitlement programs for future generations. Ive spent years studying it thats the only way to answer it. I wanted to weigh in on one of the hot button issues of the day. The number of corporations jumping into the gun debate, specifically delta which severed ties or at least stopped its Discount Program recently for nra members now facing pressure from republicans in georgia over a gas tax. What do you think of that . Conveniently, i fly american and im not going to tell delta how to conduct their business. Weve had way too many moments of silence on the house floor. Im the father of two teenagers that go to school every day. I worry about this so im hopeful that maybe we can break through some of the partisan gridlock, maybe break through some of the typical rhetoric theres a lot that needs to be done but, listen, a private company is going to adopt their own culture. People can decide whether or not they want to do business with that company its still a relatively free society, but i will say that as sack crow sank is the first amendment, so is the second, third, fourth. Its in our dna. Theres much we can do weve got to keep guns out of the hands of people who are basically evil and mentally disturbed. As a society, you know, theres much the federal government can do, but its state government, local government, its parents, teachers as a society it is time to stop the carnage. But, chairman, you said companies should be able to do what they want but then were seeing how the political universe in terms of republicans in georgia specifically may now effectively punish them for that is that appropriate or not i dont know. I dont know what you mean by punishment if they choose not to fly delta, they ought to have the privilege not to fly delta i mean, theres Certain Companies that i choose not to do business with because i dont agree with their culture. This is due to a tax benefit that delta would or would not get as a function of their withdrawal of the discount youre talking about a matter that i dont know anything about. Im sorry. It was pressure from the new york times, social media. It got the company to i read the wall street journal and the Dallas Morning News if you like the pressure because it does what you want to happen in your own mind, its okay if not thats why im curious. Thanks. Quick programming note, cnbc will carry the powell testimony starting at 10 00 a. M. Eastern time when we come back, comcast challenging Rupert Mourdocks bid for sky. The Parent Company of cnbc looking to expand its International Footprint with a 31 billion offer. We have the details coming up. I dont know. 4. 95 per trade . Uhhh and i was wondering if your brokerage offers some sort of guarantee . Guarantee . Where we can get our fees and commissions back if were not happy. So can you offer me what schwab is offering . Whats with all the questions . Ask your broker if theyre offering 4. 95 online equity trades and a satisfaction guarantee. If you dont like their answer, ask again at schwab. 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Cnbc Parent Company comcast making a bid for sky jeff cuttmore has more on this comcast, its a big company, big market cap, jeff got a lot of Different Properties cnbcs part of it. Can you just is this helping what youre doing today over there . Reporter yeah, you know what, joe, i know it must be hard for you to imagine that anybody outside of the United States has never heard of comcast, but, my friend, i have to tell you, that is a reality in this part of the world. Much of that is down to the fact that comcast doesnt have Significant Holdings outside of north america, and obviously thats why they want to do this deal this would give them 23 Million People in existing marketplace in europe, a company that already creates content. It has a news channel. It sells the internet to its customer base. It sells bundles very similar to the kind that comcast has traditionally sold to american households so in many ways this would be a fit made in heaven, but of course Rupert Mourdock may have Something Else to say about that his bid has sat on the table at 10 pounds 75 p this new bid from comcast comes in at 12 pounds 50 it is a 16 uplift on that current bid. Rupert mourdocks bid has run into problems with the politicians and the regulators here in the u. K. Many of them would look at this comcast deal even though theyre now thumbing through the business and market section of the Financial Times and other newspapers to actually work out who comcast are, they would probably welcome this bid happening because it means that Rupert Mourdock would not make a significant gain in terms of acquiring sky, and there are already concerns very much about media ownership concentration in the u. K. Stars Rupert Mourdock is concerned he said part of the reason theyre interested in it is the premier League Rights that sky hasand they havent talked to mourdock ahead of this sky blandly saying theyve noted the proposal from comcast. The football thing. I know for a fact the nfl has brought football to london so, you know, youve been exposed. You know what real football and for you to keep, you know, interchangeably using that term is disingenuous, too you have been exposed to actual football there theres soccer and theres football im just im nudging your countrymen im kidding. Im kidding. Reporter joe, youve got to start using that passport, my friend come to where they really play football. They may take my passport away thank you, cutmore when we return, warren buffet on the hunt for a big deal. Could be an airline . No. Look, hes saying hes not going to rule it out, but they are the largest owner i thought he would never do that again after u. S. Air. Got four big airlines that he owns a big stake in. I wouldnt look for an with the united mileageplus explorer card, youll get a free checked bag. Two united club passes. Priority boarding. And earn fifty thousand bonus miles after you spend three thousand dollars on purchases in the first three months from account opening plus, zerodollar intro annual fee for the first year, then ninetyfive dollars. Learn more at theexplorercard. Com like you do sometimes, grandpa . And puffed. Well, when you have copd, it can be hard to breathe. It can be hard to get air out, which can make it hard to get air in. So i talked to my doctor. She said. Symbicort could help you breathe better, starting within 5 minutes. Symbicort doesnt replace a rescue inhaler for sudden symptoms. Symbicort helps provide significant improvement of your lung function. Symbicort is for copd, including chronic bronchitis and emphysema. It should not be taken more than twice a day. Symbicort contains formoterol. Medicines like formoterol increase the risk of death from asthma problems. Symbicort may increase your risk of lung infections, osteoporosis, and some eye problems. You should tell your doctor if you have a heart condition or high Blood Pressure before taking it. Symbicort could mean a day with better breathing. Watch out, piggies get symbicort free for up to one year. Visit saveonsymbicort. Com today to learn more. If you cant afford your medication, astrazeneca may be able to help. Gglobal bonds, and highdividend strategies. Sure, these are investments. But theyre not what people really invest in. What people really invest in, is what they hope to get out of life. But helping them get there takes a pure focus. Because when you invest their money without distraction, hidden agenda or competing interests, Something Wonderful can happen. They might just get what they want out of life, and maybe even more. So many as you know, we spoke with warren buffet yesterday. He made a lot of headlines one of them was his potential future interest in airlines. You know that he has already owned big chunks, Berkshire Hathaway does, four of them in total, and yesterday he didnt rule out the idea of eventually buying an entire airline were going to talk more about that with an analyst from raymond james. Savi, thanks for joining us. This is something that i want to be very clear about. Warren buffet did not say they were in the hunt to buy an airline outright, but as you know, he has built up a large stake in four of the Major Airlines have the idea of owning an airline, that was something that was so far reaching for him before, have things changed on a very basic level and made the airlines a much better place to be i think that they definitely have youve seen profitability over several years now since the recovery in 2010 in the four years since deregulation you havent seen this long of a string of profitability. I think his comment about competition is right this is still a very Competitive Industry but its a far more disciplined Competitive Industry its not selfdestructive anymore. Theres something attractive here especially the valuations i can understand his interest in the group. This is something weve been hearing about from other investors for quite a while as well people are putting their toes back into this how weve seen the stocks run up since then. You think theres a lot more reason for investors to get involved at these levels actually, the stocks have had a bit of a mixed record over the last couple of years and really i think theres some investor skepticism here. The inflation that the market is having for the other industries, youve seen that on the labor side in the Airline Sector and now with fuel moving up i think theres a skepticism that this level of profitability is going to be sustainable, that the management teams are going to do the right thing. Thats why youre seeing low valuations we think this industry is different. I think the investors are going to pressure management and theyre in a different manner. Theyre going to show sustainability and profitability. Therefore, theres going to be a lot more up side especially if you look at the valuations of this industry as well as some of the other industrial companies. Very quickly, whats your Favorite Airline right now our favorite is alaska its gone through a merger, taken some hits but we think theyre starting to execute there. Savi, thank you for your time we really appreciate it. Okay coming up when we return, a big hour ahead cnbcs Parent Company comcast making a 31 billion cash offer for british broadcaster sky. Weve got the details and analysis straight ahead. As we go ahead, the dow and s p 500 looking up nasdaq slightly off. Back in a moment today, the new new york is ready for takeoff. Were invested in creating the worlds first stateoftheart drone testing facility in Central New York and the mohawk valley, which marks the start of our nations first 50mile unmanned flight corridor. And allows us to attract the worlds top drone talent. All across new york state, were building the new new york. To grow your business with us in new york state, visit esd. Ny. Gov. You know whats not awesome . Withgigspeed internet. Te, when only certain people can get it. Lets fix that. Lets give this guy gig really . And these kids, and these guys, him, ah. Oh hello. That lady, these houses yes, yes and yes. And dont forget about them. Uh huh, sure. Still yes xfinity delivers gig speed to more homes than anyone. Now you can get it, too. Welcome to the party. Breaking news, comcast makes a 30 million bid for sky topping foxs offer. Powell on the hill the new fed chair gives his first testimony to congress. What will he say well have the debate straight ahead. Plus, earnings from macys well bring you the numbers and the stock reaction as the final hour of squawk box begins right now. Live from the most powerful city in the world, new york. This is squawk box. Good morning and welcome back to squawk box live from the Nasdaq Market site right smack dab in the middle of times square im joe kernen with becky quick and Andrew Ross Sorkin the markets are around the flat line dow up almost 40 points. S p indicated up 2 nasdaq giving back a little bit after a couple of strong sessions the tenyear yield has moderated. Got all the way below 285. At one point now back to today that was yesterday, back to 287. 2. 87 in advance of jay powells testimony at 10 00 a. M. Which we will carry live. Macys, is that correct . It is. We are probably waiting to see what im looking to try and dig through. Is it a weird number . Yeah. The number that they are reporting on a straight number is 4. 31 the analyst estimates for 2. 71 so im trying to break out and find the number. Sounds like tax Fourth Quarter was positively impacted by taxes but only by 7 cents so that wouldnt reflect the big change there between those two. So, again, looking through to dig through the numbers. Perhaps whats more important is the company is talking about its guidance for 2018. They say they plan to return to comparable sales growth in 2018. They say theyre committing to returning macys to comparable sales growth in 2018 say theyre going to build the momentum they had in 2017. Encouraged, they say, to see a trend improvement in the brick and mortar business. They had the double digit growth in the brick and mortar business thats where walmart got into trouble when it reported its results last week when the numbers were not as strong as had been expected. Talk about Consumer Spending in the Fourth Quarter was being very strong. They say they improved execution and great products across the categories again, just looking for some of these numbers. Operating income included 240 million in book gains. 48 cents. 48 cents and 7 cents for the taxes. Still not going to get you to 4. 31 from the 2. 71 the street was expecting. Sounds like its a much better number than anticipated. The shares up by a 12 thats a huge gain for macys, 3. 21. Looks like theres a lot of good news, not only what happened in the Fourth Quarter but what theyre anticipating. Did you mention revenue revenue was right in line with expectations, 8. 6 billion versus 8. 67 billion. Its helping them on the bottom line by a much bigger number. Still doesnt account still doesnt account for the two bucks. Right but obviously its up 12 so yeah. You know, when i saw terry lundgren, even though hes no longer there, he had an up beat sort of we just spoke with stilo and he didnt know. Being out of that corner office. Heres an adjusted number, 2. 82 versus 2. 71. In the Retail Business this may be the comparable number, 2. 82 versus 2. 71 the street was anticipating. Much better number. What do they call that number, 2. 82 calling it an adjusted earnings. That didnt come immediately. Yeah. Im still looking through the release to try and figure out what exactly that includes. We will go through that in the meantime, todays top story, cnbcs Parent Company comcast making a 31 billion cash offer for british broadcaster sky. It rifles the offer for Rupert Mourdocks fox and disney given that disney is buying so many assets which would include sky joining us on the squawk news line, craig moffitt. One of the most thoughtful, dare i say, media analysts out there. Craig, you look at this transaction this morning does disney or Rupert Mourdock let this go . Well, good morning, andrew. Probably not i suspect the markets already pricing in a reasonably high probability that theres a topping offer. Not entirely clear whether the topping offer would come from fox or from disney, but, look, you know, for lets start with just comcast. This is this is a mix of good and bad news for comcast shareholders, and i suspect mostly bad news. I think comcast shareholders are going to be rather frustrated to see this bid this morning. Because well, the good news is there is some reciprocal distribution synergy, right you can distribute nbc programming in europe. You can distribute sky programming in the u. S not entirely clear why you couldnt do that through arms length transactions, but there is some synergy there. The best news for comcast is that it increases their leverage because their shareholders have beenscreaming about a lazy Balance Sheet. This would increase the leverage and thats good news the bad news is theyre going to have to twist themselves into knots to try to explain why satellite tv distribution in europe is not going to be just as obsolete as it already is in the u. S. And that they arent just going down the same path that at t went down with directv albeit perhaps with some delay, but, you know, for all of the content that sky has, it is still a satellite tv distribution platform. Its interesting that they never even mention the word satellite in the Investor Presentation for this mornings Conference Call its almost as if theyre trying to pretend that its not a satellite tv platform, but it is. Craig, theres been a lot of speculation over the last several months about, a, whether comcast would try to top the disney bid for 21st century fox, in large part because the view was they wanted this asset theres been some pressure for us to try to find that next acquisition. The next elephant. If not, what is this next elephant the pressure hasnt been coming from comcast shareholders i think its been assumed to be inside of philadelphia and their desire to acquire something and theres been some speculation that because most of the paths in the u. S. Are blocked by antitrust that that next acquisition would likely be over seas and there arent a lot of distribution assets. So to some extent this is and lets take the analogy of at t for directv again. Its sort of buying what youre allowed to buy rather than what you necessarily need theres been some talk about getting involved in Liberty Global those are cable assets as opposed to satellite assets . Well, there you have an issue of valuation and you also have the question of voda phones, so you have another interesting party there. So, you know, but but the pressure that you describe is entirely selfimposed by comcast. I dont think their shareholders are saying, gee, comcast needs to do something to get bigger. Craig, let me ask you a separate question. Assuming comcast were to be successful, and we dont know that yet, and assuming regulators were to allow a transaction to take place like this in the u. K. , the effectively 40 that twenty First Century fox disney would own, do you think they would partner and effectively continue to own that piece or do you think they would be inclined to sell that piece to comcast you know, its a great question, andrew its not entirely clear. By the way, this this bid from comcast doesnt take off the table the idea that they might still try to do a topping offer for the fox assets. Hold on hold on. Thats a huge thats a development, meaning i think the assumption this morning was that because comcast had pursued sky, the potential for a bid for twenty First Century fox in total was now off the table. You dont think thats the case . No, theres nothing that says thats entirely off the table. Comcast hasnt said thats off the table. Logically this would be one way to pursue exactly that and, look, that has been overhanging the shares for a while. The comcast shares have entirely missed the market rebound of the last couple of weeks, largely because it was reported by your own network that they were still interested in that they were interested in the topping bid for fox. This doesnt take it off the table. This still leaves the open question of now would they go after the rest of fox including the 39 of sky that fox owns as the part two of this whole story . And that overhang is going to continue to be to overhang the shares for the foreseeable future until we hear about at t time warner. Craig, obviously a move like this is not engendering comcast to rupert Mourdock Mourdock wouldnt want to go along with a deal like that if there was another deal to come over the top for all of 21st century fox though does that matter making an enemy of rupert yeah. Does it matter at all . Not really, but youre right. Its obviously easier and more expedient for fox if they want to sell the u. S. Assets to sell the whole thing to a single bidder, and so and there are probably ways. Youve seen sky shares start to appreciate in the u. K. Even before this offer because the market has gotten more comfortable with the idea that with disney now in the picture theres a better path to Regulatory Approval for the acquisition of sky fox doing it on its own might have been difficult. Disney helps that equation and so rupert and the folks at fox presumably would still rather have the whole thing go to disney than they would have to deal with all of the regulatory issues of comcast for the rest of fox or alternatively splitting it into two by selling fox separately from or sky separately from the rest of fox. I guess the very least you can say is comcast has just made sure that disney is not going to get all of sky b for a cheaper price. Im not sure that comcast cared im sure they would want this whole deal, but at the very least nobody is walking away with a sweetheart deal on this. Yes, thats right im not sure theres any part of comcast that really cares just to make disney pay more for the sake of paying more, but i think youre right this will mean that at the very least the sky piece changes hands at a higher price. Craig, do you ever think that there will be a regulatory seat change like eventually where regulators realize, you know, in the face of google or, you know, any of these these newage conglomerates, let these other guys do what they need to do just to try to survive it just seems like it would be tough to do this given the back drop with what were seeing with at t but will it come to the point where they say, you know, sirius xm, remember that . Its like, really, you dont think they should get together with pandora, spotify, all of these other the new economy, this is like do or die for some i dont want to say that for comcast, but, i mean, theres serious competition that companies are facing with the big faang stocks, right . Look, its a good point, joe. You certainly cant argue that scale alone is a problem when youre comparing the scale of a comcast to the scale of a facebook or a google because theyre relatively small compared to facebook and google, but i look, well know the answer to that question. Thats not a tenyear existential question thats a threemonth legal question in the next few months judge leon will decide at t time warner and if the at t time warner deal is approved, then it becomes awfully difficult for the doj to oppose a comcast acquisition of fox. Thats a big if though. It seems like if its not if its not a yes, then how can comcast possibly think it can buy fox . Yeah. If its not a yes then comcast wont try to buy fox and fox wouldnt agree to trying to sell to comcast because the probability would be so low that it would be a nonstarter. This is entirely a function of what judge leon decides in the at t time warner case. It seems horizontal if it were to buy fox. Except theyre already vertical. Whats that except theyre already vertical so it is it would be viewed as both vertical and horizontal in the sense that comcast is already vertical and would, therefore, be buying more content. Fair enough craig, were going to leave the conversation there always good to talk to you thanks. We had the opportunity to speak with warren buffet yesterday. We asked him about what he thought about the new tax reform law, what it means for corporate america. Its a tailwind particularly a tailwind for companies that have had lots of depreciation and they can do the depreciation up front. Its a big item there. Not Many Companies have a lot of appreciation and marketable securities but its a big item for those that do. Joining us right now is eys chairman and ceo mark wineberger mark, thanks for being here today. Great to see you, becky. Weve spoken to you in the past about what this means but now were seeing it on a daily basis, earnings that come out including macys numbers all of the companies talking about what this means to them. How are they assessing this in the early days obviously its a landmark deal everyone is looking next quarter, whats going to happen. We have to wait and see what happens. There is a Record Number of share buy backs, 170 million. 75 of the corporations have higher earnings. Theres also a Record Number of capital expenditures, up 6. 5 in the beginning of the year. We evaluate their supply chains looking for direct investment into the United States where its not a tax haven but now its not prohibitive to be investing in the United States were also seeing coupling the lower rate with the expensing, more liquidity, Companies Giving a lot more back to their pension plans, to their employees through bonuses, through wages, through hiring lots of different ways theyre figuring it out, but this pot of cash they just came into isnt going to be immediately be put to use now they have to evaluate. Well hopefully see that in increased productivity in the coming quarters. You have a good idea of whats happening in companies not through just all of the companies that you consult with at ey but all of the companies uconn sult with at the Business Roundtable what, if anything, has surprised you . Well, you know, i think the pressure thats been put on companies by the press, by the public is really surprising. The scrutiny . The scrutiny. Theres still push to short termism. Getting earnings with people looking at your last quarter a lot of ceos would like to put this money into capital expenditures, looking at m as. Were looking at seeing Companies Investing in the United States. When you have a deal, having the Foreign Company not be the parent as often. Theres this pressure to say to corporations, we know you want to do that, but you need a shortterm profitability and give it to us. That question is coming from whom, the media . Unleashing a bonanza of buy backs. I dont think thats pressure from the media saying dont pursue buy backs in fact, i would argue that most of the media is actually suggesting the opposite. No, not so much the media, the analysts, activists, shortterm investors some investors want immediate return theres a lot of cash that was sitting at home and used to be over seas. You may be seeing more buy backs today. We know we need it, its up 6. 5 since last year. Theres a lot of interpretation left in the tax law to decide how to set up your supply chain, where to instres and do your borrowing. I think youll see those ramp up over time. The 250 companies though plus who have announced increased pension contributions, increased wages, increased bonuses, thats all really good going right to the bottom line going back into the economy. Mark, one industry that you think may be benefitted the most or, again, one that surprised you that you didnt see some of the benefits coming . What im most surprised about, we were in davos and we saw the foreign companies, how quickly theyre saying we now want to invest in the United States total, siemens, fiat chrysler. We need to have a supply chain going directly into the u. S. The biggest lift comes from the companies that are mostly domestic 35 tax rate are going way down. The other issue thats out there that people havent focused on is the new proposal to limit the deductibility for highly Leveraged Companies in the u. S that will allow them to figure out how to restructure the debt. How much is done by equity versus debt. Thats a big change for corporations that theyre all factoring in we still need guidance. What is your take, by the way, on Companies Jumping in to these political and social issue debates. You were part of one of them the government gets more locked up. Thanks. The spectrum. Were the thought police. Remember, 75 . Disney announcing a multiyear expansion in paris. Beginning to roll out in 2021 and will cost nearly 2. 5 billion. It includes the addition of three new areas based on marvel, frozen and star wars. Thats nice. I think well be going to that. Coming up when we return, macys out with earnings lets show you the stock because it is up and up in a big way well explain why when we return sure, these are investments. But theyre not what people really invest in. What people really invest in, is what they hope to get out of life. But helping them get there takes a pure focus. Because when you invest their money without distraction, hidden agenda or competing interests, Something Wonderful can happen. They might just get what they want out of life, and maybe even more. When we come back this morning, we have some breaking economic news. We will bring you those numbers next and later, jay powell Takes Center Stage what will the new fed chair say in his first testimony to congress we will have the debate. Right now as we head to break, take a look at the u. S. Equity futures in the green right now dow futures up by almost 40, s p up by 2 and the s p up by 3. Well be right back. And the wolf huffed and puffed. Like you do sometimes, grandpa . Well, when you have copd, it can be hard to breathe. It can be hard to get air out, which can make it hard to get air in. So i talked to my doctor. She said. Symbicort could help you breathe better, starting within 5 minutes. Symbicort doesnt replace a rescue inhaler for sudden symptoms. Symbicort helps provide significant improvement of your lung function. Symbicort is for copd, including chronic bronchitis and emphysema. It should not be taken more than twice a day. Symbicort contains formoterol. Medicines like formoterol increase the risk of death from asthma problems. Symbicort may increase your risk of lung infections, osteoporosis, and some eye problems. You should tell your doctor if you have a heart condition or high Blood Pressure before taking it. Symbicort could mean a day with better breathing. Watch out, piggies get symbicort free for up to one year. Visit saveonsymbicort. Com today to learn more. If you cant afford your medication, astrazeneca may be able to help. Welcome back to squawk box. We are expecting the text of chair jay powells testimony to be released at 8 30 a. M. Eastern time liesmans here you better read fast Speed Reading . Are you ready . Yes, i am ready. Check on the futures. Nasdaq is negative again dow is up 26 take a quick look at the ten year lets get though right now to ylan mui we want to get right to you at 8 30, ylan. Reporter joe, chairman powell acknowledging that there have been recent market volatility but saying he does not see it as weighing heavily on the economic outlook. He says the job market is robust Consumer Spending is solid wages, you expect them to rise at a faster pace and twice he pointed to gains and exports and increasingly stimulative fiscal policy as new tail winds for the economy. The Housing Market is slowly improving as well. Hes characterizing it as slow and stable he suggested here that the recent pickup in the recent data gives them confidence and it will actually hit that 2 target revenue stake and he fears that it might overshoot still, he says hes monitoring inflation developments and that he sees for risk to the outlook as being roughly balanced. So what does this all mean for the number of rate hikes in the future powell will once again use that phrase further gradual increases in the rates are expected and that further emphasizing there will be rate hikes without boxing them into exactly how many they might do this year now this is, as you mentioned, powells first appearance before the House Financial Committee as chair of the fed he seemed to throw a bone to conservatives who will be grilling him today saying he does find personally Monetary Policy rules to be helpful but that there are so many variables that they dont take into account, guys. Back over to you. What a concept. Thanks, ylan for more reaction to chairman powells testimony, lets bring in our own Steve Liesman and Rick Santelli is here. Steve, ill tell you, we had chairman hensarling on we talked about how he wants two things he wants, number one, favors him making any money we have to get rates back to normal we have to make sure we dont do it we have to get back to normal, make sure we dont do it. Can i stop you and tell you, thats why we dont give the politicians referrals. He was pretty eloquent about it but what i gleaned was we have to raise rates quickly but we have to do it in a slow fashion. Right exactly. If we can. You know but it is a problem theyve got to walk a fine line. When a fed chair goes before congress, there is you know, the Monetary Policy is raised but there are Political Considerations he wants to tell them enough to say, you know what, leave mea lone, heres what were doing and kind of placate them its a very interesting dynamic now. A republican fed chair with a Republican Congress that had heavily criticized the pretty much the current regime the Federal Reserve is under. Right. All of a sudden now you would think some of them might support and the democrats who had otherwise supported the previous regime might now be except for that jay spoul sort of part of the previous regime too. Exactly where you sit determines more of where you stand i suppose in all of these things. I dont see much here that changes the game. Theres enough meat to maybe keep you quiet i think so. Let me say were very thankful to have ylan mui, former fed reporter to give us a great recap of that. The most interesting thing to me was him saying that he is supportive in some senses of a rulesbased Monetary Policy. Another bone . Exactly. Let me ask you quick, are you still weve got to raise them, weve got to normalize them . Even people that used to be like that acknowledge that, you know, weve got a good thing going and we dont want to go hog wild and, you know, cut off this what is a pretty good economy right now. Do you have any sympathy for that viewpoint at this point, rick or do you want to go up . Ill stick with the opinion i had in 2012, and that is they needed to raise rates to get some insurance against the next down turn, and i will stick with that we could debate if weve got enough of an Insurance Premium they have been raising rates since 2015 1 1 4 to 1 1 2 listen, to be honest, i think anything close to 2 is going to be about all the horsepower they can get unless the economy rock and rolls a bit, steepens the curve and allows them to fit in more insurance, but im okay i think one or two, maybe three more, you know, this notion theyre going to do 4 this year when you look at less than 100 basis points separates 2s from 30s, i dont think its a particularly great idea, actually and thank god theres no politics in central banking. Ha holy cow come on, steve. Ed, we made you wait. I hope you know, if you were if you were able to do it and just make decisions with whats right, do we go up quickly do we go up slowly do we go up data dependent what do we do . We go up slowly but we go up a long time ago. I guess im a bit with rick on that one i think we probably should have started our current trajectory a few years earlier, but given where we are right now i wouldnt do anything radical id pretty much stay on the same path and i would guess that the current chairman will do essentially that ed, real quick. Youre not available to be the vice chair, are you . Are you because we need a good labor bore economist. Ed for vice chair. Ed for vice chair could we start that movement now . No. I think ill stay where i am there are Better Qualified people. What if we could let you stay in california where you do a good job let me ask you a question. What is jay powell saying rick, if you want to weigh in on this, too. Fed will continue to strike a balance between avoiding overheating, boosting inflation on a sustained basis is that talking and not saying anything or is there some message in that . I have not heard a fed chair use the phrase overheating in quite a while. Yeah. I mean, my sense is that the over heating will come from higher rates that come later and the issue will be how we deal with the Balance Sheet that is easy to accommodate right now when Interest Rates are low but when youre paying interest on reserves, thats a really big issue. Thats been a very important component of policy for the past eight years or so, but the problem will be when rates rise, how will we be able to dealing with that and i think to my mind thats going to be the most interesting challenge for the current fed as we go forward rick, looking at the rate structure out there, ive got 2. 90 on the 10, 3. 19 on the 30 2. 23 let me just take a look at that, any change there. Maybe a basis point higher if youre a fed chairman coming out here with your first speech and you dont want to rock the boat, has he succeeded in not rocking the boat here . I think its too early. Hesbarely gotten the ship the row boat off the sand beach at this point and we just had a really weak durable goods number so maybe he actually moved the market two or three basis points, its hard to tell. But, listen, lets cut the guy some slack theres plenty of room in my study to put another picture of a fed chairman since mr. Vol kerrs the only one on the wall right now and lets give him some time. I dont have any problems with those statements hes made thus far. I think one of the questions here is you have to sit back and let the data develop theres a lot thats changed theres a big spending a lot of spending happening out of washington right now and theres a big tax cut that creates a prospect for greater Capital Investment and perhaps greater productivity and powell does say he sees the possibility of greater productivity ed, how would you, if you were in that vice chairman job that we all here want you to have, how would you in watching the productivity numbers and the tax cut for a clue to how to run policy down the road well, i think productivity is the key. Right as we know, productivity has slowed down dramatically and theres a very strong correlation between productivity growth and wage growth over time and aCross Country so thats obviously the key factor to my mind the most important component in getting productivity growing is essentially to get the economy growing. That all depends on taxes, but fundamentally taxes depend on spending and thats what i talked about today in my wall street journal piece so if we dont get spending under control in the long run and really the long run begins right now. Were going to have a hard time creating an environment thats long term positive for productivity growth which also means long term positive for wage growth. What has to happen specifically, ed what are you kind of hinting around at . Well, i think that the big problem that we face right now is just the numbers that the government has been putting out. Look at cbos numbers on expenditures and where well be in a couple of decades if you look at their numbers theyre talking about an increase in spending to gdp ratio of about 7 Percentage Points if that happens, we would have to raise taxes by almost 50 to close that gap that would be disastrous so before we get there, we really need to do something, otherwise, we discourage capital formation, we discourage work and all of those things are detrimental to Economic Growth i mean, if you look at the difference, say, between United States and france, france taxes and spends at about 45 , which is about 20 Percentage Points higher than we are, and they work 30 less. So, you know, good for the french they have a good life, great food, wine, food, theyre very happy but in the long run thats not going to serve us well. Do you have any thoughts on lor rest at that mester as vice chair . Well, lets put it this way i dont know her personally. I know shes very qualified. There are other people who are qualified as well. She would be more hawkish than most of the people that have been associated with that job in the past, but, you know, again, there are many fine candidates this happens every time youre talking about a fed chairman or a fed vice chairman. There are a lot of good people in our country fortunately and a lot of good talent out there and shes certainly among hem. All right thanks to ed Rick Santelli and Steve Liesman. A quick programming note, you can barely contain yourself. Youre going to be watching it just so excited. Every every word, every minute you know, ive got the popcorn and ive got the gatorade. Gatorade . You dont know whats in the gatorade, thats the good thing about gatorade i dont know anyway, thank you. There it is. 10 00 a. M. , set your tivo . Yeah. Set your alarm on your phone maybe . I use a tivo. You still do, absolutely. Love it. We used to have sound for it. Oh, you dont have that, comcast, do you . Im in the you should move there is some real estate on my street think about that. Would we go and share milk and stuff, eggs, would i come over, barbecues . Wow. Yeah. Coming up next when we return, eggs and milk and shares of macys trading higher by the way, up almost 10 now after stocks topped peatnsexctio were going to talk to an analyst all about it in just a minute today, a focus on innovation in the Southern Tier is helping build the new new york. Starting with advanced manufacturing that brings big ideas to life. And cuttingedge Transportation Development to connect those ideas to the world. Along with urban redevelopment projects worthy of the worlds top talent. All across new york state, were building the new new york. To grow your business with us in new york state visit esd. Ny. Gov. But some of us make somethinge make sommuch more. Dinner. Mom would be proud. With blue apron, any night is a chance to see what cooking can do. Running a Small Business is demanding. And thats why Small Business owners need more. Like internet thats up to the challenge. The gigspeed network from comcast business gives you more. With speeds up to 20 times faster than the average. That means powering more devices, more video conferencing, and more downloads in seconds, not minutes. Get fast internet and add phone and tv for only 34. 90 more per month. Comcast is building americas largest gigspeed network to give Small Businesses more. Call 1800 5016000 today. Welcome back to squawk box this morning fcc chairman agit pai and sinclair tribune they want to eliminate broadcast eliminations its an issue we raised with the chairman there was a report out that the internal watchdog at the fcc was investigating the role of the fcc and the sinclairtribune transaction and whether you were aware of that transaction or that it was taking place prior to changing the rules that would govern the ability to Companies Like that to get together. Did you know about that before it was announced before you made that rule . Absolutely not. Ive said that these allegations were absurd and anybody whos seen my views on these regulations knows that ive been extremely consistent going back to my first days at the commission i think my record speaks for itself. Absolutely not is the answer there. Thus far we have not heard him say that so directly and its an important piece of this story. In the meantime, macys out with Quarterly Results this morning. A beat on the top and bottom line topping expectations take a look at the stock in the premarket so its up 10 shes from kelsey advisory group. How did macys get it so right and the Investment Community get it so wrong . I think theres a couple of things that happened you had a better Holiday Season. Consumers had the ability to spend. Macys gave them the want to spend. Retailers and brands were able to come out with products that people wanted. We have a little bit of an apparel cycle whether it was fragrances, dresses, active or mens, taylored, it all seemed to work. Cosmetics and handbags showed improvement in department stores. Is this a turning point for macys i think its a bit of a turning point for the Retail Sector the reason is theyve had a couple of years to integrate digital with commercial. Inbe ven tori levels are lean. This is not to you a macys specific story you think this is a much broader story. I think its a much broader story. Okay. Are we misestimating for the rest of Retail Revenue on the low side yes, you could be typically when you have a Holiday Season sales gain and look forward 12 months, in 2010 you had a gain, comps were up 7 in the following six months. We just had a 5 holiday gain. When you get off the set are you going to redo your numbers for the whole sector every time a Company Reports their numbers i redo my numbers. To the up side . I did that already with a lot of the tax benefits put in i think well readjust now given what we saw. Where do you think macys could now be 12 months from now. I dont see why macys sitting here could be 26, 27. As long as you see the trajecto trajectory nobody wanted to buy new clothes. Do you think something has changed . It has. Denim is coming back in. We have a bottom cycle working typically for every pair of bottoms you buy you buy two or three tops all right has lundgren left . Is macys better are they operating the Stores Better i think this has happened with macys with lundgren there. I think the initiatives were put in place whether its jewelry, whether whats happening with the loyalty program, whether its the marketing, whether theyre targeting more millennials. Theyve been testing so many different strategies in order to be able to capture more of the customers. Partly macys, partly the economy. Yes a little bit of everything, but thats good for the group. Macys is an important part of the group, right, with all of the consolidation . Big sales, a lot of consolidation, a lot of space and a wide breadth. But important to shut down some of the stores, too. Key thats going to continue you need to have these stores be productive and be productive with high sales per square foot and profitable margins. One more question a question weve been asking all the guests around retail the tax cut clearly benefitting the consumer in terms of their own wallet, but do we see or expect the retailer to start passing on some of that some of the Corporate Tax savings to the consumer i do. We do survey of a bunch of Different Companies and youre going to see companies basically return cash to shareholders, make acquisitions, invest in their businesses i expect to hear over these next two weeks of earnings calls steve mana just initiated a dividend were going to hear more about buy backs and dividends. What im saying is am i going to walk into macys and see stuff on sale because of it . No. I dont think well see passing on in the form of lower prices i think theyre putting more make into the product to be able to give it a better quality and to sell more goods at full price. Thank you. Ing thank you. Appreciate it. A little bit of global news to tell you about. Saudi arabias king announcing a reshuffling of the military leadership this move is seen as an effort to promote younger promote his vision 2030. He took the rare step of declaring a woman to the Labor Ministry when we come back, jim cramer will join us live from the new york stock exchange. By the way, lets check out the futures. After we heard from what the testimony is going to be from the new fed chair, we saw a little bit of a pull back in the futures. The dow futures have come back up right now the s p and the nasdaq are barely below the flat line stick around, squawk box will be right back. Pnch down to the new yorkcramer i know you follow the macys numbers pretty closely, did you figure out what is going on there . Queue the fourth q, well hear how january is strong january is not a month that we count a lot for retail, but when you see that kind of followthrough strength, what it says is you dont just get one good quarter, its the beginning of what is a multigogood quart solution jeff needs be saluted, hes developed within citi kind of apparel and is fixing the Balance Sheet. It is really hard to get a better score in retail other than kohls. If it was kohls, it would be in the 50s. We were just watching, and that is what we try to do, as bystanders, but thats a sexy story between disney and comcast and throw comcast in there as well how do you think it plays out . Its going to be a soap opera. I guess so. I mean, International Sports remains the one thing. I just came back from europe, its the one thing that unites europe you want to be there with the growth industry. Were not talking about the subscriber growth of espn. Were talking the ultimate actual not trying to figure out where the viewers are but the trend is higher. This is a key asset. Do you see moffett . That was Craig Moffett that was craig, right . Yeah. He said comcast may still be interested in everything, not just sky, but the stuff ill refer to moffett, but i think i will defer to the man to my left in six minutes because i think david faber knows more than mr. Moffett moffett says satellite business is not a good business. Long term. Well, you know, i disagree. I think population growth is what drives viewing. We dont have any, they do jim, real quick, starbucks just saying there is an abundance of store fronts empty. This is great news for starbucks because the future of our economics is going to go down. This is not a cyclical change in our occupancy expenses but a permanent one. What do you make of that we have talked about that together and i think it absolutely is. Theres a break in the pricing coming into the Real Estate Investment trust thats what hes referring to. They will be able to get bargains and i think that howards whole theory is finally coming down as a good one and i know when i talk with the company, it is very clear what they needed is breaks in leases. They need lower prices its coming. Howards onto something. Hes always been ahead of the game i love this thinking about it. I think hes a inwe are. All right, jim, we have to unare. See you in a few minutes thanks today on cnbc, dont miss full covagere of Jerome Powells testimony. Well be right back. 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. Its simply a matter of following the signs. They all lead here. Cme group how the world advances. It is time for the your business of the week. Ensure your pet gets walked and watched. And now with the acquisition of the biggest competitor, it has the Largest Network of dog sitters in the country watch your business weekend mornings at 7 30 on msnbc to find out how they are growing the puppy love and their business a 1 gain in the dollar during february tends to be bullish for oil with the commodity gaining over 5 in march. All right. Welcome back to squawk box. Well take a final check on the markets we have been watching throughout the morning for most of the morning, we have been in positive territory a couple brief tipdowns when we heard j. Powells testimony. The s p futures are up by 1. And the nasdaq is up 2 1 2 points this comes after the 400point gain for the dow so building on the gains at this point. A lot can happen with j. Powell testifying before congress well see what happens as we get closer to that but the tenyear note, this is what stocks have been keying off of every move grow see in the tenyear, 2. 89 for now. That does it for us today. Make sure you join us tomorrow now it is time for squawk on the street. We are one hour away from Jerome Powell testifying on capitol hill for the first time as fed chairman. Of course, well bring that to you live good Tuesday Morning welcome to squawk on the street. Im Carl Quintanilla powells testimony was released a half hour ago. Well see what the q a brings. Europe is a bit lower. Tenyear as yo