Similar big gains. Big. The dax in germany, the cac in france, up by 1. 5 . The ftse is up close to 1 . Look at the dollar. You will see in currency markets just focusing on whats happening with the dollar. The dollar is up across the board. Euro at 1. 0541. The dollar yen at 113. 62. Interest rates finally went up. 2. 42. Up from 2. 35 yesterday. 2. 42, were calling that up. Good to see someone making europe great again. You know, sara eisen told me we should focus the show on the peso. Thats not a bad idea. It is interesting, even europe. Those are big gains in europe. Lets get caught up on some of the big corporate stories. Snap inc. Expected to have the ipo after the close today. The Company Targeting a 17 to 18 range, valuing the company at 25 billion. Separately the Company Reportedly developing a drone. The New York Times saying the drone would be used to take puck chores and video. Youtube planning to launch a Live Tv Streaming Service featuring broadcast news and cable channels. This is all in a bid to attract cord cutters. Youtube tv will cost 35 a month for six accounts. The lineup includes nbc, cbs, abc, fox, espn. Subscribers can also watch original movies and shows from youtubes red channel. Cord cutting is, i would argue, beginning in earnest today. Directv now is one of the first efforts at a true sort of skinny bundle. You saw the number yesterday. What is it . A billion hours, people are watching youtube a billion hours a day. Amazing. That shows you theres a difference between young people and i dont think i watch a minute of youtube. Maybe maybe i dont you dont know. It doesnt come close to the number of times i have my box, my cable i think its more the cord nevers rather than cord cutters. Did you see these crazy snapchat selfies. Theyre doing things that end up with them dying. Like yesterday what . A guy in asia. He said watch this. I will put it on snapchat. He got his friend with a girlfriend or refriend. He was at a mall. You know how you look down, a lot of times you see structures there. Ill jump on to that structure. Get me on video doing this. No. But theyre not concrete. Theyre made of like it crumbled under him. That was it for him. Snapchat is dangerous. People dry from trying to take selfies every year. Walk off the back of a cliff. Afrnl a little further back. Be careful watching youtube. My dog ears. The rainbow mouth. Stick out my tongue. You know, tomorrow we should get those filters put on to us throughout the show. I claim cat ears. Do that or wear a jacket. On todays economic agenda, personal income, february personal income and spending at 8 30 a. M. Eastern time. That will be followed by the ism Manufacturing Index and Construction Spending at 10 00 a. M. The fed also releases its monthly beige book report which tracks regional conditions at 2 00 p. M. Automakers reporting february Sales Numbers throughout the day and more fed speak to look forward to dallas fed president , rob kaplan and fed governor lael brainard. Best buy, dollar tree and mylan labs report earnings before the opening bell. Coming up after the bell, broadcom, box and shake shack. Earnings just came out from lowes. The lowes that its the only one we still see a lot. The one like home depot. Profit of 86 cents a share. 7 cents above estimates. Revenue also above forecast. Samestore sales increased by 5. 1 . Lowes was predicting fullyear earnings of 5. 64 a share compared to 5. 53. That report was well received. Stock under 75 when that happened. Now 77. 50. Our top story this morning, President Trump with an optimistic tone during his speech to congress. Eamon javers has more. Strikingly different tone last night in this event yaw that felt like a state of a union, much different from the inaugural where he talked about carnage. On trade, some white house officials gave me some guidance early in the day that he would talk about Harley Davidson, a model for american trade. He did do that in the speech last night. Heres what he had to say. He talked about meeting with these Harley Davidson executives and some complaints that he heard from them. They told me without even complaining, because they have been so mistreated for so long, that they have become used to it. That its very hard to do business with other countries because they tax our goods at such a high rate. They said in the case of another country, they taxed their motorcycles at 100 . They werent even asking for a change. But i am. That Harley Davidson moment was one of the few moments where the president went off tell prompter. He told an aside saying they brought the Harley Davidsons to the white house and tried to get him to ride one, but he didnt want to. Other than that, this president stuck to the script including on trade where he talked about competition from foreign countries. Currently when we ship products out of america, many other countries make us pay very high tariffs and taxes. But when Foreign Companies ship their products into america, we charge them nothing or almost nothing. I believe strongly in free trade. But it also has to be fair trade. Its been a long time since we had fair trade. Guys, waking up at the white house this morning there are a number of staffers who will feel this was the president s best moment so far of his presidency. And will feel this gives him some political room now to begin a more legislative phase of his presidency. Hes been relying on executive orders and speeches, now theyre positioning him to move with congress on some major pieces of legislation, really ambitious agenda for the president. Not a lot of policy specifics, but clearing the table for a legislative push this spring. Immigration was interesting. Maybe there was more we thought before the speech we thought there was more coming. The president had lunch with a bunch of television anchors, as those anchors emerged, we saw comments from a Senior Administration or maybe the Senior Administration official is the way you should describe those leaks, talking about immigration, talking about the possibility of an immigration bill. Last night the president sort of seemed to back away from whatever the Senior Administration had been saying. But he did talk about a meritbased approach to immigration, which is an interesting approach. But that would add yet another massive legislative push to his agenda. Theyre at risk of overloading congresss circuits. Would be amazing. Awesome conjecture about what that would mean. With the position he staked out to say lets compromise on this and give dreamers a path, people the ability to stay, maybe not citizenship, some people are likening that to nixon. The most antichina president ever. And then he decides to visit china. Does that and opens it up. He made comments in the past about dreamers. Hes been sympathetic to the dreamers. Those are the children who came in with their parents to the United States through no fault of their own and have grown up here and think of themselves as americans, and who could be kicked out by a massive immigration push. The president has been sympathetic to those people. He has that rhetoric in the speech, even as he has guests in the audience who are victims of crime committed by immigrants. Hes sending both messages at one. That could be a savvy political decision. Well have to wait and see. Reporter the legislative push goes from here. Interesting to see the evolution, too. Trump has always been a big guy, 63, commanding of a room. And you can see how he works a room. But president obama, when he came into office, he to me, he is good looking guy, Everything Else. But over the eight years he became really president obama. The power of the office right. And people say that wont happen to President Trump you see that setting. It started last night. Dont you think it started last night . I think it started last night. To the chagrin of all those people in white and people that wouldnt stand. People who looked like they had indigestion and Everything Else. It was absolutely donald trump in a more classic president ial mode than weve seen from him before. We also saw him hold back from some complaints and attacks on the media. We saw the president in more of the healer in chief mode. The i feel your pain president. Particularly in that moment with karen owens, the wife of the navy s. E. A. L. Recently killed in that raid. That was an emotional moment that resonated with a lot of people around the country. And the young lady at notre dame. That is maybe why futures are up, stepping in the futures are up because everybody said they couldnt be up. Everyone looking for a shock moment, they didnt see it. Andrew, youll like this. When he said no more time for small issues, and were not going to fight these small these little battles. Talked about trivial fights. I was looking for checking the twitter feed this morning. Seeing if there was anything on there. Thats my question. Not being too skeptical or cynical. I thought the same thing. I thought it was a great speech. The question was is this a pivot forever . No. Or just one night, well have twitter in the next 48 hours that will rile people all up again. I dont want those to go away completely. Its 6 12 a. M. I dont think weve seen a tweet yet from the president. I think theyll ride this for a while. The interesting thing is to see how the president responds to this. We know hes a man who reads his reviews carefully. This will be a speech that gets a lot of good reviews across the media and around the world. Will he take that feedback and say he could tweet out a couple pictures of Debbie Wasserman shultz. There was one slightly mean moment in the speech. This is a president who loves to insult the opposition and call somebody a clown. Which they would never do. There was one moment where he talked about obamacare being a disaster and stuck his hand to nancy pelosi and gestured to her as if it is her fault. There was a you saw this, too. People what was that . They looked like a cult. What was that, all the people in white . It was a protest of donald trump on womens white issues. A shout out to the suffrages. Okay. Thats good. I thought they were going to start singing. I thought they were going to they looked like a choir. It was a typical seesaw. Real quick, you said you thought this speech would be applauded globally. One of the most interesting comments he made this comment before. Its different to hear it last night for some reason. He doesnt want to be the president for the world. The question i wondered was whether that gives up our standing in terms of not really being the president for the world but perhaps the role model for the world and what that means. This is also a president who gave his full endorsement of nato last night and encouraged nato members to pay their dues. He is reaching out to nato, to the u. S. Allies around the world and saying were with you, but we need you to stand up. Thats a mixed message as well. The reason i say globalglobally turned the rhetorical volume down a bit. Thats the piece that will appeal to people around the world. For many people that was a great moment. Im not here to i get it. Instead of the pillars in germany. I will stop the seas from rising. You dont know how many people around the world wanted the american president to be the president of the world. A lot of people dont want that. And they are nationalistic in places as well. We have to look out for number one. Thanks, eamon. For more on President Trumps first address to congress, lets bring in evan bayh, former u. S. Senator and governor of indiana. And judd gregg, former governor of New Hampshire and senator. You guys are not tie in being skeptical of trump, but youre not a full throated endorser of trump, judd. Are you more today . Well get to evan in a sechblgt hes a democrat. Youre taking up the republican side today. Do you want to defer on that . What did you think last night . I thought it was an exceptional speech. I think you folks talked about it already. The white house seems to be agreeing with him. Hes turning president ial. This could be a pivotalible event for him. He could be moving in the direction of leading as a president versus up until now getting into what he defined himself as trivial events and moving on to the big issues of getting this country moving again. And how as a president he gives us a purpose and direction and defines our causes as a nation. I thought the speech hit on all cylinders last night. I was impressed. His tone was impressive. The substance was also impressive. Im upbeat about it as an american. Not just as a republican. You were from the showme state. When you have come on you wanted i like how you said that. Fehr finally listening to you. Thats not your house behind you were not in your house. No im not in my house. Im in a studio. Its a nice studio. You know why i ask . If you were, i was going to ask for mrs. Gregg to come on. She would come on and say you are a brilliant individual who she follows so closely. She thinks youre a lefty. Thats a fantastic back drop. You can get some eggs and milk . Waffles with maple syrup. If you have vermont maple syrup. Please. Okay. Senator governor bayh, i dont expect to you come out throwing flames either. I dont expect it to be like Chuck Schumer who said we have given him his chance. Now its over. Now its over. I dont know what that means. Theyve already given him his chance . Now forget about it . I missed that. When did they give trump the chance . These have been a contentious five weeks. The president did very well last night. I agree with judd on that. The speech was well written, well delivers. Unusually conciliatory. Now the democrats need to seize this moment and see whether last night was the real donald trump and can seek message discipline and common ground, or whether he gets distracted. He needs to maintain also a night and get into details, because as judd would agree, a lot of tough decisions coming up on the obama care replacement and taxes. He needs to exercise leadership on that. You said if he stays like this if this is the new trump and he stays like this, youre telling me the democrats will work with him . On some things. On some things not. Regrettably our politics is polarized now. Theres an opportunity for bipartisanship on tax reform. Repatriation of profits. Getting the corporate rate down. When george bush had his tax cuts, things were more polar sized than now, but there was an opportunity there. Theres an opportunity to bring the stranded profits overseas back home. Invest in infrastructure. I think the obama care thing will be much more difficult and it will be unfortunate that that is coming first because theres going to be a lot of blood on the floor about that. The president judd was a governor, i was a governor, you cant micro manage but its important to step in and say, listen, heres what we need to do. It can get done but the president needs to say tough choices. Heres the one i favor, follow me. Some of the hardest applause and stomping and Everything Else was repeal and replace. People in that room obviously on the republican side want that done. Can it be done without setting the republicans up for a fall in 2018 because every Single Person that loses coverage will be on nightly news every night. Youre right about that. There will be a lot of sad stories. All you need is one. They do that for a month. But every individual will be covered as if theyre typical of everyone. I think evan is also right. This is an issue that the republicans cant expect assistance from the democrats on. Theyll have to republicans have to do it themselves. There are ways to replace obama care which can be constructive. We can deliver Higher Quality care in this country at a lower cost if we follow a few basic rules of Getting Better health care. The president s system is collapsing. Had Hillary Clinton been elected, she would have the same problem that trump will have, which is that obamacare doesnt work. It has to be substantively changed. The republicans have an opportunity to change it, but they have to do it on their own. They cant expect much democratic support. Evan is right, there is ground for bipartisan assistance in the area of tax reform which is where we should be going. That will get the economy moving very fast. Gentlemen, you swear thats not your house, judd . Youre allowed to have a nice house. Bernie sanders has, like, a lakehouse. I didnt think he had any money. Im thinking of moving into this studio, making this our residence. I like that couch. I want to park on that couch. Watch squawk box. Thank you both senator governors. Dont even call us if you dont have both. When we come back, lawmakers reacting to President Trumps address tonight. We will be joined by congressman andy barr, senator purdue and others. First, lowes out with quarterly results. Well dig through the numbers. The stock up 5 . Squawk box will be right back. Welcome back to squawk box. Lowes just out with quarterly results. Profit of 86 cents per share, 7 cents above estimates. Calling in now is brian nagel. Good morning to you. Top line, your headline, if you will. Good morning. The headline is this is a good quarter from lowes. Really good quarter. Usually we have this conversation where home depot blows it out, lowes doesnt do it. We wonder is there an operational issue. Is this one of those quarters where you say maybe things are turning . Possibly. I guess the way to think about that, the gap between lowes the results lowes reported today and those that home depot reported a week or so ago narrowed. On wall street we always look at this, probably too much. Is that an operational story or are we now just saying maybe something is going on in the economy and this is a larger signal about whats happening. Its probably both. Lows had a big Analyst Meeting late last year. They talked about refocusing on improving productivity. Since that time they made Management Changes and other changes in the business. I think that may be taking hold. The other thing to think about here is weather. We talked about this over the last several months. Lowes is more weather affected than home depot given the product mix and store locations. For the first time in a while in this quarter we had some normal weather. So lows may have benefited more from that than home depot. Explain that to us, when you say its a location story when it comes to weather, what is the distinction were talking about here . Again, this is somewhat splitting hairs. Lowes has somewhat larger percentage or share of the stores in areas of the country that can be more weather affected. As far as the product mix goes, this is splitting hairs as well, but the products that lowes sells, even though lowes and home depot look similar. Lows is more skewed to seasonal products. Which are more weather dependent. As the weather turns normal, you can argue lowes can perform better. When you take these numbers and pop them into your new model, i know you dont want to front run, if you will, what youre going to do here, help us understand where you think the numbers will go in terms of will you raise guidance . The way ill answer that your guidance, that is. The Fourth Quarter lowes beat our estimate and the street estimate. As we look at initial guidance for 17, same story. Lows is telegraphing better than expected sales and earnings. Typically when that happens, street estimates start to climb. Okay. Brian, always great to talk to you. Thank you for helping us with this. Thank you. When we come back, a lot more stocks on the roll since the november election. Futures pointing to a higher open after President Trumps speech last night. We will talk to an Investment Strategy after the break. As we head to break a look at yesterdays s p 500 winners and losers. Sir theres been a breach. We need your password so we can lock down the system. My password . Yes, sir, we need your password. The password that i use . Yes, sir, your password. Theres been another breach sir right. Okay. Iha. Temyjob1. Ihatemyjob1 . Wanna get away . Now you can with southwest fares as low as 59 dollars oneway. Yes to low fares with nothing to hide. Thats transfarency. Sfx clap, clap, ding this just in. 50 million customers data was not compromised this morning in a Security Breach that didnt happen. Wall street, not rattled. At all no. Sir, sir. What went right . What went right . Everything. We have a brief statement on this nonbreach. Were happy to report theres nothing to report. My dads company wasnt hacked today. Cool. My dads company wasnt hacked today. Whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley welcome back. Youre watching squawk box live from the Nasdaq Market site in times square. Good morning. Welcome back to squawk box. U. S. Tick future s trending higher here, maybe a trump bump here. You think . What do ascribes it to . Maybe a trump bump. Last night President Trump outlined his agenda, the market rally and his plans for taxes. My Economic Team is developing historic tax reform that will reduce the tax rated on our companies so they can compete and thrive anywhere and with anyone. It will be a big, big cut. At the same time we will provide massive tax relief for the middle class. We must create a level Playing Field for American Companies and our workers. The stock market has gained almost 3 trillion in value since the election on november 8th. A record. Weve saved taxpayers hundreds of millions of dollars by bringing down the price of fantastic and it is a fantastic new f35 jet fighter, and well be saving billions more on contracts all across our government. We will have more on President Trumps speech in just a moment. Weight watchers profit more than doubling in 2016. This coming as the Weight Loss Company expanded membership for the first time in four years. This has been a roller coaster ride. I dont know if we need a lon r longer term chart. Oprah came back, it went up. They find this food, its just i dont want to eat the food. You can eat any food. The cards, the points. You have to eat cards. No, its the points, pasta, its a different point game. You can get to 24, but once you get to 24, you have to stop. Can i do it 12 hours at a time . You could. I want to do 24 worth of points in 12 hours. You could, but you may have a different result. Many stocks go up and down. Etsy posting a wider than expected loss. The online crafts store still seeing revenue growing by nearly 22 , that would be above expecttitions. And envision healthcare missing estimates. The Fourth Quarter coming up short after reporting profits this time last year. Back to the markets. Investors kicking off the first trading day of march on a winning streak. Four positive months in a row. The dow is up 13. 5 since the november election. Joining us now is seth masters from bernstein Wealth Management and peter bane, president and ceo of omam. Youre both long equities now. Both bullish on equities. I wonder was you think as we kind of have gone through some of these issues. Seth, lets start with you, take out where you see the markets at this point, how bullish you are. I think that what weve seen is a strong earnings season. And a lot of uncertainty around exactly how much more things can improve. On the other hand, there are lots of good signs. The economy is growing. In fact, its not just happening in the u. S. , its happening outside the u. S. We would be slightly tilted towards nonu. S. Stocks where valuations are cheaper and expectations are lower because there are well known problems there, but that leaves room for surprise. Where specifically . You wanted to be selective, but parts of europe and japan that we i had are attractive, especially if you can find companies that have global businesses that are not so sensitive to domestic problems. How about you, peter. Seth is right. The other area you have Seen Movement is emerging markets have come back. I think were also in one of those interesting stages where you have a little bit of dove tailing between underlying fundamental Economic Conditions and reality political perception. You had a Strong Movement after President Trumps election and the belief there would be fairly rapid change in tax structure, rapid investment in infrastructure, and rapid reduction in regulation. I think you had a pause when it became clear that we were going to have a real fight on our hands politically. Was there ever a thought that we would have a new tax plan that came in within a couple of months . Not in a couple of months. There was a pause, but it reaccelerated again. We had 12 straight new highs. It did reaccelerated six weeks ago after a pause that everyone pointed out. Nothing changed in terms of how quickly this was going to be done. What is beginning to emerge is the view that there will be deregulation. You have the challenge of obama care. As the president said, if hes going to do that first, youll have a challenge with taxes. The flip side of that i think thatstrading on his part. The one area everyone said you will have bipartisanship on is tax reform. Did you think he would say horse manure . This is you. Trump has not demonstrated an inclination from campaigning to governing. Before last night . That was valid until about 8 59 time. You think he transitioned. He absolutely did. He was president ial last night. But he can transition back. Thats the question. Looking at my twitter feed. Im waiting. You go you want 50 retracement from i would like a nice tweet today about pelosi. The issue is what happens now. He certainly changed the momentum last night. He didnt provide anybody with the fodder to make the personal attacks. If he changed momentum, well go down. Momentum has been all good. No. Is that why you think futures are up almost triple digits . Yes. I think people are look at this going we may actually get something done. Something may be able to be executed on healthcare which opens the door for tax. We can move on regulation parallel. Regulation can move parallel to healthcare. Taxes have to wait. Infrastructure can move fairly parallel to healthcare as well. I think the market is believing if last night continues, well be able to execute. Seth, he took a more conciliatory tone last night. I dont know that that necessarily means the democrats will jump on board to say how can we help this man reform the affordable healthcare act. Thats a good point, and the speech was light on details. I dont know why people are surprised by that. I dont think of state of the unions where you lay out detail. Its a more broad sweeping plan. It was a state of the union address, it was very president ial, but it is going to be about details when it comes to making the tradeoffs that have to get made. There were lots of promises made and they have to be paid for. Those will be the difficult things. The other thing to say, the other news that has gotten eclipsed is that the fed is talking more hawkishly, and thats not necessarily a bad thing for the stock market. But it will have to be digested. There are a lot of uncertainties about how this will be received in other parts of the world. What plays well in the United States doesnt necessarily sound good. We downgraded the fed. Theyre following the markets now. Thank god, right . Havent you been waiting for this day when the fed is not quite as influential . I think the fed would agree on that. Having everything reliant on Monetary Policy is unhealthy. Weve had a placid market for the last few months, which is a bit surprising. I think there will be other shoes to drop. We should expect spikes in volatility. The big challenge for investors is taking advantage of those spikes in volatility. Is that a suggestion you buy on dips or more complicated than that . In this environment where you have these risk on and risk off swings, itsts tempteding to b on dips. Seth, thank you. What happened . Trump tweeted . Katy perry and Orlando Bloom split. This is three hours ago. Didnt you see katy. At the oscars. Was orlando there . I dont know. I wasnt focused enough. Youre not part of that, are you . No. Coincidence . I dont think so. Coincidence . Who needs Orlando Bloom when you can get too big to fail. Pilar was there, too. Pal and chain. Orlando might have been there. I dont know. Congress reacts to i wasnt focused. Were you focused on katy . No, pilar. Thank you. Congress reacting to President Trumps plan for america, senator david perdue will join us at 8 00 a. M. Eastern. Hes a member of the budget committee. Well hear from democratic leadership, steny hoyer will give us his take, and later, congressman Kevin Bradley will join us from the influential weighs and means xhitdity. Love when he comes on. Stay tuned, youre watching squawk box. Committee. Love when he comes on. Stay tuned, youre watching squawk box. The future of business in new york state is already in motion. Companies across the state are growing the economy, with the help of the lowest taxes in decades, a talented workforce, and worldclass innovations. Like in plattsburgh, where the most advanced transportation is alady en and in corning, where the futu is materializing. Let us help grow your companys tomorrow today at esd. Ny. Gov welcome back to squawk box. New u. S. Commerce secretary wilbur ross commenting on the president s speech, speaking to reporters last night he said the president s remarks on taxes were not an endorsement of the gops proposal border tax system. Ross said trump was pointing out a border tax inequity between the u. S. And other countries but was not specifying how it should be fixed. President trump supposeded positively about the border tax proposal in other interviews but also called it troo complicated. Why is wilbur walking that back . Because they figured it oout to make it happen. Is it walking it back or a little of both, i think. Was fascinating to watch. People we knew, walking in. Separately secretary ross attending the president s speech in comfort and style. He was spotted wearing a pair of Stubbs Wooten slippers. They were embroidered with a Commerce Department logo. Thats cool. Wilbur was like 73 27 or something 73 confirmed by the senate. Relatively uncontentious battle. He knows what hes doing what a switch. Okay. 7227 what a change. Private sector experience. Coming up, President Trump calling for big changes to americas trade policy. We will get reaction from congressman andy barr. Hes a republican on the Financial Services committee. As we head to break a quick check of the european markets. Squawk box returns in just a moment. Is car is traveling over 200 miles pehour. To winevery millisecondmatters is on the track ng over 200 miles pehour. And thousands of miles away. With t help of at t, Red Bull Racing can share crical information about every inch of the car from virtually anywhere. Brakes are getting warm. Confirmed, daniel you need to cool your brakes. Undetood, brake biasack 2 clicks. Giving them the agility to have speed precision. Because no one knows like at t. And e wo huffed like you do sometimes, grandpa . Well, when y have copd, it can be hard to breae. 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, starng within 5 minutes. Symbicort doesnt help replace a rescue inhaler for sudden symptoms. Symbicort helps provide significant improvement of your lung function. Symbicort is for copd, inuding 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. Symosteoporosis, and someur risk eye problems. Tions, 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 child giggles symbicort. Breathe better starting within 5 minutes. Get symbicort free for up to one year. Visit saveonsymbicort. Com today to learn more. Welcome back to squawk box. President trump making a pitch for more protection in american trade in last nights speech. I believe strongly in free trade, but it also has to be fair trade. Its been a long time since we had fair trade. The first republican president , abraham lincoln, warned that the abandonment of the protective policy by the American Government will produce want and ruin among our people. Lincoln was right, and its time we heeded his advice and his words. Joining us now with more on the republican reaction to President Trumps address, republican congressman andy barr of kentucky, member of the house Financial Services committee. Good morning to you. Good morning. How are you . Great, thank you. Big question in terms of your reaction to last nights speech. Weve all talked about how president ial he appeared last evening. Do you think this is a pivot in any way . Well, it was certainly well received on capitol hill and i think around the country. Even some of my democrat colleagues remarked to me after the speech that they felt like the speech and the message was on a high tone that was a genuine and good faith attempt at building bridges, bringing the country together and voicing a vision for a more confident america, more United Country built around robust Economic Growth. I think that is a welcome message. I think if the policy results are Economic Growth, certainly better than the substandard, weak, slow growth weve seen over the last several years, i think that will do more to United Country, bring the country together than anything else we could do. Congressman, the clip we showed as we were bringing you into the conversation suggested to me he was making a case to some degree to something along the likes of a border adjustment tax. The pros is it raises a whole lot of revenue so we can dramatically lower the corporate rate, which we need to do to make america more competitive. The so weve got to get the rate down. How we pay for that, even with dynamic scoring, is an important question. The ways and means kmooet commi going to be exploring that. The negative is on importers. Philosophically, where do you land on that issue . In general, i definitely want to lower the corporate rate, and i want to let the ways and Means Committee do its work. Im definitely interested in hearing the arguments from those economists who have voiced skepticism about the extent to which the strengthening dollar would offset the negative impacts of the issue on imports. So weve got a lot to learn. Weve got to listen more. Weve got to have hearings on this. The big question mark out there is whether we get to tax reform, which is to suggest that obamacare and the repeal of it from a tactical and Strategic Perspective to some degree needs to happen first. Do you think it happens and when . I think it does, and i think the president s call to action last night was a sign of president ial leadership that will help the Congress Move the process forward. I know our leadership and rank and file members are committed to this. Were committed to this because 70 of the country only has two or fewer Insurance Options within the exchange. The Health Care Inflation continues to go up. The costs continue to go up. Millions of americans lost their Health Insurance. So its created dislocation for sure. The American People deserve a Health Care System that moves Health Care Decisions away from washington and back to where they belong with patients, doctors, and their families. So i think there is strong momentum to replace obamacare with patientcentered, Personalized Health care that treats individuals as human beings, not as a number in a Large NationalHealth Care System. Okay. Its a longer conversation. We appreciate your perspective. Hope to have you on again. Thank you, congressman. Thank you very much. Coming up, Market Reaction to President Trumps speech to congress. The futures this morning have been sharply higher. And later, senator david perdue is going to be joining us. Squawk box will be right back. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. President trump promising Economic Growth. America must put its own citizens first because only then can we truly make America Great again. This morning, lawmakers and the Business Community are reacting. A kplacomplete breakdown of the president s address to congress and what it means for your money straight ahead. In this hour, what the president s economic plan means for investors. The stock market has gained almost 3 trillion in value since the election, a record. And later, two men who know their way around the white house and the economy. Former white house economic adviser chair jason furman, and former assistant to president george w. Bush, ryan streeter, will be here to talk trade, immigration, and infrastructure. Buy american and hire american. As the second hour of squawk box begins right now. Believing in america. Good morning. Welcome to squawk box here on cnbc. We are live from the Nasdaq Market site in times square. Im Andrew Ross Sorkin along with joe kernen and becky quick. Take a look at the futures this hour after President Trumps address last evening. The dow higher by 97 points. S p 500 would open up a little over 12 points higher. The nasdaq to open up about 29 points higher. Youre also looking at green arrows in europe as we flip the board around. The cac up about 1. 5 . Dax, a similar story. The ftse up about a percent as well. Heres whats making headlines this morning. Home improvement retailer lowes is one of the mornings stock market winners. The company beating estimates on the top and bottom lines with its latest earnings. Same store sales also beating estimates, as did the companys fullyear earnings forecast. As a result, that stock continues to climb this morning. Its now up by almost 6. 5 . It is the busiest day of the week for economic numbers. Out today, we have personal income and spending. February auto sales, the ism Manufacturing Index, Construction Spending, and the feds beige book. Its a lot to get your head around. Fidelity investments is offering buyouts to 3,000 workers. Theyve been offered to those who are at least 55 years old and have been with fidelity for at least ten years. President donald trump calling on lawmakers and u. S. Citizens to restart the engine of the u. S. Economy last night. Steve liesman is here. He joins us with more on what he was watching. Yeah, fascinating speech. From an investor standpoint, i think the calculation could be with this 96 positive to the upside this morning that a more moderate President Trump, as suggested in that speech, could have a better chance of getting his pro market proposals through congress. Among the key economic elements were familiar themes. Some with specifics, and some curiously without. My Economic Team is developing historic tax reform that will reduce the tax rate on our companies so they can compete and thrive anywhere and with anyone. It will be a big, big cut. At the same time, we will provide massive tax relief for the middle class. We must create a level Playing Field for American Companies and our workers. I would note the president did not mention lowering the Corporate Tax rate to 15 . Maybe he didnt feel he needed to in this speech, or maybe its a sign hes moved off that very low rate due to deficit implications and as part of a compromise. The president also didnt mention punitive import tariffs on the Controversial Border adjustment tax. I believe strongly in free trade. But it also has to be fair trade. Its been a long time since we had fair trade. The president asked congress for a 1 trillion infrastructure bill financed with public and private funds, more defense funding, and a repeal and replacement of obamacare. Finally, the president corrected two mistakes hes repeatedly made on the trade deficit and labor force. I know a lot of economists this morning see that as a major sign of improvement. Maybe theyre still working out the details on how this all happened. I think thats right. Hes always said 15 when it came to Corporate Taxes. He didnt say it last night. I dont know what that means. Im not sure if i should be reading a president ial speech like a fed speech, if theres that much attention made to each and every word. Probably not. I would, actually. He was much more detailed and much more accurate. When he says the number o1 trillion look, i dont think the market is trading on a 15 Corporate Tax rate ping 20 to 25 is where the bid and ask is. Im excited for you. Why . Because youre going to go back to doing what you know how to do. You dealt with a fed controlled economy for eight years. We parsed every freaking word, every time they said substantial, put significant instead of substantial and all that gobbledygook. Youre going to go back to analyzing growth. You are so correct, joe. I am so happy at the prospect you dont need to be what you were. You had to be that. For six years theres been no Economic Policy to cover. By the way, i was excited when the republicans got control of congress because i thought at least they would put bills together and put them on the president s desk that he might veto. But that didnt happen. Can i make one other point here . Must you . I thought we were ending on such a good note. Lets leave it there then. I think the president was talking to individual members of congress there. I know theres a Democratic Party and theres a Republican Party. Not entirely clear to me theres a trump party in congress. Im not sure if hes if thats his own looking for his own nucleus of support in congress that maybe gets around paul ryan a little bit. I just looked at what these guys are saying. Im actually excited. Ive been asking this question. Which is what . Why yields have been so well behaved. And they just popped up a little bit last night. Steve, stick around. Donald trump also touching on the stock market last night. The stock market has gained almost 3 trillion in value since the election on november 8th, a record. Weve saved taxpayers hundreds of millions of dollars by bringing down the price of fantastic and it is a fantastic new f35 jet fighter and well be saving billions more on contracts all across our government. Joining us now is the newly appointed Portfolio Manager for blackrocks global allocation fund. What i was alluding to, russ, is where you duly noted after the initial runup in yields after the election that its been very kwie yes, sir sent. I guess your notion is before you see actual evidence there will be fiscal stimulus through successful, i guess, legislation, that the bond market was sort of just sitting around waiting with low rates. The stock market seemed to assume it was going to happen while the band market was waiting. Why the disconnect . Its a fair question. Im still trying to work through quiescent. Its a new word. What is quiescent . You guys really dont know that word . No. Its not just me. Wow. A New York Times guy im not aware. Im going to be google quiescent right now. I think part of whats going on thats scary. I know it because i can hear it out. Its in a state or period of inactivity or dormancy, which is different than what you were suggesting. Oh, was it . No, i think he actually got it. You guys are both i dont know. I went to a jesuit high school. We actually learned things. Wow. Yields. I wont use a word if i dont know how. I dont want to exacerbate exasperate too. It exasperates me. Were back to where we were last year. Its not just the u. S. Yield been its also whats happening elsewhere. The one thing which has taken New York Times, really . Youre a word smith at the New York Times . Joe, you won. Its embarrassing. German twoyear yields, negative 90. This is a record low. Ten year yield back down. Part of whats happening is youre seeing a return to what happened in 2016. European yields leading u. S. Yields. Yes, the economy looks better. Yes, theres the prospect for stimulus, but at the same time, its a global market. In that context, suddenly a 2. 40 yield looks attractive if youre a german insurance company. Chuck, will you be able to wow us with something thats not insipid right now . Its like word of the day. The yield situation weve got right now, Inflation Expectations are below where they were a month, six weeks ago. Fed fund futures are pricing in today in 80 probability of a march hike, up from 54 yesterday. This is partially on hawkish comments from dudley. And up from 32 a week and a half ago. So the market is expecting better than half odds of a rate increase. Frankly, i dont think its deserved because were not really at the dual mandate. And the fed can jawbone. The jawboning is whats led to i think lower yields in part. I hadnt seen that. Why didnt you Say Something . He did. Joe, i debated this morning whether or not to lead with the fed or donald trump. I guess i went with the momentum of the story with donald trump. I could have just as easily led in terms of what i think is affecting markets this morning with the fed. We had four speakers this morning. I was in dallas. I asked Robert Kaplan if youre afraid youre going to miss an opportunity and he said yes. Bill dudley earlier called the case compelling, a very loaded fed word. And williams said something about it too. March should be on the table. Harker saying we should do three rate hikes this year. We use thompson reuters, which is slightly different from another news organization. We believe its more accurate. I know joe doesnt want me to go there. When did that go to 65 . Overnight. After the speech . It went well over yesterday. I think it was from the fed stuff. It wasnt the speech necessarily. I think its come off a little bit from the speech. It might have been up near 70 or 80 . Anyway, bottom line is were over the 50 threshold. That gives the fed the flexibility to go. I just want to report that about eight or nine times out of the seven or eight times i was on television, i said the market was underpricing the march probability. Im not sure its a go. So its the liesman effect. Im just saying there was money to be made in the market ske skepticism about what the fed was specifically saying in my opinion. Take the next fed hike off the table for a moment. One of the reasons were where we are, still at 2. 50 on the two year, this correlates better than any other factor with longterm rates. To get out of this range weve been in, to get over 2. 60, 2. 70, 3 , dont you believe were going to have to get to a point where people have some confidence nominal gdp is going to get over this level defined as the last seven or eight years. Nominal gdp is not the number we talked about. We talked about nominal gdp is the real gdp plus the inflation. That can run 4 or 5 . Weve been running more toward the 4 range. Take off the 2 inflation. Thats how you get it. I agree with you. I think you have to get a bump up. When i look at the president s policies, i dont see the 100 or 200 basis points he talks about. I do see the possibility of 50 or 60 basis points from deregulation, infrastructure, and tax cuts. I think he can get something there. I think we can bump up gdp into the 2. 5 real to 3 level and maybe get to that 5 nominal youre talking about. I think the bull market in bonds is over, but i dont think its going to be an exacerbated bear market. We dont want markets correlated anymore, do we . I dont. Do you want the bond market correlated with the stock market . I want the bond market to start going down. Investors have a tough time the more theyre correlated, obviously. It leads to one of the reasons why theres the underperformance. The most interesting thing about last nights speech is while there was very little new incremental information, markets are impressed that this administration, unlike the previous administration, is not going to be interested in academic exercises. Theyre interested in intensity and making change. If you look at the president , lack at his cabinet, regardless of what industry they came from, theyre not from academia, theyre not from the public sector. Theyre from the private sector, and theyre all accomplished. They did that through intensity. And persevering and pedal to the metal, full out. Thats why they got there. Thats why yields are backing up this morning around the world, asia, across maturities, in the United States. Thats why banks are outperforming in europe this morning. I could see, andrew, all this finally happening to everyones shock, and then the markets peaked. When they do the tax reform, if they do, which jamie dimon says is not going to happen in 2017, when they do some of the other stuff, thmaybe thats when. That would be a buy on all this hope. Unless the gdp goes above 3 . Would that be enough to sustain it . Look whats happened to gdp. From the time of the financial crisis to now, its averaged a little over 2 . 2 after the worst less than that. Ask liesman, even though hes an english major. Its around 2. 30 years of business reporting irrelevant to the four years i spent. 15 trillion is now close to 18 trillion. Thats over a trillion dollars if you take one percentage point that youve lost off the top each year. Thats over a trillion dollars of gdp thats lost. Who thinks we can grow at 3 in 2018 . Raise your hand. Never mind. How about you . I havent seen the proposals yet. I havent see the policies. Are you talking about all of 2018 . Annualized average. Even Steven Mnuchin i think we will. Thats why im polling people to see. Thank you, Charles Campbell and russ. Whats coming up. Update you on some earnings real quick. Just in from best buy, earning 1. 95 per share for the Fourth Quarter, beating estimates of 1. 67. Revenue was essentially in line. The Company Raised its Quarterly Dividend by 21 , also announced a new Share Repurchase. However, it also predicted Current Quarter revenue and earnings below estimates in Comparable Store sales down 1 to 2 and sees profit of 35 to 40 cents a share. Thats why youre looking at the chart right there and its already down about 8. 5 before things have even opened up. A rough weak for the retailers. Target yesterday, best buy today. When with e coe come back t spring is in the air. That means the home selling season is well under way. A read on the latest Mortgage Applications data and find out how a rising Interest Rate environment could affect housing. And later, more reaction to last nights address by President Trump to congress. Stay tuned. You are watching squawk box on cnbc. E trades powerful trading tools, give you access to indepth analysis, and a team of experienced traders ready to help if you need it. Its like having the power of a trading floor, wherever you are. Its your trade. E trade whether its connecting one of or bringing wifi to 65,000 fans. Campuses. Businesses count on communication, and communication counts on centurylink. Welcome back to squawk box. It is the spring buying and selling season for homeowners. The latest Mortgage Application data was just released moments ago. Diana o dia dia diana olick joins us now. They did fall back enough last week to bring some borrowers back to the market. Total volume urose 5. 8 , but its still 28 lower from a year ago. The gains are not particularly impressive, given how weak mortgage volume has been so far this year. Applications to refinance a home loan rose 5 for the week to the highest level since december seasonally adjusted, but theres still 45 below year ago levels. Thats because Interest Rates are about 50 basis points higher than a year ago. The average contract Interest Rate for 30year fixed rate conforming mortgages fell to 4. 3 from 4. 36. But fed governors yesterday, as you all are talking about, hinted more at a rate hike in march and yields moved higher on that already. Mortgage applications to purchase a home saw a healthy 7 gain for the week, but with the Spring Season now if full swing, they should be even higher. Purchase volume is 5 lower compared to a year ago. As we saw in the case shiller price numbers yesterday, those price gains continue to incre e increase, and rising Mortgage Rates are not going to help. Back to you. All right, diana. Thank you. Coming up, youtube looking to get in on the cord cutting action. Details after the break. And more reaction to last nights address to congress by President Trump. Jason furman, he loved it. Loved it. Hell join us along with ryan streeter of the american int enterprise institute. As we head to break, listen to the president talk about fair trade. Currently when we ship products out of america, many other countries make us pay very high tariffs and taxes. But when Foreign Companies ship their products into america, we charge them nothing or almost nothing. I believe strongly in free trade. But it also has to be fair trade. Its been a long time since we had fair trade. Since i added futures, i have access to the oil markets and gold markets. Okay. Im plugged into equities trade confirmed and i have Global Access 24 7. Meaning i can do what i need to do, then i can focus on what i want to do. Visit learnfuturestoday. Com to see what adding futures can do for you. Today am helping people everywhere do what they do. Better. I work with startups like alpha modus to predict markets five times more accurately. I am helping tv networks use social data to predict what people want to watch. And i worked with marchesa to turn fan feeds into a dress that thinks. Hello, my name is watson. Working together, we can do things we could not do before. Hello, my name is watson. May not always be clear. But at t. Rowe price, we can help guide your retirement savings. So wherever your Retirement Journey takes you, we can help you reach your goals. Call us orour advisor t. Rowe price. Invest with confidence. At bp, we empower anyone to stop a job if something doesnt seem right, so everyone comes home safely. Because safety is never being satisfied. And always working to be better. Because safety is never being satisfied. Companies across the state are york sgrowing the economy,otion. With the help of the lowest taxes in decades, a talented workforce, and worldclass novations. Where the most advanced transportation is already en like inroute. Sburgh, and in corning, where the future is materializing. Let us help grow your companys tomorrow today at esd. Ny. Gov welcome back to squawk box, everyone. Youtube plans to launch a Live Tv Streaming Service featuring broadcast networks and cable channels. This is all in a bid to try and attract the cord cutters and some of the never cord types too. Youtube tv will debut in the coming months. It will cost 35 a month for sixings. That lineup includes, in nbc, cbs, abc, fox, and cnn. Users will be able to record shows to a cloud dvr and watch them for up to nine months. Why wouldnt you be a i beliebl watch any show at any time . Maybe its a windowing. Separately, amazon says its Cloud Computing service is up and running again, after what was a huge outage yesterday that disrupted internet traffic across the u. S. Shows how much were dependent on basically three companies. Google, amazon, and microsoft. The issue, which began around 1 00 p. M. Eastern time, stemmed from a failure at amazons data centers in virginia. That outage disabled and slowed apps and websites that are dependent on cloud storage, run by amazon web services, including netflix and spotify. Widespread failures on amazons network arent common. If one of these things go down, its not just that amazon goes down. Everybody goes down. It was a service used by 148,213 website, according to this outside data firm. Its an amazing thing, the power and influence and importance of these companies. And scary. Need some more players. You need additional redundancy. Thats still not working, is it . No, this is driving me insane. Whats that . The earnings. Something with the cloud. There, now its working again. Every time i curse it, it comes back. Up next weve seen you can curse. Im never going to live this down. Up next, two men who know their way around the white house and the economy. Former White House Council of economic advisers chair jason furman, and former special assistant for domestic policy under president george w. Bush, ryan streeter, will be our guests. Right now as we head to a break, take a look at the u. S. Equity futures. Market is now up triple digits, the futures are. Dow futures up by 106 points above fair value. Good morning, everybody. Welcome back to squawk box here on cnbc. Were live from the Nasdaq Market site in times square. Among the stories front and center this morning, opposite fortunes for two retail stocks. Lowes beat on the top and bottom lines and gave an upbeat outlook. But best buy is under severe pressure despite an earnings beat after that company gave weaker than expected forecasts. Best buy shares down by 9. 3 . Lowes up by 7. 3 . Okay. Were an hour away from january data on personal income and spending, both of those measures expected to post increases of 0. 3 . Separately, snapchat parent snap will price its ipo tonight and begin trading tomorrow. The ipo is likely to price above the expected range, after they brought the range down, by the way, with an offer of 25 billion. I think i might have taken some of your news reading just there. Im fine with it. I know youre fine with it. Just want to make sure. Separately, despite taking a more measured tone in last nights speech to congress, pru President Trump likely disappointed those hoping for a raft of new economic details. Trump said he wants to lower Corporate Taxes and provide major tax relief to the middle class. My Economic Team is developing historic tax reform that will reduce the tax rate on our companies so they can compete and thrive anywhere and with anyone. It will be a big, big cut. At the same time, we will provide massive tax relief for the middle class. We must create a level Playing Field for American Companies and our workers. Joining us now to break it all down, jason furman, senior fellow at the Peterson Institute for national economics. Hes the former chair of the council of economic advisers under president obama. And ryan streeter, director of domestic policy studies at the enterprise institute. Ill go to you first, jason. Was there anything in there that made you happy, sad, or indifferent . The thing that made me sad is id always been a big fan of president lincoln. Then President Trump managed to find the only lincoln quote that ever turned me off when he had him talking about protective tariffs. You cant make america a more attractive place to set up a company when as the president said last night youre going to make it much, much harder, you know, for companies to leave. This isnt zero sum. Watching the speaker of the house applaud protectionism was sad for me. You didnt buy into the idea of fair trade . Oh, people have been talking about free and fair trade for a long time. The question is how do you get to fair trade. You look at Something Like the transpacific partnership, it cut tariffs on other countries more than it cut tariffs on the United States. We have among the lowest tariffs in the world. So you have concrete steps towards fairer trade that hes rejected. Where do you stand . I think i know, but tell us. Well, i agree a lot with what jason just said. You guys arent supposed to agree here. Oh, come on. We can agree now and then. I think what trump was trying to do was to be the optimistic industrialist and the law and order president. Those were the themes throughout last night. So he didnt really give us a lot more on tax. He mentioned three things, Corporate Tax reduction, massive he said tax relief for the middle class, then he talked about imports. We have to do something about these imports where the tariff and border adjustability thing comes up. He didnt give us any specifics. Lets talk about that. The political mechanics of getting this done. Obamacare is going to come first. Hes said that clearly several times. Then hes going to hope to get to the tax issue. Are you handicapping this one way or the other . I think hes going to have some success on the tax front. I think obamacare is a much tougher why can you get success on the tax front if you cant get there first . I think the protectionism thing is hard. The border adjustability and the tariffs issue is going to be a real struggle because theres lots of dissent right now in congress on that front. On some of these other things, which they frankly talk less about, like Corporate Tax relief, i think theres some possibility for success there. I think they can get some of those pieces done. Therefore, that means you think obamacare gets repealed and replaced quickly . I think hes got a bigger problem on obamacare. Actually, the problem exists within congress itself. You dont just need to add donald trump to that. Theres big disagreements right now in the house and in the senate on what you should do about obamacare. I think thats a problem. So we all way too optimistic this is going to happen . I dont think you get anything done by not putting forward plans and telling congress what you want to get done. I looked back at every president through carter. Every single one of them had submitted a budget framework to congress by february 28th of their first year in office. It said what they wanted to do on all of the major programs, and then they pushed forward with it. As president , the main window you have to get Major Economic legislation done is your first nine or so months. Youve wasted an entire month and a half here with not only not putting a plan forward but not delegating to congress either. He constantly says my plan is coming, its going to be this, its going to be that. I think you put the Affordable Care act first. Thats not particularly important to our economy either way. I think its important for the tens of millions of people who get insurance through it. Its been a help in terms of lower Health Spending growth, but its not first order important for our economy to deal with it. What do you think is a realistic growth rate in this country, gdp . If you gave me the chance to lock in 2. 3 growth rate for the next decade, id take that over taking my chances with what actually happens. I think its more likely were below that than above that. We just dont have the demography we had in the 1980s. I assume you have a higher number than that. Joe is going to get a rash. I would like to see us closer to 3. Can we get there . I think so. We need to be a little lucky. We need to have more growth within the labor force. Thats one of our problems. We need to get some of these people who are not in the labor force back into the labor force. I mean, the Social Security administration basically projects that working age people is going to stay the same. That number is going to stay roughly the same between now and 2030. Thats a problem. Where are we going to get more people in the labor force by the people who have currently dropped out. Those are some of the people that the president is trying to speak to with this kind of optimistic industrial policy. Can he do that . Maybe, by providing regulatory certainty, which is what people are looking for. Consumer confidence, markets. People seem to be reacting to some of that. Thats what he was trying to project last night, i think. Certainty, predictability, optimism. Can you convert that into growth . Were going to need some good policy changes there. This shouldnt change the debate over what we want to do for higher growth. We want business tax reform, want expanded trade, want infrastructure. Where it does matter is are you being realistic about your deficit plans, and it was particularly striking last night that the president once used the word debt or deficit in a fiscal context. President obama in his first joint address, over a dozen times talked about it. As someone who was in the administration who has watched over the last three months as President Trump talked about last night the market go up, create 3 trillion worth of value, what does that even say to you . Look, i have money in the market. Im happy when the market goes up. Im happy when america does well. The stock market is the present discounted value of corporate earnings. Thats not the same as the present discounted value of gdp. Some of this is things like Corporate Tax cuts and regulation, not necessarily increasing gdp but i think really will boost corporate earnings. You have money in the market. Youre a beneficiary of this. I root for america. Does this make sense to you . The part that makes the least sense to me is the perceptions of risk seem to have gone down. The range of risk premium seem to be come pressed at a time when i think we have more policy risk in our country than weve had for a long time. Maybe even some upside risk in terms of gad things thood thing happen. I think theres a complacency that im puzzled by. Joseph, are you not no, im youre just going to no, just listening. I dont ascribe to its different this time. This is the first time any president has at least one year above 3 . First time. If id been in that administration, i would certainly hope that the next administration doesnt do any better than we were able to do because it would prove that maybe they could have done better things. I would hope that it was you know, you didnt even do 2. 3. You were lucky to get up to 2. I know it was after the financial cry circumstances b financial crisis, but then we get the other argument, should it snap back more quickly, or did the after effects hang with us f us . I think a lot of it was selfinflicted through regulation. Where do you want me to start . I cant do everything. I listen, i let people have their opinions. Ryan, you were in the bush administration, right . Right. We bring in a democrat and then someone who was in the bush administration. Both of these are like different parties than the Trump Administration. Exactly. Youre not going to get a bunch of exbush people to come in. Even president bush doesnt talk about obama for eight years. Six weeks into trumps administration, hes talking about a vibrant free press. Were not going to get necessarily both sides. Thats why you looked at me. Im tired. Im tired. We were all up late last night. Yeah, i watched. Joe, i think we should do everything we can for haguigher growth. I dont think we should make our deficit Reduction Plan a rosy scenario. Youve always been the party of deficit reduction. I realize that. Thats a message youve agreed with for a long time. I like growth, then well work on it. You care about the deficit afterwards . I think we have a better chance of dealing with it. Dont discount the importance of regulatory reform. I think that gives us the market where it is. Thats the predictability factor here. You dont need anything for that. The specifics there are probably going to matter more than even additional specifics on tax policy. I agree. Anything positive that happens on that front will be addive to what weve already gotten based on deregulation. Thank you, guys. Coming up, target shares dive on a shaky earnings outlook yesterday. This morning, a number of other retailers have seen some of the same pressure but not all of them. A rundown. Theres the futures right now. Up 117 points. Were getting close to 21,000. Welcome back, everybody. After targets big miss yesterday, investors are watching a number of retail earnings this morning. For more on the fallout, Courtney Reagan is here. She joins us. Good morning to you, becky. Actually, were getting a little Retail Therapy this morning after targets rough earnings and guidance sent shares tumbling yesterday. At least in the form of lowes. Lowes posting another Strong Quarter with profit and sales handily beating expectations. Comp sales coming in more than twice as good as analysts were looking for. Lowes fullyear guidance is also above the streets expectations. Now, best buy closes its fiscal year with a strong earnings beat but live revenue and comps down. Down 0. T9 down in the u. S. First quarter guidance also shy of the street. Last quarter best buy did say those samsung recalls would have a 200 million impact on the Fourth Quarter revenue and impact the comp by 1. 5 . So the company says if not for that samsung impact, it would have recorded Revenue Growth and positive comp. Now, the Consumer Electronics retailer also upping its dividend by 21 and accelerating a Share Repurchase plan from 1 billion over two years to 3 billion over two years. And despite the lowered First Quarter guidance after more than four years, the ceo declares the renew blue turnaround over. Now he says that best buy is moving into the grow phase, calling it best buy 2020, building the new blue. So part of this plan is going to be growing the business in canada and mexico. Dollar tree also just reported results. A pretty good quarter, though it looks like their First Quarter guidance is a little light. We have a retail mix this morning from a number of different sectors, but certainly feels a little better than yesterday. What surprised me has been how strong the street reaction has been to every one of these. If you beat earnings expectations, youre heavily rewarded. If you miss or are offering guidance thats not whats expected, youre punished severely. I think theres so many questions in retail right now about what the future looks like. Who stands and if theyre stangstang standing, what do they look like. I think thats the equation were all trying to figure out. You see these strong reactions for any little clue of the future. Thats even before we get to the border adjustment tax. Of course. If that happens, all bets are off and everything changes. Yesterday target says their tax rate could go from 35 to 75 . Thats their model if the border adjustment tax goes through. Any profit under that scenario . I dont know how you can. He wouldnt answer directly, but thats what we asked. Courtney, thank you. Coming up, more reaction to President Trumps address to congress. Senator david perdue of georgia joins us. Then ohio senator rob portman will stop by with his takeaway. After that, House Minority whip steny hoyer will join us. Squawk box will be right back. Its been over 100 years since the first stock index was created, as a benchmark for average. With strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . Lets take a look at stocks to watch this morning. Micron technology was upgraded to buy. Time inc. Shares are higher. Okay. Barack and Michelle Obama signing a book deal with random house. Theyll pay more than 65 million for the rights to two books. One written by the former president and one written by the former first lady. The news follows a blockbuster auction between several Publishing Companies and sets a new record for president ial memoirs. The obamas plan to donate a significant portion of the proceeds to charities. Commerce secretary wilbur ross attending the president s speech last night in comfort and in style. Ross was spotted wearing a pair of Stubbs Wooten slippers. This pair was embroidered with a custom Commerce Department logo. And robert frank is here with a look at the Fastest Growing markets in the world of Luxury Real Estate. Luxury real estate markets around the world saw a bit of a slowdown last year. Cities in asia and the pacific were the bright spots. Prices in over 100 cities rose only 1. 4 according to a new report. The top three cities in the world for Luxury Real Estate last year were all in china. Shanghai ranked first with 27 price growth. Beijing was right there behind with just under 27. Auckland, new zealand, with 16 . New york lagged at 3. 5 because of the strong dollar and fewer foreign buyers. And mansion taxes hurt the markets in london and vancouver. Vancouver actually was last years winner. Now, where not to invest, well, lagos, nigeria. 22 decline. Then moscow also not so good with 11 decline. What does your money buy you around the world . Well, monaco is still the most expensive market in the world on a per square foot basis. A Million Dollars gets you only 182 square feet of prime real estate. You get only 215 square feet in hong kong, 300 in new york. Again, were talking about prime real estate. If you want to go for bargains, go to cape town, where a million bucks gets you 2200 square feet of prime lux i cury real estate. More than 82 millionaires moved to a different country last year. Thats fueling a lot of these sales. The cities with the largest number of millionaires moving in, sydney and melbourne, australia, followed by tel aviv, dubai, and san francisco. The countries losing the most millionaires were france, they lost 10,000, and china lost 9,000. Thats shocking, the china number. France, is that because of the tax structure or something . A lot of the wealthy are leaving for security concerns and the cultural concerns. Its just a rapidly changing country. China, thats a net loss. So theyre creating tens of thousands of millionaires every year, but theyre losing even more because people want a flight to safety. A lot of these fortunes are tied to government officials or Business People that are now being sort of charged with corruption. Theyre just picking up their money and going . Their money and families and leaving. Thats why the real estate markets in new zealand and australia are doing so well because a lot of those are going straight from china to australia and new zealand. So how come the markets in some of the chinese cities are doing so well . So theres two reasons. One is because its harder and harder to get capital out now. The government has cracked down. Also, the chinese economy remember, this time last year, we were all worried about the chinese economy. It actually had a pretty good year toward the back half of last year. Its a stronger economy. Its the fact that you cant get your money out as easily as you used to. The trend with the dollar being stronger has not gone away. Has that continued to hurt new york . Absolutely. I mean, the russians were gone. The middle east started to fade away because of low oil prices. Now the latin american buyers have faded away because of the strong dollar. Thats still a headwind, particularly for new york and miami. San francisco and los angeles are still doing well. Robert, thank you very much. Lets get a check on the markets at this hour. The futures, the dow at least had been looking up by over a hundred points. Take a look at where things stand now. The dow is continuing to build momentum this morning. Futures up by 123 points above fair value. Just yesterday we saw the end of that 12day winning streak. If wed gotten to 14, i dont think thats ever happened in modern day dow 30 numbers. Slight pause yesterday. You are looking at numbers up sharply once again this morning. S p 500 futures up by 14 points above fair value. The nasdaq is up by about 31 points. Also, lets look at the ten year, as joe pointed out earlier. The tenyear yield has creeped up a little bit after the speech from donald trump last night and after all the fed speakers that we heard yesterday suggesting that a fed rate hike could be on the table for this month. Markets certainly taking that much more seriously with the fed futures. Right now the tenyear note is yielding 2. 429 . Oil prices, quickly. Wti up by about 16 cents to 54. 17. Salesforce. Com forecasting lower than expected First Quarter profits. The Company Raised its revenue forecast for its full fiscal year to just slightly above analyst expectations. Last night salesforce ceo mark benioff spoke with jim cramer about the success of the companys cloud services. You can see huge wins this quarter with gap, levi, yeti, with a lot of amazing customers. That Commerce Cloud far exceeded our expectations on the quarter. Then our marketing cloud. Heres a billiondollar business that when we acquired it just a few years ago was only a few hundred million. You probably know, jim, that marketing cloud has 450 million users on it. Our Commerce Cloud has 300 million users on it. This is the information that lets us provide more intelligence to our customers to help them be more successful with their customers. After it was all said and done, salesforce. Com down just a little bit over 1 . Coming up, senator david perdue with reaction to last nights president ial address to congress. Later, senator rob portmans turn to react. Squawk box on cnbc returns right after a short break. Back in a moment. President trumps pitch to congress. I am asking all citizens to embrace this renewal of the american spirit. I am asking all members of congress to join me in dreaming big and bold and daring things for our country. What the president s plans for trade, taxes, and health care will mean for the markets and the economy. The stock market has gained almost 3 trillion in value since the election on november 8th, a record. Top lawmakers react to President Trumps address as the final hour of squawk box begins right now. Good morning and welcome back to squawk box here on cnbc, live from the Nasdaq Market site in times square. Im joe kernen along with becky quick and Andrew Ross Sorkin. Futures are now up triple digits, up 122. The dow closed at 20,812. So you are not that far off. Youre about 70, 80 points away from 21,000. That would be a very fast move. Very, very fast. But who knows. Check out the banks this morning. Banks are indicated to do well. All up more than 1 . Almost 2 across the board. And treasury yields rising today, finally. Well see whether that continues. Treasury yields now 2. 435 on the ten year. Europe is great again, at least for today, for some reason. We cant fix everything over there. But certainly the United States can help a Global Economy if things get percolating here. Thats a pretty good move across the bourses. A little bit of corporate news. Lowes posting better than expected earnings, revenue knan samestore sales. A different story at best buy this morning. Retailers have been hit, but take a look at this. Shares under pressure after the Electronics Retailer gave a weaker than expected earnings and Sales Outlook for the Current Quarter. The stock now down about 4 . At one point it was down almost 8 . Separately, etsy reporting an unexpected loss in its last quarter. The online craft seller adding users and seeing revenue grow, but expenses increasing as well. Then weight watchers, shares getting a boost. The diet plan posting a better tan expected profit on an increase in subscribers. The company now offering strong 2017 forecasts. We still on the oprah effect there a little bit . Maybe, i dont know. Gayle king does it and shes on instagram. Shes always tweeting out her scale. Its amazing. Shes doing great. And Vitamin Shoppe falling short of earnings, the company calling the results disappointing but says initiatives should lead to improvement in the future. And Tribune Media has reportedly been approached by rival sinclair broadcasting. Shares rising on that news. Now to politics and President Trumps first address to congress. Among the topics the president tackled, jobs in america and trade. In the last eight years, the past administration has put on more new debt than nearly all of the other president s combined. Weve lost more than onefourth of our manufacturing jobs since nafta was approved, and weve lost 60,000 factories since china joined the World Trade Organization in 2001. Our trade deficit in goods with the world last year was nearly 800 billion. And overseas we have inherited a series of tragic Foreign Policy disasters. Solving these and so many other pressing problems will require us to work past the differences of party. Joining us right now is former ceo turned u. S. Senator david perdue. Senator, thank you for being with us this morning. Good morning, becky. We did hear the president talking about the plans that he wants to put forward, specifically with taxes and trade, but we still are waiting for the details to get worked out on those levels. I know thats been a Sticking Point that youve raised issues with as well, the border adjustment tax being one of them. You want to talk about where you see things right now and how you think this is going to work out . Well, first of all, im excited. We saw a president , i think, hitting his stride last night, laying out an optimistic vision for our country, telling democrats and republicans we got to come together to solve these big issues that we all know exist. Im excited that our house right now with kevin brady and paul ryan talking about how to revise our tax structure. The individual tax rates, Corporate Tax rates, the structure beneath those in terms of deduction, but also the repatriation tax. These things we know will provide growth for our country. The border adjustment tax i think is a bad discussion. I think we should be getting off of that now. Hopefully we will begin to focus on the things in tax reform. Lets remember that tax alone is not going to solve this problem. You mentioned in your headline weve got to get after these bilateral trade agreements fast. Unless we get a more level Playing Field, its going to be hard to really be competitive the way the president envisions right now. Its a lot of Different Things to tackle at the same time. The trade talks are something that are complicated but are probably happening mibehind the scenes already. We spoke yesterday with the canadian minister who was telling us about the talks hes had with the administration. But lets get back to taxes. Thats such a complex issue. There is an opportunity to see a Major Overhaul in taxes like we havent seen since 1986, but its going to require everybody kind of getting on the same page in terms of how we go about this. You can shoot down the border adjustment tax, but it is something thats expected to raise a trillion dollars and get you to the point where you can have a revenue neutral tax plan that comes in. I know youre not in favor of it, but if you dont want the border adjustment tax there, how do you propose to raise that revenue . Well, what drives us to the border adjustment tax, according to the people in the house, is the fact that we need it to pay for these other tax changes. I personally dont subscribe to that theory. Personally, i think the scoring mechanism here in washington are ill fated, frankly. They lead us to wrong decisions. Let me give you a good example. If we eliminate the repatriation tax, theres some 2 trillion of u. S. Capital overseas. These are u. S. Profits trapped over there because of our archaic tax structure here. The scoring mechanism says if you eliminate that, it causes us to lose revenue. Well, were not collecting a dime off that now for the most part. This is a situation where we need to trust the Free Enterprise system, do these other changes, do the trade as well, and watch the Free Enterprise system just grow this economy. So the idea would be dont worry about the scoring at this point. Were going to see it take off. Is that something you would expect a year from now we would see the numbers making sense . Is it something you would think longer than that . Well, heres what we have going on right now, becky. Weve got early signs of increasing or improving consumer confidence. We also see ceo confidence improving right now. Theyre even talking about investing for the first time in a decade. We see a little optimism that government right now is going to pull back on some of these regulations. I think we see a sense of confidence out there that we havent seen in a long time. Why would we want on the burgeoning side of a new recovery put a theory to test in our economy. I think we need to let these tax changes go into place. The Corporate Tax rate would make us much more competitive. E limb nati e. Senator perdue, you are a former ceo. In fact, the former ceo of Dollar General. You know full well how a border adjustment tax might actually impact the retailers. Weve heard about how those costs would be passed on to consumers. It would be a huge additional tax for the retailers. I get that. Ive had concerns myself about it. But when you talk to some of the manufacturing ceos in our country or anybody whos doing some massive exporting, they will tell you that our tax code is not fair, it is not set up properly, and the manufacturers are at a massive disadvantage. That border adjustment tax was not only there to raise a trillion dollars, but it was going to make things a little more even on a Playing Field when you look at the other oecd nations that do not have systems set up the way we do. How do you look at the tax code and say this is something were going to make sure american manufacturers are given a fairer setup than theyve had to this point . Becky, youve hit the real issue here. I spent more time in my 40year career in manufacturing than i did in retail. I understand this equation. Its a matrix out there. The sourcing pipeline for all of our manufacturers is very complicated. What we have right now is an opportunity, though, i think, to level the Playing Field only the trade side. We can only go so far with tax. The border adjustment tax doesnt really create a level Playing Field. Reducing our Corporate Tax rate and eliminating repatriation does that. The other thing i think weve got to do is give open access to these other markets. The president talked about it last night. We do not have open and free markets with china and japan. We can get that only by bilateral trade agreements, and thats what i know the president is working on behind the scenes. Its a complex equation. I fully get weve got to get our manufacturers going again. The border adjustment tax is not the way to do that. Speaking with former trade representative, they all raise the issue that the reason theyd gone to the multiparty trade agreements is because youre able to do things like get intellectual Property Rights and other issues you wouldnt otherwise. We can go to the table and say were going to renegotiate on a bilateral basis, but the concern is we lose some of those intellectual Property Rights. And what is the motivation . As a businessman, you know that its not a good deal if both sides dont feel like theyre getting something out of it. Youre not going to have a working relationship. What does the other side get if we go back an renegotiate these trade deals on a Bilateral Agreement if we want their markets open more than they are right now . What do we give in that agreement . We give what weve given for the last 40 years, access to our own markets, the largest market in the world. Thats whats happened over the last 30 years. Weve helped the third world come out of poverty, where our poverty rate in the United States hospitasnt changed a bi. We give them continued access to our market. Thats a fair trade. What we havent had is equal access to their markets. I lived in hong kong. I worked in china. Ive lived in europe. I know how unbalanced these trade agreements are. He talked about how expensive it is to get a Harley Davidson motorcycle into other countries. In my state, its a 300 duty to get poultry into japan. Thats not right. I give the president high marks in terms of opening these dialogues with these other countries for a change. You know, david, theres an old expression. You can take the man out of Dollar General, but you cant take the Dollar General out of the man. Youre retail. Thats the only reason you dont like this border adjustment tax. What if it worked . What if it worked, the dollar strengthens, costs dont go up, and it levels the Playing Field. Is your main gripe that you cant leave that other occupation behind, or do you think its too complicated or wont work . What is it . Joe, what happens if pigs fly too, right . The issue here is, look, why do we want to test something that we know in europe caused their central gotts to grow by twothirds. Seriously. At a time when our economy has every earmark of a growing recovery, why do we want to test a theory that even economists disagree on what the result will be. Look, on the one hand, lets say that we have a revaluation and it totally offsets this tariff. Lets be clear, this is a schumer tariff from the mid2000s. What if that happens . Well, all these Foreign Investments that we have right now, every Retirement Plan in america, all their Foreign Investments in stocks would get hammered. So this is a bad idea. It hammers lowincome consumers at a very time when we need to be getting their confidence up. I just think the timing is wrong. Senator, the whole thing, if it works, strengthens the dollar, but that in itself will hurt the exporters needing the help from this bill to begin with. It takes with one hand and gives with the other. Senator, thank you very much for joining us. Thanks, guys. A lot still ahead on squawk box. Snap expected to price its ipo today. Well tell you what the street is expecting next. Plus, ohio senator rob portman, his take on President Trumps address to congress. Then house ways and means chairman kevin brady will join us. Well talk taxes, trade, and much, much more. We got steny hoyer on too. Stay tuned. Youre watching squawk box on cnbc. Know you have a dedicated advisor and team who understand where you come from know you can craft an Investment Plan as strong as your values know that together, you can establish a meaningful legy with the guidance and support of your dedicated pnc Wealth Management® team. Welcome back to squawk box. Snap inc. Is expected to its price ipo after the close today. Analysts are weighing in on the shortterm and longterm for the company. Julia boorstin joins us live from los angeles, home of snap. Thats right. Home of snap. Analysts so far are mixed. The four reports weve seen so far painting a picture of some unique advantages over rivals but also major challenges. Snap snap i snaps biggest strength is the fact that users younger than 25 visit snap more than 20 times a day, spending more than 30 minutes on average. Atlantic equity praises snaps strong position among gen z. Snap already reaches as much as threequarters of the 13 to 24yearold demographic here in the u. S. , which raises concerns about its ability to expand beyond that core audience. They also point to the threat that facebook poses. Quote, facebook has scaled impressive levels in a matter of months, potentially putting snaps International Growth story in jeopardy. Another report from mkm partners also points to copy cat features introduced by instagram and others, saying snaps growth hinges on its ability to noin vat. Mkm warns against typecasting the company as either the next facebook or the next twitter, saying that snap will grow in the space between them. Andrew . Thank you for that. When we return, President Trump pitching his agenda to congress, including Major Overhaul of the health care and taxes. Well get reaction from both sides of the aisle. Ohio senator rob portman will join us next. Later, House Minority whip steny hoyer and house ways and means chairman kevin brady. Stay tuned. Youre watching squawk box. Well be right back in just a moment. Guyhey nicole, happening here . This is my new alert system for whenever anything happens in the market. Kids a natural. But thinrswim already lets you create custom alerts for all the things that are important to you. Shhh. Alerts on anything at all . Not only that, you can act on that opportunity with just one tap right from the alert. Wow, i gss wdont need the k anymore. Custom alerts onhinkorswim. Only at td ameritrade. Sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunitie we enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Welcome back to squawk box u everybody. Take a look at the futures this morning. It has been a steady climb all morning long with the dow futures now up by over 150 points above fair value. S p futures, up by 16. The nasdaq futures up by 32. Okay. President trump proposing a significant boost in defense spending in his address to Congress Last night. A budget that rebuilds the military, eliminates the defense sequester, and calls for one of the largest increases in National Defense spending in american history. Joining us now is ohio senator rob portman. Good morning to you. Good morning, andrew. How are you . Good, thank you. I want to get into the details of the address last night, but your overall impressions before we begin. I thought the tone was good. I thought the substance was good. It was president ial. I was very pleased to see him talk about bringing people together to solve problems. He really challenged republicans and democrats alike to focus on Economic Growth, which i thought was great. In terms of the things that i was a little concerned about, one would be the budget. I think youre going to talk about that in a moment. Weve got to be sure that we do keep our focus on the fiscal house. We have a 20 trillion debt. I do think that the Administration Needs to look at the defense spending in the context of the overall budget, including the socalled mandatory spending. The auto pilot spending, as well as the domestic spending, the Discretionary Spending as we call it. So a bit of a concern there. On trade, look, i think hes right that we need both fair and free trade. We can have that, but we have to be careful on the protectionism side. Overall, i thought it was a really good speech. I taught he delivered it well. How much distance do you think there is between your views of the world when it comes to having a balanced budget and to controlling the National Debt and some of his plans at the moment . Well, look, i think he also wants to have a balanced budget, but i think when you look at the numbers, its pretty clear you cant get there without focusing on all sides of the budget. Based on the speech last night and other comments that have been made by the administration over the past few weeks coming up to the budget, which well see in the next few days, you know, weve got to be sure that we are focused on dealing with not just the immediate issue but the fact that the projections show were back to a trillion dollars in annual deficits in the next eight years. Were adding another 8 trillion to the debt over the next ten years, up to 28 trillion. These are concerns. As a percent of our economy, we get back to the levels weve never seen in this country since world war ii. So this is an issue. I know the president cares about it, but weve got to be sure we start to put policies in place now. Senator, is there an amount of debt youd be willing to take on potentially in the shortterm if you thought there was growth on the other end . Well, thats a great question. I do think there are two sides to that equation. One is, of course, keeping the spending under control. Second is growing the economy. If you do that, i do believe youre going to get substantially more revenues. Thats what i liked about his speech last night because he talked about the growth component. He talked about the need to fix a broken tax code. He talked about the need to fix our regulatory system, whether there was too much overregulation causing companies not to hire as much. It is affecting revenue. He talked about other ways to raise rchevenues as well throug Economic Growth. He talked about infrastructure. He talked about helping to be sure immigration system focuses on skills. So i think thats the exciting part of this. Theres an opportunity here if congress can come together to actually give the economy a 2 growth rate Going Forward but more like 3 or 4 . Senator, its jyour cincinnai friend. Would it be fair, or is this just we shouldnt do this. So obama added 10 trillion. You saw what the results were. Couldnt we just try 10 trillion again and lets just do that over the next eight years . Suns they got ten to try their stuff with, lets just try it again and see what the republicans can do with 10 trillion. Theres a lot of consternation about it. But i think fair it fair. You did ten, let us try ten and see what happens. Andrew and becky, isnt it great to have joe back again . The band is back together, all three of you guys. Am i wrong . You and i complained over the past eight years about that. We said, gosh, this administration is adding more debt than all administrations combined. Maybe if something good happens from it, its worth it. Lets look at what happened with the stimulus. Thats how it all started. When the Obama Administration came in, they did put a lot of money into socalled stimulus. It didnt have the effect that they promised. It didnt help grow the economy. The Shovel Ready Projects were not the kind of Infrastructure Projects that generated Economic Growth in the end. So there is a much better way to spend the money that was spent last time. But we still are facing the potential for a fiscal meltdown unless we deal with this issue. I said earlier, joe, the percent of the debt the debt as a percent of our economy is probably how we should best look at it. Thats where were heading into really dangerous territory. How do you dole wieal with that . One, you keep the spending under control. Second, you grow the economy. Thats whats exciting about this. Im pleased with the speech last night in that sense. Again, he didnt just say, hey, you republicans give me tax reform with 50 votes. You said, hey, lets Work Together on this thing. Lets see if we can get democrats and republicans to agree on ab objective here, which is more Economic Growth and higher wages, which is a significant issue in my state of ohio and around the country. So the president talked about how hes a negotiator, and i imagine that means not just a negotiator with other countries when it comes to where some of these bilateral deals go. But negotiating with you to some degree. Hes talked about how the repeal of obamacare has to come before we get to this tax issue. So much of the conversation we have on this show is the expectation that tax reform does happen. Whats your timeline given the obamacare issue and how quickly that may or may not get resolved . Well, youre right. Its sequential in the sense we have a budget right now and a process called reconciliation to get the first part done on the Affordable Care act, which is the parts of the Health Care Law that relate to the budget. That has to happen before you do the second budget that gets into the tax reform. But im optimistic about tax reform because i think theres a consensus now among republicans and democrats that this thing is broken. The question is, you know, can we negotiate something that makes sense so that we can bring back trillions of dollars from overseas and give the economy a shot in the arm. Senator, great to see you. Thank you for that. When we come back, some breaking economic news. Bp gives its offshore teams 24 7 support from onshore experts, so we have extra sets of eyes on our wells every day. Because safety is never being satisfied. And always working to be better. Because safety is never being satisfied. Whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley welcome back to squawk box. Breaking news, january read on personal income and spending. Up 0. 4 on income, up 0. 2 on spending. On income its onetenth better than we were looking for. Its onetenth better than last month. On the spending, definitely a bit on the light side. Sequentially follows a stronger month from december. Real spending dropped 0. 3. The deflator month over month up 0. 4. Double last look about in line with expectations. Year over year, personal Consumption Expenditure deflator, 1. 9, 0. 3 higher than our last look. Basically in line with expectations as well. Core month over month up 0. 3. Pce core year over year up 1. 7, which is exactly our last look as expected. Arguably a little bit hotter on the pricing front. Not a lot but a bit. Not a bad number. Of course, the consumption economy youd rather see better spending. Markets moved a lot last night. Granted it might be two weeks from a fed meeting, everybody gets jittery, and of course compelling is the word that seems to have motivated, at least from a fed standpoint, as we jump to 1. 30 on a two. Dont underestimate up 1. 60 in preopening stocks. Maybe the administration, the president s speech last night made a difference, but no matter how you slice it, equities are still up, up, and away with few retracements. Andrew, back to you. Thank you, sir. Our good friend Steve Liesman is also with us, staring at his computer screen, doing the math. The personal income number being up 0. 4 is a good number after a 0. 3 in december. Wages and salaries up 0. 4. You like that. Thats after a 0. 4 in december. Like that too. Savings rate Holding Steady in that 5. 5 rate. The consumption being light is worth noting. 0. 5 in december versus 0. 2. Thats a little light. Then what happens is the Inflation Numbers take off the top of that, so that wage number ends up being, i think it must be a goose egg on actual wages. I know income is minus 0. 2 after you get done with inflation. So thats an issue. And the fed, why would it declare victory . 1. 9 . Its looking for two. Declare victory here. Indeed, i think thats what were hearing. I want to just go through a couple of the fed comments weve had the past several days, mostly yesterday, which caused this big heres bill dudley saying the case for a rate hike is, quote, a lot more compelling. San franciscos John Williams saying a march rate hike is very much on the table or serious consideration thereof. Kaplan telling me yesterday the fed should take opportunities to hike when they present themselves. And then the Philadelphia Fed harker says three rate hikes in 2017 is appropriate. Take a look at whats happened to the march fed funds probability. It was in 65, almost 70 . There it is nearly 70 , having been up from i had it down as low as 8 or so. Now take a look at something to start to watch here. The december fed funds futures. What you see here, that bottom line there, more or less the ups and downs before the spiebke, thats saying no third hike. The extent to which we go up that leg to the right for the folks on the radio, there around 1. 23, 1. 37. So thoughtful. I listen a lot on the radio. 1. 37 would be a full third hike in there. Watch the foursyllable words. Get you in trouble around here. 1 1. 37 would be a full third hike baked in. So there we go. You look at the twoyear, which is 1. 30. With all of this jawboning and the market reacting in kind saying, okay, we hear you, we believe you, what happens if its the lucy yanking the football away from Charlie Brown effect again and we dont get it . Does the fed lose credibility . Could be. Look, i think what the fed wanted, and its very hard to calibrate, is the flexibility to hike. You cant get that when youre 8 and 9 . We have seen this before. We have. And we saw it a lot of last year. They kept pulling that football away. The market kept falling and it ended up costing them money. I think what kaplan said to me yesterday is interesting in that he sees the market as being correctly priced through june. To him, march, april, may, june for that quarter point, its all the same. Okay. He said correctly priced through june. When he said that, the market was not where it is right now. When he said that, it was before it was reflecting 60 , 70 potential chance. That is correct. The market was much more down in the 30 , 34 range. So if its correctly priced, he doesnt think a price hike is coming in march. No, what host saying is that it didnt matter to him which month it happened, that march, april, may, june, that quarter point was coming is what essentially he was saying. Look, i think i want to go back to what joe was talking about in the 7 00 hour. All of this versus what could be happening on the fiscal side may be one of those hill of beans things. It may not matter that much. You notice that 65 , 70 probability has happened. And where are the futures this morning . Theyre plus 100. The market is like, you know, tell me something i dont know when it comes to the fed possibly raising rates here. You have powell at 11 00. Oh, thank you. Thats tomorrow. This week is flying by. Fed governor jerome powell. Were going to ask him all these questions. Sorry its not in the show. Got to spread the love around. No, you dont. It was probably scheduling. You would be here. Just enjoy your last few important interviews with these fed guys. Theyre becoming largely irrelevant. Can i say to you that when i did my year ahead, i said that a comment from a Banking Committee staffer is going to become more important than a fed president s speech. And thats really the story. You can move the xfl more from xlf, sorry. That was a football league. The xlf more from an anonymous quote from a Banking Community staffer than the fed may end up actually moving it. Trump had a team. Xfl. Even when i make a mistake, i land okay. Of all the gin joints in all the towns. Germans wore gray. President trump laying out more details about his plans to overhaul health care. Tonight i am also calling on this congress to repeal and replace obamacare with reforms that expand choice, increase access, lower costs, and at the same time provide Better Health care. Mandating every american to buy government approved Health Insurance was never the right solution for our country. Joining us now is House Minority whip steny hoyer. Leader hoyer, thank you for being here today. You bet, becky. We heard the president s thoughts on this last night. I know that you brought someone with you because you are so opposed to this idea of a rollback of obamacare. The one thing the president has said again and again, President Trump, is that, look, if youre in a situation he thinks some of these things are good. If you have preexisting conditions or are a child, you can stay on your Parents Health care until age 26. What do you think is going to happen . I dont know whats going to happen because the republicans have been talking about that for six years, about how they want to repeal the Affordable Care act. Trumps been talking about it for 15 months or longer, even before he started running for president. We still have no bill from President Trump. We have no bill from the republicans. We have a plan that was leaked from the republicans, which apparently now mr. Scalise said is not operative. But as long as it was operative, we were on the table. You saw substantial Division Within the Republican Party as to whether it was a viable alternative. The Affordable Care act has made Real Progress in covering america, getting america access to Affordable Quality Health care, preventive care. And of course what the republicans know is there are a lot of citizens who like a lot of the facets of the Affordable Care act. Is it working perfectly . No. Should we be working to make it better . Yes. Have we been doing that . No, unfortunately. Well see what happens. When President Trump, as youve just put in this clip, says he wants to do all the things that will make it more accessible, make it cheaper, make it better, but he doesnt tell us how hes going to do it, doesnt tell us how hes going to pay for it, and says the mandate, which of course was included so that Insurance Companies would have more clients, spread the risk, which is what insurance is all about and therefore make it affordable. You eliminate that mandate, which was a Heritage Foundation proposal many years on which romneycare in massachusetts was based. If you eliminate that, how are you going to pay for it . How are you going to have Insurance Companies in the market . I dont think we got much realistic talk. We got some happy talk last night. Difference was it was a little bit kinder, gentler than President Trump has been. Certainly a little softer in tone than the inaugural address, which in my opinion was a discussion of carnage that did not exist. But well see what they propose. Talk is cheap. Policy is tougher. Lets see what they come up with. But they didnt do it last night. President trump didnt do it last night. But it was a speech that im sure some of the objectives resonated with the American People. We all want to have all of our children get good quality educations, but how you do that is the trick. Leader hoyer, one of those kinder, gentler turns from last night was the president saying he would like to work with the opposition, with the democrats, to get some of these issues passed. I dont know that i would expect too much on that front when it comes to the rollback of the Affordable Care act, but certainly there are areas where for a long time democrats and republicans have needed or have seemed to be like that could be some room for compromise on the two sides. When it comes to infrastructure, when it comes to tax reform. Is any of that something you think is likely to get bipartisan support . I dont know whether its likely to get it, but i agree with you that it is possible. Clearly we have been talking for a long time about infrastructure investment. The president s right, weve been right for a long period of time saying we need to invest in infrastructure. Then you come to the question, okay, we have an agreement on we need to do it. How do we pay for it . Thats where it comes a cropper. Which is why nothing has gotten done to this point. Is there some way we can see some sort of agreement . By the way, if they dont get that agreement, they might roll right over your head anyway. You know, let me make an observation. If they control both sides and were not divided, john boehner would still be the speaker of the house of representatives. They may have the numbers, but they have deep division. You saw mark meadows, who heads up the freedom caucus, say the health care sort of outline that was put on the table a week ago or so said that was not acceptable to him. The head of the rsc said the same thing, which is a majority of their conference. Yes, they have the majority in terms of the numbers, but they dont have agreement within their party. They dont have a consensus, which you need to have. As you know, becky, when nancy pelosi and steny hoyer were speaker and majority leader, we didnt get any republican votes. We got 218 on our side of the aisle to enact the policies that we thought were important for the American People. The republicans dont have that. Does that mean they should not be expecting any help from the democratic side of the aisle . Im sorry, weve got to go. Becky, i want to make it very clear that were prepared to work with the republicans and work with the president on policies that we can come to agreement on. What we wont do is just have it put on the table and say take it or leave it. Well probably leave it and see if the republicans can take it on their own. They havent done too well on that over the last six years. But were prepared to work with the president on infrastructure. I was heartened by the fact that he said he was prepared to work on comprehensive immigration reform. We think thats a positive statement. Whether he can deliver any of his party to do that is problematic. Were certainly prepared to work on that and prepared to work on other things if we can do so in a way that is a compromise and not just simply a take it or leave it proposition coming from the president or the republicans. Like the original obamacare. No, no, no. Let me Say Something on that. I didnt say anything, steny. I was just kidding. I was just joking, i swear. But people dont kid on that. They think we jammed that through. That was under consideration for some 18 months, had scores and scores of Committee Hearings in both the senate and the house. Okay. I take it back. It was not just a take it or leave. Leader hoyer, thank you. Im still pulling for maryland, but they disappoint me. Card from capital one. Cash with it, i earn unlimited 2 cash back on all of my purchasing. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Which adds fuel to my bottom line. Whs in your wallet . With e trade you see things your way. You have access to the right information at the right moment. And when you filter out the noise, its easy to turn your vision into action. Its your trade. E trade. So with our ally cashback credit card, you get rewarded for buying stuff. Like what . Like a second bee helmet with protective netting. Or like a balm . You know . Or a cooling ointment for the skin. How about a motorcycle . Or some bee repellant. Im just spitballing here. Nothing stops us from doing right by our customers. Ally. Do it right. Told you not to swat em. President trump getting some broad outlines for his plan for tax reform last night. Joining us now, kevin brady, chairman of the powerful house ways and Means Committee. Congressman, we always its always the adjective. Youre very powerful. Its like the tech heavy nasdaq or the Interest Rate sensitive it is. It is kind of one word that goes all the way across. Powerful ways and means, which is and you know what else they say, congressman. With great power comes great responsibility. Spidermans foster father said that. What is happening here . Can we count on a definitive plan . All we got were broad outlines again last night. Where are you in the process . I think in a really good place. Both in health care and tax reform. What the president talked about, obviously on the same page with lowest rates on job creators in modern history and leveling the Playing Field for made in america products here and abroad. Were headed exactly the same direction. Look, were having really good talks with the Trump Administration and the new treasury secretary about this. I think its important for us to have one plan Going Forward together and delivering it this year, preferably my goal is by august as well. So we got some work to do. Look, were grinding it out in a real positive way. You know what Everyone Wants to talk about. Last night we get conflicting signals sometimes from the president about border adjustment. Today wilbur ross supposedly maybe walked back a little bit of it. An honest handicapping of whether that ends up as part of the bill, where do you think we are . Is it 50 , is it 10 it actually happens . What do you think . I think it is far better than that. At the end of the day, were going to have border adjustment in the full tax reform because we cant be competitive without it. We cant have an unlevel Playing Field here in america. Its really key, along with the lower rates and no longer taxing worldwide, with stopping incentives to move jobs overseas. So i predict, too, there will be improvements in that from the original provision. Weve been listening very carefully to retailers, to refiners, to automakers and others about how you design it the right way and phase it in the right way to allay their concerns. At the end of the day david perdue is not going to vote for that. You got no leeway on the senate side. You got like three or four of those guys that say no way. Would they vote against it if it had border adjustment . Its early. The theyre working with us on these issues. No one anywhere has produced a better plan to get this economy going and leapfrog us back into the lead. So i think we just continue to work, grow the support, listen to concerns, and solve them. We can do this, by the way. Chairman, i wanted to get your reaction. Jamie dimon made some comments yesterday at his jpmorgan investor day. Quote, one fundamental issue is whether obamacare comes first, in regard to the taxes. That will clearly delay tax reform and may make it harder to get something done. Best case, if obamacare comes first, its going to take 12 months to do tax. You just talked about august. Is Jamie Dimon Jamie Dimon righ . Well, i think hes voicing a concern that health care is so difficult, could it suck the oxygen out of the room on tax reform . Thats a fair concern, but my answer is, no, it wont. Look, were running parallel tracks here. Lawmakers clearly understand the difference between the two, know we have to deliver on both of them. So, yeah, look, its hard work. Were making huge major transformative changes in two big parts of our economy at exactly right time. Its hard work, but at the end of the day im very optimistic we get it done this year. And my preference, look, were gunning toward this summer. So, okay, i dont know whether then we just assume theres going to be border adjustment because if i could okay, for argument sake it doesnt happen. You finally realize its not going to go that way, youre going to keep it simple, so then hows the dynamic scoring going to work . I was facetiously saying that ill spot you 10 trillion like the last eight years, go ahead and work with that, well give you 10 trillion to add to the deficit. Could you come up with a good tax plan then that would get us above 3 growth, congressman . Im going to step back on the whole premise there. We are not going to stick with status quo that favors foreign products over american products. Were not going to keep incentives for companies to keep shifting jobs overseas. Were going to be that magnet. So my prediction at the end of the day this will be in it. It will be designed and transitioned in a good way. And then were going to have the lowest rates in modern history. Rates alone look this isnt 1986, rates alone wont do it. Its like supercharging an old clunker of a car. It cant compete and it cant drive along with the competitors we see today. So weve got to think fresh. And the republican plan from the house, i think, in fact i know achieves that. Chairman brady, this morning we spoke with senator purdue who said, look, those things need to be fixed through trade policy. He is from your own party. He is opposed to the border tax along with like six other republican senators ive counted up. If you dont have those six other senators, it wont get passed in the senate. Could all of those things, the manufacturing issue be dealt with from the trade perspective instead . You know, i dont think thats satisfactorily because, look, hard to go industry by industry, company by company on trade policy alone and achieve what we want to do which is leapfrog to the front of the pack worldwide with the most competitive tax code and Business Environment period. So i think the smarter way is to continue to work with senator purdue and others to address these issues. Im confident we can. Okay. I mean, youre not going to get any help from the democrats, now im worried it might be intraparty bickering, mr. Chairman. This is a good discussion to be having. All right. Well, we hope to see you again soon. Thanks for always coming on. We appreciate it. Okay. When we return, this mornings big movers, squawk box returns in just a moment. We can lock. My password . Yes, sir, we need your password. The password that i use . Yes, s, your password. 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If u love something i knoset it fe. Sudden, seyou around, ul lower than td ameritrade, schwab, and etrade. You reize the smartest investing idea, ist just what you invest in, but who you invest with. Trying to do the math here. Final check on the markets. Let me look at the dow or look at the futures. 20,812. Wow. Lets see 20,812 plus 180, what is that . Its pretty damn close. Its over. No, its close. I think its ten points shy. Eight points shy. Yeah, eight points shy. Okay. S p crawled up 18. Nasdaq called up 33. Take a quick look at the tenyear note, which finally get there today. The yield has gone up a little bit 2. 46. Yeah, we could get there today. And bank stocks benefitting. And european markets. And i guess for the rest of the day youre going to hear this has really very little to do with the speech last night, but i would attribute at least some of this to that. And i saw some why do you say that . Savvy market pros on our air yesterday saying the probability of him saying anything that causes the market to go up is very, very low. And i made a note of it and sent it around and said lets see if this guys right. Were out of time. We got to go. Make sure you join us tomorrow. Squawk on the street begins right now. Yeah, art cashin. Good wednesday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer, david faber at the new york stock exchange. Call it the trump rally 2. 0, futures way up on the president s address to Congress Last night. The dow looks to open within earshot of 21k, europe nearly 2 gains, german inflation cracks 2 for the first time in years and back home the twoyear yield an eightyear high as expectations soaring for a fed hike this