Thats why youre here. Cant find anyone. We have one guy left. Simeon. Is he bullish . He will be on. Already talked to him. One of the things hes saying is even if if there is a stumble in some of this stuff, market already deserves to be here, which is what i think. I think so, too. In terms of tax policy or that stuff is a bonus. Just not having the private sector vilified on a daily basis, not adding a new regulation, layering on a new regulation every day. When you take that off, its going to come back to a more normal level. Im with you. I think i know you are. The multiples are getting a little stretched, but Interest Rates, you know, stock prices are a function of earnings and Interest Rates. Interest rates are historically low still at 2. 5 roughly. Youre the one who coined t. I. N. A. I have. There is no alternative. And we have other things to talk about which in particular with the Trump Administration, were not talking about financial repression, monetary policy, were also talking about the other tools that governments can use to spur the economy, which means you will get a real business cycle. It makes the business more fun, frankly. I also think it will help active management over passive. Its not surprising that passive has done so well when the correlations are very high and the dispersions are very low because everyone has the same cost of debt capital. Now credit will be rationed, youll have a real business cycle. George costanza said he came up with the mother of all the first time i heard t. I. N. A. Was from jason. Theres no alternative. Margaret thatcher was the first person that came up with the phrase there is no alternative. Oh oh oh he was the first to make were the first to make it for the market. Lets look at the u. S. Equity f figures. We saw the dow give back 112 points after pushing above 21,000 for the first time in record territory. First time weve seen 24 days like that. Its only happened once before on the move from 10,000 to 11,000. This morning you can see the futures are flat. Dow futures up by 1 point. S p down by 3. Nasdaq down by 10. Overnight in asia, take a look, you will see the nikkei is down by a half percent. Stocks were weaker in china as well with the hang seng down about three quarters of a percent. The shanghai down onethird of a percent. In europe, in the early trading taking place, mixed picture. The dax is down by 0. 2 . The cac in france is up by 0. 3. The ftse is down by 0. 2. Crude oil prices slipped significantly yesterday. Worst day since january. Down 2. 3 this morning a gain of 15 cents. Wti 52. 76. Chart yesterday was interesting. For crude oil . For the markets. When sessions came out and recused himself and sort of succumbed to all of the that was unbelievable, wasnt it . When theres blood in the water yeah. The losing team sort of theyre grasping for something. They were all over it. I think he did the right thing by saying i will not be involved. At 3 00 the market went to triple digits. Some people were tying that to the notion when youre bogged down in all this crap you are not going to do the tax reform and not going to do the obamacare. Just 100 points after youre up above 21,000. Other people were saying because there will be a rate increase, which the Financial Times said the day before, we were up 300. If the rate is coming because the economy is moving, thats a good thing. If the rate hike is coming and makes stocks look less attractive, you can go on either side. 13 days in a row. Down 112, and still the worst day for the year. Lead story on this competing one of the competing websites is if you think that the tech bubble of 99 was bad, its nothing compared to right now. Because of snap . I dont know. Leads into this next story. Among the mornings top stories, shares of snapchat surged 44 on the first day of trading after pricing above the expected range of 17, it opened at 24 or so. And that brings the market cap to 34 billion. That makes snap three times larger than twitter, also puts it billions ahead billions of andrew owes me worth more than hilton, worth more than viacom. Worth more than hersheys . Worth more than ferrari . Worth more than her i have and viacom combined or marriott and target combined. I dont understand it. Someone said that the 100,000th snapchat follower is worth ten times what the million Instagram Follower worth. I dont understand it. Is it about valuing eyeballs for advertising . Younger people do spend a lot of time on it, an average of a half hour a day, checking it 20, 30 times. Their closest networks are on this. My daughter is 17, its 34 billion, its overvalued. She said theyre going to make more money. I said how are they going to monetize that . She said advertising. Nobody buys anything on snap do they. The Retail Investor has not participated in this market since 2009. If you have seen net redemptions from domestic equity funds, the thing thats also amazing, this is the reason why its nothing like 99, at least yet, theres been apocity of these companies that people love. The ipo market was down 40 last year. When you have these big events or companies that go public like a facebook, its an event. Its different than 99. You think it leads to people investing in the broader markets at all . I think there are average people who are looking at this saying watched it on snapchat and i actually like it. I want to get in on it. Its different than 99. I think were just getting warmed up on that. My own opinion. What you said about blake, that makes sense. Blake said im interested in this. But knowing that you use it a lot and knowing its popular, twitter does not equate to monetizing it. Thats my point to her. Maybe it does. Maybe i dont understand the business. Maybe its something we use frequently, twitter, is not cool. Something she uses is cool. It has to flow to the bottom line. Whether its whether thats the right valuation is another story. Whether theres a lot more of this to come, my own opinion is yes. Youll see more and more of these companies that are private go public. Your point i bet she never bought anything on snap. He used pocity, lucky its just us here. We will not talk about mike pence. I love this story. He was using a using a private email an aol account in indiana. State secrets of indiana could have been compromised. Hes thinking about charging higher tolls, the School Boards meeting in gary. He was texting someone. Any of this information could have gotten out. Any of this highlevel thats the same as hillary, isnt it . State Department Info as you lived in indiana. I did. Is anything going on in indiana that people want to hack . Theres all sorts of interesting things in indiana. Does it have something to do with the race . Is anything else going on there . Maybe russian contacteds. The indy 500 or the aol account makes it its hard to be cool with that. Thats the true thing about that. Mike pence was still using aol. Thats where he ought to be. Lets bring in eamon javers. Eamon, after that introduction, good luck. What do you have for us today . I have nothing to say about snapchat, by the way. I will talk to you a little bit about Jeff Sessions, the attorney general who yesterday, just a day after the Washington Post revealed that he met with the ambassador to russia after saying during his confirmation hearings saying i did not have communications with the russians, Jeff Sessions said he would recuse himself from any investigation into the russian influence of the 2016 election. Sessions gave that answer in the confirmation hearing to senator al franken. Yesterday he said the answer he gave was completely true. Heres what he said. My reply to the question of senator franken was honest and correct as i understood it at the time. I appreciate that some have taken the view that this was a false comment. Thats not my intent. Thats not correct. I will write the Judiciary Committee soon, today or tomorrow, to explain this testimony for the record. Sessions and his team have suggested that he wasnt thinking about the meetings with the Russian Ambassador when he answered that question because those meetings came in his capacity as United States senator, not in his capacity as an adviser to the trump campaign. Sessions was a bit vague yesterday when asked about what exactly this meeting was all about. It was during the heat of the campaign on september 8th, sessions said they talked about simply normal things. He said the subject of terrorism came up. The subject of the ukraine came up. But he did not offer specifics about what it was the ambassador wanted to talk to him about. He did get some big backing from his boss last night. The president put out a statement. Heres what the president had to say about all of this. He said Jeff Sessions is an honest man. He did not say anything wrong. He could have stated his response more accurately, but it was clearly not intentional. This whole narrative is a way of saving face for democrats losing an election that everyone thought they were supposed to win. For now the Trump White House will hope this stems the bleeding of that 24hour news cycle. Democrats called for sessions to resign. That, guys, is clearly not going to happen any time soon. A lot to of nuance here. The guys like limbaugh saying the deep whatever it is . The deep state. The deep state. All of the professional intelligence people and that piece about maybe not a stretch to say theres some effort by former Obama Staffers to, you know, release certain that was a good day for this to come out. Clearly. After the speech two nights ago. Perfect timing for that. Thats all anyone talked about yesterday. The day started out people saying, wow, even van jones said he looked president ial. It shifted from that to this. Joe, i dont follow you all the way down that line because ive been involved in writing investigative stories, not at this level but investigative stories before. They dont happen in 24 hours, they dont. Wait a second. So so some journalist was pounding the pavement to get this story . Please. No. No. But once you get a leak, if you get a leak, you have to spend some time checking it out. It doesnt just happen in three, four hours. All these stories have been handed to people on a silver platter. Yes, well they were handed to people who developed the sources who hand them the stories. The work is in developing those sources and people who might leak to you. What media outlet doesnt have sources with the democrats. Right. But its not the democrats, its the particular people who know about the meeting with the Russian Ambassador. Thats a very small group, right . Thats not the Democratic National committee. Thats not thats not the point of the wawall street journal. The point of the wall street journal is this is the jim carrey meeting, dumb and dumber. If anyone doesnt know this guy showed up in the Senators Office i didnt see the editorial. The senator didnt disclose it when he was asked and talking about meetings with russians. He said i did not have communications with the russians. You just gave what his response was. They were asking whether any trump surrogates met with russian operatives. Hes thinking about it in a different no. How many times has the Russian Ambassador been to Dianne Feinsteins office . The New York Times has an offlead story on how socially active this Russian Ambassador is. Sergey kislyak is Claire Mccaskill is a good one. What al franken asked him was not at all what he answered. Al franken asked him what would you do if it turned out that other members of the Trump Administration had had contacteds with the russians . He didnt answer that question at all. He just offered up without being asked his own denial and said he didnt have communications with the russians. He affirmatively put that out there in a way he wasnt even asked by franken. Was a threeminute question. Senators tend to be longwinded. I saw the other News Services played the entire question of al franken. Theres a lot of different angles to the way that question came out. Sure. His answer looked totally different when you watch the entire question. Sessions clearly felt he needed to put this to bed and put this out there that he didnt have communications with the russians. In his mind he says he was thinking about his capacity as a trump adviser, not his capacity as a senator on the Armed Services committee. That leaves open some of the question about why he met with the ambassador in july at the Republican National convention when presumably he wasnt acting as a member of the senate Armed Services committee, acting in more of a Campaign Capacity because he was at a campaign event. Still he says in his answer he was thinking about the campaign versus the senate roles. Hes the same guy sitting in both roles. He says that was what was on his mind. Hopefully he was colluding with them about how to win the presidency presidency, if it wasnt that, what are we talking about . Jeff sessions colludes with russias ambassador in plain sight. In plain sight. Thats the journal. We have to go. Fair enough. The only reason we should be talking about this is whether it caused the market actually to pull back after 3 00 yesterday. Thats the other question. Does this scandal mode consume this white house. Does it become the point where to the point where they cant focus anything else because theyre spending their days reconstructeding meetings which happened in the senate. Which is why sessions stepping forward saying i will recuse myself is the right move. Thats why this whole story is important to the market. Shouldnt we get something for this . You wanted a real cup . Yes. I have a real cup. I wanted to get paid for drinking like this showing the because theres not enough signage over your head . Were at the nasdaq. Yes. That coffee cup will make the difference. This is smart of dean. Yes. All right. Back to the broader markets. Joining us now is pro shares head of Investment Strategy and our guest host is still here for the hour. You were standing there. You heard me talking about you. Are you proud . We had a lot of people on, i it got to the point yesterday where i had heard it so many times i almost lost it. The idea is that were way too far long, weve played it forward. We have no idea if anything is actually going to happen. So the market is totally overvalued and due for a fall. Most of these people thought the market would be down 5,000 points when trump was elected. They havent been in the market for three months, theyve been saying dont buy, dont buy. I dont think they have a right to say dont buy yesterday as if its a new call. Your thought is it deserves to be here any way based on what. We only need a couple percent of Earnings Growth to justify something north of a 20 pe and were out of the earnings recession. Forget the volatility of earnings. In q4 top line growth for the s p 500 was shy of 5 . Thats more than enough to justify these valuations without getting to the administration sort of being, hairy audacious goals. What about just you know, the way you saw the nfib. Nothing and sentiment there. You saw Consumer Confidence, the philly fed. All these things that are a measure of people just thinking, wow, i think it will be a better environment for business. How much is that worth in terms of dow points . This has been a very slow recovery, we have had muted capital expenditure. People are underemployed. So theres a notion that we may not be at full employment because people might stop driving ubers and get real jobs. Perhaps there is more capacity left. May i ask what youre seeing in the flows of your funds . Seeing anything particular that would be of interest to our viewers . The thing that we have seen is flows into quality stocks, stocks that have grown dividends consistently. Because those have generated Earnings Growth evens in the earnings recession. Also if you look towards the mid and small cap space where people think theres the trump dividend without some of the International Hair on it, companies that have less leverage that might be less susceptible to perhaps fed Interest Rate increases has been a place where we have seen flows of late. So, just based on some of the stuff thats can you point to any of the deregulations that been done through executive orders that would also add to the bottom line of some of these companies . Even Interest Rates going up this much for banks, we should be buying the banks. The steepening of the yield curve is a good story. Other areas . Coal. The dow doesnt go up on coal. I think its so early to tell. The general sense that domestically focused Companies May be an enhanced beneficiary is about all the story is at this point. Theres not enough specificity. Do either of you think the border tax becomes law . I think theyll try. You . Wrong guy to ask. It makes a difference. I think President Trump is nothing if not bold. Hes going for it. Hes going for does he want to do that . I do. I think its the right policy. Its a very bold its true Corporate Tax reform. And i think at least from a negotiating point of view you will start he starts there. He starts at 120 a square foot and the problem becomes i understand our tax code is a bit of a mess and unfair to american manufacturers. If you put it on retailers, it will end up as a tax on consumers. It may exactly so youre taking away Corporate Taxes and dumping them on but the average consumer has more buying power. Will you have a better mix, i think, for the economy, which is less consumption, more capital spending, more saving. Its a much more balanced economy. And of course the u. S. Is one of the few countries has doesnt have a boarder adjustable tax. Every time weve gotten into trouble weve done everything we could to promote consumerism, to get the consumer to started spending. If we run into suddenly well fix this our overly consumptive economy, you run into a road block like that, how do you not have a drop in the economy as a result . It would be somewhat painful, but i think it would be worse i honestly think it would be worth the pain. So do i. For 10, 15 years, walmart has imported this stuff and sold it dirt cheap to sconsumers. We had a deflationary environment. Also brought up the living standard. Not like wage gains and b buying power. Getting things cheaper, paying a little more for it, but having a better job. You were all in favor until they started talking about german cars getting taxed. No, no, no. Theres always loopholes. In fact, only certain german cars should be exempt. Im you can tell politically where someone is. Suddenly im fully i think we have to do it. Theyll try. Your biggest problem is with republican senators who said no way. Tom cotton. Purdue purdue is a Family Dollar guy or a Dollar General guy. Former at least he came to bat for sessions yesterday. When we return, could things have been stuck between 50 and 55 for the past three months with crude oil . They have been, but new survey data shows a big jump in prices could be coming. The exclusive results next. And at the top of the hour, the first sitdown interview with the new commerce secretary. Andrew will join us from washington with wilbur ross. Squawk box will be right back. Oh. Not the smooch method come on. Whats going on here . You know how Ge Technology allows us to fix problems before they. They slow production, yeah. Well, no more catchy business acronyms. Wait, we dont need to smooch . Im sure we can smooch a solution we just need to hover over the candice, problem until. Just let it go. Hey, sorry im late for te building. Smooooooh that felt right. Whats wrong with you . Hes so trusting. Ways wins. Especially in my business. With slow internet from the phone company, you cant keep up. Youre stuck, watching spinning wheels and progress bars until someone else scoops your story. Switch to comcast business. With highspeed internet up to 10 gigabits per second. You wouldnt pick a slow race car. Then why settle for slow internet . Comcast business. Built for speed. Built for business. Spotify has reached a new milestone with more than 50 million paid subscribers, up 25 in less than six months and extends the Music Services lead over apple music which has about 20 million users. Spotify has yet to turn a profit and continues to spend heavily as it expands into more countries. Last month tech crunch reported that spotted ify is considering ipo. Starting next week, ceraweek, some of the biggest names of oil and industry will be interviewed from texas. Today we have a result of the exclusive cnbc oil survey. Its been frustrating for traders out there because were stuck in the range for crude oil, 50 to 55. Analysts say stability may be a good thing here, but the big question is what will happen next for prices. Thats what investors wanted to know. 60 of the traders, Hedge Fund Managers and analysts we spoke to say oil prices will rise. In fact, roughly the same number said that well see 70 a barrel in wti before were likely to see 30. While the opec cuts are important, theyre not the only factor here. In fact, when the cuts expire, 33 said that they expect prices to stay the same, 54 said they may drop modestly. Where do prices go specifically . By june, 55 to 59, and by year end, 60 to 69. But there are some risks out there. Shale producers are pumping more. Opec players are having the possibility of cheating here. The russians are boosting production to sweep up some of this market share that the saudis may be giving up. We have a new administration in place, as you guys know. You discuss it every day. Our respondents said the policies are not necessarily bullish for policies. You pump too much, you may send prices lower. And we may increase exports. Onethird of respondents say this will lower prices, but a border adjustment tax, more than half think that will hike prices up. So volatility is not over. It may be too soon to say this is a slam dunk when it comes to the rebalance. And i thought your interview the other day with darren woods was key. He talked about his capex plans and said were bracing for volatility and well watch the fluctuations in commodity prices. I am shocked that they said they thought it would be 69 by the end of the year . Yes. Thats not something i think darren woods is factors into this. I would think we would hit 40 by 70, but me, too i think youre right. I think big oil is more conservative now because they felt the pain when we went back to 26 a barrel. I think its more than living off of the last drop for oil prices. I think there may be a bit of a new paradigm. You pointed it out when you talked about how much shale production there is for exxonmobil they have 5,500 wells in the Permian Basin that make a 10 return on investment if crude is at 40. If you see oil prices pick up, youll see more production come on board and that will put pressure on prices. Thats the caveat here. You have all these producers having to coordinate and work together. And technology is different. Technology is allowing you to really make a profit on much lower oil prices. Thats what im i went through this in my mind. Going to houston, i thought you guys will have fun. That place will be rocking and rolling in this new environment with Domestic Production. I thought, wow, too much Domestic Production brings the price down, but these guys love exploring for and getting oil. If you can lower the cost of production by having more places to go, less regulation, less red tape, the pipelines coming in now. So you lower the cost of production, and you still it does spur more drilling. But everybody is making money. Thats the key. Everybody is making money even if it at lower prices. Then you put the border tax on, it goes from 30 to 52 isnt that whats the connect sh connection there . The idea if you bring in less product, well pump more here satisfy the domestic need. Yes. Youll be a border tax person. You are. Its close to 15 of our trade deficit is just in fossil fuels alone. Still. And if you get to the point where its an export market, which i think is the grand plan. I think were headed there, absolutely. Thats a different thats a different paradigm. A whole different ball game. For this administration, my own opinion, you have to look back to reagan the last time you deregulated the oil industry. Not good for prices. It was it wasnt so bad for the industry itself per se or consumers, but my dad was a geologist at that point. It was an issue. Thats why i think they were cautious within the survey. The other thing about the conference next week is that were having a new conversation here. Not only about the technology, but opec losing some influence, all of these Global Players coming together on a stage, having to have a conversation with each other. Thats something we really have not seen before. They will all be down there. We have the russians, we Vice President saudis, the uae energy minister, u. S. Oil players as well. Everybody is coming together to provide that insight and have the conversation about where we go from here. Nobody wants to tip the scale backwards. When we return, snapchat making its public debut yesterday closing more than 40 higher from its ipo price. But analysts Victor Anthony that eight concerns about the company. With e trades powerful trading tools, right at your fingertips, u have access to indepth analysis, level 2 data, and a team of exrienced trers ready help you ifou nd it. Its likeaving the power of a ading floor, ererer you are. Its your trade e trade at bp, we empower anyone to stop a job if something doesnt em right, everyone comes ho safely. Because safety i never being satisfied. And always working t bette because safety i never being satisfied. I love how usaa gives me the and the security just like the marines did. At one point, i did chan to Different Company with cnsce, and i was not happy with the customer service. We have switched back over and we f fl like werback home w. The process through aa is so effortless, i love that i can pass the d that they can pteed. En, ly. Wee the williams family, and were us members for life. Call usaa today wee the williams family, to talk about your insurance needs. Welcome back. Snaps first day of trading in the books. Shares of snapchats Parent Company soaring 44 . Joining us is Victor Anthony from aegis capital. Thank you for being here. You have eight concerns about snap. But we should put this out. You have a hold rating on the stock. You also have a 22 price target. You were optimistic that shares would go up from the 17 opening price . Right. I was. Theres eight concerns. Chief amongst those concerns are the slow user growth, paying 32 times for slow youuser growth a thats continued into the First Quarter of 2017. The fact that facebook is replicating snapchat effectively across its ecosystem of apps. With instagram. A couple filters on messenger as well. You have the ad mix heavily weighted towards brand advertising, which is similar to when twitter came out. Thats an issue as opposed to direct response. You have the fact that analytics are inferior, measurement are inferior. Those things are improving but inferior from what i understand to facebook as well as to google. Those are big concerns. You have the investors with zero control. You have the fact that the company is still bleeding through cash. The profitability, no one knows when the company will turn profitable. I model it in 2020. I have not heard articulation from the company in terms of how they plan to drive the business towards profitability. A lot to of concerns on the company. That said, when i speak to advertising, theyre salivating about getting in front of that demographic of 1 to 3yearolds 24yearolds. I heard users are 18yearolds to 25yearolds, but to me the 12yearolds, 14yearolds, 17yearolds, 20yearolds are probably where its more active. So, between 13 years old and 24 years old, that represents about 60 of the user base. So a heavy concentration of user base unmatched on any other platform what i hear from advertisers, if you attach your brand to that young user, the prospect of them staying with you over two, three decades is high. Do you buy that . Thats what ive been told. Im not an advertising expert, ill go with what theyre saying. If thats the case if thats true, it seems like this would be another one of the naysayers, everybody who said facebook would not be fantastic. It seems like a similar story, if its sticky enough, then maybe the stock is priced cheaply at this point. Yeah. Its an unproven model now. I think facebook was also unproven at the time. Right. You also had some mobile conversion issues dragging the stock down. With snap, you have the fact, like i said, facebook which is the behemoth in the platform. What do you think this means for the ipo market in general . Do you think there is a long list of companies waiting on line that see this and say, gee, lets go for it . I think its good. The performance of snap yesterday was good for the ipo market. I saw a list of about 150 companies, unicorns valued at a billion plus within a tech space. This is good and healthy for the tech space going forward. Well see how other Companies React over the coming year, year and a half. Performance yesterday was good. Thats a positive. But snap the business itself, thats slightly unproven. Right now youre paying 32 times for those issues what . 32 times. 32 times sales . Times sales . Versus alphabet and ten times people think facebook and theyre like high or something. Snap will either be a facebook or a twitter. Yeah. So, you know, thats what everyone is trying to figure out. Like i said, what they have going for them is the fact that advertisers would like to get in front of this coveted demographic. What i heard from advertisers, they like the nature of the platform, which they vent really seen in any other platform, even though facebook is getting that way and instagram is coming that way. They like those two aspects. If you were those two founders, would you try to take profits . At these levels, 32 times sales didnt they say lock it up for a year. They did. But if you could how much could you sell . Im out. Are you kidding . Im out. If i could get out, im totally out. Zuckerberg offered them 3 billion. For every zuckerberg theres a bob davis no. Zuckerberg offered them 3 billion. 3 each . 3 billion for the whole thing. For snap . Was a while ago. Then im just saying, if i was 26 years old and could have 5 billion bird in the hand they turned down 3 billion in the hand. Oh. Early on he tried to buy snap. This is 32 billion. Yeah. Exactly. Thank you. Thank you. Cnbc Parent CompanyNbc Universal and snapchat do have a business relationship. Wait a minute. Snapchat is cheap at these prices. Really good investment. Coming up, andrew is in washington for the first sitdown interview with wilbur ross. Then reaction from secretary rosss comment from our guest host, larry bossidy. Later, odds of a march rate hike are heating up. Former philly fed president , Charles Plosser sounds off on Interest Rates, jobs growth and the effects on the market. Stay tuned, youre watching squawk box on as soon as sncn. Hey gary, whatd you got here . Thisso thai can take myading p. Mobi trading desk you know tt inkowim seamlessly syncs across all ur deves, right . Oh, my custom sties willo th me . Anywre you want to g the markets hot sync your platfo oany device with inkorsm. Only at Td Ameritrade at are you doi . Getting your quarter back. Yoknow wk at all i was being roma. Percentage yield a bu annl thats what i find romantic. Thiss litelly thwing your money away. I thk its over there. Atay . Yeah, a little furer u what year was that quarter . What year is that one . What year wa98hat quarter . Thats the e. Youot it nothing ops us froing right by our ctomers. Ally iright. Nothing ops us froing ls get out of that water. Time for the executive edge. Were talking real estate. Rising home prices mean rising home equity and more cash to cash out and put in the stock market. Are home owners partying like its 2006 again . We can only hope. Diana olick has more. Ever since the epic housing crash homeowners have been extremely conservative with home equity, but now that prices are rising so fast, home owners are changing their tune again. First home equity lines of credit, usually second loans that allow you to pull cash out of your house when you need it dropped dramatically after the crash are now up 21 in the last two years and were seeing more cashout refinances. And down payments on recent home purchases are dropping. Before the last housing boom, the median down payment was over 7 , then it dropped to 3 during the bomb and shot back up to 7 during the recovery. Now down payments are shrinking yet again to a 6 average, all according to adam data solutions, this as more lenders offer low down payment products. Add it up, homeowners are leaning more towards leverage again. One caveat, home equity is still rising again due to those rising prices. But if prices are overheated as some suggested, and ripe for a correction, homeowners could see a pinch again. Im not saying prices will go down nationally. That does not happen often. But the increases could shrink and some markets could go negative. Joe . All right. Diana, thank you. When we return, whats working in the markets now . We have more from our guest host next. Then andrew is in washington for the first sitdown interview with new commerce secretary, wilbur ross. As we head to a break, a quick check of whats happening in european markets. Things are mixed. The dax and the ftse slightly lower. The cac is up by 0. 6 . This car is avover 2 miles per ur toinery millisecon matter bothn the track and ousands of miles away. With the help of at t, Red Bull Racing canhare ctilinfoation aby ch of car from virtuallyy. Anywhe. Brak are getting wm. Confirmed, daniel you ed to cool your brakes. Giving them the agility to have speed precision. Because no one knows like at t. E firsstock index music pcreatedhout over 100 years agos benchmfor erage. Yema people stl bud portfolios buinsting isntt justabout achieving averag its aut achieving goals. And invesco believesing ty requir the art and expertise of highconviction investing. Translation . Its time to b bch thnchmarks. Thwi the hp ofhe lowest new yorkxes in des, m mion. Compane a talented wkforce, and worldclass intions. Like in plattsburgh, wherthe most aanced transportation is alrey en and corni, where e future is materializing. Let uselp ow your coanymorrow welcome back to squawk box. Today is the first friday in march, but if youre waiting for the jobs numbers, theyre not coming today. For the data nerds out there, heres why. The Labor Department conducts its household surveys for the monthly report during the week that contains the 12th of the month, called the reference week. The employment report is released on the third friday following the conclusion of the reference week. The 12th of february was a sunday. So in this case, the third friday will be on march 10th. After making the numbers up, does it really matter . Claims are better, in my opinion. Claims are a better number. Although you, get pushed off those roles. You do. I think its a better overall indication of the economy in general and the labor markets, my own opinion. Why dont we talk about what you think is working right now in the markets. Where would you be telling people to focus their cash, focus what theyre buying. Its so uncontroversial, at least in this town. We like financials quite a bit. The stocks have moved so much. People are saying, you know, how can i buy them now. But im very much some of them moved more than 40 higher. Im very much of the view that youre still, as a sector, its trading at about 1 1 2 times book value. You can buy a lot of stocks very cheaply. I feel very strongly if the trump policy mix, the Trump Administration policy mix is highly reflationary, which means to me the yield curve is going to steepen, youll see more market activity. I like those a lot. On the other hand, i would be very careful, similarly, with the bond proxies that have worked so well over the last several years. I think i would be pretty careful there. Same thing, its the reflationary trade. I think longterm Interest Rates, they could go down in the short term, but it seems to me over the next year or two, theyre going to revert back to something thats closer to like nominal gdp, which by our likes could be Something Like 5 to 6 . Whoa, whoa, 5 to 6 . You think well get there when . Probably within the next two years. Youre kidding me. I know it sounds crazy. The average tenyear treasury yield has been, i think, 6 or 7 since 1950. Usually tenyear treasuries are about where nominal gdp growth is. I think nominal gdp growth is going to be five within the next two years. If we get if we get to those levels, what happens to Interest Rates . So normally all the academic switching models would say thats when people really start to sell equities. You get tenyear treasury yields above five is really when people switch out of equities into bonds. The good news is you have the sweet spot. In the interim, Interest Rates arent high enough to attract people away from equities. Yet, its going up because the economy is strengthening and earnings are strengthening. What happens at that point, is this going to be a dramatic rush from equities . If you think were going to be there in two years, market is going to anticipate that a year from now. Maybe, but i think youre going to from a level thats meaningfully higher than where it is right now. So the bottom line is i really think were in a sweet spot where the fed cant normalize rates that quickly. Interest rates will back up, hopefully in an orderly fashion. Yet, youre going to get big earnings gains, which will grow into the valuation. People are very worried about very high pes right now. In my opinion, earnings are going to grow into those valuations, and markets are going to continue no move higher. Jason, thank you so much for being here. Always a pleasure to see you. Thank you for having me. I appreciate it. Coming up, wilbur ross, the new commerce secretary, is in an administration thats pledged to focus more on negotiating better trade deals, a concept. Hell join us in his first sitdown interview since taking office next. And our guest host for 7 00 a. M. To 9 00 a. M. Is larry legend, former honeywell chairman and ceo. Not larry bird, larry bossidy. Squawk box will be right back. Lower than Td Ameritrade d etrade. You realize the smartest iesngdea, isnt just what you invest in, but who you invest with. A cnbc exclusive with commerce secretary wilbur ross. The leader of the president s trade team speaks to squawk box about americas trade policy, tariffs, and keeping america competitive. That interview is just minutes away. Plus, reaction from former honeywell chairman and ceo larry bossidy. And stocks stall ahead of some fed speak today. A closer look at whats fueling the latest market moves and where you can put your money to work as the second hour of squawk box begins right now. Good morning. Welcome back to squawk box here on cnbc live from the Nasdaq Market site in times square. Andrew, hes a trooper. He says how high on the way up. Hes in washington today because were Just Moments Away from our cnbc exclusive interview with commerce secretary wilbur ross. The futures at this hour are extending no, theyre not. Now, actually, after yesterday earlier on they were down. The dow jones is now positive. Just marginally. Up about four points. The s p indicated to open down about 2. 5. The nasdaq down about 8. European markets were weak earlier. Lets see if some of this recent strength is due to europe. Its mixed there. France is up, germany and the ftse both down fractionally. Before we get to commerce secretary wilbur ross, lets take a couple quick corporate headlines this morning. Caterpillar ceo is apologizing to employees over the raids by Law Enforcement officials at three Company Facilities yesterday. Take a look and you will see some video. This is from the companys logistics facility in morton, illinois. He says he was surprised because caterpillar has been cooperating with officials in their Ongoing Investigation. The company said it believed the incident was related to an irs investigation into profits earned by a swiss parts subsidiary. I have to say, i was stunned seeing this. I was watching it on mute yesterday. It looked like there was some kind of raid with really bad things happening. Yeah, take over. When you want to start . What is this like his first week, you get raided . Wheres doug . When i was listening to it when i was watching it all on video and just seeing what was happening with some of these things, i thought, what is happening . I turned up the volume and i was like, okay, lets sit back and take a look. If you watched caterpillar shares yesterday, they were under some pressure. Thats not what you want to see. You know, theres not many times youd say terrifying. Thats one time. If you hear that word raid. Yes. Not a good thing. Apparently has to do with the way theyve been moving money around with respect to taxability. I saw the numbers. Something like 2 billion in questions that theyre arguing back and forth about. Theyve been charged before, but i think they passed the test. Well see whether they do this time or not. Can we segue into another reason to fix our stupid Corporate Tax code with all the financial stuff that goes on. You need how many accountants to figure out a global tax structure . Not to mention the number of lawyers you employ. Instead, if you could have a fairer, territorial its crazy. Maybe well get tax reform. Well talk about it. Theres some obstacles. I still think itll happen. Also in our headlines this morning, costco shares are under pressure in the premarket trading. The warehouse retailer missed estimates on both the top and bottom lines for its latest quarter and announced plans to raise its membership fees. The top two fed officials are scheduled to make appearances today, less than two weeks before the next fed meeting. Fed chair janet yellen will give a speech at a chicago event. Fooi larry, this is the first time weve gotten to sit down with you since the inauguration. Just wondering what youre thinking about how things are progressing from a Business Leaders perspective and what this all means. I think theres reason to be optimistic. I like a lot of the thinking thats gone on in terms of tax reform, in terms of trade adjustments to the extent they need it in terms of a rational, Affordable Care act. I think this is the most positive news that Business People have had in a decade. Now you have to go from thoughts to action. Obviously im anxious to see what, in fact, occurs. Im optimistic were on the right track in terms of the issues were addressing. Hopefully well see it turn into policy, and the country will begin to surge forward economically. Did you watch the speech the other night . I did. Heres one of the negatives. You may need to do everything through reconciliation, and you may need to do the super filibuster. Watching the behavior of the democrats at that speech, do you have reason for optimism about working together on anything with that group . Its difficult. Remember, you cant do everything by reconciliation. You need ten democrats, for example, to approve the repeal of the Affordable Care act. So hopefully some of those people who are on display the other night will come around and think about for the first time in their political careers the good of the country. I dont think yesterday was very no, it was awful. I tried to talk you into joining me. Im going to move over to that party. Im questioning my decisions now. Anyway. New administration obviously has a lot on its plate. Andrew is in washington. He has our news maker of the morning. One of those new cabinet members. Andrew . Hey, becky. Thank you. It is a new cabinet member, but it is not somebody new to squawk box. We were just talking about it. Wilbur ross is here. Of course, a long time friend of squawk box. Youve been on the show for about 20 years, we think. I think maybe since the very beginning. Since the very, very beginning. We have 100 questions for you. This is our first time spending time with you in this new role. I have fewer than 100 answers. Before we do that though, some of the tape that becky and joe were just rolling before was of this raid of caterpillar. Your department was involved in that raid. How does that work . Did you approve that . Well, that was part of an Ongoing Investigation that had been begun quite a while ago. The Commerce Department has enforcement responsibilities both on imports and on exports. So its an important part of our function, and were going to be even stricter on enforcement, particularly on inbound goods that shouldnt be. Before Something Like that happens, do they call you . Do they call the president . Its more complicated than that, but we dont give away how people can be warned in advance. Okay. We do want to talk about trade. We want to talk about your role here in washington. Given that weve known you for as long as we have, how does it work . Theres you, theres gary cohn, theres Steve Mnuchin, theres peter navarro. Again, all names weve known for many years. How have you how do you divvy it up, and how involved do you get, for example, in some of the tax conversation, how involved do they get in the trade conversation . Well, the president has announced a very big foe us cus me is trade. I tend to be much more involved in that part. But as you know, during the campaign, i wrote editorials about other topics as well, infrastructure and deregulation and things of that sort. So its a cooperative thing. Once every week we all have lunch together, gary, myself, Steve Mnuchin and a couple of the others, and kind of make sure were all on the same wavelength. On trade, you have talked about become, quote, aggressive on trade. During the campaign, President Trump talked about perhaps a 35 tariff. How aggressive on trade do you plan to be . Well be aggressive on trade because we know that the deals that have been made historically have resulted in the great loss of manufacturing jobs, great amount of closures of manufacturing businesses. We dont want that to continue. So first emphasis will be on facilitating u. S. Exports to other countries, getting rid of both tariff and nontariff barriers to trade. The other side of that will be preventing illegally subsidized goods from coming in and really enforcing it. One of the shocks to me when i got here was to learn that there are billions of dollars of counterveiling duties that have been imposed because we con the cases but have never been collected. Weve heard a lot about a border adjustment tax. How involved are you in that conversation . Do you put it in the context of it being a tariff . Well, anything that affects trade will be viewed to some degree by the foreigners as an added burden. Value added taxes, which is close to what border adjustable is, are quite common place. Were the only oecd country, with one exception, that doesnt have v. A. T. Value added tax is always imposed on imports and always rebated on exports. Our companies are not permitted, however, to deduct the federal income tax on their exports. So its an unfair equation. Where do you think the president is on this issue . Where do you think we land . We need to do something to balance the budget you ha. We need to fill the holes. Reconciliation is probably the only way we can get thing through, things like tax relief. So we have to balance it. Border adjustability is certainly one powerful mechanism for doing that, but lets see what else evolves. Lets see what the alternatives are. What are the alternatives . We havent heard about those. Well, there are other things that you could cut less. There are other things you could do more of. The border adjustable is reckoned, i think, by the scoring of the Congressional Budget Office to add up to Something Like a trillion dollars over ten years. Thats a big number. Ten years is the scoring number the cbo uses. Weve asked you in the past to handicap whats happened in the markets. If you were to handicap whats going to happen on this border adjustment tax, you would say what . You think it happens . I think there will be something found to fill the trilliondollar hole, whether it will be border adjustable. I want to ask you about this. This is Larry Summers on our air recently relating to border adjustment and relating to perhaps the approach of the administration on what he calls hyper protectionism. He says, consumers will pay more for their goods, which means theyll have less spending power to spend on american goods, and theyll definitely have consequences for the economy. Other nations will retaliate, and theyll have consequences for the health of our companies. The consequences of protectionism is well be poorer and the world will be less safe. If you were on our set with larry, you would have told him what . I would have said look at china. If trade deficits are good, then how can trade surpluses not be horrible . Thats in effect what hes saying, that youre better off having a trade deficit than a surplus. But you look at china, its been a great economic miracle, and its perfectly obvious thats largely driven by its trade surplus. You dont worry about retaliation . You dont worry about other countries . I looked last night. Germany has said they would others have said they would retaliate. China said they would retaliate. Thats not something we should worry about . First of all, i havent said that were in accord with anything like a 20 border adjustable tax. Those countries are already taking advantage of things. Germany has been an enormous beneficiary of the weak euro. I dont call that currency manipulation on their part because theyre just part of the eu. But the fact is that what drives the german export engine is the low euro value. So the theory of border adjustable is the currencies would readjust and therefore it would be a zerosum game. Im a little skeptical about the theory that theres somehow a totally free lunch and the markets will exactly absorb everything. But we do need to do something to fill that hole. Our good friend joe back in new york has a question. Joe . Thanks, andrew. Wilbur, you turned around a lot of private sector companies. I mean, youve had a long, storied career. I know you havent been there that long, confirmed, but just looking around and getting your bearings, do you have the idea that you can do it in a government, in a Public Sector situation . Is it as hard as you thought it would be . I mean, do you need democrats to help you . If not, can it all be done just, you know, either through reconciliation or through executive orders . In my own case, while there was a lot of partisan delay in the confirmation, when it finally came, i did get 72 votes. I saw that. Only 27 opposing votes. So there are some things of which there can be bipartisan agreement. So i was very optimistic that that many people, namely a lot of democrats, also voted for me. Im very proud that a number of the Union Leaders actually wrote letters to the congress recommending that they vote for me. One of the other questions we were trying to understand is sort of where you stand on the dollar and currency in particular. I think the peso has fallen a lot mainly because of the fear of what will happen with nafta. I believe if we and the mexicans make a sensible trade agreement, the mexican peso will recover quite a lot. Okay. Becky, i know you have a question back in new york. Wilbur, i wanted to follow up one more time with the border adjustment tax. Youre saying and im hearing that its not necessarily going to get through but that trilliondollar hole will get filled one way or another. When we talked with Steven Mnuchin just a week or two ago, he told us that part of what might be happening is if youre looking at your own internal administration estimations for how things are going to go with dynamic scoring, is that how we might potentially fill that hole as far as you see it too . Well, there will be a budget message coming out shortly. Were expecting that will be a very stringent budget. So that could be one beginning of a start. So much of the budget is without anybodys control because its for interest, its more mandatory activities, and the president has announced that he wants to increase military spending by quite a bit. So the budget could be one way to do part of it. I doubt you can find a trillion dollars over the ten years strictly through budget stringency. Mr. Secretary, you had a lot of discussion with respect to nafta. Some people think its been really good. Other people have questions. What are the most egregious aspects of the nafta accord, which youre going to look at as a First Priority when you talk with the mexicans about a new pact . Sure. Several things. First of all, i think the rules of origin were far too lenient. Rules of origin means how much goods can come in from outside nafta and yet get all the benefits of absolution from tariffs that come with nafta. I think those could be tightened up quite a bit. One of the things the tpp did is in some ways, it did tighten them a bit. So theres clearly some room there. A second thing is that the theory of nafta had been gradual convergence of Living Standards between mexico and the United States. That really hasnt happened on the mexican side. The minimum wage for the peso has barely gone up in peso terms. Since the peso has gone down so severely in dollar terms, mexican workers are not at all better off than they had been some time ago. The third thing is the currency. I think partly the decline in the peso was due to worry about renegotiation of nafta, but i think we also need to think about some other mechanisms for making the peso Dollar Exchange rate a bit more stable. Talking about the trade deficit and specifically mexico, i want to read you something from the wall street journal. Maybe you can comment on this report. The journal reported last weekend that Trump Officials had asked employees of your department, the Commerce Department, to calculate u. S. Trade flows in a way that they say exaggerates the overall u. S. Trade deficit, overstating deficits with countries such as mexico, and what they said is even creating the illusion of deficits where none exist. What do you know about this . I think that article is a great exaggeration of what was going on. There has been for many years a technical debate about how you measure individual country trade balances. What the debate revolves around is how do you treat reexports, items that were imported and then go back out. Do you count those as going back to the original point from which they came and just count them the one time . Do you count them on the way in and on the way out . At the end of the day, it doesnt change your overall trade balance, but it does change potentially which countries are the cause of the trade deficit. So its a highly technical issue. My guess is itll go on and on and on over the years, like many, many technical issues do. Okay. Joseph . Wilbur, theres tax reform and then theres deregulation. I know you remember in the Reagan Administration there was actually a deregulation czar. I think that could be partially your role. At this point, do you need to introduce anything to get started. I mean, i know weve gotten started. Where are we in that process . How much more is there to do, and whats your estimate of how much that could add to gdp just alone, just deregulation alone, what could you add to gdp, do you think . Well, as to deregulation, the president has tasked the Commerce Department with making a survey of all of the manufacturing businesses in this country, asking them what permitting problems they have, what regulatory problems they have, what problems with rules they have. In fact, i believe today is the day that the request that were sending out on a very broad base will be published in the federal register. Right, right. Were going to be enlisting the support of the National Association of manufacturers, business round table, chamber of commerce, the National Federation of Small Businesses, everybody. To try to get the inputs, what are the regulations that are holding back manufacturing. You believe th i believe well find its way into the tens of billions of dollars and very possibly approaching a hundred odd billions of dollars that we can deal with. Many of these were put in by executive orders and by agency rules, and those wouldnt require acts of congress. So we are up to our eyeballs in trying to make sure we identify all the problems because where the problems come in, its not just the cost of the regulation. Its also the delays. The delays in getting projects going and the interference with businesses operating as they see best. So its a lot to do there. I think that will be one of the most fruitful areas that the administration can attack quickly. So well see that news today then, wilbur, about the federal register . Thatll be today . Yes, we think itll be published today. Sorry, andrew. Federal register is not part of commerce, so i cant exactly control that. But we believe itll be in today. Just talking about manufacturing in america, especially Big Companies in america want to know your position these days on the exportimport bank. Its been a controversial one. It is something that some people have described as central to helping our companies. Other people have called it crony capitalism. Well, i think we need some form of helping finance exports to be competitive. You look at this Asian InfrastructureInvestment Bank china has set up. Finance is clearly one of the mechanisms for international competition. So maybe there are some things that xm that could be fixed. Maybe a different mechanism is needed. But we need something to deal with that. What i hope whatever comes out of it will do is to help Small Businesses more. Only Something Like 3 of american businesses export anything. For the Little Company to organize the letters of credit that are so central to International Trade is hard. I think theres a real role for somebody providing letters of the credit and the other starts of financial support, particularly to help the Smaller Companies get going. Whats the timeline on resolving this . Well, xm, as i understand it, has been reauthorized, but it doesnt have there are va cans on the board. The future of the wto and our role in it, what do you think is going to happen . Well, wto is in some ways very necessary. Questions about the specifics of how wto functions, is it a fair setup, the dispute mechanism especially from the point of view with the u. S. Theres some fine tuning i think that should be needed at the wto. As things go on and we get a little more experience with them and they get a little more experience with us, well see how that situation evolves. What kind of conversations, back channel or otherwise, have you had with the chinese about trade . None. None . No. When do you plan to talk to them . Well, as you know, the first on our agenda is nafta because we think it makes sense to solidify your own neighborhood first. So that will be the first we undertake. The trade Promotion Authority of the socalled fast track is a process that was already starting itself through in terms of nafta and potentially others. So were first going to do nafta. Do you worry on china, though, that the chinese will effectively hold some of our u. S. Companies . Its been described as holding them hostage, whether it be the gms of the world or the apples of the world or the boeings of the world. I think you can assume that whatever overt actions we take, there will be some sort of a counterpunch coming from whoever is the other party. We but exports from china to the u. S. Are much more important to the chinese economy than are chinese exports to our economy. So i think that theres a p proportionality issue. Also, the things they export to us are not the same as the things we export to them. So its a much more complicated issue than just one on one, tit for tat. Joseph . Oh, no, i think that maybe were out of time. I was going to tell wilbur how much i liked those shoes he wore to the speech. That was going to be my last question. Oh, no. Im sorry. You know what, great minds. Another example of great minds, andrew, that think alike. Im surprised. Where do you get those, wilbur . Whenever i have hard business shoes on, i feel like im going to church. Your whole feeling can change when you got comfortable shoes on. You dont feel dressed up. Where can i get those . Stubbs wooten. Thats in florida, right . Yeah, theyre in florida and new york. Its actually a very interesting american success story. Percy steinhard is the owner. Hes a cubanamerican who fled because of the castro takeover. Hes built this very successful highend business. Okay. I have two more for you. Were not going to do slippers to end this. Weve always talked to you about markets. Youve often prognosticated about the markets. Historically, president s have not spoken about the markets one way or the other as an indicator of their own performance because if you use that approach, you might live by the markets as th theyre going up and die as theyre going down. What do you think about what the president has said . What do you think about the markets . I think the markets have given a clear endorsement of optimism coming from the new administration. I dont think theres any doubt about that whatsoever. In fact, Election Night we were with carl icahn and some others at about 2 00 in the morning when the futures market had collapsed. Carl left the party and started buying. So he was smarter than i was. I stayed at the party. He went and made a billion dollars. Becky . He made a billion dollars . Yes, in one night. Pretty good night. Wilbur, one more question. You were just talking about watching the markets. As youve been talking this morning, the peso has come under some pressure. The dollar was up against the peso before. Now its 0. 5 lower. A big swing after your peso comments. When you were talking about nafta and you talked about the currency and the decline in the peso, how would you actually what kind of mechanism would it be to the make the dollar peso more stable . What would that look like . Well, at the end of the day, currency is much more in the province of the department of treasury and the Federal Reserve bank than it is of commerce. But think back to when there was the big mexican crisis. Bob rueben was then the treasury secretary. He put in place some lines of credit running back and forth in between the Central Banks to give them the mechanism for dealing with it. So there are mechanisms, whether its that one or something else, that could be used as part of an overall package to try to stabilize things. There are lots of problems with the weak peso for mexico. We talked about the way it helps in terms of manufacturing competitiveness. But mexico imports an awful lot of its food. In fact, i believe theyre the biggest importer of corn from the United States. So a weak peso hurts the average mexican and certainly hurts the poor mexican to a very, very substantial degree because most Food Products are ultimately dollar denominated. Got to ask two more questions before we go. One is the issues of russia have dominated the headlines recently with this administration. Im just curious, as someone whos part of this administration, how much of that dominates your own conversation and how worried you are to the extent it side tracks some of these other policy projects, which so much of our add generals focused on. I dont think it has very much impact on the economy at all. It certainly has not been a big thing in terms of the activities of commerce. Were trying to build up domestic manufacturing. Were trying to help with deregulation. Were trying to help with promoting exports. Were trying to do a lot with enforcement. In the next week or so, youre going to start to see a lot more out of us on enforcement. I think its ridiculous to go to all the trouble to bring a trade case, win it, and then not enforce it against the other party. We will be a very strong enforcer of it. Okay. Were going to let you go. I see youre tweeting now. I just saw your second tweet went out recently. Second tweet. It was a defensive tweet because people between the campaign and now had opened fake Facebook Accounts in my name, fake this account, fake that. So we felt the only way to deal with that was to set them up for me. I do not intend to be a serial tweeter. So the president has not rubbed off on you on this score. Well, the message in his tweets rubs off, for sure, but not the behavior. Im afraid otherwise people will think im putting those slippers as foot in the mouth. Wilbur ross, it is a pleasure and privilege. We appreciate your time this morning. Great to have you on in this new capacity. Thank you, andrew. Joe, becky, good to talk with you. Good to talk to you. Thank you, secretary ross. Joining us now for reaction, our guest host this morning, former honeywell ceo and cnbc contributor larry bossidy. Former u. S. Commerce secretary under president george w. Bush, carlos gutierrez. Hes the chairman of the Albright Stonebridge group. Whats your policy on commenting on current commerce secretaries . You like george w. Bush . What do you think so far . You like what you heard . Its easy to comment on secretary ross. Ive known him for over a decade. I worked with him when i was at commerce. Hes the right person for the right time. He knows how the world works. He knows how trade works. He knows the good and the bad. Hes got tremendous experience, tremendous knowledge, tremendous wisdom. So hes the right man at the right time. One of my questions was, whats it like, for you too, secretary. You were in the private sector. When you go into that i mean, its hard for me to come up with a word. A maelstrom . A swamp . What is it when you go in there and suddenly see what it takes to do something versus a ceo decision you used to be able to just make. Dont you get frustrated and bogged down . I think i might you know, there are moments of frustration, but the overall sense is not one of frustration. Its one of the greatest jobs in the world. Its the greatest job i have had. It totally absorbs you. All the sudden you have information at your fingertips. Youre meeting the mes interesting people in the world. Youre negotiating things that make a difference. And yes, as part of that, you have some frustration because you have congress, so youre not doing things in isolation. And you also have an inner agency process. One of the things about the way washington is organized is that no one has responsibility over anything. Over anything in the sense that for example, climate change. The department of commerce is one of 11 agencies that has something to do with climate change. Its the same thing with trade and the same thing with just about anything you pick. You have to use this inner agency process. It is somewhat cumbersome at times, but it does keep all the agencies focused on, you know, the right direction, on the right strategy. Larry, ive known you a long time. No way for you. I know you. Theres just no way. Ive seen you on a golf course. If you dont finish in two hours if they ask you, just say no because its going to be a bad situation. You know, ive been approached from time to time. I dont have the dna for that type of work. I dont know about that. Im sorry. Larry, you know yourself a lot better than i do, but we tend to think of government as bureaucratic, political, nothing happens. What secretary ross is going to find is some career people who are incredibly knowledgeable. You call in the person who sits on the turkey desk, and theyre going to know everything you ever wanted to know. So very highqualified people. Youre meeting some of the most interesting people in the world. Youre doing some of the most fascinating things. Yes, there is frustration, but that frustration can be tackled by building relationships on the hill. Then, you know, larry, washington can benefit from your experience, your wisdom. You bring things from the private sector. Incredibly, there are things from the Public Sector youll learn that you realize there are some good processes. One thing i want to say about wilbur ross is that unlike former commerce secretaries, i think that secretary ross could be the most influential commerce secretary weve had. Perhaps you have to go back to herbert hoover. But hes known President Trump for 25 years. Hes done business with him. He was extremely helpful to President Trump during the whole Atlantic City situation. So he is someone who will punch above the weight of the Commerce Department. Thats Something Interesting to watch. I think thats great for all of us because hes someone who brings a tremendous amount of wisdom to the party. Carlos, ive been reading with respect to the border adjustments a peck of the tax reform that you have a different view in terms of its effectiveness. What is your view on the border tax . You know, my concern is that the border tax become an instrument to offset all the spending in the budget. So we need to come up with money. Defense is going up 58 billion. We want to cut taxes. We want to spend a trillion dollars on infrastructure. Were not going to touch medicare or social security. Thats a lot of spending. And you have to find a way of offsetting it. I worry that if we look at the border tax as a tactical way of offsetting our expenses, our spending, then i think it could backfire. I think we need a look at it as part of a trade strategy. We cant do it in isolation. We cant do it in a vacuum. We have to sit down with our trading partners. We have to make sure that its not perceived as america only. One thing is america first, but the other thing is that america has to win every single time on every single negotiation. Countries will just retaliate, and it will turn into a trade battle. I dont think we want that. So if we put it in place and if its done in a way that appears to be aggressive, that appears to be in retaliation, that appears to be against countries, then theyre just going to turn around and respond in kind, retaliate in kind. We cant afford a trade war. The world cant afford a trade war. So you know, someone like a secretary ross, whos got the cultural sophistication, who has the knowledge, the wisdom, he can try to pull that off where we can do this, look at it through the lens of trade, not just a tactic to offset taxes, but the big risk here is that were just going to have tariffs move up all over the world and essentially just make things tougher for every single country in the world. So weve got to be very careful. Secretary gutierrez, appreciate your time. Great day to have you on. Thank you. The most influential commerce secretary weve had. Thats high praise coming from you, mr. Secretary. Thank you, sir. Coming up, mark grant. Remember yesterday i said i got to find somebody whos been buying and bullish the whole time. Mark grant is the only guy we can find. At the top of the hour, more reaction out of the interview of the morning with commerce secretary wilbur ross. Senator dan sullivan will join us. As we head to break, heres secretary ross from the interview we just had. Well be aggressive on trade because we know that the deals that have been made historically have resulted in the great loss of manufacturing jobs, great amount of closures of manufacturing businesses. We dont want that to continue. So first emphasis will be on facilitating u. S. Exports to other countries, getting rid of both tariff and nontariff barriers to trade. Joining us now for more on the markets is mark grant, chief strategist at hilltop securities. Mark, we like to check in with you once in a while. Theres a couple things i can go back to where it was nonconventional wisdom and you stuck to your guns, and it has happened. Lets start with do you watch this show sometimes in the morning, mark . Do you get a chance . Absolutely i watch it in the morning. When you hear just about every sell side guy that we have say that and theyre amazing because, you know, they come on lets say this wednesday. At this point, im paring back a little. I think the market has gone too far too fast and theres too many unknowns. Theres some roadblocks these programs could hit. The market has already moved up. But then i find out a month ago thats what they were saying. The month ago before that, thats what they were saying. So the entire 14 they think they can still come in and pick a new top to say that im negative now. Ive just almost had enough of it. What good is the advice at this point . You were long right from the start. At this point, do you think yesterdays move portends any trouble with what was 14 out of 15 days or so . Joe, i mean, a lot of people come in, maybe theyre trying to impress you or their company or i dont know what, but some guys are right and other guys are not right. Thats up to you to assess who those people are. Weve had a big move. Price earnings multiples are going to get adjusted down significantly when we finally get some tax plan. Interestingly enough, and i think this is a critical thing to say this morning well, first, wilbur ross and i served on the board of directors of an Investment Bank together. Hes an incredibly bright and very skilled human being. But what the people before me this morning said in a very broad brush way about the border tax adjustment, as far as im concerned, the biggest adjustment is going to be on the energy sector. I think were going to end up taxing oil coming into the country. Were going to end up giving credits of some kind for exporting oil. I think its going to be a huge boon for the american oil business, which i think is going to help carry the stock market higher. I was thinking the same thing. You know, you think that too much drilling will bring prices down. I dont know. A renaissance in drilling here, if you do it the right way, is going to be a renaissance. Its not going to be a negative just because theres more of it around. We still import way too much. Its way too much of our trade deficit right now. Ive seen people say solar is like 10 . Its like 0. 8 . Very low number. Were dependent on fossil fuels. Youre going to have to not fly anywhere and put on a lot of down coats at night if youre not going to use fossil fuels. Mark, what about Interest Rates . Why were they theyve been dormant. I used quiescent. That was confusing to some people. With all this fiscal stimulus and Everything Else and tax cuts, why arent rates spiking at this point . Is it a global thing . Well, joe, as you may recall on the 8th and 9th of november right after mr. Trump was elected, i said equities are going to go up. Buy equities, buy them aggressively. I said Interest Rates were going to rise. I thought to around 2. 51, which by my calculations, and i do it differently than a lot of people, but 2. 51 is the support resistance line on the ten year. So we hit it, we went back down into the high 2. 30s. Now were back at 2. 51 today. Ms. Yellen is speaking at 1 00. I think we may finally break this and have a little higher yields. But thats only going to push mr. Trump to finally appoint the three people to the fed, and i think the directive from treasury and from the administration is going to be keep Interest Rates low. So we may bump up a little and head back down as a result of the new directions from mr. Trump and his administration. Mark, larry bossidy. Hi, larry. Assuming the border tax does go in, theres going to be interesting ways to administer. For example, auto parts go back and forth across the border four or five times as theyre finally asemi assembled into the final product. There will have to be exceptions. The question is, will there be exceptions, in your view, on energy as a consequence of the lobbyists that will be involved in this act in the final analysis . In other words, arent the exceptions that will have to be made somewhat concerning as to how effective the border tax can be . Larry, i got to tell you, thats a great question. I think on things like auto parts or something in retail or those kind of areas, youre probably right. There will be exceptions, and there will be plenty of negotiations. However, on energy, lets look at who were facing off with. Iran, iraq, yemen, syria. I think that the Trump Administration is going to take a very hard line in saying lets use american oil, lets tax any foreign oil coming in, lets use american energy, and even if the price, say, of gasoline goes up a little, at least were buying american, selling american, and taxing american. I think thats right up the middle line of mr. Trump and mihis policies. The only thing more common than people telling me that the market is overvalued and, you know, its up on expectations, not facts, the only other thing is that its sort of the same people. The market was primed for this anyway. Earnings were improving. Gdp was finally starting to improve. Trump was handed a market and an economy that really has very little to do with what weve heard. I guess the easiest way counterfa counterfactual arguments are impossible. If Hillary Clinton were e lekle, would we be at 21,000 . Is there anything to the notion that this optimism has boosted the market . Joe, the only question in my mind is where these people are living because they have a make believe story in their head. I suppose its the same kinds of people that have gone after the Trump Administration for everything they can find. In my opinion, there is absolutely nothing that has driven this market. Really, nothing, except for the hopes surrounding mr. Trump and his new policies and the cutting of taxes and the increasing of infrastructure and the country is off in a new direction, a new adventure, if you will. People are excited about it. Thats why i think the market is where it is today. Well, if you were on record saying that the stock market was going to collapse with a trump win and then you witness this, thats really all you got to say at that point, that it was going to do it anyway. You really got nothing else to fall back on. Anyway, hopefully the people that say that arent watching, because theyll come in and say it again. Well all sort of be in on the joke. Anyway, mark grant, thank you. Good to see you. Thank you, everybody. Thank you. When we come back, more reaction to our interview with commerce secretary wilbur ross. We are watching the peso and other currencies this morning, which did react to what secretary ross was saying on our air. Later, coming up in the program, snap making a splash on wall street. Should investors be concerned about growth forecasts and how the Company Plans to actually make money . We will talk about the Business Model and what it means for investors. Squawk box will be right back. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Deartheres no other way to say this. Its over. Ive found a permanent escape from monotony. Together, we are perfectly balanced. Our senses awake. Our hearts racing as one. I know this is sudden, but they say. If you love something set it free. See you around, giulia did you know slow internet can actually hold your business back . Say goodbye to slow downloads, slow backups, slow everything. Comcast business offers blazing fast and reliable internet thats over 6 times faster than slow internet from the phone company. Say hello to internet speeds up to 250 mbps. And add phone and tv for only 34. 90 more a month. Call today. Comcast business. Built for business. Lets get back to our guest host today, former honeywell ceo and cnbc contributor larry bossidy. Were going to talk about what wilbur ross was just saying. Larry, where do you stand on trade issues . I like what the secretary said about tax reform and basically the border tax. Remember, tax legislation, no one is going to like not everyone will like the end product. That you know. I think the border tax, theres a couple things we need desperately. One, it raises a trillion dollars, as the secretary said, over ten years. Secondly, it stops this tax rate arbitrage. In other words, where you go to Different Countries because our tax rate is so much higher than others. The socalled inversions and debt stripping, thats gone. Thirdly, they talk about retaliation, but china and mexico have refundable v. A. T. Taxes. In other words, when we buy from mexico, we pay a 13 v. A. T. Tax, which is refundable to the producer in mexico. So theyre already there. Theyre already there, but any time you change the structure of a deal, even if the other side was benefitting greatly at your expense, you would understand as a businessman that the other side may give you some serious pushback and try to find other ways they can regain what they have just lost. Yes, thats a good point, but remember, we have the biggest market in the world. People are not going to do things that preclude them from participating in our market. So you know, it is i love the trump view that it is time to protect the American Manufacturing and the Business Environment in a way that at least puts us on even keel with the rest of the countries with whom we compete. They may be able to raise a billion dollars if they dont do the border tax a trillion dollars but no one yet has come up with an idea that accomplishes that. Theres two things the border adjustment tax is supposed to do, create revenue, but also create an even playing field. I think its an integral part of tax reform. I hope people stand up and defend it. Larry, even right now youre seeing a split in the republican party. Theres a lot of republicans that want obamacare light. They want to keep the entitlement. Theres guys on the other side that just want to put in the repeal that you had on obamas desk nine months ago. Its going to be the same with this. You have hardcore guys that are ready. You have the middle wishywashy types. You put your finger on it. Thats why we dont get anything done in the congress. You saw it the other night in the trump presentation, the divide that exists. Disappointing. You got to get over that if youre going to make progress in this country. Its intraparty, not just interparty though. Larry bossiyd is going to remain with us. When we come back, more of our ve interview with commerce secretary wilbur ross. 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. Safety doesnt come in a box. Its not a banner that goes on a wall. Its not something you do now and then. Or when its convenient. Its using stateoftheart simulators to better prepare for any situation. Its giving offshore teams onshore support. And its empowering anyone to stop a job if something doesnt seem right. At bp, safety is never being satisfied. And always working to be better. At bp, safety is never being satisfied. 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 or your advisor t. Rowe price. Invest with confidence. Live from the most powerful city in the world, new york, this is squawk box. Good morning and welcome back to squawk box here on cnbc, live from the nasdaq this is live . Were live. Watch, ill pinch you. All these things ive been saying yeah, no filter, baby. Were from the Nasdaq Market site in times square. The futures right now, lets take a look. Positive as far as the dow goes. Lets look at the treasury yields. I thought that was interesting, the mark grant analysis. I didnt think the fed mattered anymore. President trump puts some dovish people on the fed, maybe rates dont go up. Which if that happens, then in turn maybe the market rally gets even more juice. We ought to double down on janet yellen then. God almighty, can you find anyone more dovish . Thats right. Shes going to talk about this morning about the rate hike upcoming maybe in march. I doubt thatll happen. The economy continues to be soft. Among our top stories this morning, the two Top Central Bank officials are scheduled to make public appearances today less than two weeks before the next fomc meeting. Janet yellen will be giving a speech at the chicago event. Stanley fischer will be speaking in new york. And in corporate news, check out shares of snap. They are trading higher once again this morning after surging by 45 on the companys first day of public trading yesterday. Now lets get back to andrew in washington. Hes got highlights from the news making interview with commerce secretary wilbur ross this morning. Hey there. Great to see you. We just finished up with wilbur ross over at the Commerce Department. Were at his office. Weve now moved over here with a different backdrop at the moment. One of the big issues that we talked about, of course, was trade, particularly with mexico. I want to show you a clip of what he talked about relative to the peso. The peso is moving this morning. I think the peso has fall an lot, mainly because of the fear of what will happen with nafta. I believe if we and the mexicans make a sensible trade agreement, the peso will recover quite a lot. Of course, this has been a big issue. Larry summers has talked about whether the drop on the peso would become an incentive for u. S. Companies to do business over there. Lets show you, we have a number of other highlights from the interview. Well be aggressive on trade because we know that the deals that have been made historically have resulted in the great loss of manufacturing jobs, great amount of closures of manufacturing businesses. We dont want that to continue. So first emphasis will be on facilitating u. S. Exports to other countries, getting rid of both tariff and nontariff barriers to trade. The president has announced that a very big focus he has in mind for me is trade. So i tend to be much more involved in that part. But as you know, during the campaign, i wrote editorials about other topics as well. Infrastructure, deregulation, and things of that sort. So its a cooperative thing. Once every week, we all have lunch together. Gary, myself, Steve Mnuchin and a couple of the others, and kind of make sure were all on the same wavelength. Well, anything that affects trade will be viewed to some degree by the foreigners as an added burden. But value added taxes, which is very close to what border adjustable is, are quite common place. Were the only oecd country with one exception that doesnt have v. A. T. Value added tax is always imposed on imports and always rebated on exports. Our companies are not permitted, however, to deduct the federal income tax on their exports. So its an unfair equation. It very much appears that the Trump Administration is getting more and more behind a border adjustment tax, as evidenced by his comments and a number of comments that have been made to folks that ive talked to here in washington over the past couple days. I think were going to be seeing more of that. I know theres been questions about whether we would see a border adjustment tax and whether the administration would be supportive of it. I think were getting there. The other big issue, by the way and joe, you were the one who raised it. Deregulation. Today plan to roll out a plan for companies to be able to explain which regulations dont work and to see how that all plays itself out. I thought it was a great interview, andrew. We got you. We know were going get some good New York Times type questions. You got the Larry Summers stuff. Then you got me. I sort of come maybe from a little bit different you know, were both in the center but just slight lly here on one side. We covered covered the waterfront. Got larry legend here, bossidy. Big border tax guy. More and more people that you respect and im starting to think, heres my idea. Retailers, youve been making hay for years with these ridiculously cheap input costs from china. Consumers benefit a little, but weve been stuck in this deflationary environment. Lets get things going. Lets get wages going up. Lets get more jobs, and then consumers will have more money and we wont have to worry about if something costs two cents more. Lets get moving. Lets get a dynamic economy going, save the trillion dollars so that we can do a tax cut, which will across the board help everyone and stop wringing our hands about what happens to macys. Except for the german cars. There needs to be an exemption there. I want to get you on board. Its down party lines, abndrew. Youre antiborder tax. Now we have to go for it. Its not that im antiborder tax. And we didnt talk enough about this with the secretary. Really, about what it means to have manufacturing back in america and how far we can take that. We can. Youre worried about robots all the time. Andrew, thats going to happen anyway. What we better do is to do as best we can with policy and then were going to have to accept what happens with Artificial Intelligence and Machine Learning and robots because that cant be stopped. And joe, you have a new follow on twitter. I do . Uhoh. Whos that . I think maybe wilbur ross. He wasnt following me before . I dont know. I dont know. I just know there was a lot of twittering. I dont tweet a lot. Well have to get him to follow squawk at least. If i follow him, i can dm him. But then i get nervous. Remember Anthony Weiner thought he was dming someone. It went out on his feed. And thats what you were planning on . No, no. Ill let you in on a secret. Theres another guy who was tweeting under his name. Under whose name . Im saying wilbur has a person. Oh, oh, oh. If you dm him, it may not i dont know if its going to go directly to him. I might mess it up, like i said. Like Anthony Weiner. None of us want to see what you were going to dm. I wasnt going to tweet that to wilbur. Ive never done a dm. Maybe a couple times. It makes me nervous. All right, andrew. See you later. Thanks for going down there too. That was a nice backdrop. It was. Its an amazing office. Next time were all going to go down. You got to see its incredible. Government space. Dont tell me you havent bought some of them slippers online already too. I know you. I may bring you back some. Size 11. Andrew, thank you. Well see you i think a little later in the show. Lets get more on reaction to this interview with secretary ros ross. Joining us now is alaska senator dan sullivan. Senator, thanks for being here today. Good morning, becky. Morning, joe. Morning, senator. We spent a lot of time talking about the border adjustment tax this morning. Secretary ross says he thinks its very important. Where do you think things stand right now . Well, first i just want to comment, i think wilbur ross is the right man for this job, a very important job. I was an enthusiastic supporter of his in the senate. Its clear just from the interview. I watched the interview. He wants and donald trump wants the federal government now to be a partner in opportunity and growing the economy. Thats going to be a Welcome Change from the past administration. So i just wanted to mention that. I thought the interview was great. On the border adjustment tax, im clearly somebody who has an open mind about it. As your previous guest stated, we need the revenues. No doubt about it. There are some questions i think still need to be answered. Is this going to be disruptive or stimulative in terms of the economy. Theres a lot of talk about its going to significantly increase the strength of the dollar as one reaction. If it came into effect, would that undermine exports . Theres an issue with wto compliance, which is also port. Theres a lot of senators looking hard at it. There are other senators who have come out and said not a chance. Tom cotton has walmart in his backyard. There are going to be some youre never going to convince. What do you think the odds are just in terms of if youre trying to do a count right now, could you get there . Look, i mean, were in the midst of a discussion. Any time you talk about comprehensive tax reform, youre going to have people coming out initially saying, hey, im against it. This has happened in every kind of major tax reform that the congress has undertaken. Its not unusual. I think, again, as we get deeper into the discussions and details and the impact ill tell you, im from the great state of alaska. Were very export oriented. If youre an export oriented state, this could be very helpful in terms of your industries and in your state. The discussions are very robust within our conference. Theyre going to continue. Im not sure about guessing where we are in terms of a vote count, but its an Important Initiative that were all looking at hard. Senator, kevin brady, the chairman, said the same thing you just said. I kept trying to say, okay, what are you going to do when this doesnt work . He said, this is going to work. Were going to do this. Its early, and this is where we started. Were going to well talk to david perdue. Were going to talk to tom cotton. This sellerearly on. Hes pointed out the senate doesnt have an alternate plan. Yeah, nothing else. So kevin brady had your thinking that was early and its going to be done that way. I worry about a lot of the wishywashy, pseudo conservatives in your party right now though. Kevin brady came over and briefed our conference just two weeks ago with the speaker. We had a very, very lively exchange. Thats what we need to be doing. Thats not unusual. I think thats actually healthy. You guys were talking about tax reform. Wilbur ross, President Trump, theyre talking about and are focused on another element of what i call tax reform, which is regulatory reform. Theyre focus on this is the critical thing to get our economy going. All these regulations put on by the obama administration, these are taxes. To focus on that as well is, i think, going to be really important to jump start this economy, which the president focused on in his speech to a joint session of congress. Thats another key area the congress is focused on and i think is united on. Snartenator, larry bossidy. Theres been discussion youre going to have to do the Affordable Care act reform before tax reform. Is it likely thats going to be so contentious that tax reform will not occur this year, or it has a chance to occur during 2017 . I think we have the opportunity to do both. A lot of senators are focused on trying to do both. The number one thing we need to do right now, with the exception of making sure our country is safe with a stronger military, is grow this economy. Grow this economy. As you guys know, we had a president in president obama, never hit 3 gdp growth in a year. We need to get back to traditional robust levels of growth. That includes repealing and reforming, repairing, replacing, however you want to call it, obamacare, which is collapsing as we know it right now. But also, major tax reform and regulatory reform. The other area that doesnt get a lot of attention, which i think is going to be critical to jump start an economy, is taking advantage of the opportunities in energy. We have this great energy renaissance. The last administration tried to crush it. This administration wants to help it. Thats another way to get the economy moving. Senator sullivan, thank you for your time today. Thank you. Tried to crush it then took credit for it, which is classic. Anyway, coming up, calls for a march rate hike are gaining momentum. Were going to talk to former philly fed president Charles Plosser about the economy and yellens speech today. Thats next. Whats happening here . This is my new alert system for whenever athing happens in the market. But thinkorsm already lets you create custom alerts for all the things that are portant to you. I guess we dont need the kid anymore. Cuom ales on thinkorswim. Only at Td Ameritrade. Welcome back, everybody. The next fed meeting is less than two weeks away. Rods of a rate hike are heating up. Steve liesman is here with a special guest. Well, you know this guy. Hes a friend of squawk. He was around for a long time when he was the Philadelphia Fed president. Now i think hes having a better time today now that hes a civilian. Thats right. Charles plosser, thanks for joining us. Weve been talking here about the change in attitude of the market. If we put up this probability chart, i dont remember seeing a spike like this. We were down below 8 on the probability of a march hike. Then something happened. Bill dudley used the word compelling. What went on here, charlie . With r y were you watching this . Do you have a feeling for why that happened . I think the change in sentiment is reflected partly in the data. The fed has been trying to say its going to be both slow and measured in its pace of race increases and data dependent. At some point, those two things can conflict with one another. What the data is telling them at this point is that they better get on with this. I think what weve seen in the last week or two is the fed trying to catch up with the market and their expectations and move things forward a bit because theyre afraid that if they keep waiting and keep waiting and by the way, steve, theyve been very creative if the creative in their excuses for not raising rates. Theyre running out of excuses. They know if they dont get started, they could find themselves in a very uncomfortable position. Are they there yet, charlie . We had data this week where they almost could have declared victory. 1. 7 on the core number. Lets just declare victory and move on. Are they too late . The cpi is both core and headline above two. To say were not close to a target, i mean, come on. With what accuracy do we think we can move on here . When you look at labor markets and wages, do you think theres brewing inflation in the here . Well, i think there is brewing inflation in the system. Its obviously gradual. Inflation moves slowly. A year ago, the fomcs forecast of inflation, they werent going to get anywhere close to 2 until like 2018 or 2019. Well, its come a little quicker than they anticipated. Charlie f the fed is truly i dont know, i havent seen it, actually. Maybe theyre not. If theyre truly anticipatory instead of reactionary, in the past you do qe and stay at zero for the animal spirits and the asset prices go up and you hope it filters down. Youve tried that, obviously. So when you see a trump election and the optimism and Consumer Confidence and all these things start spiking, why was it at 8 . We would look at each other when it was at 8 going, they got to go in march. Are they out of their minds . I dont know why it took so long for the fed futures to get up to where they are. I actually think have my perspective and my taste, i always have thought that the fed has been not very forward looking and more reactionary to the data from day to day. And their actions in the past, as i mentioned a few minutes ago, their actions in the past were each meeting where they thought they were going to move. They found some new excuse. Brexit or china or some reason not to go forward. I think the market was conditioned to believe that, oh, theyre not really serious. If theyre going to be reactionary and not anticipatory, why not do it rules based. They didnt stick to any of their rules. You know where i stand on this, joe. What ill tell you, joe, is it depends on what kind of mistake you want to make and what the fed has said is the mistake they want to make is one that allows for more inflation, not less. If they were in an environment of hotter inflation, of hotter price rises, the mistakes they would have made would be on being tougher. Theres a big argument that im sure charlie will tell you about why you may or may not want to incorporate asset inflation into your inflation metrics for policy. I think what you have to remember, the history is the fed, that theyre always, always late raising rates, almost always. They follow the market, they dont lead it. So i think what were seeing is a realization on the part of the fed now that, wait a minute, things are getting ahead of us and we need to keep pace with that, or we could find ourselves in deeper trouble later on. I cut larry off. Im sorry. They kneneed to raise rates,d i hope they do. One thing they might cite this week, the Fourth Quarter gdp was 1. 6 . This economy, everybody says its going to get better, but it hasnt gotten better. So hopefully theyll see something in the future that gives them some confidence to raise rates, but they may have something to fall back on this time as well. That raises a really important question, which is charlie f you were sitting on the fomc right now, the big debate right now, how do you incorporate the coming policies of the Trump Administration . Would you have built that stuff into your forecast already . Or do you do like whats been happening right now, which is the fed has decided to take a waitandsee attitude. They do try to anticipate. They are wondering what the effects the staff will be running forecasts under some different assumptions to see how big affects might be. Since you dont really know what policies are going to come forth, theres more uncertainty. I think what the fed sees, and perhaps correctly so, one of the things they see, they see more uncertainty about the future because we dont know what the new policies are going to be and how theyre going to play out. So there is more uncertainty. But i think the way to think about it, they see the risks tilted to the upside. Can we get charlie back . Please do. The stock market sees, the fed doesnt see, that its not whether policies get done. Its just the idea that the optimism even were trying is even good. Thats why i said the term is risk to the upside. All right. We do want charlie back for an extended period. Thank you very much. Coming up, this mornings biggest movers. Coming up, a grand slam. Squawk box hits the court with Venus Williams. The tennis champ is taking on entrepreneurship and the retail business. Next, squawk box on cnbc will be right back. You cant predict the market. But through good times and bad. At t. Rowe price. Weve helped our investors stay confident for over 75 years. Call us or your advisor. T. Rowe price. Invest with confidence. Itthat can make a worldces, of difference. Expedia, everything in one place, so you can travel the world better. Coming up, we have this mornings top stories. In the meantime, take a look at the u. S. Equity futures, which dow has turned around. Its in positive territory again this morning, up about 19 points. Gave back some yesterday, but before that it had been a long steady did not feel like a cloud. That driverless car . I have seen it all. Intels driving. The future traffic lights, street lamps. Business runs on the cloud. And the cloud runs on intel. I wonder what the other 2 runs on. car horn 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 ways wins. Especially in my business. With slow internet from the phone company, you cant keep up. Youre stuck, watching spinning wheels and progress bars until someone else scoops your story. Switch to comcast business. With highspeed internet up to 10 gigabits per second. You wouldnt pick a slow race car. Then why settle for slow internet . Comcast business. Built for speed. Built for business. Welcome back to squawk. Breaking news to bring you. Sources telling me that Nbc Universal, the Parent Company of this network, a unit of comcast, has invested 500 million in snap. Snapchat, of course, the ipo that took place yesterday, up 44 in just a day. We should tell you that, at least my understanding, is that Nbc Universals stake is the only new strategic investor that was invited to participate in this. Its a 500 million investment, bought at 17 a share as part of the transaction. Sources tell me that Nbc Universal will hold the investment for at least four months but likely much longer. It is part of an effort to deepen the relationship between nbc and snapchat. Nbc, of course, has made lots of moves over the past 18 months, spending about 1. 5 billion to buy up all sorts of digital assets, including 400 million into buzzfeed, 200 million into vox, and an assortment of others. All of this has happened under the leadership of steve burke, the ceo of Nbc Universal, whos being aggressive about the Digital Strategy of nbc as it tries to seek and reach more millennials. Nbc, of course, last summer i was down in rio, if you remember. They worked with snapchat and buzzfeed, creating over 2 billion views on snapchat. A big move, a Major Media Company now involved in snapchat. The only major u. S. Company u. S. Strategic Media Company involved in senanapchat at all. Only other are alibaba and ten cent. But those made prior to the ipo. Big news and may actually create more of a floor for snapchat in terms of justifying the valuation and what it means to the digital economy. Andrew, you dont have to evaluate the investment at 32 billion that nbc made. You evaluate it at, what, 20 billion. It wasnt at 25. Well, exactly. They made about 220 million in a day. Nobody asked me. Youre not in on this, are you, andrew . Im not in this. I do know that Nbc Universal had been pursuing a relationship with them. Were employees. Were inn to. Were in on it sort of. Comcast employees. We are. Im happy. Im good. If you get enough positions in these, the one or two that succeed are going to pay for the rest that may not be as successful. Pretty good strategy. Clearly what youre seeing is nbc take lots of different bets, right, whether its vox. I think were going to have ed lee on in a min from recode, which is part of that company. Youre also talking about buzzfeed. Youre also talking about they bought a Company Called sports engine recently. Youre also seeing them within the context of snapchat and the partnership there, starting to create original programming for snap. Perhaps the most aggressive, i think, of any of the u. S. Media companies in terms of what that relationship is and what it means going forward, were going to have to watch this one. Andrew, as you mentioned, ed lee is here. Ed, i saw you as andrew was talking about this nodding your head. You think this is a good deal . I think its a good deal. I think its a very smart deal. First of all, i think snap had a great ipo yesterday. It was very well done. I think the underwriters handled it really well in terms of pricing and getting it out there. There wasnt too much volatility. You know, its the question though is the company itself. Going forward, we have to see how its going to perform, what its going to do. Lost half a billion dollars last year. Dont expect profit any time soon. Were still in growth mode. But theyve got a nice cohort. Theyve got a lot of audience. Theyve got a lot of young people, over 150 million. Thats the future. If youre a Media Company, if youre Nbc Universal, you want a part of that. You want a piece of that before it gets bigger and bigger. I guess the uniqueness of this, what ive heard time and time again, is how theyve been able to take live video, the connection to it, and video on the small screen with mobile in ways that most other players have struggled with. I think thats i think what sets snapchat apart, or snap the company, apart from facebook, its closest comparison in a lot of ways, is people communicating through picture and video as opposed to text and messaging. Thats different. Its a different mode of thinking. Its a different mode of communicating. For someone like even me, its a hard thing to wrap my head around sometimes. My initial feeling when i want to communicate with someone is send them a text or call them on the phone or write a letter. This is taking a selfie and annotating it. Its a difficult way erent way thinking. For anyone else who wants to jump in, theyre talking 32 times sales, not profits, which is a hefty price tag. Thats where the analysts weve spoken to, those who have looked at this and had questions about it, said well, you got to hope this pays off and that this materializes. Yeah, theres definitely a lot of risk factors. I think thats something to look at. You said it was priced right. The company got 17. The stock moved 44 . Whats your thoughts on that . Was it priced right . Well, you know, its always its tricky, right. Its more alchemy than science. Thats a good mix. Not too much, not too little. I think 44 is generous on the part of snapchat, if you think about it. The underwriters, bankers made some good money. Early investors made some money off this, which is a good thing. You want people to be happy about it. You dont want to leave too much money on the table. Snap, you know, they raise what is 3. 4 billion. They hold 2 billion they can use for other things. Acquisitions and hiring. Nothing worse than a busted ipo. Ed, what does it mean for the other traditional Media Players, for nbcu to align itself, and particularly for snapchat to align itself with nbcu. Snapchat has been relatively agnostic to some degree in terms of the different Media Players its partnered with. Clearly the effort here is to deepen that relationship in a much more meaningful way. I think thats a good question. So if youre disney or one of these others, you know, how are you thinking about this now . Well, if youre disney, another media player, youre like, okay, thats another part of thing i need to get into in some way or another. Nbc universal is placing its bets with snapchat, with vox media, Parent Company of my website, as well as buzzfeed. Steve burke is really diversifying, i guess, is the best way to think about it. If youre disney, if youre cbs or viacomm, you want to take a deeper look at, okay, i need to step in and make sure im part of this new sort of emerging media landscape, whatever that looks like. Taking a look at snap shares this morning, theyre up another 3. 6 , almost 3. 7 just after that huge run we saw yesterday, the gain of 44 . Heres a look at comcast shares in reaction. That stock up about 1 . Ed, want to thank you very much for joining us today. Any time. And andrew, nice news. Nice to see you. Nice to see you. All right. Im going in the green room. I got to do this. Okay. Coming up, Venus Williams is in the house. The tennis champion is here to talk about business on and off the court. Im going to go right now and get a selfie. Stay tuned. Squawk box will be right back. Whether its connecting one of the worlds most innovative campuses. Or bringing wifi to 65,000 fans. Businesses count on communication, and communication counts on centurylink. This is where i trade andrs. Manage my portfolio. 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. Welcome back to squawk box, herb. Weve been watching the futures this morning. After a little bit of give back yesterday, markets are mixed this morning. The dow is up once again. Its indicated to open up by about 14 points. S p futures off by 3. 5. The nasdaq down by jeust over 1. Also been watching currency markets. As secretary wilbur ross was speaking earlier, you did see some sharp reaction in the peso. Take a look at whats been happening with that chart. Right now the dollarpeso is down by about 2. 25 . Joe . All right. March is womens history month. Our next guest is honoring the occasion by highlighting gender equality in sports. Venus williams revolutionized tennis as one of the greatest female athletes of all time. Shes also ceo and creative director of active wear lifestyle clothing brand. Venus now working with brawnys strength has no gender campaign. Lets talk about the womens history month. Its great to be a woman. It is. Its a wonderful thing. Its wonderful to be working with brawny and strength has no gender. Ive had so many amazing experiences with being a woman and overcoming obstacles. Its just the perfect month to celebrate women. I never thought about it, always being the brawny man, until i started reading about this. Its awesome, isnt it . This month is special. Its going to profile a woman. When i heard about it, i was just so excited. Its a perfect way to really honor the contribution that women have had in this country, throughout history, and its a special thing. I know world tennis day is coming up. You have a lot of people competing. Do you need any other you need any other maybe not. Do i need a coach . Are you offering . I know you have andy roddick and others. Are there any other single players that need someone to spar with them . Ill keep you in mind. Its a little late in the game. Maybe next year. Yeah. So tell us about this. This is on march 6th. Madison square garden. Yes, march 6th at Madison Square garden. Im teaming up with a lot of awesome players to celebrate tennis. Were celebrating a lot this month. Celebrating women, celebrating tennis. Lots to celebrate. Venus, whats the state of womens tennis in the country, do you think . Oh, my gosh. Did you see the Australian Open . Yeah, unbelievable. Had to be optimistic. Very optimistic. Actually, serena is part of this campaign as well and celebrating trail blazers like her and Amelia Earhart and women who have really broken down barriers. I mean, you guys, if you combine the grand slam, its like crazy. Serena could play for five more years, couldnt she . Do you have any idea . You could too. I dont think the opponents would like to hear serena wants to play five more years. Shes not irrelevant. Yeah, its changing. Tennis has changed so much. You can play grand slam tennis and win majors and keep doing at 35. Thats going to be like a pete rose record. Yeah, her record is pretty untouched. I dont think its ever going to be matched. Your life has changed. Youre involved in a lot of different things. How much time do you spend with tennis as opposed to other activities . Its the first thing i do when i wake up in the morning. Still, im at that point in my life when i wake up and the first thing i think about is how am i going to get better. You know when you wake up and thats not in your head, its time to move on. Im not even close. But you are working on your mba too. Im working on my mfa, masters of fine arts. I did go to business school. I could maybe be an intern in the back or something. Then i went back to arts. I love the arts. Im involved in fashion with my line and interior design. But youve also spent a lot of time with your book talking to entrepreneurs. The connection between athleticism and entrepreneurism. What did you find . It blurs. The connection is so fluid. Sport is so much like business. Its all about strategy. Its all about learning from losing. Its all about setting goals. When you play sports, it teaches you so much. Thats why i encourage young women and also young men as well, but especially young women, to build confidence through sports. Also, thats my message as well for womens month. Gender equality in tennis, thats a pretty good model for Everything Else, dont you think . I think so. I think tennis sets the standard for the world, right. Or am i just biased . If youre buying tinckets to the final, i dont think you feel like, oh, its a womens final. Sometimes you rather wish its the womens final than the mens final. You have a lot to do with that. Thank you. How are you doing in terms of eke what anymorety of payment . Are you getting paid the way you should in terms of these tennis tournaments . Yeah, that was a big deal a number of years ago. We achieved equal prize money in tennis. Theres trail blazers like Billie Jean King who paved the way for that over the years to get us where we are now. Im happy to be in this position to say that we have equal prize money in the tournaments, especially the majors. Youre selling yourself short. You were a key component in that entire thing. In 2006 you were writing editorials about it. I planned on winning wimbledon, but growing up, i didnt realize there was not equal prize money in the majors. When you grow up and youre around the courts and realize there isnt, you either take a part of it to make the world better or sit back and watch. Its nothing i planned to be a part of, but sometimes you find yourself in that position. Had your future brotherinlaw on yesterday. He designs all of serenas stuff, thats his fashion sense . He tried to did he try to take credit . He did not. Joe is making that up. He said he had nothing to do with it, as a matter of fact. Okay, the truth comes out. Hes great though. Hes a great guy. Trying to incite a little division. Did he sit here yesterday . He did. All right. Were about the same height. He is. I might be slightly shorter. So well, that gets too personal. Maid of honor . When is that coming up . Do we know anything . I am im not allowed to say anything. Could be bad luck too. Venus, its great having you here. Thank you. How many twitter followers you got . I dont know. But i dont know we are hashtaging. You do snapchat too. Not as well as serena. Are you actively involved on your social media in general . I am, i am. Can you tweet or snapchat out something about squawk box and you being on it right now . As soon as i get to my phone. Youre a business person. Im sure you watch squawk box every morning, mostly, if youre not practicing. When im not practicing. You got that right. She just said she practices every morning. You dvr it. Yes. Okay. Good answer. All right. Thank you. Good seeing you. Good luck. Congratulations, venus. Good to see you. Really appreciate it. When with ke come back, jim cramer will join us from the new york stock exchange. Weve been watching the futures. Its been a mixed picture this morning. Dow futures up by 17. Stay tuned. Youre watching squawk box on cnbc. Time now for your kensho stat of the day. How do the broader markets perform in march . The russell 2000, dow and s p the russell 2000, dow and s p all gain over 1 . Did you know slow internet can actually hold your business back . Say goodbye to slow downloads, slow backups, slow everything. Comcast business offers blazing fast and reliable internet thats over 6 times faster than slow internet from the phone company. Say hello to internet speeds up to 250 mbps. And add phone and tv for only 34. 90 more a month. Call today. Comcast business. Built for business. Welcome back, folks. Lets recap some of the breaking news that andrew just brought to us a few minutes ago. Cnbcs Parent CompanyNbc Universal has invested 500 million in snapchats parent snap. Nbcu has allocated shares as part of snaps ipo, those shares came at 24. Nbc universal had already been doing business with snap. Its part of an ongoing relationship. Nbcu, a unit of comcast, had already been in a strategic investor in Companies Like buzzfeed and vox as well. This is adding to that portfolio. Steve burk has been the one so actively looking for these deals and investing in them. And comcast shares this morning up by about 1 . Still laughing andrew, he missed out on venus. He was down there. He missed out. Hes the worst with stars and people. This is the guy who just took a selfie and got her autograph. Yeah, im pretty bad. Lets get down to the new york stock exchange. Cramer gets this all the time, not quite the same if youre Venus Williams versus you get a lot of it, jimbo, but this was venus. Shes so fabulous. I thought going have a masters and also get the fine arts. The mfs. Some people are impressive in every single thing they do. Youre watching tv say, wait a second, holy cow that person is impressive. Bingo is she ever impressive. Its great. I know, i feel im a little embarrassed. I mean shes such a powerhouse. No, embarrassed at the reaction before, during and after because i, you know little star struck here, jim. You should be. There are very few people you should be star struck over and ask for selfies with and be proud of and shes one of them. I got an autograph on my phone. I can send to my kids. Anyway, jim, wilbur ross highlights. Look, i think that he is correctly laying out the case about how every other country has really figured out how to beat us. And its okay for us periodically to put our gloves up and figure out a way to make it so we dont get beaten. This is one of those things, you had dan damico on the other day, i think theres a perception at home everyone plays fair with us, no one plays fair. At least if we do defense of ourselves, i dont think thats bad. By the way i think the peso is a buy, been saying peso is a buy, been looking at real estate in mexico because its so cheap. What about snapchat and news andrew talked about with nbc . Ive been saying snapchat going to a 40 billion valuation put at 28 would make it around 40 times sales which is versus say facebook which came at ten times sales. Figure goes to four times that because the buzz is great. Snap is building a complete ecosystem of small videos, four minutes, its going to be mtv. Only way to reach that audience. Its obviously going to be overvalued and go even more overvalued. And thats just the way it is. Thats the way the stock market works. All right, my friend. You know b. G. , brad gilbert, hes watching. He loves venus and said its nice we were so excited. B. G. s book is a fabulous book. B. G. s a really knowledgeable guy. Awesome. I know. When youre watching a match with him its like, you know, just better. Anyway i learn from him every time. Hes really smart. He is. Awesome. Anyway, jim, thanks. Well see you at the top of the hour. Later today on power lunch dont miss a cnbc exclusive interview with mylan ceo Heather Bresch at 1 00 p. M. Eastern time. Is happening before our eyes. Shift in Human History sixty to seventy Million People are moving to cities every year. At pgim we help investors see the implications of long term megatrends like the prime time of urban expansion, pinpointing opportunities to capture alpha in real estate, infrastructure and emerging markets. Partner with pgim the Global Investment management businesses of prudential. 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. 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 welcome back everybody. Our guest host this morning former honeywell ceo, larry, if youre looking at whats happening in washington, what do you want to see this year . Whats on your wish list . Im excited we could have modification of the Affordable Care act. That needs to be done. We could add tax reform, we could add deregulation. If we accomplish those three things, it will be one of the best years in political history. Im excited and hope it happens. Thats a big wish list. It is. Big items. A lot of things have to happen for each of them to get out the gate. And they may not, but nonetheless those are the right pursuits it seems to me. I think the mandate is left than the modification, you want obamacare light or do a repeal and take your chances . How do you replace it without a huge entitlement . Its a huge entitlement. Do we keep it . It doesnt give way to easy answers, but nonetheless i do think its getting out of control from a cost standpoint. It has to be modified and hopefully well come up with a solution that makes it as affordable. Keep the entitlement itself. Yes. Its going to happen. Its going to happen. Well, larry, again, i want to thank you for being with us today. Weve been watching the stock market this week and what did you think as we watched the dow cross 21,000 for the first time after crossing 20,000 just 24 sessions. I think trump has every reason to take a bow for it. I just hope it continues. I know theres a correction somewhere out there. But for now it makes you very pleased. Also been watching yields today. And if you check out the treasury market, the twoyear is at its highest level since june of 2009. Tenyears been moving up. I saw above 2. 5 this morning too. Do you think thats going to be no, i think its going to move forward. But a tenyear at 2. 5 in my history is remarkably low, so i think the fed will probably move in march. I think they should. They may well find excuse not to, but we need to get on with rate increases. And i hope we start this month. Lets say we play doubles, me and you on one side and venus on the other. Do you think we could get a point . The two of you versus her. Basically, i know, joe, you cheat so we might get a point. Although i dont think i could. We couldnt. Thanks, larry i cheat . Thats horrible. Make sure you join us monday. Squawk on the street is next. Good friday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer, david faber at the new york stock exchange. Pause in the rally continues for a second morning. Futures are mixed although a lot could change as fed speak hits a change today. All before 1 00 p. M. Eastern before they go