Transcripts For CNBC Squawk Box 20170425

U. S. Dollar versus the Canadian Dollar. Again, all of the things that have been happening with that potential trade war. Tariffs being slapped on canadian lumber. We will talk more about that in a moment. Take a look at what happened in the asian markets. The nikkei ended up by 1 . The hang seng market was up, too, up by a third of a percent. There are green arrows for most of the major markets. The cac in france is indicated up 0. 25 . The dak x is is slightly lower. If you look at crude oil prices, wti is trading below 50 a barrel. Its up 13 cents, but wti for the june contract at 49. 36. Among the other top stories, tensions with north korea on the rise. Today the country reportedly conducting a big livefire exercise. All to mark the foundation of its military. Top Trump Officials will hold a military briefing tomorrow at the white house, which will include the entire United States senate. The Trump Administration plans to impose a new tariff on canada. Wilbur ross announcing the plan to implement a 20 tax of imports of canadian soft wood lumber that would be effective retroactively. Ross said the trade dispute centers on canadian provinces that have been allowing loggers to cut down trees at improperly subsidized costs and selling them at lower prices. The Canadian Dollar is down 0. 4 against the u. S. Dollar. A big interview coming up. Commerce secretary wilbur ross will join us at 7 00 a. M. Eastern time in a first on cnbc interview. And new details emerging on President Trumps tax plan. Reports say that he has asked aides to draft a proposal that would cut the Corporate Tax rate to 15 from 35 this could set up a fight with some republicans on the hill. Because the lower rate could mean a loss of revenue and that could drive up deficits. Is that even real . I dont know. 15 . I know people in the white house who say 15 doesnt make sense. Im not sure how this is an opening gambit. An increasing the deficit perspective . The top line is 35 . We know most companies are probably in the 20s. This is like alice in wonderland. There is no way to make 15 in terms of the math working. Do you take the red pill or the blue pill . Unless you look unless you dynamically score it into the money heavens. Which is which Steven Mnuchin has told us theyre working on. And larry kudlow and the other guys who wrote in the oped last week were talking. Dupont earnings out right now. An adjusted number of 1. 64. The street was looking for 1. 39. Several different numbers. Continuing operations of 1. 52, actual earning of 1. 27. Looks like a beat of expectations. Dupont came in with sales of 7 7. 7 billion versus 7 7. 5 billion. The stock is unchanged right now. Other headlines coming out. They say that they are looking for that dow chemical merger to close in august. They also say they see the first half adjust the earnings per share of about 2. 90. Really quickly trying to do the math. Thats above where the street estimates are now. If you add up the first half and second half, estimates are closer to 2. 40. So, it looks like theyre raising guidance for the First Quarter. A little more color. You know the numbers, like you said, a beat on eps, beat on the top line. Gross margins up. Volumes rose 4 . A new soybean variety in latin america driving sales as well. Top line, bottom line, guidance, everything looks good for dupont. Yeah. Stock is unchanged now. Well keep track of this. The other big political story of the week, we were talking about whether there will be a shutdown later this week. Political leaders faced that midnight friday deadline to reach a spending deal or face a shutdown. President trump indicated hes willing to back away from his demand that a government funding bill include money to build the wall on the u. S. mexican border. U. S. Officials say trump is open to obtaining funding for the wall later this year. This has been a major Sticking Point in negotiations to avoid a shutdown. But reality on the wall has finally arrived. I cant say its surprising to see this, because it would have shocked me to see a Government Shutdown based on this. It was shocking to me that we were talking about the wall in the context of the shutdown. That was thrown in a hornets nest. On todays agent dafshagend, the monthly s p caseshiller home price index out at 9 00 a. M. Followed by march new home sales and april Consumer Confidence at 10 00 a. M. When it comes to the earnings front, we just heard from dupont. Thats one of five who report before the opening bell. The others are 3m, caterpillar, coke and mcdonalds and well hear from eli lilly and lock seed millie. At t and chipotle report after the close. Cocacolas incoming ceo, James Quincey will be on squawk alley today at 11 00 a. M. Eastern time. All week weve been taking a closer look at President Trumps first 100 days in office. On thursday, becky, joe and i will be in washington to speak so some of the most influential names in government including kevin brady, steny hoyer, senator rob portman, senator david perdue, House Freedom caucus member, David Schweikert and Democratic Caucus chairman, joe crowley and commerce secretary wilbur ross, who we will also be seeing this morning. We want to get over to washington. The Trump Administration still has a lot of positions to fill. Just 23 positions confirmed by senate, 473 appointments awaiting a nomnominee. Lets find out where the white house is lacking staff. Kayla tausche joins us this morning from the capitol. Good morning. To deal with those political battles you have been talking about, funding the wall, government spending, healthcare, tax reform, you need people. As of last night that number went up to 23 with the Senate Confirming sonny perdue as secretary of agriculture. In total 1242 positions require senate confirmation. The Trump Administration is behind progress of other administrations. The president prioritized cabinet secretaries, but only one agency, homeland security, has a deputy secretary. Many offices like the comptroller of the currency have leaders serving past expired terms. Reince priebus said this weekend there are hundreds in the queue because of historical unbelievable obstruction from u. S. Senators that are wakactin inappropriately. Some of the vacancies have impact. Its harder to draft and pass policies in a timely manner. Treasury has more than 100 people working on tax reform and tomorrow we expect just an outline of the principle thats white house is pursuing. The other impact is advisers without confirmation consolidating power n this specific case trumps family. If you try to run the government as you would a family business, run everything think one Single Office you wont get much done and small things will become crises because you wont have the opportunity to get to them. Ivanka trump is in berlin on official Business Today promoting womens empowerment. She had an oped overnight on that topic. Its unclear if the president is choosing to run the white house as a Family Office out of preference or out of necessity and whether that will continue as some of those vacancies get filled. Thank you for that. We look forward to seeing you in person hopefully in just two days. Looking past the geopolitical risk of the French Election as the dow surges more than 200 points following sundays outcome. Lets find out what else is on the radar that could upset the markets. Joining us is ian bremer. You make your money as president of your razor group. Yep. I want to talk france. Can we talk about this headline on the front page of the wall street journal. U. S. Readies candy lumber tariff. We will talk to wilbur ross at 7 00 this morning. First point, if you want to do something on trade, this is the equivalent of quind of liki shaking down the little kid for lunch money. Its canada. Its relatively small. Soft lumberment g mentlumber. They have no plan b but the United States. They dont china is the bigger problem. But weve given 100 days to wilbur ross to figure out how well work more closely on a broad swath of trade issues with the cli these. A chinese and trying to get their help on north korea. If were changing nafta, i expected it would be mexico that we would be slapping tariffs on first. That was all the rhetoric early on. A couple months ago we were still buddy buddy with trudeau. They were hear, there was a lot of nicy nice talk. I heard from canadians around those meetings afterwards that were worried, we dont know who to deal with. It will be challenging. They were slowrolling it in part that was before rwilbur ross was commerce secretary. I think the actual oneonone with trudeau and trump went well because trudeau was cautious and trump was asking for help on immigration. Oh, thats good, theyre asking us for something. As you know, these headlines can come from anywhere. The big mistake people made is the narrative, you have bannon on one side, gary cohn on the other side. Trump is in between. Trump, jared, and i think most of the team on trade, theyve had a feeling from day one that economic nationalism is required. That American Corp ralorations fundamentally globalist, that the american presidency has to get better deals by being tougher and pushing american strength. We could win. You remember davos, scarmucci shows up and said we can win a trade war with the chinese. Frankly, yes. It will hurt both of us, but whos bigger . You put that together with 100 days, they want to make some announcements on something, this is what you get. This an opening salvo or a little shot of nothing . I think its the economic trade equivalent of what we did on syria you have a range of ideas, you pick the one that allows you to say you have done something without risking much. Thats what theyre doing. People looked at syria and said this was the right measure. It was very measured. It was not something that was going to stretch beyond any of these issues. Is that same story here . Dems are not happy with the canadians on dairy. Almost anyone you talk to say this is one where you may not like trump, but there is a trade problem here. It needs to be addressed. Its not like soft lumber has come from nowhere. This is the culmination of a dispute that began in 1982. I knows there going to be reaction to this. Trade war coming with canada. The initial deal expired in 2015. It looks like the Trump Administration is just continuing what previous administrations had already put into the futures market the futures market knew this was coming since the beginning of the year. Lumber prices have been shooting up because they expected something to happen. You can make a clear and bipartisan argument for why this is an okay measure. You could have done the same thing on syria. Saying this is obamas chemical deal, didnt come through. Trump wont put it forward that way. He is made for tv, but the reality is not much. Youre corporate clients are reading this story this morning and calling you and asking what . They want to be calmed down that this is not going to lead to a broad american antitrade protectionist regime. You plan to calm them down or stir the pot . For now i calm them down. But we recognize taking steve bannon off the Principles Committee of the National Security council did not suddenly mean Goldman Sachs took over President Trumps trade policy. Number one, bannon has been involved in this. Number two, theres a feeling that trade the first thing that trump did of meaningicy pe of the transamerican trade deal. Nobody was campaigning on that. Hillary clinton was not campaigning on that either. Hillary said she wanted a legislative fix, heres what im doing to help the workers. Now well do tpp. When he talked about the jobs picture this is the one thing that polled for him very well. On both sides of the aisle, they wasnt fair deals for americans. The wall street journal, i see America First. You have had no legislation in the first 100 days, but you have had executive orders. You got beaten around on immigration. The headlines President Trump seeks to revive 30yearold lumber deal is not as sexy as president slaps 15 or 20 tariff on imported canadian soft wood. Like the syria strike, it probably sends a message. This is the sexy evident wall street journal sed dine he headline hes had since the syria strike. It sends a message listen up or we will take steps to impact you. I think all of American Allies look at trump and say this guy has more capability to do volatile things that could damage the relationship. Hes not as committed to us. Certainly there are some negative aspects. If youre a company like germany, you will hedge away from the u. S. If youre mexico or canada or the uk or israel, saudi arabia, japan, whoever you are run by the United States is the only superpower. You have no choice. So, trump called the first 100 days his contract with the american voter. Has he kept the contract . No but thats okay. He changes his mind on a lot of stuff. Like the wall, for example. We are not ready for the wall. China is not a currency manipulator. Nato is now before he was against it, now hes for it. If youre going to check him on facts, then, no this is a disaster. But lets leave that aside. Do we feel does america feel more great again under trump given what he says and what the base is watching . Yeah. I think they feel happy. If your watre watching squawk in the morning, i would say on balance trump is not your guy right now. Okay. Ian bremer, thank you, sir. My pleasure. We have much more to do including fallout from wells fargos fake account scandal. Shareholders will vote today on whether to oust some Board Members and shake up the boards governance. Well get a live report from that meetings next. At the top of the hour, are we starting a trade war with canada . Commerce secretary wilbur ross will tell us why the u. S. Is slapping new tariffs on lumber. Thats a first on cnbc interview. Squawk box will be right back. Excuse me, are you aware of whats happening right now . Were facing 20 billion security events every day. Ddos campaigns, ransomware, malware attacks. Actually, we just handled all the priority threats. You did that . We did that. Really. We analyzed millions of articles and reports. We can identify threats 50 faster. You can do that . We can do that. Then do that. Can we do that . We can do that. Rays always been different. Last year, he said he was going to dig a hole to china. At t is working with farmers to improve irrigation techniques. Remote moisture sensors use a Reliable Network to tell them when and where to water. So that farmers like ray can compete in big ways. China. Oh. He got there. Thats the power of and. Welcome back to squawk box. Shares of express scripts getting crushed this morning. They announced yesterday that anthem would not be renewing their contract. Heres what the ceo had to say on closing bell yesterday. Our model allows us to create competition, not only amongst retailers, and the supply chain, the manufacturers, the generic companies, all of those are things well have tremendous scale to do. We dont need to be associated necessarily with any particular part of the supply chain. I like the fact that were independent. That we can drive down costs for our plans and our patients by creating competition. Well be plenty big enough to be able to do that. Anthem sued express scripts last year saying the company was overcharging them and not passing along the savings. Express scripts was the main company at the epipen scandal. Once the news broke, we spoke with heather bresch, she threw the needle at express scripts. This whole pharmacy benefit managers, they talked about them in congress. Theyre bubbling up from what companies and industries few people have heard of. I never understood that entire blame the pharmacy benefits manager. Maybe there was markup there. A lot of the original markup came from the company itself. If i seell ian a cup of coffee, you take your cut, andrew takes his cut, but then lets pull an amazon, jack up the prices wasnt all the market came from me and andrew, it started with you, brian. Dont blame me. Its just an analyses. Analogy. But they take a percentage of the hike. The more i hike, the more you hike, the more in other corporate news, marcato capital said Buffalo Wild Wings made an astronomical error in proxy materials filed last week. Marcato said that the chain falsely outperformed the s p 600 restaurant index over a fiveyear period. Last week, marcato called for ceo sally smith to resign. The relative share Price Performance there for you. Fireworks are expected at wells fargos annual sharehol r Shareholders Meeting today, this is because of last years scandal in which the bank admitted that some employees opened multiple accounts in customers names without consent to meet sales goals. That resulted in the resignation of john stumpf. Leslie picker has more. Reporter im told votes are still being tallied. We are told, this is according to a person familiar with the matter, that several directors are actually close to that 50 threshold. Anything below that 50 threshold would cause them to need to submit resignations. Wells fargo clawed back hundreds of millions of dollars. They had hundreds of millions of dollars worth of settlements. Executives have resigned but some Share Holders want more flesh, and the influential proxy Advisory Firm such as iss are urging shareholders to vote against 12 out of 15 of the directors, including the chairman, steven sanger. This is extremely rare. In the last five years iss has done this seven over times. In this type of situation where theres no shareholder putting up a competing slate, their sway, the proxy Advisory Firms sway can be more powerful. Thats what one proxy solicitor told me. My sense is that management and the board are treating the recommendations seriously and have gone out and communicated with investors. Wells fargo shareholders seem to have a mind of their own. Warren buffett owns about 10 of wells fargo stock, hes likely to vote in all of the directors, one thing that could help the board of directors is that the stock has rebounded quite s substantially from postscandal lows. Leslie picker, thank you. Well see you all day. Get ridedy. Ready. President trump expected to release new tax cut details tomorrow. We will hear more from jason furman coming up. Before we go, a look at yesterdays s p 500 winners and losers. Its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . Whether youre after supreme performance. Advanced intelligence. Or breathtaking style. Theres a cclass just for you. Decisions, decisions, decisions. Lease the c300 sedan for 389 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. Welcome back. Youre watching squawk box live from the Nasdaq Market site in times square. Good morning, everybody. Welcome back. Take a look at u. S. Equity futures. Theyre higher once again even after the big gains we saw yesterday for the market. Yesterday it was the French Election, relief that the polls were right for once. This morning you can see that carrying over. Yesterday was the best day for the major averages in about seven weeks. The nasdaq closed at a new high. This morning s p futures are indicated up by 3 1 2 points. Dow futures up by 54 points. The nasdaq indicated up 8 1 2 points. Have some stocks to watch today. First up, humana reporting better than expected profits. The Health Insurer is raising its fullyear forecast and being helped bay stroy a strong perfo in its retail business. Whirl p Profit Guidance over temporary integration challenges. This comes as a result of the companys 2014 purchase of an italian appliancemaker. Whirlpool off 1. 8 . Alcoa posting upbeat earnings for the First Quarter saying its expected aluminum demand to rise this year. The company reporting weaker than expected revenue growth. Alcoa up 3 . Developing overnight, the Trump Administration planning to impose a 20 import tax on soft wood lumber imports from canada. The move comes saying canada is providing unfair subsidies to lumber producers. Canada denies those claims. They could have an impact on the housing market. Housing markets rely on soft lumber in new home construction. Canada exported 5 5. 6 billion o soft wood lumber into the u. S. Next year. Look at some of these u. S. Lumber company stocks, particularly wearehouser, that stock up 1. 5 . Louisiana pacific also up. We expect to hear more about this from commerce secretary wilbur ross. He will be here at 7 00 a. M. Eastern time. Ian bedroom ser wiremer is w morning. When i woke up this morning and saw the news, i thought is this the beginning of a trade war . Youre not so sure thats the case. Not at all. I think theyre doing as much as they can before this artificial but important mark for them, the 100 day mark. One of the best things trump has done in Foreign Policy is a reasonably successful meeting with ping pixi jinping. It will be hard to maintain that over 2017. For now he doesnt want to hit them. Who does that leave . Canada and mexico. Canada lost the flip. Blame canada. Earnings out from eli lilly. The drugmaker earning 96 cents per share, beating estimates by 2 cents. Revenue slightly above forecast. We will talk to the company in the 7 00 hour. Arconic wants to settle its proxy fight with elliott management. The company is giving elliott which owns a 13 stake until tomorrow to rerespond. This a week after arconics ceo resigned after sending a letter to the shareholder. These letters went back and forth yesterday, a new series of letters, got personal all over again. They said she thought they had a deal, then they didnt have a deal. Arconic thought they had a deal with with elliott . Paul singer thought he had a deal with arconic, then might have asked for more. Trying to create an operating committee that didnt exist before where he has majority control of the operating committee. Arconic sends them a letter, sends elliott a letter saying we appreciate your statement that youre prepared to overlook this contest more personal elements, we feel such personal elements do not belong in this contest. Having said that we must add we dont believe your firm was chosen to rise above these attacks, to the contrary your elaborate fight deck has a number of personal attacks against the former ceo. We hope to go forward, blah, blah, blah. It gets into a whole thing. If you have time on your second screen, google the letter. He is not going to let it go. Singer has been in nasty fights before. He sieged an argentinean warship in africa. A hedge fund. He waited them out for years, right . You cant just say you cant let him stay quiet. Lets talk about what is amounting to a big battle in washington. One over taxes. President trump expected to unveil some details in his plan to overall and cut the nations taxes. Joining us to talk about the trump agenda, jason furman. And still with us, ian bremer. Good morning, jason. Youve seen the headlines this morning that the Trump Administration planning to announce theyll go with the 15 Corporate Tax rate. A lot of people thought the math never made sense. But they are going to start there. Does that make sense to you . This white house really doesnt seem like its learning. It was a month ago that their efforts to repeal the Affordable Care act failed. Right after that, a bunch of stories about how on the next set of stuff, they were going to reach out, work with democrats, try to figure out a bipartisan path forward. Instead this latest leak suggests theyre coming in with an opening bid thats to the right of where the House Republicans are starting. Thats a problem because its bad economics, adds a lot to the deficit and it wont help the economy if it cant Pass Congress and Something Like this wont be able to pass. So you think this is an opening gam you about tbit to o negotiations . The negotiations have to begin with we heard you, were reaching out. Were trying to do something bipartisan. I say that partly because you want id like to see Business Tax Reform passed. Thats the way i think it can pass. Second of all, its more likely to be a better idea. Something like this that adds trillions to the deficit, thats a bad idea. Thats bad for our economy. Our deficit is okayish right now at 3 of gdp. It is set to rise to 5 of gdp. With this it would rise even more than that. That would undue any benefit that the tax cuts themselves have. Its a bad idea. Its an idea that cant pass. They should show instead they can reach out and try to Work Together to try to pass something meaningful. I know youre not a dynamic scoring kind of guy. I dont mind dynamic scoring. Is there a way to make the math work . Im fine with dynamic scoring. I think dynamic scoring should be done by the joint committee on taxation and the congressional budget office. Theyre the score keepers. They have a good model. They do it in a rigorous way. We all know the cbo has not gotten it right either over the years. Lets call a spade a spade. They sometimes theyre too high. Sometimes theyre too low. On average about right. You tend to see outside advocates always think their policies will work miracles. Or they think the policies they dont like will destroy the economy. Usually the truth is somewhat smaller than either of those. If you look at reasonable dynamic scores you tend to see it, they offset maybe 10 , 20 of the costs of what youre proposting. Proposing. So you propose 2. 4 trillion, that takes the price tag down to 2 . So you get a benefit from the rate cut, but that extra deficit hurts the economy. When i was in the white house, we saw people parading through saying nothing is worse than deficits. Deficits are uncertainty. Deficits are a problem. I have a question for ian, you look at these numbers, you have corporate clients all over the world, but here at home, do they look at this number and say this is great . Im very excited. Or do they say this is not going to happen, i dont know if i should be excited. They know sthey shouldnt be excited. I fell theres too much made out of this he backed himself into a corner. He said i will give you the biggest numeric tax cut that the planet has ever seen. Once he did that, hes anchored himself. Its not anchoring around the democrats versus republicans. Its around what he initially said. Now he has to come up with an initial headline number, not tethered to reality which will go into the ether as quickly as one of his tweets and forgotten. Why do you say that . What, 15 . Why not . The effective Corporate Tax rate is probably below 20 s p 500 has it at 23 on average. On a worldwide income, thats u. S. Income. On a worldwide income, the numbers are as low as 10 . If we can go from a fake 35 , because then you deduct everything, to a real 15 , wouldnt that be something . Then it wouldnt be magnitude of the cut that people are concerned about. Im not an economist, but andrew asked what the ceos think. I dont have a single ceo client in the u. S. Or anywhere else who thinks 15 is remotely close to reality land. Theyre talking 25 , 28 . Trump in the past has said a lot of these opening numbers that he uses are negotiating tactics. He told us that on the show before. With the chinese, with the tariff levels. Thats an opening gambit. Maybe the number comes down from there. I remember in a conversation he had back at vanity fair when Kellyanne Conway was sitting next to him, he was throwing numbers out about golf. How many times he golfed. Obama had golfed. The head of golf digest was in the room. He had the actual numbers. Kelly aanne conway was like tru math. Trump numbers dont mean the same to him like it does to the rest of us. Jason, weve been talking about this canada lumber tariff. We will talk to wilbur ross in a couple minutes about it. Where do you come down on that . I have to be honest, i once read a mem move o on the topic this debate has been going on since canada became a country over a century ago. I stopped reading there. But having these things as theatrics, part of the 100 days if its been going on for that long, maybe its a good thing somebody is standing up and doing something about it. The last agreement ran out in 2015. Right. This is a little bit like a longrunning dispute, theres a lot of blame to go around on both sides. I think this type of theatrical rollout as part of the 100 days doesnt thrill me. But we need to make progress on this dispute with canada, and our deal ran out in 2015, we need a new one going forward. Thats not crazy and unreasonable. Jason, infrastructure, theres some talk at least with the tax plan that well hear about that you might marry Infrastructure Spending with the tax proposal . Does that make sense to you politically in terms of trying to get some democrats on board . It makes sense to do both together. It makes sense xhekly. If y economically. A lot of democrats like Infrastructure Spending, these two have been paired in a number of tax bills over the last couple of years. Thats the way i would move forward. But you cant move forward with a big deficit increasing. By the way, it will be a temporary tax cut. Who wants a temporary tax cut . We need something permanent and stay in. The only way to do that is with buyin from both sides. Jason furman, thank you. Thank you. We thank ian bremer joining us as well. I wanted to talk to you about aramco on the front page of the wall street journal. Is it worth 2 trillion or not . Theyre doing Everything Possible to make it 2 trillion. If its not, what happens to him politically . I think hes okay. Everyone understands you have to give him time to do this vision 2030. Its him or the end of the kingdom. The whole thing is how much tax is the kingdom going to take from aramco. We talk about taxes here. Some say they want 93 of aramcos revenues. What do you think . Theyre trying to make it much more attractive. 15 . Exactly. No. Theyre trying to make it easier. So far the internationals have been responding well to it. Thank you. When we come back, well bring you three big interviews. First on cnbc, commerce secretary wilbur ross will join us at the top of the hour. He will tell us why the Trump Administration is slapping new tariffs on canadian lumber. Then an inside look at earnings from pharma giant eli lilly. Ceo david ricks will break out the numbers. And later the ceo of the largest auto retailer, autonations mike jackson will talk earnings, auto sales and why tesla could be one of the great ponzi schemes of all time. Stick around, youre watching squawk box on cnbc. And the wolf huffed and puffed. Like you do sometimes, grandpa . Well, when you have copd, it can be hard to breathe. It can be hard to get air out, which can make it hard to get air in. So i talked to my doctor. She said. Symbicort could help you breathe better, starting within 5 minutes. Symbicort doesnt replace a rescue inhaler for sudden symptoms. Symbicort helps provide significant improvement of your lung function. Symbicort is for copd, including chronic bronchitis and emphysema. It should not be taken more than twice a day. Symbicort contains formoterol. Medicines like formoterol increase the risk of death from asthma problems. Symbicort may increase your risk of lung infections, osteoporosis, and some eye problems. You should tell your doctor if you have a heart condition or high Blood Pressure before taking it. Symbicort could mean a day with better breathing. Watch out, piggies child giggles symbicort. Breathe better starting within 5 minutes. Get symbicort free for up to one year. Visit saveonsymbicort. Com today to learn more. Welcome back. Right now its time for the executive edge a modern day gold rush is happening now. Luxury real estate. Robert frank is here to take us inside. Good morning. Its known as the Platinum Triangle and its home to a massive gold rush in super homes. The question is how long can it continue . Average sale prices soaring 66 in Beverly Hills in the First Quarter to 8 million. Sales volume in bellaire and hombe homes is up 6 . Wealthy europeans and royals has touched off a new arms race among spec builders. This is the latest entry, its called opus. Over 20,000 square feet. An infinity pool, has a gold champagne vault filled with 250,000 worth of krystal, and a gold lamborghini and rolls royce. There is a glass waterfall, wellness spa. The builder said 1 100 million the is fair due to whats nearby. If you take the comps that have told, i think this price is well at 100 million. He is building the biggest most expensive home in america. Its nearly 100,000 square feet. Its 5 500 million. There it is. The first ever pictures on television of that construction of the 5 500 million house that will be finished next year. We will be the first to bring that to you as well. Nice. Looks amazing. Robert, thank you. Thanks, guys. When we return, earnings alert. S. A. P. Reporting this morning. The ceo, bill mcdermott, will join us next. As we head to a break, a quick heck check of whats happ in european markets. 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Youve got to learn all you can. To help protect yourself from dvt and pe blood clots. Talk to your doctor about xarelto®. Theres more to know. Massive Software Company s. A. P. Beating on nearly every metric. Bill, you need to settle a debate. You didnt even notice this. And youre a worldwide company, but id like you to focus right now on your u. S. Side of the business, which you also used to run okay. You beat onning earnings, revenue, clout, how much has been a jump because of a continuation the previous quarters and years . In our case its been a continuation. Weve been on a seven year or Core Software business, and as you know, weve nearly tripled the stock price and tripled the revenues of the company, so weve been on a roll now. So becky during a men break was talking about unleashed and animal spirits the the major markets, they have taken off. Do you think the economy has changed, or is there Something Else . Well, whats interested in our business, in cloud businesses, double very healthy in has to have a digit at backbone, so thats the way we think how do you automate my supply change so i can win, now theyre moving into machine learning, artificial intel convince, the internet of things, how do i connect to things. How do i drive new business models. What we have is a soft way platform that does all that, and its fully integrated, customized in 25 industries. One of the things you might want to think about this goes into public or private sector. The ceo wants a digit at boardroom, complete visibility with their management team, what is going on in my business, how do i know . How can i make adjustments on the fly . You run a german company, as someone whos effectively importing services into the country, they raise tariff, how do you feel about that this morning . , well, you have to think about our role in the u. S. Economy differently. We have over 20,000 workers in the United States. I can go on and on. Youre betting on a 50 tax rate . Im knot betting on anything. What we are doing is building great software, taking care of our customers and keeping our shareholders happy. Great answer. We have the commerce secretary joining us when we come back, and cocacola is out with earnings. Really want to be there. But you cant. cheering at cognizant, were helping todays leading Media Companies create more immersive ways to experience entertainment with new Digital Systems and technologies. Get ready. Because were helping leading Companies Lead with digital. Its a very simple procedure, mr. Diaz. Were just going to make one small incision here, then were gonna go in and remove your 67 corvette. My vette . Its just a gall bladder you dont have. Aflac paying you cash, so you might have to sell that sweet little muscle machine just to cover your rent. More funny juice. But my papa gave me. That. Car. What do you wish you had . Aflac. Ohh, i love doing that. Health can change, but the life you love doesnt have to. Keep your lifestyle healthy with aflac whoa thats amazing. Hey, im the internet i know a bunch of people who would love that. The internet loves what youre doing. So build a better website in under an hour with. Gocentral from godaddy. Type in your idea. Select from designs tailored just for you and publish your site with just a few clickseven from your. Mobile phone. The internet is waiting start for free today at godaddy. Im dr. Kelsey mcneely and some day you might be calling me an energy farmer. Energy lives here. Todays market test after a stunning rally, attention turns to washington, and a very busy earnings agenda. We have the numbers and reactions straight ahead. New this morning, with a Government Shutdown looming President Trump suggestses hes opened to waiting on funding for the border wall. Commerce secretary wilbur ross will join us for a first on cnbc interview. And a new book on the influence on capitalism and why he says the very success is dangerous. The second hour of squawk box starts right now. Announcer living from the beating heart of business, new york city, this is squawk box. Good morning, welcome back to squawk box right here on cnbc, wee live at the Nasdaq Marketsite today. Joe is off today. We should also welcome, the circus is here from showtime. Mark halperin is in the house. We have cameras all over the place, and well have wilbur ross in a moment. Looking at the futures, it looks like the dow will open up higher, the nasdaq up higher as well, as is the s p 500 looking open about 4. 5 points. Yesterday the dow gained 216 points, the best day since march 1st of this year. Yesterday frances crack best performance since auction of 2012. The ftse has gained nearly 15 since the brexit vote. We have a lot of earnings, including cocacola, i know brian is going over those numbers as we speak. Kind of a mixed bag here. He came in at 43, the consensus 44. Revenues declined 11 on a net base, but were slight will you above consensus. Revenuesenen ko senses 8. 9 billion. Volume growth was flat, but they said, hey, the shift of easter and weakness in some of the latinamerican markets were really to blame. The stock is up about 0. 7 , and of about 3 , so the market focused on may be of what may come. Slight will you below and ask slightly above. Will that 3 projected organic volume growth be enough to save the stock today . Well see. A couple other things to Pay Attention to eli lilly reported revenue also above street forecast and lillys results were helped by higher demand for diabetes treatment. David ricks is going to join us to review the quarter and talk about health care as well. The u. S. And canada now in the middle of a trade dispute. Commerce department moving to impose a tariff on softwood lumber that enters the United States from canada. Secretary ross, thank you very much for joining us this morning. Thank you, becky. Its great to see you. Is this the beginning of a trade war with canada . I dont think so. By and large things are pretty calm between the u. S. And canada, but within the last week there have been these two incidents, the terrible event with the Dairy Farmers in wiscons wisconsin. Last week ago when i was in japan with Vice President pence, President Trump was out in wisconsin announcing the buy america hire america program. There he encountered some women whose farms were being taken away. They are losing their farms because the canadians had apparently ended the importation into canada of certain highfiltered milk, so it was a very emotional scene for him. Now its being followed this week by the unfortunate necessity of having to put a billion dollar tariff on softwood lumber that was subsidized coming into the u. S. This has been a longrunning dispute, i know, in terms of the lumber thats gone on for decades at this point. Do you think this is something thats fixable. The canadians are saying theyre going to sue. What do you think the next step is . First of all this is a preliminary finding, a whole process of another x days until we get to the final, but generally speaking, the preliminary finding and the final are pretty much the same. Im sure the canadians will take whatever appeals they can. One of the peculiarities with nafta, one of the very bat features is often the panel turns out to be three canadians and two americans, so you have the strange situation of foreign nationals deciding whether or not the Commerce Department properly applied its rules. If youre a ceo global ceo waking up, reading this news, is this something larger . Not just about a trade war with either canada or mexico, but a larger discussing about trade and a takeaway thats different from this particular issue . I think there is a larger takeaway. The Trump Administration has been much more focused on enforcement than had been true. The u. S. Is the least protectionist of the major powers, yet we have the highest deficit, 500 billion. The other cunning that talk about free trade are very protectionist europe, china, japan, so they have the rhetoric of free trade, but the reality of protectionism. That set of facts is not going to be permitted to continue. Their rhetoric must match their behavior, and hopefully by changing their behavior, and if need be, we will do more to defend or borders. Mr. Secretary, earlier this morning we were joined by ian bremer. He likened this move to Something Like the strike on syria. Its very targeted, very measured, and sends a clear message. Would you agree with that analogy . Well, i wouldnt regard the canadian situation as being anything like the war with isis, but it certainly is a very precise set of tariffs on a very precise set of imports. The reason were putting it on is canadas forests are owned by the various provinces, and the provinces charge very discounted, we believe, very subsidized prices to the lumbermen which in turn lets them get a subsidized low price coming into the u. S. It simply seems unfair, because in the u. S. Most of the forests are privately owned, and therefore they pay full market rate for the stumpage. Do you worry that canada will respond listen, one of their biggest is cars and machinery, but things like fruit juice, cocacolas earnings were out today. A lot of sugar in some of these products, you cant make the argument that the United States does unfairly subsidize sugar. Do you feel that canada is going to reciprocate with something on a product that would be close to a big u. S. Corporation on i think they already have in effect with wrecking the dairy industry. It seems to me you would effectively prohibit Dairy Products from the u. S. Going into canada. They have this very complicated system for dairy management up there but it basically is very, very protectist. So i think between that system and the dumping of lumber, you have some signs that nafta is not working very well. If we really had free trade between the two countries, how are they blocking u. S. Exports of milk to them . And how are they dumping lumber down here . So it just shows what a terrible arrangement nafta has been, not just at the southern border, but also at the northern border. Hey, wilbur, talking about trade, we are hearing an outlip about the tax plan that were going to hear about tomorrow from the Trump Administration, but the one thing we havent heard about is the border adjustment tax. Is that dead . I dont know that its dead, because the budget thats being put in will be an opening salvo in the whole tax negotiation. So well have to see what come out the other end. I think what is a little different is the president seems to have been making it clear that if he needs a little higher nearterm deficit out of which he we can grow with all the stimulus, it sounds as though he may be up for that. And therefore, we might be taking on more debt. Dot think thats politically palatable. We were having a conversation about making the math work. Its hard and there are going to be conservatives out there and democrats obviously on the other end who are going to say know. Jason, if i recall correctly, was part of the democratic administration, and under obama, there was more new National Debt incurred than cumulatively for all the president s before. So i think people from that administration have very little grounds for criticizing a nearterm deficit by the president. But just so we understand, in terms of the math, youre willing to take on debt. How much debt do you think will be political palatable to take on, if you will . The whole thing about tax, while im obviously very interested, its not directly a function of the Commerce Department. It is in fact more the Treasury Department and the people in the congress. Right. So i dont want to comment before they actually come out with their final budget. Where do you expect to see new trade deals developing . What areas of the world do you think were most likely to strike think about it. The first actually has very few trade agreements. Some mexico, for example, has had 3 agreements, including with the european union. We dont have a trade deal with the european union. We dont have a trail deal with japan, we dont have a trade deal with china. I think theres a real reason for that, a structural problem. Prior administrations have made so many unilateral concessions to our trading counterparties, that we dont have a lot left to give them. For example, the tariff on autos going into europe is 10 . Wow. Our tariff is 2. 5. Tariff going into china with autos is 25 . How do we go to china and say you have a 25 tariff, we have 2. 5, well get rid of ours if you get rid of your 25. Its not a very proportionate thing. So the sad part is that in the misguided unilateral effort at free trade, we have actually weakened our ability or the prior administrations more properly, have weakened our ability to make future trade deals. Let me just follow up on that for a moment. Youve made that point in the past, wilbur and its right, and it sounds incredibly unfair when you lay out statistics. How do we adjust that without expecting that these other nations, even though the deals were set that were unfair, how do we expect to fix that without having other nations come back and take some sort of have some sort of reaction and put other things up as a result. Theyre not going to turn around and say, oklahoma, well do tit for tat a this point. Were starting with stricter enforce innocent both with the canadians and lumber and on the other side. A few weeks ago we put a 1 billionplus fine on zte, a Chinese Telecom equipment people. What they were doing was violating the sanctions on north korea and on iran. So the policy of this administration is, first of all, we will strictly enforce the wto rules. Whatever trade deals we have. Thats number one. Number two, we will try to go to our trading counter parties, particularly those with whom we have big deficits and say, look, there is a number of items you buy some from us and some from others, since youre running a big surplus, you ought to give us a better market share of things you are buying anyway. That costs them nothing. Transition to manpower, wilbur. If youre right about everything. People i have talked to have suggested that i agree with everything that trump and the to Commerce Department is doing, it comes down to manpower. Multilateral deals are struck, because you can make a lot of deals at the time. Do you have the manpower, the time, the people that can literally go and negotiate with mexico, negotiate with canada, negotiate with china . No matter how complex something is, doesnt it come down to people and time . It does, but it also comes down to willpower and philosophy. I have, after all, negotiated quite a few deals over the years, so it is something that im not unfamiliar with. And its not so much the volume of people, its the way that you handle the process and the determination with which you go forward. Youve mentioned multilateral deals. Sure, you can make a multilateral deal and what happens is, first of all, they take ten years to do, because you have so many moving parts, and that means, with the way the world changes, theyre practically obsolete by the time you settle it. But worse yet, there are two structural flaw, the first one is, lets say youre japan, i go to the u. S. And want some agricultural concessions. You say, okay, mr. United states, but now heres what i want back from you. So they took a nick out of it. Lets say they go aniest next to vietnam. Theyll say, sure, well do thats correct but here is what we want out of you. Think take another little nick. Now weve been nicked twice. Japan will benefit from what vietnam got. Vietnam will benefit from what japan got, so thats one problem. When somebody has been negotiating the same deal for eight or ten years, you get so invested in the process, that you just want to get a deal done, not to get the deal done, so i think there are several flaws with multiple negotiation. It doesnt say its impossible to do a multilateral deal, but if you look at a tpp, it was a mess. There were some good things in it, but also some very weak things. Nafta is a mess, and nafta is also an obsolete deal. I think we have adequate man pow tore deal with what we need. Mr. Secretary, i wanted to get your comments on a story picked up by politico this morning about peopler navarro, whos been on this program. They write is navarro losing influence, prompts reversal on labeling china as a currency manipulator, as well as an overall softer stance. Have raised questions about the role of a top member of his cabinet. What do you think about that . First of all, i think politico and other people observing the white house love to stir up controversy, and it makes people read that media. That doesnt surprise me too much. But if im not mistaken, while i was in japan, peter was very much with the president out in wisconsin when they were announcing the buy america hire america program. I dont see any signs of the sort of dissent that are being chronicl chronicled. What i do see is something you would normally see in a new administration. There naturally is some pulling and tugging within the administration, some different points of view. Theres always a shakedown cruise for any new administration. But thats healthy. That means that different views are vetted and when the president gets to make his decision, hes now heard various sides of the argument. I would view that as constructive, not destructive. Mr. Secretary, i just wanted to also help clarify one point. Earlier you made a comment suggesting the tax proposal is an opening salvo. Does that mean its not something the president thinking is going to happen, its part of a negotiation, sort of anchoring one point to begin a conversation, or at 15 , its something he thinking is a realistic number that can get done . Well, the president doesnt bluff, he doesnt put forward makebelieve proposals. Im sure he has strong convictions that this would be a good proposal. The only thing i was pointing out was that obviously you have the two houses of congress that have to go along with it, and then win the houses, you have the parties, then its hardly a secret to squawk box were in a very partisan environment and we have a small rep majority in the senate, so the idea that there should be some pulling and tugging as this goes through the process ought in and out to surprise anyone. Senior ross, i want to thank you very much for your time today. Well, thank you for having me on. Stay tuned. Okay. Thank you, sir. We will. Thanks. To other stores making headlines. We have hearty from duepont, an coke, well have, and mcdonalds will report shortly after that. Also ahead, some fresh housing data, caseshiller prices expected out, expected to show a 6 jump year over year, and new home sales data for march. And can mart, the Retail Pharmacy unit has cut the cost to epineff run, and free for some of its insured patients. Okay. Coming up, when we return david ricking will join us after the break. Later autonation ceo will give us a read on the automobile sector. And poem ko as former chief commit as a guest host. Stay tuned. Youre watching cnbc. Drug maker eli lilly reporting a profit, and joining us is david ricks, the ceo of eli lilly. Good morning. Good morning. Thanks for having me on. Great lazy on the earnings. Its always nice to beat the street. In terms of looking through the truly the sales of trulicity has taken off. We grew the total business 7 in q1, 9 for the pharma business, and ten points for the nine. More than all of it was attributed to our new produces. Other new launches are all taking off is a very exciting way. The strategy is playing out, were executing well, and it was a good solid operating quarter for the company. We always talks about policy and talking about trump win his first 100 days, and there was a lot of talk about the future of aca. How did that play into whats happened in this quarter . First of all we dont have a big business in the Affordable Care act plans, the exchanges. In medicaid expansion, we serve a loot of patients, but the prices are extremely low. Thats actually an opportunity, i think, as people look at revising the current law or perhaps changing it altogether, innovations and newest products really arent included in a lot of those form helaries. Fda decline to approve the new Rheumatoid Arthritis drug. Whats the state of play there . Thats right. Earlier this month, fda informed us the current package wasnt approvable in their eyes. This is a drug for r. A. We disagree with that decision. They have asked us to look at more clinical data, to look at the difference between two doses and additional safety data. The process is once we receive the letter, well go back and meet to deeply understand the concerns, and recalling that its landlords approved in europe, same package we submitted to the fda. Were looking forward to digging in with them and figure out how to get the drug to patients who need it. Whats the timeline look like . Well be meeting over the next month or two. The timeline to market is what depends on what happens in that session and what they view as the gaps in the clinical profile. As i said, we dont disagree with that. Well have to talk it through and find a path forward. How should we be thinking about the kind of targets you should be looking at collusive is a great transition for us. Sort of a readymade phase 3 asset and it will be off the submission next year. Most of our focus, actually is in the earlier clinical phase, where were looking to attract assets into our oncology portfolio, immunology and diabetes. Dave ricks, good to see you, sir. Thanks for having me on. Appreciate it. The biggest auto retailer, autonation is set to report results. Is the industry ready to roll over after a multiyear boom. Were going to speak with the ceo. Announcer time for todays aflac trivia question who is the current ceo of mcdonalds . The answer when earthquake squawk on the street continues you dont have. Aflac paying you cash, so you might have to sell that sweet little muscle machine just to cover your rent. More funny juice. But my papa gave me. That. Car. What do you wish you had . Aflac. Ohh, i love doing that. Health can change, but the life you love doesnt have to. Keep your lifestyle healthy with aflac ugh. A cnbc exclusive, the new incoming ceo of cocacola james quincy on earnings, the economy and what investors can expect. Now the answer to todays aflac trivia question. Who is the current ceo of mcdonalds . The answer Steve Easterbrook im just a cheeseburger in paradise good morning. Welcome back. Wee live at the Nasdaq Marketsite. A takeover deal may be upsend the. Its received a new takeover bid from an unnamed Multinational Telecom company. That is above at ts agreement to buy Straight Path for 95. 63 per share. Straight path has notified at t of the bid. It now has five days to respond. You remember we look at the stock the day the deal came out. The stock had been trading at about 40, and then a huge premium. The senate has confirmed sonny perdue as prisons agriculture secretary. All but one cabinet position has been confirmed, that of labor skerritt. 15 directors are all up for reelection and 12 have faced negative recommendations from i. S. S. , coming in the wake the the banks scandal. Guys, we have breaking sinus on 3m. Its a good number. No way to characterize it. Eps 216, that is nine sentence better than the consensus of 2. 07. Revenue at 7. 7 billion better than the consensus. 3m also raising the organic local sales growth forecast basically the ref guidance is become jacked up versus the previous guidance of 1 to 3 . Thinking their tax rate will fall a bit. Cash flow was strong. Sales up 4. 2 , so eps, revenue, guidance, sales, different divisions, 3m beating on nearly every single metric. Theres your headline. Caterpillar shares, another dow component out this morning, coming out with earning including restructuring costs, street was looking for 62 cents, the company also beating in terms of the revenue numbers. Street had been looking for 9. 27 billion, and theyre raising their Sales Outlook for the full year. They now say they expect between 37 and 40 billion for sales, street was at the low end of that. You can see the stock is indicated up about 3. 3 . Comments from the chief executive, new ceo jim umplebee. They say that they had strong First Quarter performance and they are seeing signs of recovering in several of the industries they serve, but geopolitical and market uncertainty, continues to prevent risks for the year. You know, so what were looking at here, if we frame this, five dow components, we have mcdonalds coming, you but if we look across the board. They had some volume issues. Beat on the revenue number. But depont was solid across every single business metric. 3m solid, caterpillar, the numbers you gave is pretty good. These are numbers that have been in the works for quarters and years. I mean the economy seems to be humming along pretty solid. And on a global basis, too. But this has been the sort of push pull of this conversation. Is it policy . Is it the economy, a combination of both . Is it, you know, just the animal spirits . What is it . And youre right. It does feel like the economy is stronger, the question, though is sort of the trump rally. The question becomes, was it that it was a trump rally and people didnt appreciate at the time that the economy was as good as it really was. The futures this morning as we came in, was up about 50 points, now seeing tripledigit gains, up 102 points, as brian mentioned, most of these dow components having strong numbers across the board. Is it a combination of things . Nitro, you put it into fall and get your car a bunch of extra horsepower, as a car guy, i sort of wonder, did we have all these things in place and this probusiness administration added some nitro to the economy, so we got that extra turbo boost . Everybody is trying to frame it as its my credit, this credit, why not say its everything . Nothing is black or white. Like the weather, which is very gray today. Mike jackson will talk how the economic policies will impact the auto industry. Squawk box returns in just a moment. The power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Thithis is the new new york. E . Read think again. We are building new airports all across the state. New roads and bridges. New mass transit. New business friendly environment. New lower taxes. And new University Partnerships to grow the businesses of tomorrow today. Learn more at esd. Ny. Gov autonation rolling out quarterly results. On the top line. Joining you beat on the bottom line, but not on the top line. Were very opt mystic about preowned long term. We look at the number of offlease vehicles coming back to market, increasing from below 3 million to over 4 million over the next couple years. Well have a greater supply at a better price point that we think we with grow or preowned business significantly, and also in thesecond, we look forward to opening or First Freestanding down in texas. Lets talk about that preowned hangover. What do you see as supply, and where do you think we stand as the industry overall . Primarily around takata. We had to move to a full disclosure policy rather than not selling them at all. It simply became overwhelming, we had aged inventory that we had to use quite frankly price to clear. When we look at the new Vehicle Business that you touched on earlier, we view that as flat to slightly down. You know, if i look at incentives now at 10. 5 of msrp, you know, becky, you and i have talked about this in the past. To me the red line on incentives is 10 of msrp, where they begin to lose their effectiveness. Incenti incentives 16 higher than a year before. I think really at the last left of whats prudence. Then i look at industry new vehicle inventories at 4 million units. Thats 100 billion of finished goods, meaning that the production has not been tempered at all. The salvation for the industry, of course, is the stampede to a truck mix, so that transaction prices for the manufacturers are still net of incentives increasing, so their profitability is fine, if we had reverse mix, it would be a could taos troy, but the trucks are here to stay, and again long term, that points again to the obama regulations on fuel economy most likely will be mott rated in league of artable gasoline. Hey, mike, you made some provocative, perhaps even incendiary comments about tesla last week. It was a quote we all found fascinating. Tesla will either be one of the great ponzi schemes of all time or it will work out. I assume you mean that at the moment. Is itti scheme, or is it going to work out . Andrew, thanks for reminding me about that. I forgot i said that. I was asked about teslas valuation versus gm. I said its incomplicaexplicabl. I think General Motors is far more than what the marketplace is putting on it. I think investors have underestimated how much General Motors has changed and how this shift to trucks is structural and permanent and underpinning future profitability. And im not saying tesla they built a good brand, they build a good vehicle, but the valuation being higher than General Motors is inexplicable. I threw in a few more inflammatory words, that can happen with me. I think the point is valid and well see. Mike, can you talk about tax reform, where youd like to see things . Well, for this economy to keep moving, theres two important steps, with you regulatory reform. I think thats under way, and thats been a huge encouragement to business already. You dont need congress to do it. President trump has appointed professional deregulators who are extremely effective. Corporate tax reform, absolutely positively has to happen. Everybody agrees that the Corporate Tax system for america, for the United States of america, is broken. You have trillions of capital trapped overseas, you have this global taxation system that makes absolutely no sense and the highest marginal rates in the world. So the dilemma that ive been waiting for to hear an answer to, is youre not going to be able to do all of that without either getting less revenue or increasing deficits in the near term, or youve got to put something in place like that cockamamie border tax, which sounds like a bad High School Science experiment. So i think and i anticipate its a major signal from the administration theyre willing to add to deficits in the near term for the sake of longterm growth. Thank you, michael. Good to see you. Good to see you. More stocks to watch ahead of the open, a lot of movement out there. And pimco former chief Paul Mcculley, and how it all impacts your money. Check out european marngts this morning after yesterdays strong gains. We are up again a lot. They are all higher. Say that again. [ speaking Foreign Language ] we are back. Oh yeah . Ended up saving a ton of money on car insurance. I hear they have a really great mobile app. The interface is remarkably intuitive. Thats so important. Into welcome back, everybody. Two dow components out with earnings this morning, caterpillar reporting profit of 1. 28 a share. That more than doubled estimates. Actually when i think you look at caller pillar those were 64 cents, revenue beating expectations. And they raised their outlook for the fullyear revenue numbers. The street was at the low end of that. You can see that the stock is up by 5 . Now, they did make some comments where they warned a bit about the potential volatility and Global Markets and in the commodity markets, but still the street seems to be ignoring those concerns. Caterpillar shares of. Coming up, one nationss most enduring symbols of capitalism and pointed criticism. Ought thor of New York Times bestseller did you have mcdonald will join us to talk about the new book. We are in the green in a very big base. About 109 points. We are back with the debate about hbs in just a moment. The power of 100 of the worlds top companies. The power of a proven 15year track record. The power of an etf. The power of qqq. The thinking we put in, clients get out. Power your clients portfolio at powershares. Com qqq. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Welcome back to squawk box. Harvard Business School is a Training Ground for csuite executives. Its a comprehensive history form the book is called the golden passport and what he calls the failure of the mba elite. Good morning. Good morning. The booic is on you today . The book is out today. Its causing a lot of commotion in the csuite and world of academia. This is a bit of an indictment of harvard Business School and the business world. The point of the book is simple. The school was founded a century ago to try and respond to the fear that Corporate America in that time was going to eat the rest of the country. Im trying to get them back to the first principles. Is this an indictment of capitalism . No, not at all. Do i advocate for the abolish abolishment . No to keep it honest as part of an university, and instead early on they said forget it. No, no, having read the book, theres a fascinating history. You seem to make the case that things changed, shifted if you will that effectively the school was somehow coopted by wall street. Yeah. We American Management was revealed as not the greatest thing ever in the 70s, and that they had been coasting post war they had a choice. The schools could double down and figure out where it all went wrong, or they could jump on to the shareholder capitalism boat, and they did. They hired michael jensen, bought into share prices, the north star of everything. Here we are on cnbc, and basically sold their soul. Includes a gentleman named jamie dimon, who you know very well, because you wrote a biography about them. Do you think that Something Like jamie dimon was effectively corrupted . No, not at all. I dont think everybody who goes there comes out corrupt. I think that the school could do a better job of keeping in its curriculum the idea that management can be an enlightened exercise. I dont think they do that effectively enough. The fact that people come out and theyre enlightened and talented managers, thats not a surprise to me. I dont think that counters the thesis. Is it a harvard problem or Business School problem . At this point its a Business School problem, but it was a harvard problem. Chicago, some of the other do they take their cues from harvard . It used to be that everyone took all their cues from harvard. More recently, you know, theyre one of a group of elite schools. When i wrote a column about this book, which i think is a tag nating book and people should read, the feedback i got feedback from people who have been to harvard Business School in the last 10, 20 years who say did you have mcdonald does not know what hes talking about. This is a group of people actually fighting back against whatever you think of as the corruption of capitalism, its one of the most enlightened places in america these days. Do you agree with that . I think a lot of people sort of missed the point. You spoke about pikal jensen. There was an excerpt in po but i think that definitely the Business Schools have said we have moved on from that. Its like, well, you may have moved on, but the culture hasnt, the society hasnt. Were still dealing with the ramifications of that. Did you have mcdonald, the book the golden passport. Thank you. Thank you, guise. Paul mccully, and later on shark tank investor daymonn john. Ck a benchmark. Flexshares etfs are built around the Way Investors think. With objectives like building capital for the future, managing Portfolio Risk and liquidity and generating income. Thats real etf innovation. Flexshares. Built by investors, for investors. Before investing consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. Whoa thats amazing. Hey, im the internet i know a bunch of people who would love that. The internet loves what youre doing. So build a better website in under an hour with. Gocentral from godaddy. Type in your idea. Select from designs tailored just for you and publish your site with just a few clickseven from your. Mobile phone. The internet is waiting start for free today at godaddy. Lets[ whimpers ] dog. Find pingpong. Find your awesome with the xfinity x1 voice remote. Thats amazing earnings alert. Five dow components rolling out results this morning. The numbers and Market Reaction straight ahead. New this morning, the Trump Administration, on imported canadian lumber. Highlights with our interview with wilbur ross coming up. And why Ben Bernanke Ben Bernanke is worried, and why you should be worried, too. Good morning, everybody. Welcome back. We are live. Im becky quick along with Andrew Ross Sorkin and brian sullivan. Joe is out today. Our guest host this hour is a senior fellow at cornel university. Great to see you, paul. Good to see you, becky. Check this out. The futures are sharply higher again this morning. We started up with the futures about 50 points. Weve company after company that has beat expectations. As a result the dow futures are up above fair value. The need dak up by ten, brian will give you more details in a moment. Check out treasury yields in the meantime. The tenyear is yielding 2. 3 , brian . Yeah, you mentioned it. Mcdonalds numbers are coming out. The theme this morning, folks, mcdonalds beating estimates. 1. 47 on the eps side. Revenue it is also coming in at 5 if the 68 million. So continuing the trend of what we have seen, which is beats on the top line its one thing, as we know, to beat on the bottom line, right . Right. You can tweak or massage is a nice ways to put it earnings numbers. Revenues are a different story. You had highlighted the quarter for caterpillar, as you noted, was so much bert. The number was actually 1. 28, so more than doubled the expectations. 3m was nine kretz bon. Dupont was about 24 cents above. Mcdonald say the First Quarter was helped by the expansion of allDay Breakfast offerings, really getting back to what it does so well. Steve easterbrook getting tons of credit for this. , i will say this, all the analysts the last two weeks, weve seen about three or four major upgrades. They have highlighted this. To your point, they took you took my market share . Im going to take it back. You know mcdonalds Marketing Budget is larger than the next five fast food restaurants combined. They say theyre continuing to focus their effort onsh but probably where that money is going. I would say earnings are strong. Is it time to bring in Paul Mcculley. Do you think its as good the economy is in a mature expansion. I stress mature expansion. Its in recovery anymore. The last recession was almost a decade ago, so its actually humming quite nicelies. Theres nothing fundamentally wrong. The issue, the political issue that led to mr. Trump being in the white house is income inequality, not whether or not the economy itself is doing well. Well have more from paul in a moment, but andrew has the details on all these other stocks out this morning. Caterpillar reported a profit, more than double the estimates of 62 cents, also raising the fullyear forecast as several of the key markets recover. 3ms full share was ten cents above maker of scotch tape and postit notes so its not just a u. S. Story. Also mixed story, but revenues this time topping estimates. You dont want to miss the companys new ceo on squawk alley. Also some deal news. Tyson foods finding advancepierre foods. And then we should talk about Straight Path community indications it now sets its received a new bid from a Multinational Telecommunications company. Its not saying the name of that company. It calls the bid superior to at ts offer of 95. 63 cents per share. Earlier reports said vising had considered topping at ts offer. Thats a big gamble on spectrum as we all move towards 5g and superfast bandwidth speeds. The Trump Administration is planning to impose a 20 tax on softwood lumber imports from cana canada. This moving come as the United States says canada is providing unfair subsidies. Canada denies those claims. Commerce secretary wilbur ross joining us in the last hour, first on cnbc. I think theres a larger takeaway. The Trump Administration has been much more focused on enforcement than had been true previously. Theres a good reason for that. U. S. Is the least protectionist of the major powers, yet we have the highest deficit, 500 billion. The other cunning that talk about free trade are really very protectionist, europe, china, japan, so we have the receipt ricks of free trade, but the reality of protectionism. That set of facts is not going to be permitted to continue. News of the new tariffs sending the u. S. Dollar higher again the canadian looney. Weyerhaeuser and louisianapacific, right now weyerhaeuser, he has asked epps we are expecting to get details tomorrow. Add political leaders reach a midnight friday deadline. With the clock ticking, President Trump has said hes willing to back away from the previous demand that a government funding bill include money to build a wall. Officials say trump is open to obtaining funding later this year. Were ben bernanke and democrats the that view is backed up by the new survey that says your politics increasingly define your view of the economy. Bernanke said hes worried that would lead to bad policy decisions. And hes going to join us in a week, so well be able to continue this conversation. Paul, this is a theme that we have heard echoed time and time again, steve balmer was here, robert ruben, all of these concerns about taking numbers, hard facts, and using them to push your agenda on one side or the other. Its an incredibly polarized way of looking at the world, which i think describes our political system, and also our society. The choice is not in the dumps those are both facts. If youre on the political spectrum, you can make those particular aspects the end all and be all of life, and i think in terms of what mr. Trump is looking at, hes talking about a huge tax cut, increase in the deficit. They finally have recognized what theyre willing to do. Thats what you do in the early stages of a recovery in order to prime the pump. You dont do it in the last stages of an expansion. This expansion could last a number of years. Youre implying were at the end, not the beginning. Were not at the end, but back to quote unquote full employment. We can stay at that level for a long period of time. Maturity doesnt mean youre going to die tomorrow. I just turned 60 next month. Im not going to die tomorrow, i hope, but you would call me mature, i hope. Theres so many different viewpoints to why he havent gotten back to better gdp numbers. Its a mystery to many of us, because weve had strong job growth, and weve had weak productivity growth. At the time youre seeing incredibly powerful earnings, and earnings at the high share of gdp in my lifetime. When you look at the facts of full employment and strong earnings, you think in terms of productivity cant be going sideways, but you look at the d gdp data, and thats what it says. Ill do a comment question. Steve liesman is not here, so he may disagree. I think the way they calculate gdp is screwed up. Ive that you could to some people who believed the way the number were not say the numbers are rigged. Do you think the way we measuring product activity now and some of the indicators are just not reflective of the way that things are actually working . That could very well be the case. This is not the place to get deep into the wonky weeds, but reality is stronger than the productivity number. Let me ask it a different way which is specifically dewonked. Do we specifically ignore it . No, you dont. You never ignore the macro data, but you put it in the context of what we are seeing out the window. The reality is usually somewhere in between. So if we were to pursue a tax agenda like the one that the Trump Administration is which youre going to hear a lot more about tomorrow at a 15 Corporate Tax rate, what would happen . Meaning what would it do to employment . What would it do to the economy and then of course bhald it do to the debt . A big physical stimulus package, were talking about cutting taxes, increasing the deficit, which is fine, that will stimulate aggregate demand and actually want to push the Unemployment Rate lower. So it makes a great deal of political sense for mr. Trump to want to do that. The big question then becomes whats the feds responsibility . Would they allow a physical stimulus to push the Unemployment Rate down another full percentage point to a three handle . Thats the big question. You think it would . Actually, i think they would. They would allow it, and it would work in terms of bringing the Unemployment Rate to that low number . Oldfashioned keynesian theory would work. I think the fed would underwrite it. They wont tell you they will do that, but i think they would. Sustainable . Would it be sustainable . Meaning if you could get the rate under 4 , is that sustainable . It would be a very interesting experiment to run. Sustainability on the Unemployment Rate is, can you complete inflation contained . Actually i think you can keep inflation contained. I dont think youll be south of 2, youll move towards 3, but i think thats a policy choice. Would you trade off another full percentage point decline in the Unemployment Rate, knowing that you are pushing towards 3 inflation. If you put that question to the america people, im not sure they would say keep inflation at 2. But i think the question is would i trade that for potential more trillions of debt . What are the implications there . By the way, both of democrats and the Freedom Caucus are going to take. I never worry too much about the National Debt. You dont . I really dont. Okay. So therefore i would not put that high on the calculus. I think put put that far too much. Why . The music started. Were going to let him answer the why. When we come back well continue that conversation. Congressman luke mecir is the chairman of the Republican Policy Committee. Hell tell us what investor shoos expect from congress in the coming days. Youre watching squawk box right here on cnbc, back in a moment. Yet alternatives can tap opportunities that traditional assets cant. And even though theyre called alternatives, theyre actually designed to help meet very traditional goals. Thats why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. Translation . Goodbye 60 40, hello 50 30 20. The Republican Policy Committee will launch the task force for the american worker. It aims to deal with the challenges facing everyday american workers, some of the issues slow economic recovery add rising living costs. Joining us today. Luke messer is the chairman of the republican policy commit te. What youre up to today is not just this, given all the other issues, potential for a shutdown in the government loom over us, but in terms of the american worker, is that your number one priority . At least this morning . I think thats the American Peoples number one priority. I was fascinated about the conversation you just had. You know, where the rubber meets the road for the average american is wages. Economists will tell you in real dollar terms, the performs power of the median wage has gone up about 84 cents in the last 50 years. I believe thats what fueled the rise of bernie sander, so they get a piece of the american dream. Were going to talk about those issues today. Larry kudlow is coming in to speak to us. Mayor blare milo, who is from a small town, is going to speak with us. I do they some of the others issues were debating help to contribute to that. And tax form is another one, the Trump Administration planning to announce at least an outline. Were already hearing that in terms of a Corporate Tax rate, which may go to wages and how fast you think the economy and businesses grow,less a 15 Corporate Tax rate. Would you be prepared to sign on to that. Clearly americas Corporate Tax rate is not competitive with the rest of the world the only real way to raise wages is to but heres what im a little concerned about. I want to make sure as we make americas corporations more competitive, we dont make americas Small Businesses less competitive. So i want to see that part of the plan as well. I think weve got to look out for Small Businesses in america, which are almost always one of the biggest engines of job creation and wage growth. Congressman, Paul Mcculley is here, and he made the argument that we shouldnt necessarily worry about the debt. I dont want to put words in your mouth, but obviously you have to take on debt even with listen, we have to worry about our debt. We cant spend away our kids future, but the only real way to get after the debt is to have a growing economy. We somehow have to break out of this pattern of 1 to 2 growth into 4 growth, which would, as i understand it, basically add the German Economy to the American Economy every year. Thats what happened in the 90s when we paid down the debt. The biggest way we were able to tackle is all task revenues that come from that. Congressman, youre absolutely right from an arithmetic perspective. Do you think the Federal Reserve is willing to underwrite and the well, i smile, because they probably wont consult with me before they do it, but my hope is they will. Listen, weve got to get at they frozen paychecks and stagnant we have to break through this pattern of the last decade where frankly things went pretty well, but for working americans, it wasnt happening. I think the only way that really happens is the kind of dynamic policy and the kind of growth where employers are willing to compete. To pay their employee alternates more. Congressman, we spoke with wilbur ross earlier this morning in particular will the story. U. S. Readies canada tariff. Are you some support of this . And do you think well be launching a trade ward both with canada and perhaps with other countries . I think the idea of mr. Trumps America First policy that is we look out for american industry is important. Im very leery of tariffs. I think they have all kinds of economic consequences and eventually retaliation from countries we throw tariffs against. I want to learn more about it. I think the best thing we can do to protect american businesses is to create the Economic Conditions in america where people all over the world want to invest here. With regard to the jobs market some may this i were at full employment. Year not at zero percent, but statistically you dont get a lot lower than this. If we want to grow, were going to need people. How do we square this up with immigration. Are we going to need more people here if the economy continuing to grow . Again, a lot of folks in this economy are underemployed, a lot of folks have jumped out workforce, because theyre better off new york working with the government benefits they might receive. So theres growth with folks that are already here, but i also agree with you, were going to have to have an adult conversation about whats the appropriate approach to immigration policy. I think President Trump has a lot of the fundamentals right here. If we can secure the border and have a conversation with the American People about the fact were not going to create a a giant flame here that folks from all over the world continue to come illegally, we can start to deal with what do we need to do particularly in skilled trade and have the kind of success that this nation has always enjoyed. Congressman, we appreciate your time this morning, and we wish you luck with your plans as well. Talk to you soon. Thank you. Take care. He said we need adult conversations. Can we have them in d. C. . Weve got having that here. I know, but in d. C. , can they . Virginia tech used to have nickel beers. We could use that it d. C. , and then we could nickel beers. How old are you . And i paid ten cents for a hersheys bar. Coming up. Good things apparently are cooking at mcdonalds the earnings coming in very strong. That stock set to hit another record high. The futures are indicating a big jump, 200 points open at the dow, another big day for the earnings. Youre watching squawk box. Stick around. At fidelity, trades are now just 4. 95. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. And at 4. 95, you can trade with a clear advantage. Bp engineered a fleet of 32 brand new ships with advanced technology, so we can make sure oil and gas get where they need to go safely. Because safety is never being satisfied. And always working to be better. You can either generate investing a trillion dollars, 1. 5 million up to 5 million jobs. Anybody who thinking they missed out out trump rally, i think youll get a better buying opportunity in the next few months. I think youre going to be disappointed. Coming up, a potential board shakeup at wells fargo. Shareholders are voting today. Well take you live to that meeting next when squawk box returns in just a moment. The road can change in an instant. But with lightning fast shifts and dynamic tracktuned suspension, what the road demands, the gs delivers. Experience High Performance through high technology, in the lexus gs 350 and gs turbo. Experience amazing. Whoa thats amazing. Hey, im the internet i know a bunch of people who would love that. The internet loves what youre doing. So build a better website in under an hour with. Gocentral from godaddy. Type in your idea. Select from designs tailored just for you and publish your site with just a few clickseven from your. Mobile phone. The internet is waiting start for free today at godaddy. Good morning, everybody. Welcome back to squawk box here on cnbc, we are live from the Nasdaq Marketsite in new york. If you want to know why the dow futures are indicating another strong open, you can look no farther than the dow components. Cocacola is the only one of these five to miss on the bottom line. All five Beat Estimates on the top line. You can see caterpillar is the big gainer, but dupont and mcdonalds both um by better than 2 . The nettic would be to at about 85 points to the dow. We were up by about 50 points, but you can see things have taken off. Well talk to an analyst about mcdonalds in just a moment. We have a key read on the housing market. The february caseshiller report is expected to and theres a dispute arising over just how much saudi aramco is worth. The wall street journal is reporting that the company is worth about 500 billion less than the 2 trillion that the saudi government has suggested. Officials working on the deal have worked the numbers in a varies of ways and reportedly cant come up with more han 1. 5 trillion. Still a massive ipo. Joining us now is will slaybaugh on the surface, top line, bottom line guidance looked good. Is it . I think its very good. I think it was a poorly kept secret they were going to have a good quarter. So most expecting things to be better than where the street numbers where. I think the biggest thing by far is the u. S. Beat. I think the investor bar was some of the in the 0. 5 to 1 range, so to retake some market share that they had lost in the past few years and get the u. S. Back on track was encouraging and to see the bottomline beat as well, i think theres nothing negative to point to here. We noted earlier in the should mcdonalds Marketing Budget is bigger than the next four, five quickservice restaurants, fastfood, whatever you want to call it, but does this recapture something they can continue, or is it a onequarter wonder . I think it is. Thats something we highlighted recently, refocusing on the huge transactions that they have lost. That value guest is going elsewhere, because mcdonalds is focused onall Day Breakfast or on some premium items that didnt work quite as well. So what they do well is volume and convenience, and the stores i think its the right thing to do. I think theres a long runway, the mac junior worked on the well, innovating around a core item. That i was dollar drinks in the summer, more value items later on to augment some of the innovation happening, too. You think this is just management 101, good managers making the places run better . I hate to make it so simple, but i think, yes. I think easterbrook has done a good job on refocusing on what matters to the guest, speed, convenience, value. Hes improved the quality, bask blocking and tackling, but i think refocusing on that matters, and giving the managers more power to do that themselves, and regionally as well. Not making just one mcdonalds change, but making it renalently. Will you raise your price target . Weve seen a nice little move here recently and been on this train for a while. Its one we continue to sly. Will slabaugh continues to like it. Thank you. Thank you. The United States preparing to slap tariffs on canadians lumber. Heres the tweet from the president canada has made business for youre dairy farmer in wisconsin and other borders states very difficult. We will not tooened for this. Watch. Will empower ross made reference to the visit to wisconsin and some of the conversations. I dont think its going to be a trade war. I think there will be lots of headlines on microoriented enforcement actions. Kind of like early on mr. Trump would brag that i brought this many jobs, which is rounding errors compared to the monthly job gains. So i think that the trade policy will be to find quick and easy wins. This is an old dispute with the lumber going back 25 years, so i think you pick disputes that are old disputes, where its on your side, and therefore you get agreed headlines about it, but i dont see it as a harbinger of anything serious sort of trade war. China is a big deal and theres not going to be any issue with china. The issue with lumber is small potatoes. Those secretary ross says they are using these issues to send a broader message that kind of puts traiting partners on notice by making sure they are enforcing all the wto rules to the full extent. I think thats fair. Theres an announcement, that we have policies and we have police on the beat, but thats simply enforcing what you have. Which is probably good news for business. Yeah, absolutely. In other headlines this morning, cho banni has now filed a lawsuit against alex jones, accusing jones of publishing false information about the company, saying stories that showed up on his website links cho bannis owner to a Sexual Assault case involving refugee children. The company is seeks at least 10,000 in damages. Alex jones has been a part of a number of scandal stories before, you may recall the pisagate story. Hes also contended that the september 11th attacks were inside jobs carried out by the government, and theres been a number of other issues related to alex jones. Worth notes, given that we were talking about Donald Trumps tweets, donald trump has long been a fan of alex jones. Among the big events to watch today is wells fargos annual Shareholders Meeting. Leslie is there. Most of them are snoozefests, because nothing happens. Not this one. Fireworks are expected. Reporter thats right, brian. I left my pillow in my hotel room here. Investors are already starting to trickle in. Im told that a stanch at portion of votes have not yet been cast even now, according to a western with knowledge of the matter. There were still several directors coming in at around that 50 merits threshold. As you know anything less could caught them to submit their recentition nations some directors are coming in between 50 and 70 , it certainly would be a rebuke of their position on the board. Three of the new Board Members, including tim sloan, im told are coming in at well above that threshold. They appear to be safe. The idea here is that theyre not really responsible for the scandal since most of them were not affiliated with the company at the time it took place one analyst i spoke with that its highly unlikely that theyll choose to oust most of the board. It strikes me as somewhat unlikely that investors would simply, you know i try to wipe the slate clean for an entire board. Its virtually unprecedented. Reporter now, unlike political voting, shareholders can actually change their votes up until the end of todays meeting, so well be watching for that, as well as the q a portion, which could be quite contentious, guys. Thank you, leslie. In the meantime another tweet from President Trump dont let the fake media tell you that ive changed my position on the wall. It would get built and help stop drugs, human trafficking, et cetera, all of this coming aheadsh did or question mark on whether the government should shut down a friday. Hes been pulling away a little bit from including the cost of the wall in the current budget, saying temperature come later. Squawk in the tank, Small Business optimism hitting record levels since President Trump took over. Well talk with daymond john next. Stay tuned. You are watching squawk box on cn cnbc. Its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . Box. The reason for the music this morning is the dispute thats been brewing for decades between canada and the United States. The United States now threatening or preparing to slap some tariffs on canadians lumber. You can see that that haz an impact. The u. S. Dollar stronger again the canadian looney. And the equity markets here expected to open up higher. Dow futures indicated up by almost 150 pounds. All five of the components beating on the top lines. The nasdaq is up by another 16 points after closing at a record level yesterday. Small Business Optimism hitting record levels since President Trump took opening. Joining us now is shark tank investor daymond john. Good morning. Thanks for having me. Great to see you. I want to talk restaurants in a second, but weve got having a debate all morning. Brian used a good phrase, the nitro that might have been poured on the economy. You go nitro for gasoline, like a little extra boost. Weve been trying to great these first 100 days of the Trump Administration and understand what he has or handle down. How do you think about it . I think obviously the market is up and if hes going to built a bunch of mince and thickets of that nature, optimism is high, but i think were looking at the effects of what the previous president had put in place. I can barely change anything in my household in 90 days, so i think were feeling the effects of what happened the past four, eight years, and the optimism is false. Its not realistic. Are we holding him to an unrealizic expectation. Whether we like it or not, hes the pilot of the plane, im a passengers, so im rooting for him to be successful. I am hopeful, but reality is unless he educates people and the skill gaps will get wider and wider. If youre a truck driver right now, then everything is going odds mated after that, so you dont have a job. Unless you have a technical skill, you are done. Are you robots by 2030, robots will take it over. Absolutely. What do you think you dont think this is a problem or challenge from 50 years. I think it will be in the next ten years. The number one job for males is operating heavy machinery. Females number one job is being a receptionist but everything is going virtual. Immigration is not taking our jobs. Last time i called the operation, it was google that took her job. Whats the solution . Economic empowerment and training from a skill gap coming up. Right now were not competing with the skill gaps. All these jobs, these kids today are going to graduate 50 of them are going to graduate with college and theyre going to retire with a title that a job of a jobe that doesnt exist today. How do you train somebody for four years in a job thats wont even exist. Is that an argument for forget about college and get on the job train . No, please go to college if youre going to be a doctor doctor. I need you dove some skill before you cut me open, but if youre going to automating cars or converting social media or operating drones, you better be able to operate that, and you can probably learn that skill gap in a over. Over at bmw they couldnt fill jobs for their technicians in 18 months, they said. The hyundai dealership has had a sign up for mechanic. They cant find a mechanic. Wee to deal with the big oily stains. A mechanic today pulls up a computer with a program. Paul a few weeks ago i called retail the new oil. The economy is getting better, oil was stinking, hurting, costing us job. Retail lost nearly 100,000 jobs . Three month. I worry, is retail is 5. 5 Million People work in this industry, automated out, amazoned out, youre a Small Business retail type of guy. Wheeze going to happen . The middle man is going to get cut out. Big retailers will create this opportunity themselves. A bunch of empty malls . I think well find a way to replace it. Look at the teslas and apples of the world that bring a lifetime that make people more sticky when they go in there, but there will be a change. People are still going to want out and hopefully meeting people in a social way and touch and feel things. Bubba qs . Absolutely. You know, i did that about three, four years ago on shark tank its right around tomorrow were launching with burger with hardees tell me what happened. I remember when you ball this company. What happened between then and noun . Everybody thinking entrepreneurs and i can wave this wand and help them. I fail about three, four times finding copack respect e. Bubba went around the world, we finally found some copackers that knew how to pull this bone out of the rib. The rib has a technology on the patents and the process, and then we world with hardees and karl juniors, and they said we want to support. Thank you very much. I dont think youre too much of a shatter. Im not. I have robots and burgers on the brains now, and some dangerous combo. Thank you. Thanks. When we return, jim cramer live from the New York Stock Exchange on a day when the future is indicating a much higher for the dow. A lot of big earnings and a lot to talk about. Youre watching squawk box. Stick around. The vix has dropped about 20 in the past week. While the fear index falls, stocks tend to soar, with the s p up 3. 7 . Want to get down to the New York Stock Exchange. Jim cramer joins us now. Choose your own adventure this morning. Lots of companies reporting. Cocacola we can talk about, mcdonalds, lilly. Name the one you want to pick first. Caterpillar, a little bit more sales, monster amount of earnings per share, because they cleaned up the supply chain, theyve really taken a lot of costs out, mcdonalds the key there is you got the franchisees energized, converting custers in casual to permanent and thats terrific. Netflix i cant believe is only up 1. 50. Theyre in china through an affiliate of baidu. These are remarkable stories and people are kind of looking about what trump may be doing. They ought to be looking at what the companies are do be. Easterbrooks more important than mcdonalds, than trump. You made a point yesterday, im losing track of time that, perhaps theres actually no premium in the market for what could come in terms of policy out of washington at this point. Yes. Theres a discount. The rest of the world is doing better than us and go over the calls, two palm, 3m, mcdonalds or caterpillar. Were not the source of upgrowth. We need to get Corporate Taxes down and need to get something going. Double digit out of asia and high Single Digits out of europe. United states weve plateaued and if is reasonable to think maybe were not the engine right now. Before we go, 15 is the Corporate Tax rate. Real or alice in wonderland . Through the looking glass, my friend. Hmm. Touche, touche. Jim, see you in a few minutes. Yep. Cocacolas incoming ceo James Quincey will join the at 11 00 app. Enterprise printers by hp. Which is great, unless youre a corporate spy. Unsecured printing makes your network vulnerable. Enterprise printers by hp help prevent costly Security Breaches that can compromise your network and reputation. So im stuck spying the Old Fashioned way. Hey. Im not spying. Secure printing by hp. I. T. Orchestration by cdw. Predictable. The comfort in knowing where things are headed. Because as we live longer. And markets continue to rise and fall. Predictable is one thing you need in retirement to help protect what youve earned and ensure it lasts. Introducing brighthouse financial. A new company established by metlife to specialize in annuities life insurance. Talk to your advisor about a brighter financial future. I cant wait for her to have that College Experience that i had. The classes, the friends, the independence. And since we planned for it, that student debt is the one experience, im glad shell miss when you have the right financial advisor, life can be brilliant. Ameriprise at crowne plaza we know Business Travel isnt just business. Theres this. a bit of this. Why not . 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Our guest host is Paul Mcculley, senior fellow at cornell law school, former chief economist at pimco. Paul, youre of the opinion that donald trump and the fed are on a collision course at this point. What do you think is happening . Mr. Trumps acting like the economy is deep in a hole, and wants to stimulate aggregate demand. That would have been a great thing to do eight years ago at the depth of the recession. Mr. Trump was not president. Mr. Obama was and mr. Obama wasnt given the latitude to go ful fully keynesian so mr. Trump is proposing policies that would be appropriate early in a recovery at the mature stage of an expansion so it has a high potential to overheat the economy. Talking about Infrastructure Spending . Infrastructure spending, tax cuts. Bottom line, a big increase in the budget deficit. Theyre working towards the notion of saying yes were going to have a bigger budget deficit which is a stum lus imulus to t economy which is appropriate at some some times, at this juncture, however, it raises the issue of overheating, and thats the issue the fed has not exactly been on an opposite page. Theyve been stimulating full bore for years and years and years, and thats been the knock on the fed for some time is, when do you take your foot off the gas pedal . Part of the reason the fed has had to be so accommodative, weve had physical restraint for so many years. It sounds like donald trump is doing things that the Federal Reserve has been hoping somebody would do for a while. Right . Just very, very late, but the real issue is, are you willing at the fed to let the economy overheat . So what would they do, jack up Interest Rates as a result or unwind the Balance Sheet to counteract . Those are two different poll is is, the Balance Sheet and the Interest Rate but the whole issue is, are they willing to let the Unemployment Rate go lower . It doesnt mean that they wont it can go lower . Yes, absolutely. You can take it lower. You can go to a 3 on the Unemployment Rate. The only issue, are you willing to take the inflationary risk associated with it. Hmm. So were going to see a moment in time where the fed has to make that decision, you think . Yes. I think it will happen over the next 12, 24 months. When is the last time we had a 3 Unemployment Rate in the United States . You werent even born yet, andrew. I know. I need the history lesson. Im not even sure i was born. It was close in the late 90s i believe. We got down to a low four handle. Depends where wat group. Over 25. Brian thank you for hanging out. Join us tomorrow. Squawk on the street begins right now. Like we always do at this time i get to shine throw your hands up in the sky good tuesday morning. Le with come to squawk on the street. Im Carl Quintanilla with david faber and jim cramer. Futures up 150 as five dow components report and some of them like cat absolutely crush estimates. Stocks could be looking at the best twoday gain of the year, if this holds. Will we also see nasdaq 6000 . Europes adding on to yesterdays gains. Tenyear climbs back to 2. 3 and case shiller home