Transcripts For CNBC Squawk On The Street 20170303

Europes pretty mix. Tenyear above 2. 5 and inflation finally returns to japan, 0. 1 on their cpi. Roadmap begins with a pause in the rally. A cnbc exclusive with wilbur ross on how trade changes in a trump white house. And snap day two, the stock soars in its debut and now news that Nbc Universal, our Parent Company, making a strategic investment in the company. And a dramatic scene at caterpillar headquarters, offices raided by federal agents. The latest on that. Stocks looking to bounce back from biggest oneday decline since january, but s p and nasdaq each on track for a sixth consecutive weekly gain. Dows on pace for its fourth positive week in a row. Earlier on squawk this morning the new commerce secretary wilbur ross commented on the postelection market rally. I think the markets have given a pretty clear endorsement of optimism coming from the new administration. I dont think theres any doubt about that whatsoever. And in fact Election Night we were with carl icahn and some others at about 2 00 in the morning when the futures market had collapsed, carl left the party and started buying. And so he was smarter than i was. I stayed at the party. He went and bought and made a billion dollars. Hinted at border adjustment. Said there will be something found to fill the trillion dollar hole, but the real news came when he said a trade deal could help the peso and thats when the peso really moved. Right. I think the peso is at this point actually ridiculously undervalued. Putting my money where my mouth is. Actually looking down there. Not allowed to do stocks but i think the peso has gotten to the point where theres such value if youve been to mexico you realize its kind of like its gotten debased to the point where its almost like, you know, fantasyland down there. Its ridiculous valuation. Ive been involved with mexico for many years. Its not anything new. But i did find that what was incredible about what wilbur ross said, which is very indicative of what dan damicco said, used to be the head of newcorp. , weve been getting killed by everybody. Its not like were starting a trade war, were putting up our dukes and not getting punched anymore. Just enforcing the deals or the trade decisions that have been made and following up with that he says youre going to start to see it in the next week or so. Right. It doesnt sound as radical. Ive been sitting next to a guy whos said over and over again that we have to do something to raise some money. And i felt better about the idea even if you listen to the costco call last night and say, listen, this is terrible because obviously for the retailers, but this is going to happen. Theres going to be some sort of border tax. There will be some sort of v. A. T. Value added tax. I think its way too early to say that. Well, its too early to talk about anything, but i think there may be some sort of small amount. There may be, again i think theres also a possibility that the president would rather have the ability to put a retaliatory tax on certain countries or in certain situations. That could be. We can keep doing the math on the border adjustment tax and where it ends up. Yes, will it get out of the house most likely. Does it get out of the senate . Unclear to how to get to the math. And the point weve made so many times the key component of overall tax reform given it is the key revenue raising implement that theyre going to use for the overall plan. And all of it works together. You dont get no more Interest Deduction without b. A. T. At the same time every retail Conference Call its always are you kidding me youre going to add 20 to what the consumer pays . We dont make anything here. They all say it. 90 . Costcos talking about 90 of the stores its stuff thats imported. Theres a lot of opposition money up against it. Its interesting. When you say theres some sort of border tax, i dont know why youre saying that. Im not sure what its going to look like. I was listening to will ber ross this morning. Okay. So. When you were on the subway i was listening to wilbur. That may be the case, but hes the commerce secretary. He doesnt get to say to congress do it. Short of value change the border tax is the medium term story, not the long term story. Thats true. Not the long term story. I point out when i hear the other day i thought he was against lets put it this way. I dont think that anythings going to be this is going to take a long time. Theres too much theres way, way too much indecision on this thing. Every day. Every day. Well, were in march now. We got to cut rates for something. Were in march now. Aca is still front and center when it comes to legislative calendar, so some people start to think tax reform starts to bleed into next year already. Can we stop talking all the distractions. I was going to say, we got to stop talking to russians. Everybody talks to russians. Enough of the russians. Why are they talking to russians . What is this 1943 . Trying to figure out how to divide up western europe . Ambassadors are i know. You have to talk to them back then. You had to give a little look see and figure out if were going to keep poland, which we didnt. These guys are talking to russians. Why dont they talk to brazilians and venezuelans and other countries kind of on the edge there . It is curious. Just suggesting other countries we could talk to that are not as, you know aggressive. Russias front and center. Its like our fault. Well hear more of what wilbur ross said later this morning. Interesting Carlos Gutierrez said he could be one of the most influential commerce secretaries will punch above the departments weight. Thats good because most of the Time Commerce secretary issues figures once a month and thats about all they do. They have a really nice building in washington, d. C. I hear they have 44,000 employees. A lot of employees. All that data. Yeah, they could just bring in adobe they could replace all the data in five seconds. Got dealing with the weather and with know about the weather on this. Yeah. And the census which of course you have to ramp up every ten years for. I think a lot of people look at the Commerce Department and say, well, theyre pro commerce. The whole Mission Statement of the department. There you go. That is great insight. Wow. I offer genuine insight. You were incredible. I come to play. You do. By the way, snaps going to 40 billion. Speaking of which happening. After yesterday moving higher one day after soaring 44 in its wall street debut, now our parent Nbc Universal announcing its invested 500 million in the parent of snapchat and that the investment was made during snaps ipo. Andrew ross sorken with the scoop this morning arguing we appear to be the only strategic n investor and according to his sources weve agreed to hold on for at least a year. There you go. Right there. Look at that valuation. Its coming. Its coming. Those who were shorting it theyre already screaming, you cant short when you start these new deals by the way, but people do. Thats going to be a wakeup call. Theres going to be a lot of deals announced with media companies. Our Parent Company comcast likes to take shots on Different Things. 400 million in buzzfeed, 200 million in vox. Now 500 million in snap. Some of that from comcast venture so you do have to differentiate. Right. Believe me, i know the deals coming and thats not an unusual deal. Some could be revenue share but theres going to be a lot of programming because theyre trying to make this into mtv, much more than just a messaging, which is why some people feel like they can buy it and grow into it. They also have to have huge adoption. Has to be much more adoption. And they got to give us Monthly Average users to give us a sense theres a pipeline that the daily average users is gone. But snap is not going to look like it does now. Not just squirrel faces on cramer. So youre suggesting channels . Yes. That are nbc branded one day you watch on snap . Yes. You know, Brian Roberts has been making the rounds a bit lately, chairman and ceo of comcast, he was at the Morgan Stanley conference earlier this week. I hear you were there. I was not there. That was in san francisco. Oh, you were at a dinner. I was at a dinner where he was then at something yesterday. But talking about comcast being the aggregator of aggregators, very excited about the x1 integration, new platform using youtube now available on it saying that 30 of x1 subs use netflix through the platform, after just 90 days. And on demand usage growth up 35 in january. By the way, this idea of channels kind of i mean, you never know, right . We dont know. Unbelievable stuff earlier this week on google. X1, yes, i work for comcast, x1 is pretty cool. It is. So youll have your snap channel. Im just saying youre not the desktop you know, the set top box may not exist three or four years from now. That is so 1990s. Is it . Scientific america, remember all that . It is. Scientific atlanta and motorola. None of you i still got the box. Theyre still bringing the sysco box in. I ordered 500 things because i was talking to my wife about what we ought to order. Listened to me and ordered everything. Soon youre going to have alexa with you at all times. Why not . Right. You got a problem with that . I dont have a problem with that. The Washington Post had a piece on kids and growing up with alexa in the home, we talked to the tv, it never talked back. Right. I tell you im downloading a lot of music. Its really pretty great. I was a bose guy, and bose is terrific. Very nice. Bose is really good. Good sound. But im an alexa guy. Actually, im an echo guy. Echo uses alexa. Yes. Not a sonos guy . I got sonos too, breaking down on my phone. Oh, wow, a lot of cool stuff here. All right. When we come back, well get you the latest on this caterpillar raid in peoria and what the ceo is saying about it this morning. Take another look at the premarket. Obviously its still early, but a down day today for the s p would be the first backtoback losses since the end of january. Were back in a moment. Trading tools, give you access to indepth analysis, and a team of experienced traders ready to help if you need it. Its like having the power of a trading floor, wherever you are. Its your trade. E trade the markets change. At t. Rowe price. Our disciplined approach remains. Global markets may be uncertain. But you can feel confident in our investment experience around the world. Call us or your advisor. T. Rowe price. Invest with confidence. Caterpillar dealing with a fallout over the raids by Law Enforcement officials at three Company Facilities yesterday. Cat said it believed the incident was related to an irs investigation into profits earned by a swiss part subsidiary. In a cat memo reviewed by the journal, ceo said he was surprised because caterpillar has been cooperating with officials in their ongoing investigation. Apologized to employees in the memo saying, quote, im sorry we had to experience this today. Stocks had a rough couple days. Yeah, that stock was down 4 yesterday. I have to admit i was taken aback because when youre cooperating, theyre not supposed to do that. Now, maybe there was some sort of glitch in the cooperation, but that was shocking to me. I mean thats just not the way i was thinking is this the new regime. Is this President Trumps regime . Because cooperation typically means they dont descend. Its been a long time since youve seen one of those descend, there was a hospital chain, no need to mention it, where there was a big descend and sent the stock down reeling. This company i thinks doing better so it cant have that happen. Its been in this range between 90 and 100 since election day. Yeah. Because they did preannounce basically theyre not going to be able to do the numbers, unlike deere didnt bother to preannounce, didnt do the numbers and kept going higher. A lot of these big machinery companies, cummins is doing well look at things like ag co, big moves nobody looks at because we stay focused on tech, which is great. But a things have to go really right. You have to cut taxes, believe in Worldwide Growth going to 3 , 4, 5 . You did have a great manufacturing number the other day. Yes, it was. Thank you for pointing that out. Great manufacturing number. Theres a lot of good stuff happening. You can push out some of the things were talking about in washington if the rest of the worlds economies continue to put up those numbers. Japan, theyre doing cart wheels over this 0. 1 . They should. I thought maybe the lost decades over. Socgen havent had inflation since december 15. Look at deutsche bank, the bank, that is a great barometer for commerce in europe. Its really strong. That thing took out 20. Amazing. Some of these moves are really incredible. And theyre not being repealed. Look, yesterday was supposed to be a bad day, right . And then after the close you got costcos numbers and costcos numbers were not that strong. And people expect today would be a big followthrough on the downside. Micron had a preannouncement yesterday midday and no one even cared. And now suddenly it does matter. So, i mean, the banks look like they have stopped and were rolling over, no. You got a lot of fed speak today. I think it could help them. This market remains in bull mode. Right. Well, lets talk about costco if we can. Sure, why dont we . Why dont we . Lower in the premarket, 1. 17 misses, revenue shy, raise membership fee for the first time in years. Gasoline and fewer coupons having an effect. The fewer coupons is really kind of threw people for a loop going there every day low pricing. I happen to love costco, okay. But i found the Conference Call unhelpful in trying to figure out what went wrong because at one point theyre like are you caught up in the price competition and they said, no, thats walmart and target. Were not part of that. What is sharp decline in fuel . People focus on gross profit dollar growth. Numbers werent that bad. They were not that bad. They were not that bad, no. And i think people are mystified when you cut back on couponing and you got some gasoline adjustment. But they basically made a very strong case that, listen, were going to raise the fee, people are going to stick by the fee, the credit card continues to do well. And just ignore the negativity here, guys. And i think people will. I think the stock will come back. Same store sales of 3 and membership fee income up 5. 5 and raising, as carl said. Remember, when they raise the fee, everybody still takes the card because the card is one of those things. Weve long argued its an annuity, costco, an annuity business. You take my card away from me, take my prime away from me, i have nothing left other than my iphone. Those are about all the things that matter. Family too. Family always put family first. The eagles going into the free agency market, family and then fees from costco and prime. I got to have priorities. As it pertains to the consumer. Yes. You got a lot of people betting on either better wages or a tax cut, right . Right. So youre starting to see revolving credit get a little juice. Yes. But do you think gas prices are going to take the wind out . No, i dont think so. Were kind of stuck here. Well get the rig count but theres a lot of oil coming, storage really high. I think oil ends the year at 60, i think you can go up. But i think the downward pricing we heard from kroger yesterday really interesting. The kroger call quite frankly very disappointing. Walmart, price wars. I love the guys from kroger, but im hoping they come out and theyre very bullish, but they said were disappointed. So its always hard to say i dont know why theyre disappointed. Im not disappointed. They said they were disappointed. If theyre disappointed, im disappointed, okay . Okay. Meanwhile snap just went up another dollar. I cant look at you without thinking about squirrels and funny queen face rainbows getting out you bet it was going to 40 billion. You said day one though. Its still within a 24hour period. You lost the bet, but, but, you were right, directionally you were right. No one thought it was going to go up as much as i did. Thats why i took the bet. Because it made no sense. Still a 24hour cycle. Were almost there, david. I would also remind people you always answer every question put to you, stupidly. Thank you. You said a year from now and you said lower. The market cap is 37 billion, im off by 3 billion and still within 24hour news cycle. Some have outstanding total shares. Yeah, youre right about that. Dont forget facebook came public at 19 times sales. This ones now at, you know, call it 36. 5 times sales. It is more expensive than facebook, remember that. But the people investing in snap right here, some smart people. Very smart. Well see. A bold call yesterday or the day before yesterday. I was totally out there. People were like trashing me. Well, go ahead, make my day. Well get cramers mad dash, well count down to the opening bell in a minute, take another look at the premarket. More squawk on the street from the nyse after a break. Eres frank . Its league night saved money on motorcycle insurance with geico go up the country. Bowlithout me. Frank. im going to get nachos. Snack bars closed. Gah ah, ah ah. Im goin up the country, baby dont y wanna go . Im goin up the country, baby dont you wanna go . Geictorcycle, great rates for great rides. This car is travg er 200 miles per hour. Toin, every millisecond matters. Both on the track and thousands of mes away. With the help of at t, redull racing c share critical information t every inch of e car from virtually anywhere. Brakes are gettingarm. Confird,aniel yoneedo cool your brakes. Understo, brakas bac2 clicks. Giving them the agility to have speed precision. Because no one knows like at t. All right. We got about six and a half minutes before we get to the opening bell. Thankfully that music stopped. I love turnaround stories. One of the great turnaround story ss a Quiet Company called marvell technologies. Taken to a hold right before the end of the quarter and i said i bet that quarter is going to be bte, which in english better than expected, this is related to disk drives. The whole industry whether it be micron which preannounced middle of the day yesterday, this is old tech coming back to life. David, this company could be higher on a takeout basis or earnings. I really, really like this whole group. You know, youre talking about like these are companies that are selling at, you know, i dont know if its 16 times earnings. Theres a lot of stocks selling well below the market multiple in tech and i think you got to look at them. By the way the auto desk quarter was a good quarter. There were a bunch of tech earnings, micron preannounced marvell, auto desk were good people decided to suddenly get negative on. Well, theyre not on this one. They shouldnt be. This one is a major turn. Big management shakeup right here. And everything since then has just been nothing but net. All right. All right. Yeah. Thank you. Nothing but net. Get back to talking about the eagles, im sure. Theyre out at the combine. They dont really want to go into free agency. Ben lives in brooklyn by the way. We got an opening bell coming up for a friday. Going to wrap up trading of course. Maybe another big week in the books, well see. My business was built with passion. But i keep it growing by making every dollar count. Thats why i have the spark cash card from capital one. With it, i earn unlimited 2 cash back on all of my purchasing. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Which adds fuel to my bottom line. Whats in your wallet . So i can take my Trading Platform wherever i go. You know that thinkorswim seamlessly syncs across all your devices. The markets hot. Sync your platform on any device with thinkorswim. Only at td ameritrade. So what else is new . Humm. Shes doing good. She needs more care though. She wants to stay in her house. I dont know even where to start with that. First, lets take a look at your Financial Plan and see what we can do. Ok, so weve got. Well listen. Well talk. Well plan. Baird. Youre watching cnbcs squawk on the street live from the Financial Capital of the world. The opening bell in just about two minutes. Theres post eight where were going to watch for the opening trade out of snap, set to open up another 6. 5 . Youre busy tabulating your market. Yes, doi because ive been saying 40 billion. We are so close to my 40 billion level. Remember that i always like to point out like you say twitter, people say whats twitter to sales, twitter right now is 4. 7 to sales and this one is about 37 to sales. There are a lot of people i think at twitter who are no doubt thinking, wait a second, were at 11 billion and theyre almost 40 billion. If there really is going to be big adoption of advertisers, twitters too cheap. But some people think that twitters challenged. Well, but that was the big debate going on. Twitter or facebook, twitter or facebook. I know its not it may not be fair to snap, but thats the way a lot of people were thinking about this. Yes, they do. I think its not i think theres a middle ground between facebook and twitter. By the way, twitter could get better. Im not saying twitter i mean, i know the quarters bad. Yeah, numbers are not moving really in the right direction in terms of monetization. If the president went on if the president went on snap, would that hurt twitters valuation . I dont know. It hasnt helped it. Can you imagine . That would be great. And not out of the realm of possibility. No. Not at all. No. I remember when, what met the pope to onboard the pope into instagram, david, anything can happen. [ applause ] lets get to the opening bell here. Lexington realty trust at the nasdaq Asset Management firm lane celebrating its recent ipo. People are talking about ipos again. They all want to know about snap. I said get it while its hot. You know it got our attention a day after snap is people now coming forward and saying i had a chance to get in early. One example, chris wellknown tech investor, tweets a screen shot of a note he got from bobby murphy in 2012. Hey, chris, enjoyed the talk last night. Really respect your world view. Were currently living and working out of a house in the palisades. It would be awesome if you could come by for lunch or hang out one afternoon. There you go. Venice. Have you ever been in venice in it was a great place to sleep in your car. Great place. By the way on sunday i used to offer my spot for 5. Ill pull out for 5. Thats how i made my money. What were you doing back then, jim . Homicide reporter. Say again . Homicide reporter. Homicide reporter, right. Different beat now. Got it. Im a different beat now. Im following snap in venice. Youve done it all. Law, cop shop. At least sa ka was smart enough to keep the email, i guess. Yeah. Text. In a few minutes were going to be at my 40. You are getting close now. Im clocking it. You laughed at me. Well, no, i just took a smart bet. And i won. But, again, to the extent that you were trying to say this thing was going to have quite a move, you are absolutely right. And it did yesterday. We should have two congressmen debates now. It was priced well at 17. It was handled well yesterday. My point by the way i reported the underwriters didnt want it to shoot up too much. I said farley did a great job. It did not disrupt it opened within two hours. The whole things been done right. There are a lot of jealous people. Now you got followthrough on the comcast announcement. Very well time to help second day trading. Sure is. Obviously took place previously. The purchase was on the ipo though, carl, correct . It was actually on the ipo from the ipo 200 million shares that were available. Now worth 720 million. Thats nice. Easy come, easy go. Ive got to tell you a lot of tech is moving up here today. Not nutanics but a lot of tech paused yesterday is going to come back today. Google is going to come back. I dont understand why that was down. I thought that might have been a stock sold in order to raise money for snap. That was the one i saw hurt the most that shouldnt have been. That one is a horse. Dollar peso, dollar now the lowest level against the peso since election day. Yeah. It spiked to 21. Its interesting. My wife was down there during the period of the election, holy cow, there was a lot of activity. What do you expect out of if not lacker, powell, fisher at 1 00, does she seal the deal . I think in the fabulous interview with Steve Liesman yesterday, jay powell, its time, we dont have a lot of turmoil overseas, things are very good here. Were starting to get nice pickup. If we get some fiscal stimulus, youre really going to wish we did three. I think look, the whole tone is set. And bank of america which is the number one gainer if they raise rates, is telling you that stock is telling you whats going to happen. Just watch b. A. C. And youre going to know exactly what theyre going to do. So the fact that goldman is the once again the top dow component exactly right. Goldman is kind of sticking here in this 2. 50, 2. 60 level. This could be the breakout. I know. But now its trading about 1. 6, 1. 6 times book. That whole thing you got trapped in is a very 200809 thing, you have to start breaking out and think about eps. Understood, Goldman Sachs now 100 billion plus market value. A lot of guys getting their deferred comp in stock are saying, oh, my god, thank the lord i waited. Then why are hamptons prices so sub par . I dont know. Theres a lot of bankers j. P. Morgan at Goldman Sachs and Morgan Stanley who are wading into stock they had marked at much lower level. J. P. Morgans at 14. If you start looking at eps, this is the group thats the cheapest in the market. If you care about eps. Thats why it keeps going up every day. If you had four rate hikes, all the estimates are too low. These are inexpensive stocks. People are looking for inexpensive stocks in the time of the love and time of snap. Look at this snap. Were going to talk to amds chief later today. Oh, the amd reviews. Micron, amd taking on intel once again in pc. I know, but the reviews were kind of like i dont want to hit them too hard because i think a lot of people were going to sellen the news when the chip came out, but the reviews are just okay. Brian krzanich is not a laydown guy. Hes the ceo. The ceo of intel, hes a player. He also thinks im not a simulation. He said theres only a 28 chance that im a simulation to make me feel better. Not a fan of bernsteins downgrade of intel. I didnt like that at all. I took it personally. You cant take it personally. Why not . Its just business. Oh, yeah . Yeah. For you. Mr. Naysayer. Couple other calls, gopro, citi initiates a sale. Why bother to put that out . Let me just throw some more dirt on that grave. Do you mind if i just bring a bulldozer and put some more dirt on that . Can we use ten nails instead of eight . What was the point of that . The guy worked for months and decided its a sell . Thanks for nothing. Its a sell. Thats great. Where were you at 90 when goats were riding on surfboards. Sell. Thats helpful. Value added. Theres not a lot of value add. We know that, thats why we try to point out the Street Research that is value added. Apple like 93 best days are over. We bring those guys on all the time. All the best days guys are over, they still come on, theyre like, happy, hey, we never said we didnt like it. 139. 11. Not quite its alltime high market value at 730 billion, but not far off at this point is apple. No. But its a Consumer Products. The price is the highest. Remember they bought back enough stock so that previously they had had a larger market value. It is the cheapest Consumer Products Goods Company i follow. Thats how you have to look at it. Right. Its all followed by these tech guys. And they all want snap, which is going to have 100 gain in sales. Theyre looking at snap versus apple and theyre saying apples best days are behind it and snap the guys like 26 and we all love him. No. Apple, that stock is up 20 this year will you stop being amazed by everything . I am amazed. Stop being amazed. Look at honeywell, you should be amazed by honeywell. But apples a big part of the s p. What is your amazement . Im losing interest in your amazement. Are you really losing interest . No, i like your amazement. Thats what my late father would say. You guys are fighting again. Do your wives not like each other . No, were not fighting. Its foe tension. Its faux tension. They have no idea. They dont understand the depth. No, the depth. We dont want to let them know. The bromance that really goes on here. Yes. Western dig, i only mention because you took a new position. I did. An inexpensive stock. A lot of people felt like when micron intraday raised its numbers, remember microns got flash and Western Digital has flash and microns stock didnt go up. People said thats the top. Micron does sell 16 times earnings typically happens right before the deluge, but not a deluge. Western digital mentioned with marvell, team by the way reported by starboard this drive and dram is hot. I urge people to go back to the hp quarter where they said that a lot of stuff is good. Hp inc. Hp inc. We always need to define. Theres, hpe, which is not doing well my travel trust owns, thats meg whitman, hp inc. And the super rig company, the true hp. Im amazed at how that company is are you really . Thats good to hear. Whatd you get in on snap . Where are we on snap . No, where did comcast get it . At 17 at the ipo price i would assume. Now competing with ebay for market cap. Yesterday it was tussling with General Mills and Delta Airlines in that neighborhood. Marriott, target. You know, one of the problems honestly i wish we could all agree, 1. 57 billion shares, i think bloomberg has a different number. Yeah, i know. To be fair theres rsus, theres different forms of stock, i guess, that make it a little more difficult than you might expect to know the fully diluted share count of this company. Ive seen 1. 4 from some, 1. 6 right now. Look it up right now on fact set market caps 28. Right. Thats off. I know. I know. It is very hard to try to figure out. So lets all come to an agreement on how many shares are outstanding of snap and then we can maybe youre at 40 billion. Im using 1. 42. I use total diluted serum. Right. I did a lot of work on this, thank you ben for helping me. This is gripping the market. And thats why i thought it was orderly even though it was gripping. Typically when things grip its just not orderly at all. Especially when theres younger folks there ringing the bell. Is that farleys kid . Oh, no, that was yesterday. Interesting mr. Spiegel took a different route and his partner. They left the exchange. They went to Goldman Sachs and they watched from there. And they watched the book getting put together at goldman, which was the stabilization agent. Right. Morgan stanley also the lead underwriter. They didnt hang out. You saw my selfie with evan, right . Did you see . Yes, i did. I tweeted it a thousand times yesterday. I did see it. Very impressive. But did you get a ghost plushie . I did. I had it all day. It was kind of like live long and prosper. Anybody who gave me a hard time, i put it right in their face. All that, dows up 20 as we said earlier led by goldman. Lets check in with bob to see whats moving on the floor. Hello, guys. Happy friday. Great day for snap. Lets look at sectors, mixed market but still positive. I say positive because the bank stocks are up, this is despite of course concerns about higher Interest Rates, theyre again leadership stocks today, industrial stocks also on the upside, materials up, take a look at gold. Golds been down four days in a row here. So everybodys talking about the fed. And the question is are we going to enter a new phase of fed policy where theres less worry about low inflation and global risk and the feds more confident about hitting their targets. Take a look at etfs around this, tlh, ten plus year etfs, long term treasuries. That has been weve seen prices come down four days in a row. Yields have been higher four days in a row. Were back down near the january lows. Thats a yeartodate chart youre looking at right there. Thats had very heavy volume this week. On top of that some other etfs in the bond space have also had very heavy volume for the last four or five weeks here. Look at the lqb, corporate bond, they had notable inflows in the month of february. Prices came up. Theyve been down most of the day, this week of course as yields have moved to the upside. Prices have been down. Despite the rise in rates, the bank stocks are holding up terrifically of course. We talk about the kbe, the big bank etf all the time here, that hit the highest level since 2008 on wednesday. Yes, it was a down day yesterday, but the trend still remains on the upside for all of the bank stocks. You heard jim talk about micron. Its not pushing the other Semiconductor Stocks to the upside, xsd you want to look at, remember thats also off historic highs a short while ago here. Sectors this week up very simple, the trump trade very much alive. This is the classic trump trade here, financials, industrials and materials on the upside. Interest rate sensitive groups like telecom on the downside. Finally, you heard about that announcement from our parent nbcu about a 500 Million Investment in snap. This could be very important for the stability of the stock down the road. Remember, they announced their longterm investors more than a year, thats a substantial investment 500 million. So in a sense they could be a factor in stabilizing this stock because they are potential sellers that are not going to be there that are ownership in the stock. I noted yesterday many of these ipos have these sixmonth cliffs where the stocks tend to move down after six months first Earnings Report out, people tend to lighten up on their investment. Theyre going to be a longterm holder, again, this could be an important factor in helping stabilize that stock for the next several months and certainly maybe up to a year. Right now the dow industrials up 19 points. Guys, back to you. Bob, thank you very much. Bob pisani. Lets get to the bond pits as well check in with Rick Santelli. Big day today over at the cme in chicago. Hey, rick. It is a big day. Its a big day. And i know all of my compadres all seeing how midday and fed speak plays out, but i have to tell you it seems like so much wasted energy. You know, weve had a huge run in stocks. Think about back in the day of qe trying to raise the level of Financial Assets on somewhat of a faux premise. Now at least we have a premise that things can happen. We have the right makeup to get it done. These opportunities dont come along and the dollars taken a bit of a hiatus even after yesterdays run its backed away from unchanged on the year. They should have just done it. They should have done it yesterday. Two days ago. But to put all this focus is really taking away in my opinion from some of the trade thats going on in the markets for more fundamental reasons. The fund game is getting old. Get on with business. If you look at a oneweek of the twoyear you can see its up about a dozen basis points on the week. At the levels we havent seen since the summer of 09. A oneweek of tens, wow. Last week we saw 2. 31, 2. 32, its been a big week, but its exaggerated a bit because we basically went from the lower end of the range, look at a september 1st of tenyear back up into the heat of it. And do remember if you look at a november chart of tens minus bunds, and ive talked about this a lot, were hovering at the midpoint of the big 2. 35 down to 2 right in the middle around 2. 16, 2. 17, see the way its backing away, many use that for surrogate for general direction of Interest Rates. Have they reached crescendo of the famous dance of the fed, maybe its going to back away, yeartodate of bunds, you know, tens are now at 2. 49, swewe set off a handful of basis points, but look at wlast going on with bund yields they settle at 2. 31, hovering much higher, 35ish. You can see on a basis were connected, but theres a real gamma beta aspect, greek levels, we get the market turns but not at the same rate, thats why you want to watch the spread. Finally, the dollar index. One week of the dollar index is really interesting. And the way it backed away from unchanged 102. 20 now down 31 shows you theres a lot going on as currencies try to grapple with not only policy that may lie ahead but the Interest Rate differentials. Pretty counterintuitive on the weeks that weve had and treasuries to see the dollar index unable to really jump above unchanged on the year. Jim, david, carl, hey, if we get anymore guys half my hits going to be telling you guys its back to you. Rick, thanks. Rick santelli. When we come back, a surprise winner from the snap ipo. Stocks up another 8 this morning. Later on the very outspoken founder of lululemon, chip wilson, will join us, well get his take on retail in the age of trump. Dows up 12. If you missed it yesterday, here is that selfie with jim and evan spiegel, the cofounder of snap, as we said up 8 . Back in a moment. 90 of the Worlds Largest supercomputers run on intel . That means you can take a universe of data in your case literally and turn it into medical discoveries, diagnostic breakthroughs. Proof that black holes collapse into one singularity. I dont know what that is. But yes. Innovation runs on supercomputers. And supercomputers run on intel. You are super smart. And super busy. Ooh ufo false alarm, eyelash one of the winners from the snap ipo is a Silicon Valley high school. St. Francis high of mountain view, california, disclosed it invested 15,000 in the seed round back in 2012. That investment which gave the school about 2. 1 million class a shares was made at the urging of light speed venture cofounding partners, chair of the growth fund of the school. According to courts the school sold twothirds of the shares at 17, raised 24 million. Thats a great story. Isnt that a great story . That is. That is. It was four years ago he was on the floor with us. You know, not that we can invest. No. You can always say, gee, what if. People are saying, oh, cramer, when i liked, oh, cramer invested, now cramer short it. I cant own anything. I can own everest, bug, two dogs. And a bunch of homes. I have two dozen homes. Youve had a successful career, a very long one i might add. What does that imply . Nothing. Is the runway now foamed for whoever wants to come next . Yes. And are they going to you think accelerate their plans . Well, it will be interesting. Would an airbnb or, geez, right now i think uber, i think theyre really being very clear theyve got some issues. But, no, i dont think either of those. But i think there are a lot of guys that are in the 4 billion to 5 billion that are waiting involved in communications, they can come in. I dont know how many more social media places there are, frankly. But this one, remember, snap is trying very hard to become something other than what it is now because if its just a message system between me and my daughter, its not going to do it. Wow. This is quite a second day move. It really is. Whatd i tell you . You did. I said he was going to laugh at me the way John Travolta laughed at sis si space ek in carrie and i took the whole darn school down. Fire breaking outd everywhere. You are kind of like carrie. Well get stop trading in a moment. Dows up 18 points. Dont go away. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Time for cramer and stop trading. One of my absolute favorite rebirth stories is berlington coat go private comeback Burlington Stores are putting up unbelievable numbers and good note pr bmo theyre going to benefit from the mall closures. They their stores offer real values. This is when you pick up winter coats. Theyve got good seasonal stuff, 25 for easter outfits. But 75 off coats, thats better than amazon. And the stores are nice. So when we go, i think nows the time. I could use a coat for next year. Go with me to burlington, a really nice store. Looking forward to it. Hes never going to go. No, take him to burlington, vermont skiing before hell go to the score. On Burlington Northern maybe. Whats on mad tonight . This is it. Tonight im doing off the tape private company, this is the company thats taking the world by storm, its peloton. No offense to unbelievable instructor for fly wheel or rachel w. At sole cycle, this is the company that has the device. Y i dont know if youve ever used one, have you ever been on one . I have not. Go on one right now. So exciting. Those bikes are pricey. Expensive, but you get in shape on that. They go come on, come on, come on, lisa, and shes like at home in her house. Its Virtual Reality meets ive seen the ads on our air actually. Very nice. Its the greatest product. Marc benioff turned me on to the product. Did he really . Yes, he did. Salesforce. Com. If that stock doesnt go up, david, you know what i think could happen there. Yes, i do. Strong week, jim. It was a strong week. Snap is almost there. And evan and i, we are tight. We are tight. You are not. Tight. Have a good weekend. Well see you tonight. Mad money at 6 00. When we come back, more on snap building gains from yesterdays debut as our parent announces a 500 Million Investment. Later on jim stewart of New York Times and his take on the valuation. Back in a minute. Oh. Not the smooch method come on. Whats going on here . You know how Ge Technology allows us to fix problems before they. They slow production, yeah. Well, no more catchy business acronyms. Wait, we dont need to smooch . Im sure we can smooch a solution we just need to hover over the candice, problem until. Just let it go. Hey, sorry im late for team building. Smoooooooch that felt right. Whats wrong with you . Hes so trusting. Good friday morning. Welcome back to squawk on the street. Im Carl Quintanilla with kelly evans and david faber at the new york stock exchange. Good morning. Good to have you here, kelly. A busy friday. Saras off today. Another muted open, dows down but a lot is coming our way with fed speak culminating this afternoon. Were going to watch that. Roadmap starts with the dow stumbling. And commerce secretary wilbur ross speaking out in a cnbc exclusive. Trade, the possibility of a border tax and regulation all in focus and moving markets. Plus, snap is soaring, the vanishing messaging app surging in its second day of trading and we got news this morning that Nbc Universal, our Parent Company, is making a strategic investment in the company. Lets get to Rick Santelli with breaking economic data. Hey, rick. Yeah, this is one of my favorites, nonmanufacturing Service Sector ism for the month of february. Were expecting 56. 5, we have more. 57. 6. Boom because its the best since halloween since 2015. Lofty number. If you go through the internals, i know many thought wed have employment today, of course its next week. Februarys kind of a short month. But look at the employment index. It did move up from 54. 7 to 55. 2. But we had a handle switch on new orders from 58. 6 up over 60 to 61. 2. So those are the internals ive looked at. Ill continue to comb through them. But like many of these feel good indices and general respondents seem to be very optimistic, this is no exception as the tenyear hovers right around that 2. 5 mark, basically five weeks ago we closed above it. We settle the year around 2. 44, you can do the math. Carl, back to you. Rick, well come back to you later on, Rick Santelli. Meanwhile this morning, commerce secretary wilbur ross joined squawk for an extended swer view interview. Our andrew ross sorken is live with that. Outlining our stance on key issues this morning. We saw moves in the mexican peso after his comments about the currency and our southern neighbors role in the north america free trade agreement. I think the peso has fallen a lot mainly because of the fear of what will happen with nafta. I believe that if we and the mexicans make a very sensible trade agreement, the mexican peso will recover quite a lot. And ross saying the first thing on his agenda is nafta and negotiating what he calls a fair deal. Heres what he said on the new aggressive u. S. Trade stance. Well be aggressive on trade because we know that the deals that have been made historically have resulted in the great loss of manufacturing jobs, great amount of closures of manufacturing businesses. We dont want that to continue. So first emphasis will be on facilitating u. S. Exports to other countries, getting rid of both tariff and nontariff barriers to trade. And of course President Trump expected to unveil the white house tax reform plans this month, a key part of that the border adjustment tax, big issue weve talked a lot about. He says its key to balancing the budget. Well, anything that effects trade will be viewed to some degree by the foreigners as an added burden. But value added taxes, which is very close to what border adjustable is are quite common place. Were the only oecd country, with one exception, that doesnt have v. A. T. And value added tax is always imposed on imports and always rebated on exports. Our companies are not permitted, however, to deduct the federal income tax on their exports. So its an unfair equation. Looks more and more like value added tax or v. A. T. Will happen. The Commerce Department also announcing the federal register notice, a new Program Allows companies to fill out a form to target what they call regulatory burdens. So you can go online to do that now. Finally told us the background on those stubs wooden slippers went viral, i dont know if you saw them on twitter or elsewhere, gotten them with the commerce signature on them. There we got a picture of them. We should tell you, given we had a little tweet there, hes also stepping up his twitter game, carl, i know youre a tweeter, but he says hes not about to take after trump or become what he calls a serial tweeter. He also has a person, a body man whos been doing some tweeting for him, if you will. Carl, do you have a body man . Im working on the body man. You need a body man. Carl needs a body man. Andrew, i was going to ask you you mentioned about the v. A. T. Affecting the deficit, he also had a headline here about well have to do more than tighten the budget, ten years isnt enough to wipe a trillion dollars. In other words to me feels like were hearing one of the president s major cabinet officials emphasizing the deficit deliberately in a couple of different ways this morning. Do you read anything into that . My read was that they really do want to balance the budget, which we didnt talk about obamacare but really gets to having to try to land obamacare first because you want to take a trillion dollars off the table over the next ten years on that. So at least you start the game lower, but i felt for the first time this morning and ive been talking to people in washington remember over the past week around the administration i thought they were not necessarily going to do the border adjustment tax. And i have to say at least based on some new conversations, plus the one this morning with wilbur ross, i think were going to see something much more meaningful than perhaps we might have thought a couple weeks ago. All right. Well see, andrew, thank you. Great stuff this morning. Andrew ross sorken speaking to commerce secretary wilbur ross. Markets on pace for sixth weekly gain in a row with yesterdays snap ipo adding to optimism while worries about the timeline for key policy issues are linger and weighing on markets for now. Blackrocks global chief investment strategist joins us and Morgan Stanleys municipal strategist here with us at post nine. Richard, ill just begin with you. In some of what andrew was just referencing, if the v. A. T. Does happen, for example, how much do all of these Different Things effect the markets, or is everybody just kind of focused on the big picture, the good picture, tax reform, deregulation, its all going to happen . I think what the markets really focusing on is the reflation trade. Thats been amplified by hopes of tax reform, hopes of deregulation. But whats happening underneath all of that is the datas Getting Better and Getting Better not just in the u. S. But increasingly is Getting Better globally. And that is starting to lift optimism and animal spirits in Financial Markets around the world. Michael, youre focused on the health of municipalities i would imagine across this country, maybe an interesting different window in how strong conditions really are. Weve seen the confidence stuff very high but then data on the ground seems to be more mixed. Yeah. I think i agree with that. And the way tax sort of intersects with muni is what happens to the personal tax code, whether or not the tax benefit will change and the Overall Health of the economy. So we are actuallyin ordinately focused on things wilbur ross and others are focused on is whether or not this border tax is going to get done because in a strange way thats a window into whether or not well get a tax cut thats fiscally stimulus, a tax cut that carries unintended consequences of fx adjustment and lost interest of deductibility, those sort of things tie to the economy. As it relates to munis, on the one hand weve heard these other areas of growth make munis less attractive but so much of infrastructure is financed through munis, right . How important is that . Well, its definitely important, on infrastructure in particular the question is whether or not they want to use the tax plan as a vehicle for financing infrastructure. It seems like the signals theyre giving us is thats what they want to do. If you watch the president s speech the other night he mentioned they would create a trillion dollars of spending through public and private partnerships together. Thats a tax plan thats a plan that hypothetically be funded by tax credits, were skeptical you could get the immediate pulse of fiscal stimulus that way because practically speaking state and local governments have had trouble financing things through publicprivate partnerships. Unless theyre willing to privatize and give up tax revenue given for them which typically doesnt happen unless a stress situation, were skeptical you would get the immediate fiscal impact we think markets are more or less positioned for. Richard, you mentioned the reflation trade being a big part of this. So were going to hear from the fed chair janet yellen and fed officials keep telling us seems like march or next week or whenever the meeting is primed for a rate hike. We were talking about two yers, ten years and yield curve seems to be flattening. Are we Strong Enough here for a rate hike . Will we march on past it if it does happen . So first of all we think a rate hike in march is now highly probable. Were still looking for three hikes this year, but i think whats been really notable is just how resilient the equity market has been to increasing expectations of higher Interest Rates. So weve seen an upward move in bond yeelgds over the last week or so. Significant increase in Market Expectations earlier than anticipated fed hike yet equities are stronger. And i think thats because people are seeing the feds reacting to a strong economy. And i think the market can be resilient to higher Interest Rates, resilient to higher yields as long as those moves seem consistent with stronger u. S. And global growth. Same question, richard, for you. J. P. Morgan data yesterday said maybe we only do 1. 5 in the First Quarter when it comes to gdp growth. So have the markets and these rate hikes and the confidence surveys is that all outrunning the reality on the ground . Well, i think what were waiting to see is whether the significant pickup weve seen in corporate and Consumer Confidence over the last few months starts to get translated into materially stronger activity. Now, were seeing some evidence of that. But actually i think investors will want to actually see the hard evidence coming through. What is certainly notable is theres a lot more in the price around the u. S. Market than around International Markets. Weve seen the u. S. Market significantly outperform International Markets not just over the last few weeks or months but actually for a number of years. So theres a lot more optimism about u. S. Growth in the price. I think some of the surprises were now getting globally are outside the u. S. Again, not because growth is strong but just coming through stronger than the market was anticipating. Were see thing that in europe asia. Thats for sure. Thank you both for joining us this morning. Thank you. Taking a look at shares of snap for a moment here on the second day of trading. As we said earlier our parent Nbc Universal has announced its invested 500 million in the company. Stock broke through 27 earlier this morning currently hovering below that almost a 10 gain and as david said impressive action for a second day of any new issue. It is. And certainly one would expect being helped by that news that comcast, our parent, did buy off of the ipo. Remember, it was 200 million shares, 50 million of which were locked up for a year. So really only 150 million shares that are actively being traded. And they are being traded quite actively. We had very large volume yesterday, but this is quite a strong followthrough. At this level and by the way there are some different numbers in terms of total share count on a fully diluted basis, but lets assume 1. 4 billion, that seems to be a number many agree with. Youre talking 37 billion, 38 billion in market value right now. Thats about 37 or 38 times expected revenues this year. Thats up there. Thats getting up there. Yes, it is. And im just impressed that the price of it continues to move higher throughout the session. It was up 4 then 6 now nearly 10 . A lot of momentum behind this one clearly. When we come back, as we said, a lot of fed speak headed our way including yellen 1 00 p. M. Eastern time as the odds for a march rate hike are surging. Probably no surprise the markets are going to stay quiet for the time being. Dows up one point. Back in a minute. Their experience is coveted. Their leadership is instinctive. Theyre experts in things you havent heard of researchers of technologies that one day, you will. Some call them the best of the best. Some call them veterans. We call them our team. E trades powerful trading tools, give you access to indepth analysis, and a team of experienced traders ready to help if you need it. Its like having the power of a trading floor, wherever you are. Its your trade. E trade on a perfect car, then smash it into a tree. Your Insurance Company raises your rates. Maybe you shouldve done more research on them. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. And if you do have an accident, our claims centers are available to assist you 24 7. Call for a free quote today. Liberty stands with you™. Liberty mutual insurance. Welcome back. Some headlines coming out of the u. S. Monetary policy forum here in new york. Our Steve Liesman is on site with more. Steve. Yeah, kelly, im here at the Monetary Policy forum with the whos who of fed officials. First ones to speak out of the box, jeff lacker, the hawkish richmond fed president making some hawkish remarks saying the u. S. May be in a mid 1960s preinflationary moment where you have stable inflation, not too much concern about whats going to happen, meanwhile in the policy, in the fiscal regime, in the monetary regime inflation is brewing. Hes warning of the complacency that led to the later on inflation. Showing inflation stability can be suddenly lost. He suggests that monetary and fiscal policies need to watch out because they could be in conflict and goes through a fascinating history of the 1960s when indeed they were Lyndon Johnson brought the then fed chair down to his texas ranch and exhorted him not to raise rates. Finally, jeff lacker, Central Bank Independence cannot be taken for granted. Said its very important that the fed withstand political pressure. Lets take a look at the fed Fund Probabilities on this day of extreme fed speech, which is going to be out there. Were now at 74 , look at that change. The folks who im talking to cannot believe how quickly this went from below 25 , even as low as 8 to now being a virtual certainty of a rate hike at the feds meeting on march 15th. And then take a look, i think this is not well appreciated, the december fed funds futures now trading around 1. 25, last i looked at it, there it is right at 1. 25. Folks, this is telling you the market is beginning to bake in that third rate hike. This is december. And 1. 37 would be fully priced in. So youre nearly halfway there. As we said, as carls been saying big day of fed speak. Heres whats coming up so write it down in your calendars. You have feds jay powell at 12 15, not expected to be on Monetary Policy, but 12 30 fed vice chair stan fisher, and if you dont get the point half an hour later there comes fed chair janet yellen, who should i think pretty much bake in if its not already the idea of a march hike. I would be very surprised, guys, if she were to lean against what weve heard the committee has been over the past several days. Yeah, steve, some have tried to do some work looking back at meetings where odds were 50 or better. How many times the fed didnt come through. Its hardly ever. Hardly ever. Yeah. I mean, this is what its about is that the fed is cool with raising rates. It doesnt want to surprise the market. It wants to have everybody be in unison, hey, its going to go up, you price in its going to go up then we can raise rates. When its not it means theres some dissidence and fed doesnt like to raise rates in that environment. This is an environment where for better or worse, look, it was one day when most of this action happened we had kaplin on in the morning and then few speakers co coalesced around this idea sooner than later, we had kaplan say we should do it because we can do it and not wait and then there was bill dudley with his phrase, its a compelling case for hiking rates. And that was that repricing. I have not seen the market ever reprice this quickly, but i will say i thought it was underpriced before that. All right, thank you, steve. Steve liesman. Sure. Of course well be checking in later on. When we come back, gop members of the house debating a possible border tax. New york congressman gregg meeks weighs in on squawk on the street. Well be right back after this quick break. Nce i added futures, i have access to the oil markets and gold markets. Okay. Im plugged into equities trade confirmed and i have Global Access 24 7. Meaning i can do what i need to do, then i can focus on what i want to do. Visit learnfuturestoday. Com to see what adding futures can do for you. Or keeping a Hotels Guests cuttinconnected. I to 35,000 fans. Businesses count on communication, and communication counts on centurylink. Companies across the state are york sgrowing the economy,otion. With the help of the lowest taxes in decades, a talented workforce, and worldclass innovations. Like in plattsburgh, where the most advanced transportation is already en route. And in corning, where the future is materializing. Let us help grow your companys tomorrow today at esd. Ny. Gov the Trump Administration and gop have been debating that border adjustment tax that could change trade relations with neighbors like mexico. Heres the secretary of commerce wilbur ross earlier this morning on squawk. Well, anything that effects trade will be viewed to some degree by the foreigners as an added burden, but value added taxes, which is very close to what border adjustable is, are quite commonplace. Were the only oecd country with one exception that doesnt have v. A. T. And value added tax is always imposed on imports and always rebated on exports. Our companies are not permitted, however, to deduct the federal income tax on their exports. So its an unfair equation. Joining us here at post nine this morning congressman gregory meeks, serves on Financial Services among others. Its great to have you, congressman. Welcome. Thank you. Good to be with you. For a long time street didnt believe this border adjustment was going to happen, but increasingly were hearing that its winning in the white house. And we just heard the commerce secretary. What do you think . Well, i dont know what the white house does because initially they were against it. And now it sounds like hes for it. And so i guess we have to see what takes place ultimately. I dont think that though were looking at it from the viewpoint of the consumer because, you know, the new york fed was not supportive of it. And it could be dangerous for consumers because it could raise prices for consumers goods. But what the president will do or not do who knows. Hes contradicted a number of his secretaries before and hes contradicted himself before. Are you worried about constituents paying more at walmart . Could it be offset by lower income tax . Well, yeah, i am worried about them paying more. Im also worried about the theory because, you know, in order for the b. A. T. Tax to be successful from the way i look at it and understand it, the value of the dollar has to go up substantially. In fact, most will say it has to go up at least 20 . And theres a lot of factors that takes place for that to happen. If it goes up a percentage or two, thats a lot. So if you dont thread that needle, then you have a problem. And consumers have a problem. And it causes us to have the consumers to pay more money coming, you know, for their normal goods, for consumer goods. Your district includes jfk airport. Yes. Is that right . What could the president do on his infrastructure plan to get a fast train from jfk to the city and back. If he talks about that, we can really have dialogue and conversation. You could get a lot of people onboard with that kind of thing. Absolutely. We need to make sure that jfk, which i look at as the gateway to america, is upgraded. Thats the kind of investment that i think democrats and republicans can Work Together on, you know, to figure out how we have light rail going to manhattan to jfk airport. Even how we can connect it to laguardia for domestic flights. That makes a lot of sense to me. When i travel to other places they have those kind of modern connections, et cetera. Yeah. We need to do that in new york and all over the country. When it comes down then to the idea of a border adjustment tax and where we stand on tax reform are so many other parts of the president s agenda, the expectation is the democrats are going to Stay Together as a block and vote against. But you got excited when we mentioned infrastructure. Is there a scenario under which you can imagine where some Democrats Join with republicans on votes in some of these other things if infrastructure is a part of it given there may be some republicans who are not necessarily going to go with the majority of their party. Well, listen, weve got to wait and see. As i said, i get confused sometimes by this president because he says one thing one time and then the next time he says something different. And when i look at his initial budget that he puts out, at least what he said at the state of the union and other times, i scratch my head. I know my colleagues on the republican side will because hows he going to pay for all these things . You talk about tax cuts that hes looking to do, especially for corporations. Thats there. You talk about 54 billion for you sound like a republican. But it is. I mean, you need to know how because then what do you cut . So as a democrat what i am concerned about is domestic spending, et cetera. Yeah. Shut down every Domestic Agency and people who need wont have. So as a democrat i am concerned about how hes spending. Ill tell you Something Else you may want to be concerned about as a representative from new york is whether or not a final tax plan on individual includes the no longer being able to deduct state and local income tax. Absolutely. That i keep hearing if we get it, if we get individual is going to be a key part of it. Thats going to crush new york, isnt it . It will i mean, the two taxes, tax pieces that will be devastating to me if you cannot deduct state and local income tax. And one other that ive heard republicans floating, not being able to deduct interest on your mortgage, on your first mortgage. Those would be devastating to me and to the average new yorker. You dont think they touch that third rail, do you . Well, i hope not, but im starting to hear some whistling and some rustling behind because theyve got to pay for something. What do you say to people who argue democrats have never been fiscal hawks, where was all this concern about spending when Bernie Sanders was promising free tuition for everybody . Well, what i say is lets look at the facts. If you look at spending, you know, it really went up under george bush. Thats when spending when republicans who basically were in charge of the presidency, the house and the senate at that time, spending went up drastically. Under bill clinton spending went down in fact we had a balanced budget. If you look at barack obama who inherited a huge all these deficits, he started doing better and we had certain fiscal guidelines that were put in place looks like the republicans again while theyre in charge want to blow right through the ceiling. But youll admit that 3 growth do a lot for your constituents. Well, i agree that, you know, if we can put the growth in. But you can see growth whats happening goes slow under barack obama and theres a lot of things i think he did that put in place that is now giving the economy some strength in moving forward. Let me just ask you one brief thing as well. Youre on the Financial Services committee as i understand. Yes. Is this one area because you do represent parts of new york and the whole metro area benefits from when wall street is strong, when the Capital Markets are strong, do you support financial deregulation, the kinds of motives that are being talked about . See, i think what we need to do is because what the republicans want to do they want to gut or as they say even with affordable care, they want to repeal dodd frank. I think that would be the wrong thing to do. But can you fix dodd frank . Are there fixes that we can work on collective together to make dodd frank stronger and yet give us the same security . Any examples . Well, for example, some of the regulations are small and medium size banks. There are some of those just over regulations that we can work on together that would help speed the economy, put more money for Small Businesses, we can work on that together. And that would be good not only for new york and urban america, it would be good for Rural America too where you have Small Businesses there. So those are the kinds of things that dodd frank we can look at how we can fix dodd frank so we dont have to have those unintended consequences effecting individuals. Congressman, its good to have you in. Good to be with you. Thanks for joining us. Gregory meeks joining us at post nine. Lets get to sue herera, half past the hour, get a news update. Hey, sue. Good morning, carl. Good morning everyone. Heres your news update at this hour. Vice president mike pence under fire for using a private aol email account while serving as indianas governor. Pence discussed sensitive Homeland Security issues on the personal account. Thats according to the indianapolis star. It was also hacked by a scammer, but state law in that state does not prohibit Public Officials from using personal email. German chancellor Angela Merkel arriving in tunisia for day two of her north africa tour. Shes meeting with tunisian president and Prime Minister to discuss Border Security and steps to curve migration flows into europe. No more snow days . Say it aint so but it could happen in minnesota. Lawmakers there are considering a bill to replace five snow days every year with elearning days. Students would do online lessons at home with teachers checking in to answer questions. And take a look at this. Some shocking dashcam video from the nevada Highway Patrol capturing a truck driver losing control look at that, sending thousands of beer bottles crashing on to the road and into that officer. Moments before the officer had pulled over a driver for speeding but considering the crime scene was pretty much contaminated he let that driver go with just a warning. Thats the news update this hour. Kelly, ill send it back down to you. A lot of beer. Sue, i wanted to go back to the internet is killing the snow day . You want to turn people against internet this is how you do it. I think snow days are every childs right is to have a snow day every once in a while. I know. In minnesota especially of all plac places. Especially. Elearning days. Ick. When we come back, snap soaring in second day of trading here at the new york stock exchange. Its now 13 . New york times prize winning columnist jim stewart will join us when we come back. This car is traveling over 200 miles per hour. To win, every millisecond matters. Both on the track and thousands of miles away. With the help of at t, Red Bull Racing can share critical information about every inch of the car from virtually anywhere. Brakes are getting warm. Confirmed, daniel you need to cool your brakes. Understood, brake bias back 2 clicks. Giving them the agility to have speed precision. Because no one knows like at t. Shares of snap are surging on day two of trading. You can take a look right here. The parent gaining more than 13 this morning no, now its wow. Its gone parabolic, guys. Our next guest says snaps investors are betting on the kind of growth which few companies have ever achieved. Joining us now here at post nine to discuss that, Pulitzer Prize winning New York Times columnist jim stewart. You know, you were talking about a 25 billion valuation, jim, in your article. Come on, man, you were way behind. Way behind. But i updated that to 34 billion, but at 25 billion i quoted, you know, very prominent analyst Michael Nathanson saying its not, quote, patently crazy. I think at 34 billion im going on a limb and saying this is patently crazy. Jim, were above that now. Were close to now the 40 billion jim cramer was saying we might actually hit on first day of trading. Thats kind of where we are right now. Well, id like to take these numbers to some of these rational market theorists and have just say tell me what is rational to that. By any metric this thing is just off the charts. Lets forget profits, lets forget revenues. Lets even forget daily average users because you can buy facebook way, way cheaper than this and get all of that. So all were looking at here is average Revenue Growth per user. And to start to get at some of these values 25 billion, 30 billion, 30 billion, were getting above there, they have to have astronomical monetization of this thing. I mean like 400 next year. They were saying maybe to get to 1 billion, but to get to these numbers you have to get to 3 billion and 4 billion by 2018 and 8 billion by 2020. I mean, i guess anything is possible, but you know, why would anyone expect this . It would be incredible. Maybe because the conversations were having about it now are the things people said about facebook three years ago. Well, but remember facebook investors were cool to that. People were very skeptical of facebook. It faltered in the opening. It went down for a while. It took a while to gain traction. People were very worried about the transition to mobile. Facebook was pretty rational, at least with benefit of hindsight. This thing is so far off the chart. And what kind of amazes me about it is facebook didnt have any real serious competition when it came out. This thing is staring at instagram owned by facebook, and facebook salespeople cross sell all these products. And instagram has shown it can be quite nimble at copying things like the stories thing. One of the things i like you pointed out interesting to think through is the revenue per user. Talk a little bit about, you know, for this kind of valuation, how much revenue per user were talking about for snapchat versus these others. Well, in the year theres no question that snapchat can grow that revenue considerably. They were very late to start monetizing this. They leaped from, i dont know, they had a huge Revenue Growth over the last year. Theyre making a little under 6 in the u. S. Per average user. Facebook makes a little over 12. So they could double that revenue and reach the facebook level. But theyre trading at a revenue multiple of six times facebook. I mean, doubling it doesnt get them anywhere close to this. Theyve got to quad rup quadruple and s quadruple and theres concern about growing users, there are only theyve already got 68 million of the youth in which i find amazing statistic, but unless they can breakout and get the old fogies like me to go on there, i dont know how that broaden that demographic. They can go global they already are global because clearly theyre well above that number. They are. And fascinating thing about it, look, people do invest in stories. You know, tesla is not going to be making money any time soon and yet the stock trades up there. Im not saying the stock is going to plummet or anything, but it is a story. And part of the story is that they have brought us into a post language world. You dont need to speak any particular language to be sharing these photos, china, russia, theres no language barrier because theres no language. And what kind of world is that going to be . Its kind of hard to get your head around it, but if thats going to be the world were living in maybe this is going to be huge. I dont know. But were basically talking Science Fiction here. Picture says a thousand words, jim, come on. Going back to the future. Look what happened to text already, now 140 characters is enough. Yeah, i know, this is going to shrink it to nothing. All this language of course is out the window. Out the window. We were just up 16 in the stock now up 13 , lets call it 38 billion or so. Theyre assuming 1 billion in revenues this year. A very large growth rate, over 100 . Right. There is also though, jim, a real shortage of shares. Theres only 150 million shares of this thing really available for trading. Retail may want in on this story, thats why maybe were seeing such a big jump. Ive noticed some news reports that teenagers were buying it. I dont think as a teenager this should be your first stock. Isnt it great for teenagers to buy stock period . Buy what you know . Yeah. I hope theyre diversifying their portfolios a little bit and not putting all their money on this. You know, look, from people whove been to the roadshow told me they were talking 1 billion in 2017, 2 billion in 2018. Thats great. Thats 100 yeartoyear growth. But those numbers dont get you to these valuations. And thats as far as the underwriters are going. I cant believe the underwriters themselves thought well, they might have thought scarcity jim just tweeted, snap hits my 40 billion target. Was that his target . It was. With the caveat he says all of this is silly, right . All of it is he did make that point. He said day one of trading we bet on it, but he was essentially, in 24 hours. They did an amazing job, they sold this thing brilliantly. Essentially no data to go on, i would like to be sitting on there because somebody did a fabulous job. Long term interest of snap well have to see. Its a very high frothy valuation. You will be revisiting this story, i think. Im sure we will. Maybe in pictures. Tears . Jim, thank you. Thank you. Jim stewart. Sticking with snap, our robert frank is with us taking a look at who made and who lost the most money on its opening day. Hey, robert. Hey, carl. Well, snap cofounders evan spiegel and bobby murphy both adding 1. 4 billion to their wealth yesterday. Theyre now worth more than 5. 8 billion each as of trading today. Now, before the ipo as of wednesday their net worth was only around 4 billion. So they are now the only two billionaires under 30 years old, spiegel is 26, murphy is 27, who run their own publicly traded company. And theyre also now among the 100 richest people in america. They top other longtime billionaires like fedex founder fred smith, ralph lauren, Sumner Redstone and stan druken miller. Each own about 10 of the company, remember they have the super voting shares so actual net worth could be more than 5. 8 since their voting shares carry a premium. But the ipo is also a big Wealth Creation machine for other investors, mitch lasky of benchmark shares now worth of 3 billion. They cashed out of about 180 million yesterday. Lightspeed was the first to back snapchat and their reward is at 2 billion stake. And Michael Lynton and former sony exec and former imran khan. They have a way to go to catch up to Mark Zuckerberg at 32 worth 59 billion. And the google guys theyre like old wealth now, theyre at 42 billion. So 5. 8 for bobby and evan. Still a ways to go but pretty good week for them. Good stuff, robert. What an amazing story with so many angles. Our robert frank back at hq. When we come back, taxes and budget in focus. Ricks going to sit down with the former director of the cbo. Take another look at shares of discount retailer big lots. Beats estimates announces a stock buyback and a dividend hike. Dows down 34. More squawk on the street continues in a moment. Hey gary, what are you doing . Oh hey john, im connectingur brains so we can share our amazing trading knowledge. Thats a great idea, but why dont you just go to thinkorswims chat rooms where you can share strategies, ideas, even actual trade with market professionals and thousands of other traders . I know. Your brain told my brain before you told my face. Mmm, blueberry . Tap into the knowledge of othetraders on thinkorswim. Only at td ameritrade. Is the market set to soar and then plunge . Thats what investment strategist jim paulsen predicts. He explains why on tradingnation. Cnbc. Com. More squawk on the street coming up. Welcome back. With markets lower again here this morning lets get to Rick Santelli for the santelli exchange. Good morning, rick. Good morning, kelly. Good morning to my guest doug holtzeakin, thanks for taking the time today. Thanks for having me, rick. Youve had a variety posts make you quite well rounded answer to many questions. We know markets are up and political pundits their job is to kick the tires whether its on taxes, regs, health care, all these things, its the democrats versus republicans, progressives versus the right, nothing is going to get done. Its going to be like its always been. This stuff is hard and complicated. My answer to that is is this little itty bitty box because, guess what, we need to think outside the box. And ill tell you what im referring to, theres one quality of donald trump, President Trump everybody should be aware of, he likes to negotiate. He likes the art of the deal. My contention is theyre all missing the most important variable. On all the issues of the day when the left and the right clash, and they will clash once we get off this cartoon russian stuff, hes going to lock these people in a room until they come up with a compromise. People have joked about that. I think theyre going to see a chapter they havent seen. Your thoughts. I think youre onto something, rick. We know that its hardly the case that we have unified republican rule in the house and the senate. They disagree a lot. And certainly in the white house. And he ran an unorthodox campaign. Hes hardly got some automatic loyalty to the republican establishment. He knows he needs democratic votes to raise funding for example, so i expect him to reach out to them. He included some things in recent speech to congress on immigration and paid family leave that are interesting and important to them. I think were just starting to see the beginning of that negotiation. I agree. Now lets actually dig a little deeper. Lets take the big story of the day, border adjustment tax. You know, theres been so many stories written on it. And it is going to be a little bit complex. But in the end whether this is a pawn in a game of chess with regard to negotiating or whether its something thats going to be in the legislation, im not sure. But i guarantee you that this president is looking at all these issues and hes most likely going to make some democrats upset, some republicans upset because i think the only people he cares about are his base. And they want something done. Finish this off on your thoughts on all the issues of the day and how compromise could get us over the finish line. I think hes got his eye on the prize. The prize is better economic growth, thats why he ran. Thats what he promised his supporters. Tax reform is a route to better economic growth. It can produce better investment, cement the u. S. As a low Tax Jurisdiction in the globe. And all of those things can happen with or without the adjustment at the border. Thats just something he can trade or keep depending on what it takes to get the deal done. The deal is tax reform. The deal is better growth. Same story on the regulatory front. Same story on health care reform. Hes not looking at the Little Details that are, you know, the policy guys are obsessed with, things i spend my time worrying about. Hes worrying about getting it over the finish line. Thats what you need, a white house dedicated to getting big reform over the finish line. Excellent, doug. Were all going to have to wait and see how it turns out, but my money is betting on compromise. Believe me, many who want it arent going to be happy when they get it, but i think its coming nonetheless. Thank you, doug. Kelly, back to you. Thanks, rick. Thank you guys both. Lets send it to it over to jon now with a look at whats coming up on squawk alley. Jon . Kelly, chipmaker a ds stock is up 5x over the last few months all in anticipation of what it did this week. We have the ceo on squawk alley coming up. Also, weve got the founder of lululemon going to join us. And snap still soaring. What has to go right for it to be a good buy here . All that and more coming up on squawk alley. Your path to retirement may not always be clear. But at t. Rowe price, we can help guide your retirement savings. So wherever your Retirement Journey takes you, we can help you reach your goals. Call us or your advisor t. Rowe price. Invest with confidence. Whether its connecting one of or bringing wifi to 65,000 fans. Campuses. Businesses count on communication, and communication counts on centurylink. Welcome back to squawk on the street. Embattled director of the cfpb, Richard Cordray, sat down with our john harwood and john joins us now with highlights from that conversation. John . David, democrats have loved Richard Cordray and the Consumer Protection bureau barack obama created, republicans in business not so much. I asked the director whether he sees his mission as going after a small number of bad apples or whether the whole system is rotten. In virtually every marketplace, there is some player, some participants, who are willing to bend the rules and push the envelope to get an advantage and hope and expect that they wont get caught and theyll be able to do that, and in the Debt Collection mark, for example, there are people who will do that. They will harass and abuse and oppress consumers just to squeeze payments out of them and hope and expect that if anybody ever tries to hold them accountable, theyll be able to, you know, weasel out of it somehow. I think in other markets there are times where there are Market Dynamics that make it difficult for people. So, for example, in the leadup to the crisis, when the mortgage underwriting standards were starting to deteriorate, it became very difficult for Community Banks and Credit Unions in particular who had standards that they had adhered to for years, and suddenly, people were coming in asking for loans, and theyd say, no, we cant make that loan, that wont work, but they knew theyd get it from somebody else. It becomes a difficult dynamic for them. Im giving up market share. I have to lower my standards in a kind of race to the bottom, and thats where regulation can play a part in upholding basic standards. The reason i asked the question is i do think that some people in business bridle at the idea that democrats in general, maybe president obama in particular, people like you begin with the presumption that people in business have bad motives. I dont. I dont begin with the presumption that anybody that i deal with has bad motives, and thats political people, business executives, people in the nonprofit sector, other colleagues in government. I just never felt that its helpful to think about peoples i assume good motives on the part of people, unless proven otherwise. And for the most part, that makes your interactions more productive. Now, Richard Cordray says that his work at the cfpb is consistent with the desires of those bluecollar trump voters, but white house aides are looking into ways of firing cordray, and if they dont, republicans in congress are going to try to clip his wings through legislation. What would some of those ways of firing him be, john . Well, theres a possibility of a direct firing of him. That is legally unclear whether trump has the power. Theres a legal case going on. If not, republicans could try to switch through legislation to a commission system, change the funding of the cfpb, or abolish the office altogether. All right. Thank you, john. John harwood reporting from washington. As we send you to a quick break here, take a look at shares of snap. They continue in the second day of trading to surge, you can see, up 17. 5 . It does appear Retail Investors certainly getting their opportunity now to buy it, and theyre taking it. Were going to have more after this. Why pause a spontaneous moment . Cialis for daily use treats ed and the urinary symptoms of bph. Tell your doctor about your medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain, or adempas® for pulmonary hypertension, as this may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have a sudden decrease or loss of hearing or vision, or an allergic reaction, stop taking cialis and get medical help right away. Ask your doctor about cialis. Companies across the state are york sgrowing the economy,otion. With the help of the lowest taxes in decades, a talented workforce, and worldclass innovations. Like in plattsburgh, where the most advanced transportation is already en route. And in corning, where the future is materializing. Let us help grow your companys tomorrow today at esd. Ny. Gov 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 . Welcome back to squawk on the street. Im dominic chu. Shares of perrigo taking a decline as the department of justice is looking into the generic drug business. The Justice Department has been looking into possible collusion in generic drug pricing in recent months overall. Cnbc has reached out to perrigo and have not heard back, but we will let you know as soon as we do. Now back over to carl and the squawk alley gang. Back over to you guys. Thank you very much, dom. Good morning. It is 8 00 a. M. At snap headquarters in venice, california. Its 11 00 a. M. On wall street. Squawk alley is live. Good friday morning. Welcome to squawk alley. Jon fortt is back from barcelona. Welcome back, jon. Thank you. Good to be here. Kelly evans with us also at post 09 a friday. Snap on track for another day of gains following that hugely successful market debut