Transcripts For CNBC Squawk On The Street 20170310

Higher. Plus, were going to have more opposition it appears to the border tax. The ceo of jc penney says it makes profitability virtually impossible. The Corporate Tax myth, a new report showing many of the american Largest American Companies pay no taxes at all. Within that headline number of course the better than expected jobs report shows private sector payrolls up by 227, construction up 58,000, thats the most in nearly a decade. Average Hourly Earnings up, numbers coming ahead of next weeks fed meeting in which policymakers are expected to raise rates. That construction number driven perhaps by trump rhetoric or policy. Perhaps by a warm weather in february and very little snow across the country. Well, ive got to tell you, i always like to look at where the jobs are created. And ive been waiting for construction. I love construction jobs because theyre such a great ripple effect. Construction punches way above its weight in the u. S. Economy and increase by 58,000. I also like to see manufacturing up 28,000. And then mining has been such a drag. Now, that is not because the epa pruitt just got approved, but i do think the makeup of the jobs is such there will be more jobs coming. Because these are jobs that get other jobs. Thats not the same with health care. Labor force back to 63. The highest since march of last year. Basically matches a the highs of the crisis. Meaning maybe theres a little more slack than we thought. Yeah, i mean, i think people coming back to the labor force is really important because weve been absent. I think that is part of the animal spirits. Now, look, watching this atlanta fed, they keep cutting what they think is the gdp. Im not buying that. I think gdps going to hold up well. When i look at these numbers it makes me think that there are people taking loans and getting things done. Now, you think, wait a second, isnt that too soon since november . Not really. In the process you get a loan, if you have the permits, maybe start getting something done, maybe start doing some hiring, but the weather does matter. And i say that because southwest air one of my absolute favorites just came out with some revenue numbers that were weak and they blamed the rainstorms in california. So lets just say, lets just pause it the idea perhaps this is an even better number given the fact that southern half of onefifth of the country, california, was kind of shut down by rain. Some numbers to go over here thanks to Peter Boockvar whos helpful when he puts all this together. 199,000 private sector job additions averaged over the last three months, versus 189,000 over the past six months and 180,000 over the past 12. So we had picked up over the last three months. But to put it in perspective, in 2015 private sector job adds 213,000 and in 2014 239,000. This may be one reason why were not seeing bond yields skyrocket this morning. Because its not that its additive but not so much you should be freaking out. Right. The take was the bond market was perhaps fearing the worst of the best. And then look, i always feel so im always feeling a little bit sociologically mixed by saw only up six cents for the hourly rate, then think the american worker, six cents and then we got this about how rich people pay taxes, its just two countries. Yeah. You did have an increase in 25 to 54yearold employment which people have been looking for, fairly significant one. Nice. Which is important in terms of the makeup of the labor force. U6 matches post crisis low. People are tossing around threemonth charts of aggregate hours worked coming back to levels that would take you back to 13, 12, that would be good. Look, the economy is better. And were seeing actual i interview a lot of ceos for mad money. Always like to talk about the other shows that im on. I mean, there isnt one that doesnt feel like things are better. There isnt a single one. Now, i have United Technologies today. I really want to hear what they think about what greg hayes has to say. Ive seen greg hayes be kind of a straight shooter over time as a ceo. I dont know if you feel like that. Yes, i do. But i would like to know what he thinks because im seeing on a smaller level lots of people who are involved in distribution. Lots of people involved in well built Important Companies ring the bell, food machinery, whatever, theyre seeing good numbers. Theyre seeing some good numbers. Now, retail is horrendous. I mean, i cant believe that retail cant pull down a country theres so many jobs being lost in retail. Its frightening. Its frightening. Its 10 decline in mall traffic. When you say that, what are you thinking about . Some days we go on and im then left saying, wait a second, jim, the malls dead but childrens place is doing all right. The malls dead but e. L. F. Is doing all right, it doesnt appear to be bleak across the board. Lets take that. What is childrens place doing to increase profits, close 200 stores. Foot locker, close 90 stores plan for profitability. When you see macys trying to improve profitability closing 68 stores, penny, there they go, they got improve profitability, 140 stores. Cigna yesterday actually good number caused a big short squeeze, 165 mall based stores, limited 250 stores, wet seal 171 stores. I had Columbia Sportswear on last night theyre doing well despite rei. Im sorry you look at these and say good guys are closing stores, bad guys are closing stores, look at those malls, the mall reached yesterday they were in a minicrash. Those were really interesting numbers. Im glad you put those together. Now, the omnichannel of course is making up for that, right . Oh, thank you. Youre playing my game here, man. Recode today, amazon registered more apparel sales than any retailer in the u. S. For millennials. Well, its funny because i was going to go back to the comments by richard hain at urban outfitters. Remember were six times the number of Square Footage in europe and japan. David, heres where the rubber hits the road. Last night ulta reported gross margin number that was down ten ticks. Okay. Why . Because their online is doing so well. Richard from urban out fitters gave an incredible treatise about how online is killing offline. Their own online, not just amazon. He is saying, look out, its not additive, its negative. So people are realizing, omni channel, the great omni channel, is killing them. Name three retailers that did really good this quarter. Name me three. Childrens place. Well, there were three that did excellent. Okay. Good relative to what . Did very well. T. J. Not a mall. Tjx according to New York Post whole new leaf here home depot. Well, okay, apparel. So happy birthday. Anyway, listen to me, tjx, burlington and ross stores all did well. What do they not have . Omni channel. Theyre not willing to cannibalize. Omni channel, take this down, david. The omni channel is the donner party of retail. Essentially eating your own foot. They left four weeks too late, got 23 feet of snow and you know what happened there . I do, you mention it so often i had to find out. Brains and couldnt eat your own. No one ever ate their own family. Thanks for sharing that again. I appreciate that. I went down to where donner party happened. Meeting resistance from one of the u. S. Biggest trade partners, canadian Prime Minister trudeau expressing concern that such a tax would hurt both countries economies. He delivered keynote at cera week last night in houston. I think one of the things recognizing of course how much the canadian economy depends on close collaboration and integration with the american economy, anything that creates impediments at the border, extra tariffs or new taxes is something were concerned with. At the same time jc penneys ellison talked to Courtney Reagan about whether or not hes looked at financial models that would assess the damage to retailers from border adjustment. Take a listen. It takes our tax structure as an example from roughly a 34 Corporate Tax to over 170 . So that gives you an idea of the Financial Impact to a company like jc penney. And thats very consistent with other companies, Companies Like best buy, target, kroger, walmart, i mean, you name it, i mean, were all in the same precarious position because we dont have manufacturing capacity that exists in the united states. Does that mean theres no chance for profit . It will be very difficult. Very difficult. In the short run virtually impossible. Fabulous interview by courtney. Fabulous interview. And i will just say unlike the other retailers that he mentioned their Balance Sheet is not going to be able to sustain this decline. You know, tepper made this point the other day on squawk box though, border adjustment tax gets phased in over a number of years, the dollar perhaps does react to a certain extent. Its not all completely clear, even though you get this enormous pushback from retailers that profitability is going to be something they can simply not get to. Theyre having a hard enough time as it is to your earlier point, jim. Right. Look, one of the guys i absolutely i have a lot of ceos i just really love, but i had this guy, tim boyle from Columbia Sportswear, i happen to love their clothes, 49th largest taxpayer in this country by the way. And they were saying, listen, you know, if youre looking at this border tax from the u. S. Point of view, youre really forgetting what happens after we put it through. Because they do a huge amount of business in europe. And he said you think theyre just going to say, hey, thats okay, u. S. , fine. No. Theyre going to do another retaliation. Retaliation. Hes talking about tariffs. Hes talking about 1930like tariff wars. Weve got to be careful. We do. Though im still of the belief were not going to end up with a border adjustment tax as part of tax reform, though we will have retaliatory tariffs from the president to a certain extent. Thats actually a little more logical, i think. You do . Well, look, i think president obama put through a i know no one even remembers that guy, but president obama put through very tough tariffs on china. Yes. And south korea. On steel. And what saved the American Steel industry . It was those tariffs because you could see where a. K. Steel, you could see what happened at letter x. Im not saying that president obama was trying to make America Great again. Thats a trademark. Thats like greatest of all time. Muhammad ali was like a trademark. But tariffs can work. Tariffs can work. Ak steels higher you know, theyre not going to lay off people en masse. Especially if youre serious about shortening value chains, which i dont think theres any doubt the white house is quite serious about that. Yeah. I want to hear from gary. I mean, you know, who what jim cramer w joe kernen was saying, one of the things i would ask, gary call, gary, is that good or bad . Oh, well ask him, we certainly know that. Whether or not well get a definitive answer i think is much more of a larger question. Because its not clear that the administration the administration has yet to coalesce behind a point, a specific point of view on a border tax, right . But when you listen to target look, ellison is a terrific guy. Hes trying to save jc penney. They help employ a huge number, huge, tens of thousands of people. You do not you may have a border tax and that may actually raise some revenue, and then you lose tens of thousands of jobs at jc penney, are you kidding . Where are those people going to get rehired . Coal mines . Checkers . Were getting rid of checkers. Have you seen what this does to the checkers . 3 Million People are going to become, what, Sales Consultants . Youre talking tens of millions of people in retail. Thats right. Lets not forget those are jobs. Theyre not just money coming in. You cant find jobs for those jc penney people very easily. We went to work at jc penney after fulfilling lives. I hear you. Well, february payrolls up 235,000, jim. They can switch to manufacturing, those people, yeah, fine. When we come back were going to talk about that new study jim mentions that claims that 35 Corporate Tax rate is a myth. Plus white house reaction to the jobs number. We will talk to gary cohn, director of the president s economic council, take another look at the premarket. We are halfway through the president s first hundred days in office. More squawk on the street in a minute. Hey nicole. Hey i just wanted to thank your support team for walking me through my First Options trade. We only do it for everyone gary. Well, i feel pretty smart. Well, were all about educating people on options strategies. Well, dont worry, i wont let this accomplishment go to my head. Im still the same old gary. Wait, you forgot your french dictionary. Oh, mucho gracias. Get help on options trading with thinkorswim, only at td ameritrade. Duexperience our mostand perforelevated suvs ever. Including the lx, gx, rx and nx. Experience amazing. Its your tv, take it with you. With directv from at t, stream all your live channels, on your devices. Switch to directv and lock in your price for 2 years. New offers starting at 25 mo when you have the new at t unlimited plus plan. The 35 Corporate Tax rate is a myth for many profitable fortunate 500 companies according to a new study. It shows 258 fortune 500 companies were consistently profitable over an eightyear period and paid a 21. 2 effective tax rate. Study also found 100 companies enjoyed at least one year in which their federal income tax was zero or less. 18 Companies Including ge, priceline paid no income tax over the eightyear period and collectively the 258 companies enjoyed almost half a trillion dollars in tax breaks over the last eight years. Not sure this is entirely breaking new ground. No, and remember theres lots of companies that werent just took some losses, didnt necessarily make that much money. To me a much more valuable study is what happened say last year when the economy started getting better. Right. Although they did make the point that those were profitable companies. Right. And i think the debate were going to be having on Corporate Tax reform, these are salient points that are worth paying attention to. No doubt. Not to mention and this has already been done by many people trying to figure out the potential breaks that are going to come from tax reform, theyre already looking at the effective tax rate for many of these corporations and seeing whether in fact they would benefit from lets call it the overall package of tax reform where you get rate down to 20 . And many of them wont. Thats whats interesting. Right. And yet you can imagine why we need Corporate Tax reform because the territorial system and elimination of so many of the potential games that need to be played by these corporations and i say games, theyre legal, moving ip, moving so many other things in terms of what they do to avoid u. S. Taxes would be potentially done away with. General electric in a statement said the report in comment said the report is deeply flawed and misleading but brings us back to the caterpillar news this week in the times. Then again priceline, what, 75 of their business is from overseas. Duke energy, well you know what, a lot of the Utility Companies have very complicated cost structures that make it so they would not necessarily be large taxpayers. And no one ever expected them to be as regulated utilities. So lets take it with a bit of a grain of salt. Caterpillar i am all over. Im spending so much time on that. Its very difficult to figure out whether its criminal, whether its civil, how much of it was at stake, how much was it to get around the repatriation. Very difficult. In the meantime of course business finally got good. Just great that this happens right at this moment. Typically youve had little patience for accounting questions. In this case it seems like youre willing to give them more benefit of the doubt. I would like to know whether the change in the ceo was related to the idea that they wanted to get ahead of what was obviously a longterm discussion over taxes to say heres some good faith. I would hate that to be the case because i like doug a lot. But they made a change and it was never really explained, particularly because business was starting to get better. But a lot of times the government is a quid pro quo, like hey, maybe you make that change, maybe we go lighter. I dont know. Impossible to find out. I am saying vault on that issue. Right. Of course under the tax reform plan there would be repatriation holiday, unclear what the grade would be there, but it would be lower than the 20 that has been discussed overall as the Corporate Tax rate. Right. But cat was just starting to build a head of steam. Yep. When we return well get cramers mad dash, count down to the opening bell. Dont forget white house Economic Advisor gary cohn with us in a few moments on the jobs number and the white house game plan for boosting jobs further. Take another look at the premarket. A nice friday setup. More squawk on the street in a minute. 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Yes, weve come to the end of the week, important trading session ahead after we digest that jobs number. Where are we headed . You know, heres a contrary, and i just love this call, this is a Morgan Stanley call right in the teeth of the mini crash of oil saying wait a second, we expect Oil Inventories to burn off. Inventories worse since 1982, they think thats important. And they think oil will go to 62. 50 by year end 2017. And theyre making a very strong case to own the big oils. Ive got to tell you, often, david, we find research is trend following. So we kind of feel like, well, thank you for that, what does that do . This kind of reasoning i think is terrific because what it says is dont give up the ship. Just when everyone a lot of this is because the speculators, this was the largest number of speculators that we have seen in the commodity futures trading commission, and that precipitated this because they were all betting that opec was going to shut down. A lot of the people felt that because the aramco deal, people feel like the saudis are going to keep oil up. We heard from the saudi finance minister earlier this week, didnt we . Yeah, it was all kind of bullish down there. Or yes, at the cera festival, no, thats our person, sara. You tend to think this is a decent call . I think oil goes to 47, i think it cant get through 55. Our Companies Sell so much oil in the futures market it stalls and then gets to 45 and we shut the spigot. I dont think you can get i just like the call. 45, 55. Porpt important to keep an e oil. Lets see what we do today, by the way in addition to watching the market of course were going to have white house Economic Advisor gary cohn joining us to talk about the jobs report. Keep it here. So with our ally cashback credit card, you get rewarded for buying stuff. Like what . Like a second bee helmet with protective netting. Or like a balm . You know . Or a cooling ointment for the skin. How about a motorcycle . Or some bee repellant. Im just spitballing here. Nothing stops us from doing right by our customers. Ally. Do it right. Told you not to swat em. Youre watching cnbcs squawk on the street live from the Financial Capital of the world. The opening bell in just over two minutes on this jobs friday. If youve missed it 235,000 is the number above the expectation of about 200. A lot of interesting bond Market Reaction here, jim. Geez. Theyre being very patient about whether or not were in the throes of some incredible wage inflation. What does it take to move the tenyear . I mean, the tenyear i think should be at 3. Again, rick just talking earlier about, you know, we havent seen three in a long time. Why isnt that at three . I mean, maybe because if youre anyone in europe 770 Million People in the euro you dont want to be in their bonds. Which make no sense whatsoever. Right. Building on a lot of maturities. You want to be in italian bonds where theres like a cash economy . No, i dont. The Third Largest bond market in the world. No. Sell, sell, sell, buy, buy, buy. Bill gross said 2. 6 is a more important number than dow 20k, dollar euro parody, oil at 60. Do you think its a true battleground or not . Thats a nice showman view. I think that those are were given hyperbole, i think thats a little hyperbolic. I think three is where i would say, okay, now somethings going to happen. Provided that the 30year is at 3. 10 at the time, where i see it now. See it now. What a great show that was. 3. 16 on the 30year, almost 3. 17. I wonder what gary cohn would think of that. Were going to find out in a few moments. A lot to talk about. Hopefully we can pin him down on some of the views attributed to him via anonymous sources. Right. We know the president has tweeted that forget all those stories its all dynamite down there. Meanwhile watching crude as well as you guys covered a few moments ago still below 50. The Energy Sector the only s p sector negative since election day. I was working on my show and you tweeted that and i retweeted that, i have to tell you that was electric. People were like furious, dont you know it wasnt the president s fault. I mean oil got whatever. But it was really incredible how much people were just glued to that statistic that you tweeted. Glued. Theres the bell and the s p. At the big board today its welbilt, supplier of commercial Food Service Equipment celebrating rebranding. Yes, did you know at one point they were the largest employer in new york city . Wow. Yes. Largest employer. Because yes, im not kidding. I just met with mr. Hirsch who was the founder of the original. How so . They just had a lot of jobs that built a lot of equipment. They make a lot of food equipment. They make, for a restaurant they make garland, they make fryers, refrigerators, you have a good restaurant, you have a franchise restaurant, you are using welbilt, all of the great restaurants use welbilt. I know because were like trying to save a little money. Good breadth at the open there. At the nasdaq its presidio, an i. T. Solutions provider. The leaders, floor, vol can. Wow. Thats a nice comeback. Its good to see a couple of the Technology Stocks that have been doggie of late, nvidia and apple doing a bit better. By the way, facebook message, another thing theyre doing against snap. I mean, boy, facebook is just decided were going to eviscerate snap. Theyre not buying them at 14. Theyre eviscerating snap. Eviscerating. I think they sit around, i think zuckerberg sits around said, all right, ive had enough of that snap. Get rid of that snap. Thats funny, jay yaro runs our Digital Business tweeted yesterday zuckerberg he thinks takes a screenshot of snap and hands to his engineers and says make this. Absolutely. Oh, i think its worse than that, take a screen shot, destroy this. I mean, i think he is a very competitive fella, you know. They typically are. Yeah. Yeah, theyre competitive. Yes. I want this put out of business. By the way, i was looking at some snap ads. Im not clicking. No. Sometimes they fool you. I mean theres like an espn, theres like a kong ad for the movie. Part of it is they pressure the advertisers to be creative in the content so that its part of the experience. True. And espn, which by the way is the greatest and is on snap, is the greatest. Does iger have a shock button on you now . Their coverage of free agency before the free agents are even free agents, shefter has it. Later this morning well talk to jim stewart. His times story today looking at the probabilities of Howard Schultz, iger was that something . Benioff. He floated benioff. Benioff was floating in that piece. Holy cow. What about him . He was floated in the whatd he say the business that was a fun piece by jim by james b. It was. We talked a lot about schultz in the past. We asked him many times. Id like to ask about same store sales. You would. You were not particularly pleased with the same store sales. No, this Current Quarter im concerned about the same store because of the mosh pit problem, the guys cutting in front of you because of the mobile pay. Jim harleys having a nice morning. Baird is out saying q1 sales are tracking above. Thats very good because they were tracking below expectations not that long ago. So thats positive. We have a nice market here. I think people feel its one of those goldilocks numbers. Right. We were talking about snap just a moment ago. Did want to share some research from aegis, cited this data from app tracker earlier in the week and now following up saying they sliced through the data by developed country to see where the strengths and weaknesses are for snap and the takeaway daily average user growth weak in most major developed countries including u. S. , australia, south korea, russian, germany, russia and germany the only two where it appears strong. Interesting. But those are shares with us now a little over a week. Yep. Actually showing some strength. Can i tell you im a little relieved about something . Ulta was down 15 points earlier. And ultas now back up, as it should be with that 16 Comp Store Sales and the addition of mack. They now have mack cosmetics at ulta. They do . Yeah, thats estee lauder. Lets bring in gary cohn in on the news of the day from the white house. Labor Department Says 235,000 jobs is the number for february. Gary, good to have you back on the show. Good morning. Good morning, carl. Thanks for having me. Jim just used the goldilocks term. First time ive heard that today. You going to go along with that . Sure, why not . I think it was a perfect number. Right exactly where it needed to be. Our jobs plan and our Jobs Creation and bringing jobs back to america is going exactly the way wed like it to go. When i was on a month ago we talked about bringing jobs back. I think this number reaffirms everything that were trying to do. How much of it is potus and white house . How much of it would you legitimately say is minimal snowfall, warm weather, a good february . Look, theres clearly a good february as part of the number. Im not going to deny that, but on the other hand when you look at what weve been doing here at the white house and all of the ceos that weve brought in whether it be exxon or sprint or intel, theyve promised enormous amount of jobs and job creation in the united states. Those hirings have not been done yet. Those are future hirings. So were still living on the hirings from the normalized Economic Growth thats built into the system here. So when you look at whats ahead of us and whats built in the system we have a huge backlog of hiring that we already know about in the normal run rate of the economy. So were very excited about whats ahead of us. All right, gary, jim. Weve got this debt ceiling i know we have got always concerns about debt. Always worried about the border tax. How about this . Ill let you take credit if you go with it. We need a make America Great again 50year savings bond, 1 trillion to fix our infrastructure. Gary, why shouldnt we do that . You know bonds, come on, 3. 16 with the ten, the world is starved for 50year u. S. Government paper backed by the full faith and credit. Could you please give us that savings bond . Jim, well Work Together on that one, hows that . I dont need credit. We can Work Together on it. Im happy to be your partner in this one, but we agree with you. We had a large group in here two days ago into the white house talking about infrastructure, talking about the enormous needs. We have underinvested in our infrastructure for the last 50 or 60 years in the united states. We have enormous opportunity right now, and jim, as you point out, we can issue enormous amount of debt in the 50year and 100year segment to finance debt. Im not sure how much debt we need to finance. Theres an enormous amount of capital in the system looking for Long Duration assets in the united states. We have enormous amount of Long Duration assets with real revenue attached to them in the infrastructure world. We are going to go rebuild those assets, were going to do it in publicprivate partnerships, were going to do as much as we can in a variety of different financing mechanisms. Its not all going on the governments Balance Sheet. In fact, were going to do it as efficiently as we possibly can without using the governments Balance Sheet. Gary, another Important Initiative of course undertaken by the administration is tax reform. Last time you were on i asked you about it, you didnt really give an answer in terms of where the Administration Stands on a border adjustment tax, which is such a key part of it. But ill ask again. Okay. Is the administration in favor of or against a border adjustment tax . Well, im going to give you the same answer i gave you a month ago. So if you want me to do that, well go ahead and do that. Were exploring all opportunities in taxes. We want to protect american jobs. We really do. As we started out were talking about jobs today, its jobs friday. We want to bring jobs back to america. We want to bring manufacturing jobs back to america. So anything we can do to incentivize manufacturers to come back to america, thats important to us. That said, taxes is just one of the tools we have at our disposal. Right now i think you all know were actively involved in health care and Health Care Reform. When we get done with Health Care Reform we are going to get to taxes. We are actively working on a variety of different tax alternatives. And we will present a tax plan when were done with health care. So were going to get an answer from you guys at some point, i would assume, in terms of the specifics on that border adjustment tax and or what youre going to do to replace it if you dont like it to keep the rate low but not bust the deficit . Or do you not care . I mean, is that a view of the administration though, gary, that maybe forget about the deficit, lets just get tax reform through regardless of the revenue raisers that need to be a part of it . No, no, we do care. We do care. We care about the deficit. We care about revenue, we care about whats going on. Were going to most likely absolutely do taxes under reconciliation. Were going to have to be deficit neutral over a tenyear period. Yes, we will be able to use dynamic scoring. And we think weve got some opportunities to do that and do it in a very constructive way for u. S. Consumers, for u. S. Industry, for everyone as a whole. We are working on a bunch of really interesting ideas to reform the tax system in the united states. Gary, put your old Goldman Sachs on. Jim, im not jim, im not allowed to do that. Forget goldman. Forget goldman. Whatever. That was a great place to work for a couple of weeks. This trillion this stock market 2 trillion in wealth, how important is the stock market to this white house . Look, the stock market is important to us, but its just one of the barometers that were looking at. We look at the stock market every day, but we look at the employment data, were looking at gdp data, were looking and talking to ceos every day about what theyre seeing in their business, about what theyre hiring needs are, what their opportunities are, where they see opportunities for us in america. So, look, the stock market is a barometer. The nice thing about the stock market its a fairly realtime barometer for us, so we do look at it. Gary, speaking of the data, weve had the president during the campaign and before cast dispersions on the veracity, the legitimacy of some data, including bls. Does he believe it now . Look, we look at all data. We are very data driven. In the nec where i work and where im the director my team looks at enormous amount of data. Were evaluating whats going on in the economy all the time. Were trying to drive the administration to the right place and make the right decisions. Gary, real quickly, its a jobs day, you mentioned right at the top the president s policies helping to create jobs in the future. But some would say, you know what, the promises that have been made by corporations, many of them were in the planning stages already. And really when you add the numbers up, they dont even add up to what we saw this month in terms of job growth, or last month, how do you respond to those who say its still really not something we can necessarily see as a long term answer in terms of job growth . Well, i would completely disagree with that. Weve had many ceos and ive been involved in these meetings, ive been intimately involved in these meetings, many ceos have walked in and specifically said to us and said to the president that without you being in the white house and without your policies and without your reform agenda, without your tax agenda, we would not be building these facilities here in the united states. So id start with that. Number two, its not just the jobs theyre committing to. Remember, for every job you bring in one of these specific facilities theres all type of ancillary jobs. Theres suppliers for these facilities. Theres services for these facilities. Theres an enormous trickle down effect in job creation when you bring back these big manufacturing facilities to the united states. So were very excited not just about the facilities but all of the ancillary jobs that are created. Gary, we know youve got to run. We look forward to next month. Good to see you again. Thank you very much. And, jim, i cant wait to share credit with you on the infrastructure. Fair enough. Cramercohn no, cohncramer. Whatever you want, jim. Gary cohn, National Economic council at the white house. What did we make of some of his answers specifically regarding debt and border adjustment . Look, i think this is really just still up for grabs. I mean, i think they just keep speaking to ceos and keep speaking to ceos. And i dont think they have the answer yet because i think theyre trying to be really considerate about it. I do think an important point he made in terms of using dynamic scoring perhaps but making sure its deficit neutral using reconciliation in terms of tax reform, thats an important point because there are some who believe maybe the administration will simply be willing to say no to a border adjustment tax and the revenue that would be raised by it and simply willing to accept a higher deficit with lower rates that youd be getting under Corporate Tax reform. He seemed to say, no, were focused in part on making sure its deficit neutral. I do like the fact he said, listen, we can do some off balance 100 and 50year bonds, the worlds starved for them. Dont look at me like that. Come on the 30year is a pretty decent maturity. The world wants 50 to 100. The world wants it. Will take away from the 30, wont it . The world wants it. He could do it. He could sell it right now. 100year bond . Well, 50 easy. 50year treasury, a savings bond for your kids, you would buy them right now if they had a savings bond, and gary knows that. Gary knows that better than anybody in this country. Good to have him. On all that wed love to get Rick Santellis take as we get back to the bond pits at the cme. Good morning, rick. Good morning, carl. You know, deficits are a weird thing. We can talk about them, we can static score, dynamic score, come up with different answers, cbo can give us numbers, theyre nonpartisan, but garbage in, garbage out is also nonpartisan. I think what icahns trade on is even before trump considered running before president the out years 2025, 2026 we have a real deficit problem. That doesnt include anything we may add to it. You know, i dont know, 50, 100 year bounds, they sound like a good idea. Talk to friends with credit cards, you know, if your Credit Card Company says i have a deal for you, real big deal, hey, ill extend your payments out another 50 years and ill cut your monthly bill by 30 , is it really a great deal . Im not sure. One thing i can tell you, it was a great deal for everybody who bought those auctions. You know, weve talked about it, no markets linear, so on the week, on the week tenyear as the crow fly up 11 on the date or down five, now its 10. 4, down four on the day, up ten on the week. Why is that significant . Because as important some of these levels are, jim, you get once again the award of the day, you were talking about anybody want to buy italian bonds . Listen, i like italian pastries and pasta, but im not sure id buy italian bonds. Thats part of it along with the auction. Theres a whole other side to the short trade thats a mitigateling factor. Quickly, intraday two down, gives you an idea of how things have reversed, same thing is true for tens, but tens are fascinating. Theres your intraday. Lets go to september of 14, and also basically mid december of 2016. The one close over 3 basically since the first half of 2011 occurred on new years eve of 2013. You see that one blip right there. Open the chart back all the way to when we really actually spent some time over 3 and youll see it first half of 2011. Dollar index, does Technical Analysis get any cleaner than this . This thing keeps bouncing away from its 102. 20 close for 2016. Did it again. Does that mean it cant pop through it . Of course not, but it also means that there are a lot of mitigating factors here that even though the obvious rates going higher, you know, as traders down here know if you really want to make a wallet fat, its the timing that gets you rich. David, jim, carl, back to you. All right, rick, thank you very much. Rick santelli, what a block. When we come back our Pulitzer Prize winner jim stewart looking ahead to 2020 and which ceos might run for president. Dow up 43 points to start the morning. Back in a minute. Deartheres no other way to say this. Its over. Ive found a permanent escape from monotony. Together, we are perfectly balanced. Our senses awake. Our hearts racing as one. I know this is sudden, but they say. If you love something set it free. See you around, giulia but i keep it growingby making. Built with passion. 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 . Markets off the initial high but still pretty good breadth today. A lot of tech leading, but you just mentioned energy. Yeah, energy just cant hold the bid because there is the inventories have to be worked off which is why i thought the Morgan Stanley comment about they will be coming down was so important. It is amazing that tech is strong even though fin sar is so weak which is a key part of the optical chain. It shows you people are containing the negative tiity t that. Have you been watching j j go up endlessly . Celgene . Yes. Mary is one of the finest executives in the country, doesnt get enough credit, they have figured out how to have a brick and mortar store that works and they deserve more talk. Just talked to gary cohn National Economic council, if you missed it a moment ago, take a listen. We have underinvested in our infrastructure for the last 50 or 60 years in the united states. We have enormous opportunity right now and, jim, as you point out, we can issue enormous amount of debt in the 50year and 100year segment to finance debt. Im not even sure how much debt we need to finance. Theres enormous amount of capital in the system looking for Long Duration assets in the united states. We have enormous amount of Long Duration assets with real revenue attached to them in the infrastructure world. We are going to go rebuild those assets, were going to do it in publicprivate partnerships. Were going to do as much as we can in a variety of different financing mechanisms. Its not all going on the governments Balance Sheet. In fact, were going to do it as efficiently as we possibly can without using the governments Balance Sheet. Wow. Right. I just thought that was real big news. I know what people have to recognize is these guys were not born yesterday. They are very clever. Hes talking about capital being out there that might be willing to invest in a bridge, for example, you put the toll up, know its going to last for 40 or 50 years, obviously theres maintenance or longer so it becomes sort of its own long dated sort of bond in a way. Remember we used to yet it is owned by a private public partnership. Im fine with that. I just want some bridges that dont fall. Some democrats are not fine with the piece with which financiers would like to get their i would like to get to point a from point b without breaking my axle. Lefrak said its a lot more than roads, its water supply. Yes, it is. Were pathetic in this country. We all know it. 4 trillion . Yep. Pathetic. Stop trading with jim in a moment. Dont go away. Time for cramer and stop trading. I was worried about how estee lauder would react to putting mack into ulta. Huhuh, people love it. The stock is screaming. The ceo of estee lauder, i know theyve had some problems in hong kong, but i bet you he believes in the selfie generation. I bet he believes when you walk out you have to have makeup. Thats why mack going into ulta is fabulous for them. And i think that that stock is now going to have a considered move in not going to stop here. Get to know his name, hes a brilliant executive. I have met him. You met fabrisio . I have met him. Hes my guy. Is he . Youre constantly doing that. Its not a zero sum. Greg hayes is my guy. Greg hayes no hes not. Yes, he is, hes on my show tonight, United Technologies. So what . Hes my guy. Theres greg hayes right there tonight, right . Yes, my guy. Along with lending tree. Sorry, david. All right. Well see. Well see. Not backing off. Thank you, and happy birthday to david who knows him only in passing. A little bit. When we come back goldmans jan hatzii surks. During the lexus command performance sales event, experience our most refined mols ever. Including the ls, lx and es. Experience amazing. Hey ron theyre finally taking down that schwab billboard. Oh, not so fast, carl. Oh no. Schwab, again . Index investing for that low . Thats three times less than fidelity. And four times less than vanguard. Whats next, no nimums . No minimums. Schwab has lowered the cost of investing again. Introducing the lowest cost index funds in the industry with no minimums. I bet theyre calling about the schwab news. Schwab. I a modern approach to wealth management. Ews. Sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Our customer is a our 21yearold female. Heavily into basketball. Wait. Data just changed. Now shes into disc sports. Ah, no shes not. Since when . Since now. Shes into tai chi. She found disc sports too stressful. Hold on. Let me ask you this. Whats she gonna like six months from now . Who do we have on aerial karate . Steve. Steve. Steve. And alexis. Uh, no. Just steve. Just steve. Just steve. Live business, powered by sap. When you run live, you run simple. And her new mobile wedding busine. Nette at first, getting paid was tough. Until she got quickbooks. Now she sends invoices, sees when theyve been viewed andtadahpaid twice as fast for free. Visit quickbooksdotcom. Good friday morning. Welcome back to squawk on the street. Im Carl Quintanilla with sara eisen, david faber at the new york stock exchange. Markets on this jobs friday looking okay. Pretty broad buying in place as we got close to an alltime high on the nasdaq. Oil trying to recover getting closer to 50. Our roadmap for the hour begins with stocks getting a boost after the u. S. Added 235,000 jobs in february. Was it a trump bump . And has the stage now been set for a rate hike next week . And the ceo president , why Pulitzer Prize winning columnist jim stewart says trump paved the way for a 2020 president ial race between executives. Plus, a new study showing some of the largest u. S. Companies are actually paying no taxes. Well talk to the lead author behind that report. But first, lets get straight to our senior economics reporter Steve Liesman with more on what looked like a very healthy jobs report for the month of february, steve. Yeah, give me 235 all day long here, sara. Its a positive jobs report helped by some temporary factors like weather but still showing really solid underlying strength in payrolls and in the economy. Here are the numbers everyones talking about up 235, not a big revision in january up 9,000. The Unemployment Rate ticking down to 4. 7 bank accou . A big entrants into the work force helping the Labor Participation rate. Average hourly wages kind of muted, 2. 8 year over year. Labor markets continue to point to improved economic momentum in 2017. We view risks surrounding the recovery as broadly balanced and see now substantive recession concerns. Now lets look at where the jobs are or were in the february. Construction and leisure hospitality, those two numbers will be helped by the Better Weather up 58,000 on construction. But manufacturing coming roaring back up 28,000, big number right there. Health care a perennial winner 27,000. Retail taking a dive after a good january number, but a lot of that was in the bricks and mortar stores. You have to wonder whats going on there given some of the store closures that weve had. Now take a look at what all this means for the fed. What were looking at here, folks, is the january fed funds futures. What were trying to gauge is whether or not a third hike is baked in. That would bring up to 137. So you can see the market is now more and more sure about a third rate hike for this year. And john from rbq writing about a second hike saying if this momentum is maintained we expect the fed to hike at the june meeting. With march just around the corner and baked in never too soon to Start Talking about june. Steve, im wondering about the Market Reaction and bonds and the dollar. The dollar a bit weaker, some buying of bonds. Was this just buy the rumor, sell the fat because both were coming from pretty strong places in that report. Well, sara, i know you followed Mario Draghis comments yesterday. That created a bump already in yields. We have this 2. 61, 2. 60 level as well as a rise in the twoyear as well which seemed to hit around 1. 38 i think was the number that was there. Look, im interested in this rise in 1. 37. Okay. Im interested in this rise in bond markets, but whats happening in stocks look at the dow there up 71. The fact the stock markets are taking this really in stride and keening in on the higher Growth Prospects rather than the downside of higher rates is very interesting to me. It tells me that rates growth trumps rates every time. We will see. Well see if theres a breaking point level on that. Thats right. Steve liesman, thank you. Thanks. The director of the National Economic council, gary cohn, joining us earlier with his reaction to the february jobs report. Take a listen to cohn on whether the administration will ignore the Deficit Impact of tax reform. We care about the deficit. We care about revenue. We care about whats going on. Were going to most likely were going to absolutely do taxes under reconciliation. Were going to have to be deficit neutral over a tenyear period. Yes, we will be able to use dynamic scoring. And we think weve got some opportunities to do that and do it in a very constructive way for u. S. Consumers, for u. S. Industry, for everyone as a whole. We are working on a bunch of really interesting ideas to reform the tax system in the united states. Lets talk about all of this. For more were joined by j. P. Morgan chief global strategist david kelly and ds economics founder and ceo diane swonk. Our jobs day regulars. Welcome to you both. Good to be here. So, david, lets just key off of what gary cohn said about the deficit. Doesnt dynamic scoring mean that theres actually going to be a deficit . Whats the significance of that . Well, no, it doesnt. If you do dynamic scoring, honestly you can say if you make certain changes in the economy, even in the structure of taxes and that causes Economic Growth to accelerate, then you get some more revenue. But you have to be honest about it. I think if we look at cbo numbers. If they do the dynamic scoring properly its hard to get a big bump in Economic Growth from a revenue neutral approach. So we just have to see how it works. But i really like this commitment to deficit neutrality over ten years because this economys at full employment. Its doing very well. But it doesnt need a lot of stimulus right now. Frankly we cant afford a lot of stimulus right now given the debt. So i like the commitment to keeping deficit neutral over the next decade. Diane, economists keep saying were at full employment and then we get numbers like 235,000 jobs added during the month. So what does that tell us about how sustainable it is to get this kind of job creation . Well, i think the more interesting issue is that we saw a lot of people join the labor force. We saw that other up tick in Labor Force Participation which came almost entirely by people without a high school degree. These are some of the people that are the most marginalized and the fact the labor market hit this Tipping Point last year where we saw it move from easy to tight and wages began to accelerate, now employers are having to sort of dig deeper into the barrel and look at workers if they have to invest more in as well to bring their skills up and in fact one of the gains we saw in employment was in private education which includes training by employers, which was very interesting to see that. Thats something thats been absent much of the recovery even normal Training Programs were cut in the wake of the crisis not only are we seeing Training Programs come back, but were now seeing employers willing to invest in employees that may not have all the hard and soft skills that they would like. That is the exact symptom of actually a tight instead of a loose labor market. Speaking of which, david, i wonder the tenyears action today is that a reflection of the fact that this number didnt come up at 300 plus . Or is it more about labor force and the idea that maybe there are some more workers at the bottom of this bucket . Well, i think theres still a lot of demand for fixed Income Securities worldwide. And i think thats keeping the treasury rates from backing up more. But i do think the treasury rates will rise further. I mean, this i think means were a go for liftoff on a fed rate hike next week. But honestly if we get these kinds of reports, this kind of economy, i believe the Federal Reserve will raise at every press Conference Meeting this year, unless we have some crisis. That would be four rate hikes, not the two the market is pricing in. If you did get four federal funds rate hikes this year, i think obviously treasuries ought to be somewhat higher yields than they are right now. Are we seeing wage growth for that to happen, diane . Yes, we are actually. Were at 2. 8 on a year over year basis, thats within spitting distance of the feds goal of 3 sustained wage growth. That will deliver some more inflation out there. This is what the fed cares about. This is despite the fact that growth in the First Quarter looks like its coming in less than 2 , which means weak productivity growth. But i think what were seeing now is finally the fed has its goal is employment and stable prize e prices. Were getting both those goals and i think the risk of four rate hikes just went up quite dramatically this year and it will be interesting to see that dot plot as they raise rates in march next week at their march meeting. I think youre going to see a couple people on the fomc or at least participants in the meeting that raise their outlook on rate hikes in 2017 as well. Diane, you mentioned productivity growth still not really there. I mean, do you expect that were going to see that given its a key component of overall gdp growth . This is the huge uncertainty out there. Im really worried about productivity growth. We do need so see some more investment. I think well see more this year. Weve seen a lot of productivity growth on the shale oil fields. We need more broad based gains in investment and productivity growth. I think well see some rebound from what weve seen but to see the kinds of numbers to getted to administerings Growth Numbers you need to see the best productivity growth weve seen in the post world war ii period and that doesnt seem likely. It does bring up this idea, david, that yes were seeing a spurt in hiring and big boost in confidence, but its not really translating into that much of a boost for business spending or Consumer Spending. Why is that . Well, yes, because i think on the consumer side weve had very good Consumer Spending numbers for a while here, so some pause is reasonable. But we dont have any pent up demand. Were at 17. 5 Million Units in vehicle sales, thats above trend. Its an old expansion hard to get consumers really excited here. And on business spending businesses need to know that they have a market which we encourage them to invest in the united states. So if we had a lower dollar and greater emphasis on increasing exports in this country, that might lead to more investment spending but you need a huge amount of extra investment spending in order to bump the productivity number. Absolutely. I share dianes worries about this. It will be very hard to get productivity high enough to m n meaningfully change this rate. Thank you both for joining us on this jobs day. David kelly and diane swonk. When we come back, reaction on todays strong jobs number and the feds next move with goldmans chief economist jan hatzius. And Pulitzer Prize winning columnist jim stewart when squawk on the street comes back. it just feels like anything is possible here in upstate new york. at corning, i test smart glass that goes all over the world. But theres no place like home. Theres always Something Different to do like skiing in the winter, jet skiing in the summer. We can do everything. New york state is filled with bright minds like samanthas. To find the companies and talent of tomorrow, search for our page, jobsinnewyorkstate on linkedin. So beautiful. What shall we call you . Tom name it tom studies show that toms have the highest average earning potential over their professional lifetime. See . Uh, its a girl. Congratulations two of my girls are toms. I work for ally, finances are my thing. You know, im gonna go give birth real quick and then well talk, ok . Nice baby. Lets go. Here comes tom 5 nothing, stops us from doing right by our customers. Ally. Do it right. Whoo look out. As the nations first ceo president has donald trump paved the way for more korcorporate executives to seek higher office. Schultz of starbucks, iger disney, benioff at salesforce to name a few, while theyve all denied it our next guest says thats common ahead of any campaign or primary season. Joining us at post nine to talk about it is Pulitzer Prize winning New York Times columnist jim stewart to have you. Its great to have you. What a great read. Thank you. It was a lot of fun working on this. Of the people that you talk about, which one interests you the most in terms of a probability . Well, i think of the ones that i mentioned Howard Schultz is probably the farthest along. Hes the ceo of starbucks. Hes going to be easing out of that job in april but still staying involved in the company. And he came, people told me, quite close a year ago to throwing his hat in the ring. Bob iger at disney has definitely had talks, but hes been willing to extend his contract. I dont think thats so likely. The others are a little more out there. But i do know from multiple conversations that a lot of ceos are beginning to talk about it and beginning to talk to some key fundraisers to see would this be feasible. Obviously they all have a lot of money themselves, which makes that easier. But you still need to attract financial support. You go into a pretty good discussion of the differences between operational prowess and campaign prowess, right . And media prowess. Yes. And very few can replicate what trump has done across those. Yeah, i think people underestimate trump to some extent that he spent decades cultivating the trump brand, the trump name. David gergen told me, we had a great conversation this week saying he is a performer first and foremost. And very few chief executives are performers. And youve got to get out there on the campaign trail, you have to, a, perform, you have to interact. I mean, you can quarrel with how trump deals with the press, but he deals with the press. He is not surrounded by layers of handlers which most ceos have been. So these are all obviously democratic potential candidates. Obviously. I wonder if its being driven by opposition to President Trump and his policies, or just the fact that looks like you dont need any experience in that corporate experience is as good as any. Well, i think a lot of people started thinking about it when they realized that, oh, my gosh, weve got a president now with none of the traditional resume. There was a very funny interview with oprah on bloomberg tv where they say have you thought about running for president. Because obviously you dont really need any political experience to know, wow, i hadnt really thought about that but it seems to be true. So, a, people are thinking along those lines that its possible. And b, many of them are saying look, this guy isnt that great a manager. Im a better administra adminis a better successful business person, why couldnt i do it . I could do a better job. I think thats kind of whats driving it. But few of them have to your point the long term recognition that trump has had as a result of of course being on the apprentice for example for all those years. Yeah, i think theyre underestimating that. I mean, the only one in this group that has that kind of recognition is oprah. By the way, if oprah threw her hat in the ring, i mean wow. She has all the qualifications, i think, to win. Does she want to do it . Stu who had been advisor to mayor bloomberg kind of the prototype for the successful business intern but he was saying they typically underestimate the scrutiny and Opposition Research that gets done on him. He pointed out somebody will pore through every second of every Television Show oprah has ever done if she decides to run and dig up something controversial. Didnt seem to stop trump. Well, no. I mean, again, he had such a teflon brand that, you know, all this stuff kind of bounced off of him. Maybe the same thing would happen with oprah, but i dont think you could say that about any of the others. Did you see the Weight Watchers stock . Well, presumably although again who knows, under the new standard, but presumably she would have to give up her job as a pitch woman for Weight Watchers if she went to the white house. Well see. Precedents are being broken all the time. True. Iger specifically having written a book on disney, would it surprise you . Not really. Although honestly i think iger would be more likely to run for mayor of new york city, how about that . Mayor of new york city or governor of california. I think realistically the presidency is out of reach there. Hes probably the least known there. And he didnt build the company, so he cant kind of run saying, oh, im the creator of disney the way Howard Schultz can say i created starbucks. I think his goals are maybe a little more modest. If he does stay at disney for several more years, he doesnt have to be in any rush. Outliers, zuckerberg, who else . Benioff actually spoke to you and said business is the place to effect change. Yes, very cleverly didnt deny that hed ever do it but he was saying, look, im making a big impact here. And he is. You know, that pledge 1 thing he has really gotten some traction. He has been outspoken on some political issues. So hes been quite effective from his platform as a ceo. Its like you dont have to be the president to change the world. You know, some people say elon musk probably has had more impact. Now, hes another occasionally you hear Wishful Thinking, you know, can we get him to, you know, step in. But hes not he wasnt born in america, so we have that. Wed have to revisit all of that. Zuckerberg absolutely not. That all came from a thing about would he still have voting control if he did serve in government. Thats not happening. And i think Sheryl Sandberg is mostly Wishful Thinking at this point although somewhere down the line i expect its quite likely she might decide to run for office. What do you think it says culturally that were in a mode where ceos are looked to as a well for candidates whereas in past generations it was really about military service for instance . Yeah, and political service. I mean, this is the new world were living in. I think people some day look back and say there was pretrump and there was post trump. And in the post trump world i cant imagine i mean i know four years ago i was not having this discussion with ceos. It was not, you know, open season and thinking anything is possible politically. This has really opened up the world of possibility to other people, which by the way maybe thats not such a bad thing. And not just ceos, there are other successful people who may not have the traditional resume who could be president. I mean, the Founding Fathers most of them were farmers, i think, and you know they came in, they did it and went back to their work. Maybe this whole idea of the career politician is something people are getting a little tired of. I would take it a step further, jim. Ceos used to get bashed in washington. Obviously the last administration came in during the financial crisis. And now theyre parading into the white house nearly every single day. And you have Vice President pence and President Trump saying its an honor to be, you know, on tape with these great ceos. It feels like business is sexy again. Yeah, well, that is a sea change. And i think thats actually very healthy. I think its great that Business People and other people too are being consulted and brought into the national conversation. It is, you know, still not without controversy, you know, iger got lots of questions at the Shareholder Meeting why are you on this council. You know, Travis Kalanick had to quit, you know, protest tim cook wouldnt even go on. So are these Photo Opportunities . But i think in generally speaking its healthy and has created a different climate and attitude toward top business executives. Its saras mustread of the day, you know it . Yes, i hope you were watching at 5 35, our morning mustreads. David was. Always. Every morning at 5 30. It starts at 5 00. Oh, thats right. Coming up, a major retail ceo speaking out on the possible border adjustment tax. Some specifics here, why he says it makes shortterm profitability virtually impossible. And take a look at stocks at this hour. Weve got a broad market rally here. The s p 500s up half a percent, still we are looking at the first down week for stocks in the last seven. Much more squawk on the street. Stay with us. Uh, yeah. Its over, larry. What is . The whole wheelie thing. What do you mean . I just got this baby to get around the plant floor. Right, but now Ge Technology monitors every machine. Yeah, it brings massive amounts of information right to you. So you dont need that. Well, it makes me look young and uh. With it. Time to move on. Oh ill move on. Right into the future. Backwards. Youre going backwards. The futures all around us not just on your little tablet, my friend. Whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley weve got some headlines crossing right now from a meeting between commerce secretary wilbur ross and mexicos economic minister on trade. Ylam mui has more for us on commerce. Hi, sara. Secretary ross provided some new details on the timeframe for renegotiating nafta this morning. Take a listen to what he said. Theres a very specific set of proscesses required to get through the trade promotion act, the socalled fast track for negotiations. We are now in the very early stages of that. The next stage will be hopefully some time in the next couple of weeks. Well be issuing the 90day letter. And thats what triggers the beginnings of the formal process itself. Mexicos economic minister said his country would be ready to start negotiations by the end of may. So it looks like these talks could start some time this year. I asked secretary ross how long it might take to get through those negotiations. He told me that this is a very complicated deal, it needs to be updated and it could likely be expanded to include sectors of the economy that didnt exist back when nafta was drafted in the 1990s. I of course also had to ask him about the border adjustment tax and what it would take for him to make up his mind on which way to go, whether to support it or not. And he said that the proposal currently lacks a lot of details and suggested he might need to see actual legislative text from the house before he makes up his mind. But more broadly speaking the appearance with mexicos economic minister was really a show of cooperation on an issue over sugar imports from mexico that has been a long running dispute between the two countries. They wanted to show that they could Work Together as they began to look forward to these major trade negotiations over nafta going forward. Back to you, sara. All right, thank you, ylan, ill take it. Ylan mui in washington, d. C. A prominent retail ceo voicing his concern over a possibility of a border tax to our Courtney Reagan. Courtney joins us now with more from that interview. Good morning, david. Marvin ellison was among the ceos that metd with President Trump and lawmakers last week in washington to discuss tax reform, specifically of the impact of the house proposed border adjustment tax. The retail has run financial models and ellison says the tax rate for jc penney swells exponentially. Take a listen. It takes our tax structure for example from roughly a 34 Corporate Tax to over 170 . So that gives you an idea of the Financial Impact to a company like jc penney. And thats very consistent with other companies, Companies Like best buy, target, kroger, walmart. I mean, you name it, were all in the same precarious position because we dont have manufacturing capacity that exists in the united states. Does that mean theres no chance for profit . It would be very difficult. Very difficult. In the short run virtually impossible. Thats a blow for a company that posted its first positive net income in six years. Ellison says while jc penney has a higher percentage of private label clothing brands than competitors do, which means its more in control of those costs, it will still cause it to rise to raise those prices. He says he cant take out 20 of cost from production without cheapening the quality. And he wont sell goods with a lowered quality to his shoppers. Ellison reiterated to me it would take him about a decade to get the level of manufacturing capacity in the u. S. To serve the needs of his shoppers. And if thats even feasible, its nearly impossible to know what that would cost, carl. Really important interview. Good work, courtney. Courtney reagan on jc penney. When we come back, goldmans chief economist jan hatzius will join us, his take on the jobs number and a lot more. Squawk on the street in a minute. Online u. S. Equity trades. You realize the smartest investing idea, isnt just what you invest in, but who you invest with. Hey nicole. I just wanted to think your support team for walking me through my First Options trade. Well, were all about educating people on options strategies. I wont let this accomplishment go to my head. Get help on options trading with thinkorswim, only at td ameritrade. Good morning everyone. Im sue herera and here is your cnbc news update at this hour. Russian president Vladimir Putin hosting turkish president erdogan in moscow for talks on syria. Putin hailing the close interaction between the two nations military forces in that war torn country. South Korean Police say two people died in protests against a courts decision to remove that countrys president from office. Thousands of residents and president s supporters reacting angerly shouting and hitting police with flag poles and also demonstrations in favor of her removal. Amateur video capturing the immediate aftermath of an axe attack inside a german train station which injured nine people late thursday. The 36yearold suspect was arrested after jumping off an overpass as he tried to flee. Police say it appeared the suspect had Mental Health problems. Bmw is adding nearly 134,000 suvs to a 2016 recall to fix drive shaft joints that can fail and cause the vehicles to stop moving. It covers certain x5 and x6 suvs from the 2011 to 2014 model years in the u. S. And also in canada. And thats the news update this hour. Carl, ill send it down to you. All right, sue, thank you very much. As you know by now the economy added 235,000 jobs in the month of february. Were joined this morning by goldmans chief economist jan hatzius, here at post nine with david and sara and me. Good morning, jan, good to see you. Good to see you. Not too far off on the headline number and made changes to your fed forecast in terms of hi timing of hikes. Yeah, weve made some small hawkish revisions basically pulling forward hikes in 2017 into june, to march next week, then june, then september. Still three for the year . We still have three for the year. So thats not a change from before, but the timings a little different now. And we also pulled forward the start to Balance Sheet adjustment from 2018 into late 2017. Id say its a fairly close call between three hikes plus Balance Sheet adjustment and four hikes. I think four hikes is definitely possible, but thats our best guess. So directionally why are you doing that . Basically because the economy shows very solid momentum. And i think todays number is testament to that. I think the ism numbers, surveys more broadly have been consistent with that. And i think the fed showing going every three months is something that they are in principle comfortable with. Of course it always depends on how the numbers come in and what happens to financial conditions. So the fact that financial conditions have actually eased since the december meeting i think has been a very important development. You get a sharp tightening we might regret this change but our best guess is that wont happen. How much credit does President Trump get for todays blowout number . I think its a little too early to really see, you know, big effects one way or the other. What is clear i think in terms of whats happened to business confidence, if you look at some of the sentiment numbers, those have increased very sharply after the election. So i think theres still a question in terms of hard economic indicators, how much of that is going to show up in the hard data, jobs data, gdp data. Gdp isnt tracking so well in the First Quarter, but i think its just a little too early to tell. But if you break apart the components of this report, we saw this big jump in construction jobs, but we had a warm february. You saw a loss of retail jobs. Im just wondering how sustainable it is to get these above average plus 200,000 level jobs. I think thats a good point. I dont think you should take this 235,000 at face value. I do think there was some weather in it. Weve seen almost 100,000 jobs added in the construction sector in the last two months. And the warm winter i think had something to do with that. So we should expect some payback over the next month or two months or maybe three months. Jan, tax reform certainly also part of the Overall Economic landscape in terms of the benefits that may accrue if we get it. Earlier we had gary cohn join us of course who runs the National Economic council, and i asked him about the administrations plan. Of course he wouldnt offer anything on a border adjustment tax. But he did offer at least the idea that they are going to be thinking about deficits. Id love you to take a listen to what he had to say and get your reaction. We care about the deficit. We care about revenue. We care about whats going on. Were going to most likely were going to absolutely do taxes under reconciliation. Were going to have to be deficit neutral over a tenyear period. Yes, we will be able to use dynamic scoring. And we think weve got some opportunities to do that and do it in a very constructive way for u. S. Consumers, for u. S. Industry, for everyone as a whole. We are working on a bunch of really interesting ideas to reform the tax system in the united states. Jan, is that kind of new, or is that something thats encouraging when you think about deficits overall and deficit spending . I mean, i think the deficit will play a role of course. That for us is one reason why we think that ultimately the size of the tax cuts is not going to be as large as what was proposed during the campaign. If you take the numbers that were published during the campaign, you get to 2 of gdp or more in terms of the overall fiscal easing once everythings phased in. Were building in about 1 of gdp. You know, i think thats still a fiscal boost, not 2017, but 2018, 2019, but i do think its going to be a little more modest than some of the numbers that are out there. Does the timing matter to you for Corporate Tax reform . The administration wants to get it done by the august recess. Senate leader Mitch Mcconnell has said otherwise this week. Do you think that investors care about when exactly that happens as long as they have the hope still that its going to get done . I think it matters to some degree. My expectation would be that its going to take a little longer. And, you know, late 2017 has been our assumption. It could even go into early 2018. And i certainly think as far as the Economic Impact is concerned, this is not a 2017 issue but a 2018 issue. So, you know, i do think for this year the economy has good momentum, financial conditions are providing a boost, that is helping us but i dont think fiscal is really going to be a major factor. Are you willing to call a serious turn in Labor Force Participation . Or no. I would be surprised if we saw a really big increase in Labor Force Participation. I mean, i think some further increases are possible as we go, you know, maybe a little bit beyond full employment. But it looks to us that the current level of the Labor Force Participation rate is not very far away from where we would say it should be structurally. Just looking at the demographics, looking at trends in things like years of schooling and so forth. So when we see data that looks at jobs hard to fill, is that only going to get worse . I would think so. I mean, under our forecast for the economy where we get increases in, you know, in employment to population ratio still above trend growth, yeah, i think well see some more skills shortages and there are already some out there. I dont think at this point were meaningfully beyond full employment, but my expectation would be we do go beyond a little past full employment. I want to get your thoughts when it becomes something Equity Investors will start to Pay Attention to. I think thats hard to have confidence on at what point, you know, other markets, equity markets or other markets focus on higher rates. But i do think its a headwind for the equity market. And its one reason why our portfolio strategists dont really expect big gains from here, at least post the next few weeks. And the fact that Interest Rates look more likely to go up than down, i think thats an important reason. Channelling costin as you speak. Channelling david costin. Jan, good to see you as always. Jan hatzius of Goldman Sachs. When we come back, a new study showing Many Companies paying no federal income tax. Lets get a look at shares of southwest airlines, lower. A lot more ahead. Stay with us. Into promotions . Nah. What else . What if we hire more sales reps . Nah. What else . What if we digitize the whole supply chain . So people can customize their bike before they buy it. That worked better than expected. Ill dial it back. Yeah, dial it back. Just a little. Live business, powered by sap. When you run live, you run simple. Im val. The orange money retirement squirrel from voya. I represent the money you save for the future. Whos he . Hes the green money you can spend now. Whats up . Gonna pay some bills, maybe buy a new tennis racket. Hes got a killer backhand. When its time to get organized for retirement, its time to get voya. Duexperience our mostand pthrilling models ever. , including the exhilarating is, gs and rc coupe. Experience amazing. 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 this years best performing mega cap etf could have a lot more room to run. Thats when you knat one techni analyst says. Find out why on tradingnation. Cnbc. Com. More squawk on the street come upg. I work with people everywhere on sea, on land, and in the air. Inspecting towers way up high avoiding turbulence in the sky. Personalizing treatments with dna and recommending who should play. A dress that thinks, which crops to grow, tax prep to help keep payments low. You can find me on an oil rig, i answer questions small and big. Hello, my name is watson. Lets get to the cme group, Rick Santelli and the santelli exchange. Hi, carl. Ill tell you, what an exciting day. Markets to me are so fascinating and today even more fascinating. So lets take a look at how the markets reacted here a bit. Remember, when we look at rates, we just finished threes, tens, 30s, 56 billion in supply, lets look at an intraday of tens. Notice the lows right around 2. 57. Okay. And that in and of itself is fascinating because, listen, this data it wasnt really cold. It wasnt even middle of the road. Now, i was way higher, three handle, because i think ones coming, but it was a pretty decent number. And year over year wages pretty decent. And well get into Labor Force Participation in a minute. But look at where the market moved. Basically moved down towards the 57 level, where did we auction the tens at . 2. 56. So right now watch 2. 56 and watch that big resistance around 2. 61, 2. 62. Because breakouts especially close on either side give you some clues as to what we may be looking for next week. 30s give you a more granular picture. They went off at 3. 17 on the auction. You can see the low 3. 16. This is important because those areas will be defended. If you continue to be under water based on auction price and you participated, its not a complicated trade, most likely youll sell futures in tens or 30s and the cash and thats the move were looking for. Okay. Now lets get back to whats going on. Labor force Participation Rate look at the chart. Okay. Now this is a chart going back to early 2011. Why is it interesting . Because were starting to see it move higher. 63. Its moving a bit higher. How important is that . If you open the chart up to a 20year chart, you see how important it is. You see that flat top on the right side . You know, charts are basically giving you an idea of the underpinnings here and there could be more to the upside. Why is that important . Listen, underemployment the level is what 9. 2 . And the people that are out of work, tens of millions of people over 90 Million People that can work, i think the fed and many experts have thought, you know, that that pool isnt going to change and if the jobs market gets hot, you know, were going to have to find people. Well, i think we know where the people are hiding. And i really do think where im different why im looking for a 300 number and maybe even some upside to Unemployment Rates, which isnt a bad thing, is because i really think were starting to see were going to use those people again. Thats my feeling. And i think thats a huge, huge positive. The other thing that we need to talk about real quickly here is if the real Unemployment Rate, and i think it is, the real Unemployment Rate is the underemployment rate, weve made huge progress over the last five or six years but also may explain or go a long way to explain why the fed seems to be dragging its feet. Okay. Another way to look at the fed is we may have a four handle on the advertised rate, but if the reality in their mind especially if you can go back into this pool of people that nobody thought could ever work again, what it really means is is that we arent at full employment. And that might change the dynamics of what makes the fed move. Carl, back to you. Thats a good point of view after talking to hatzius a moment ago, rick. Thank you. We look forward to seeing you on meet the press this sunday at 9 00 a. M. Eastern time. Dont miss it. Separate news, tracking Consumer Trends here. It is official, americans now drink more bottled water than they do soda. Thats according to a new report from research and Consulting Firm beverage marketing group. The study shows bottled water consumption in the u. S. Has reached 39. 3 gallons per capita last year. And that was enough to put it over the edge because carbonated soft drinks slipped to 38. 5 gallons. The shift comes of course amid concerns about the Health Effects of sugary beverages. Several cities voting for a soda tax and just a general trend thats been going on, guys, for a decade. Both moving in opposite directions, soda consumption has been falling while bottled water consumption has been rising. I took a look at the market share, which brands are the most popular for the u. S. Number one is cocacolas dasani water. Right. Number two is aquafina owned by pepsico, number three is pure life by nestle. Actually nestle gets the number one spot globally. This is just u. S. Market share. Nestle owns all of these bottled water companies. By the way a lot are just purr fied water. True. I mean, the idea this has become the dominant beverage is incredible. For those of us who grew up drinking it out of the tap. Not to mention all those plastic bottles. But incredible marketing opportunity. And i guess also goes to the fear people have about their local water supplies, i suppose. Well, theres that. And its also a big strategy it marks a big strategy shift for some of the big beverage makers because cocacola still exposed to carbonated soft drinks. Of course. And pepsi as well. And so theyre going to have to shift their portfolios because bottled water is where its at. This does include sparkling water, which is a much bigger deal overseas, as wilfred frost would tell you. And a lot of those brands, peligrino and perrier owned by nestle. Yeah, Long Term Health policy implications as well if the trend continues. Could be good news for diabetes rates, childhood, onset, you name it. Right. Thats why cocacolas strategy of smaller packages selling them as a treat is what theyre hoping takes them into the next generation where millennials do want to drink healthier. Its also something ive been covering with these soda taxes popping up all over cities. They want to raise their budget and decrease diabetes rates which has been a drag on health care. All right. Well, lets send it over now to jon fortt with a look at whats coming up on squawk alley. I love it, guys, byebye cola wars, hello water fight between coke and pepsi. Coming up on squawk alley, were going to talk about where the jobs are. Also Walter Isaacson is going to join us to take a look at whats happening with the economy overall and employment. Of course we also expect President Trump to be meeting with house leaders over health care, all that and more coming up on squawk alley. During the lexus command performance sales event, experience our most elevated suvs ever. Including the lx, gx, rx and nx. Experience amazing. Oh. Ncome on. Och method 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. Another ipo opening for trade at the nasdaq. Its presidio, an i. T. Solutions provider, relatively flat after pricing at 14. That was the at the low end of the range. Of course, snap took a lot of oxygen out of the room last week, but well keep an eye on this as it opens for trade. Tech is the bestperforming sector right now on the s p. New analysis on Corporate Taxes shows 18 profitable fortune 500 companies actually paid no u. S. Federal taxes over the past eight years the institute on tax United Nations and economic policys new report summarizing the 35 Corporate Tax rate is actually a myth. Matthew gardner, lead author of that report and senior fellow at the institute joins us now. So we constantly hear the refrain that the u. S. Pays one of the highest Corporate Tax rates in the world. It makes us uncompetitive at 35 . Youre saying thats not true . Explain. Well, what we did in our new report is to look at all of the fortune 500 corporations that have been profitable over the last eight years and see what they actually paid. What we find as a group, theyre paying a little bit more than half of 35 , and that more than 100 of them actually found ways to pay zero in at least one year during this period. So 35 simply isnt the reality for many of these companies. You actually named some names and were showing some of the logos. Big Companies Like General Electric and exxonmobil. Talk about some of the strategies these companies are employing to get these lower or nonexistent tax rates that you fou found . All of the tax structures are completely legal. Theyre strategies that have been expanded in recent years by congress. Accelerated depreciation for utilities. Executive stock options, resurgent Development Tax credits and a special tax break for manufacturers. You add up all of these tax breaks and what you see is that there are entire industries that are finding ways to almost zero out their taxes, with astonishing regularity. And why do you think that these ceos and the investors we talk to are so excited and some of them are these names that youve listed about potentially lower Corporate Taxes under a trump administration, even down to 20 or a little more than that . Well, i think right now, we have a situation in which there is a tax rate that looks high on paper, and will be sharply reduced. And if corporations are excited right now. Its probably because if you look at what the proposals are from leaders of congress, theyre answering all the easy questions about how far they want to lower the Corporate Tax rate, but theyre not at all addressing the hard questions that many of these companies would be fearful about. Which is, will my loophole be taken away . Will my tax break be taken away . Bottom line is, the proposals were looking at right now are going to be huge Corporate Tax reductions overall, and for most of these industries, on top of the low rates were seeing already. Well, tax reform as we currently know it, at least, would include taking away some of those deductions that youre talking about. And others, as well, to try to raise revenue. Im curious, though, matthew, to the extent that you could share it all, if youve looked at, given that were taking in as much revenue as we might have thought, is there a way to understand what Corporate Tax rates currently being laid out would be a revenue gain . The first thing we know about Corporate Tax reform is its a tradeoff between closing loopholes and dropping the rate. And its been estimated that if we aggressively close all the loopholes available, Something Congress has not said they would do, you could take the Corporate Tax rate down to somewhere in the mid to high 20s. As you know, because leadership and President Trump have proposed taking the Corporate Tax rate lower and not going to close all the loopholes. So as it stands, the Corporate Tax rates were looking at right now, would end up sharply reducing Corporate Tax payments overall. I think its important to note that a lot of these companies that you point out are big multinationals that do a lot of overseas business. And we know Companies Like Procter Gamble take advantage of the fact that they do operate in other places where they can get better deals on taxes. The case for tax reform would be, they wont have to do tactics like that, and that the revenue can come in from the u. S. Government, if we become more competitive for global Companies Like a p ge. Well, one thing we see out of this report is that there are actually two different ways in this Companies Compete internationally. They compete against european country countries with legitimate economies and real tax systems. And we find theyre paying tax rates that look an awful lot like what theyre paying in the u. S. When you talk about Companies Like microsoft and apple and google shifting their profits offshore, theyre not shifting into countries with real tax subpoenas, theyre shifting into the caymen islands. Zero percent, which is what these countries are paying in the caymens, is always going to look good compared to 35, 15, 20 , whatever tax rate you need. As long as zero percent is available, these companies are always going to find a way to shift their products into tax havens. Thats the real concern. And simply dropping the rate wont accomplish that. Weve got to leave it there, matthew. Thank you for joining us to talk about some of your findings. Matthew gardner is the lead author of the report at the institute on taxation and economic policy. As we head to break here, take a look at stocks at this hour. The rally continues, though. We do have energy and real estate sectors in the red. Technology in the lead. That explains why the nasdaq is doing the best of the bunch. Much more ahead. Stay with us. So what else is new . Hows your mother . Umm. 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. Or keeping a Hotels Guests cuttinconnected. I to 35,000 fans. Businesses count on communication, and communication counts on centurylink. 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. Welcome back to squawk on the street. Im jackie deangelis. There was some optimism that more than an 8 slide in crude oil futures this week, that we would turn them see positive here. Maybe a little buying the dip. Not happening so far. A little boost in crude after that positive u. S. Jobs report, but we turned negative again, seeing another nearly 1 decline here. Breaking under 50 this week and holding, potentially closing under 49 a barrel, really key when it comes to this trade. Back to you and squawk alley. Jackie, thank you so much. Its 11 00 a. M. At the white house, 11 00 a. M. On wall street and squawk alley is live. Good friday morning. Welcome to squawk alley. Jon fortt, sarah isen and myself at post nine. What a day. The u. S. Economy adding 235,000 jobs in february. That was past estimates called for 197. Construction recording its biggest monthly gain in nearly ten years