Transcripts For CNBC Squawk On The Street 20170315

Some trump tax returns are made public. We know what he paid in 2005 taxes. What does it all mean . And the Prime Minister of ireland joins us live. His country has hundreds of u. S. Companies meeting with the president tomorrow. Well find out what hes planning. First up, though, the fed is set to wrap up the twoday meeting. Fellow policy makers are going to announce a rate hike at 2 00 p. M. Yellen has a News Conference half an hour later. Trying to hang on to breakeven levels for the month, the story is going to be about the dots and the word gradual and business investment. I think you will hear a lot of people say, this could be the beginning of the 17 rate hi2017 that caused problems in the 2000s. We are at a low level. Youre not fighting much of a fed. I believe very strongly we have a much better tone of business in this country. There was an article today about lending and that lending is not that strong and i recognize that. But i have to tell you. The companies i deal with, warehouse companies, businesses are strong, well above where it was last year. And this is a group of ceos that i have had. U. S. Concrete. Again, these are big companies. Martin, marietta, big aggregate companies that do business around the country. How can you sit there and say if u. S. Concrete is having the best year, that we should be worried about a quarter. You are referencing some charge that shows loans flattening out a bit. You know, new corps yesterday was talking about steel that goes into residential construction. A big uptick. These numbers that i get are aggregates and the largest Steel Company in the country is seeing a real, big surge. You can say, wait a minute, jim, some of that is because you cant dump anymore. New corps, the low coacost pror is basically giving a forecast which says its all systems go. And a quarter point doesnt mean anything. A half point doesnt mean anything. Thats how strong the demand is. When weve seen the broader market, weve seen wti down and thats pressuring some parts of the market and then weve got i dont know if i want to call it a we just had senator thune on. Its a swamp. Is it getting drained . No. Its like a bayou. The question becomes how long, if ever, is that going to take. And if it doesnt get there, then what does that mean for tax reform. You need these repatriation. It makes you feel like you want to jump up and down. Called a qe 4. Yes. I dont know if you know that, jpmorgan ive heard that. Its like fort knox. Yes. U. S. Producers are producing 100,000 more barrels a day each month that he is why you need the saudis who met with President Trump. Theres been various stories. Goldman says, did they cut back . Didnt they cut back . The level of whether they cut back is whether the u. S. Producers are really pumping here. Why . The permian is a good number at 35. Thats a good point. It shouldnt be lost on people. The cost of production and ability to actually make money to lower prices dramatically moved lower over the last few years since oil started to make its move lower. Yes. In certain areas. You know whats so fun about the backan, crude was sent by rail before then. The cost of crude will come down making it more economical. The backan has been obliterated by this. Some parts will be back in action with more drilling and more rigs with the dakota access. Right. By rail is a crummy way to transport oil. It would seem like it. To the point that i was making on the aca repeal and replace, many people believe you will not end up with tax reform but to mr. Dimons point, they believe that you will end up with a tax cut and repatriation. Thats seen as likely, not necessarily the broad parts of tax reform as presented to us so far by the blueprint. I agree. On page one of the post, trump allies call the ryan bill a trap. More discussion about whether the president just jettisons this thing and lets the senate take up what is being called a repair bill. Would that speed the pace of tax reform . President trump is having a really hard time with this swamp. I watched squawk box. Two senators and representatives arguing about everything. Honestly, its like the old days. Lets not kid ourselves. We have ryan saying weve got the plan, the president maybe not scrapping it. Its supposed to work. Thats democracy. Thats the way its supposed to happen. Yeah, but democracy takes forever. We need a tax cut now. We need a repatriation now. Keeping the balls in the air and you dont like the weight. Im actually fine in terms of the stock market but i would say that the country could use it. The stock market, we like it off. We like it out there. So when it happens, weve got something to look forward to. If youre President Trump, i shouldnt have used the word we. That was probably a mistake. Yes. Because thats like the mandate. Yes. Im saying if youre President Trump, youre saying, well, wait a second. Right before my eyes, jobs, jobs, jobs but there is often deregulation because he is deregulating. Much more able to be felt by corporations almost immediately as a result of the ability of the president to actually make it happen. Were going to get a taste of that today. He goes to detroit. Hell make remarks with Auto Executives and workers before going to nashville where he probably will try to sell the health care bill. But the detroit appearance is about deregulations and pg standards. Another day that they are not working. Theyve had the few west days at work since this guy got elected. I think they would claim that it is work going to the white house. But youre right, their travel schedules have included washington, d. C. , and following the president wherever he might be. They dont put fenders on when they are not meeting with the president. No. This is a very complicated when that cbo came out and no one wants seniors to lose when i heard seniors losing health care, well, i tell you something, guess what its actually that its like 60 to 64 where youre potentially crushed because then you get medicare once actually, you are that group. Thats right. Im telling you cold, dead hands off my benefits. One of our good friends mentions the core inflation rate. He would call it a trend and i remember the days when the Feds Fund Rate used to be 200 basis points above inflation. I think the feds have got a runway to really if they want to say a lot of Different Things and they have to be more vigilant, they can say that the risks are now even, that weve got to go back to normal. Theyve got so much covered, its unbelievable. This gives them so much cover they can confidently say, listen, weve got to get back to the old days where we have somewhat of a rate, not this kind of emergency rate. Theres no need for any emergency rate at all. There isnt. When do they start to actually deplete their Balance Sheet . Well, that is just talk about morass but they never started selling. No, they never sold. 4 trillion, right . Chinese have sold. Chinese have sold. That was a great trade by the chinese. Not quite as good as apple. It was unparalleled. Apple price target raised. Its all about services. I remember speaking to apple saying would you please go out with the service thing and i hate supercycle. When you google supercycle, it says type. Yep. Rbc takes the target from 140 to 155. A couple pages of the president s tax returns from 05 have been made public. They show he paid 38 million in taxes that year at a rate of 25 . Also reported a business loss of more than 100 million. Hes refused to release his taxes since becoming a president ial candidate. Joe scarborough says congress should pass a bill requiring every president ial candidate to post the last three years of tax returns beginning in 2020. That would make it so people are compliant. No one has said this and its going to be out there. There were a lot of people on the left who said they felt trump wasnt really making any money at all and he was one big phony. I have not heard this story. If you made that amount of money and, by the way, some of it is just in licenses, which is a fabulous annuity business, trump this, trump that. He made a lot of money. He is not a broke guy. He obviously denies this in tweets but david k. Johnson, the journalist who says these were delivered to him, brings up the idea he did on the Rachel Maddow show where this was revealed that he thinks trump may have actually been behind giving the it shows that hes wealthy. Right. It show as decent rate. 25 or so and shows significant annual income. Yeah. Its very little. And those looking who continue to look for connections in some way with russia, it doesnt necessarily mean were we to see every tax return from every year and every page of them that wed be able to discern what is going on given how many llcs and entities he uses. Right. But were still waiting. One would hope that we would know the sources of his income and a lot of other things. I hear that music in my ear which often means its time to go but not this time. Depreciation, hes in real estate, the greatest break in the world. Its a fabulous thing. Its why people go into real estate. Depreciation. When we come back, irish Prime Minister enda kenny in the u. S. To visit the president. Take a look at the premarket, oil up for the first time in eight sessions after the 11 decline. Back in a minute. Their experience is coveted. Their leadership is instinctive. Theyre experts in things you havent heard of researchers of technologies that one day, you will. Some call them the best of the best. Some call them veterans. We call them our team. Irish Prime Minister enda kennedy is getting ready to meet with the president tomorrow. Hey, eamon. Good morning, carl. Prime minister, thank you for being here on cnbc. Appreciate your time. Youre meeting with the president tomorrow but youve once called him racist and dangerous and youre taking some criticism back at home for taking the meeting. Tell me why you decided to take this meeting with President Trump tomorrow. Well, first of all, what i said was that the language used by the president was racist. I never said anything beyond that. And responding to an invitation by the president of the United States and very happy to do so. This is a tradition thats gone back very many years enhanced by tip oneil and Ronald Reagan many years ago. Its not about me or the president. Its about the symbolic contribution that the irish made to america over 250 years and well continue to make. So we want to work with the administration as a microcosm of the european union. We want to work on that and i would say that after the 1840s when the irish came here because they believed in america, they believed in the compassion of america and they believed in the opportunity of america and we still believe in that. The estimates is that there are undocumented irish living in the United States right now and whats your message going to be about the undocumented irish immigrants here now. I think theres two important things here. You normally have with countries with the United States allocations of visas for young people to come and live here and work for a period to get a feel of American Business and society. The undocumented is part of the bigger process of Immigration Reform. We know there are 11 Million People living in the United States who are undocumented. 50,000 of those are irish. There are people here who do not have full documentation yet made the choice to come here many years ago, they are married, contribute to American Society and in some cases have worked and in some cases died for america. Thats a bigger part of the Immigration Reform that is a matter for the american administration. So i would say to President Trump and Vice President pence and others, it has to be part of the overall immigration process. We would like to see a far greater allocation of shorttime visas for young people like we had in the past which is, indeed, part of the schumer bid where up to 10,000 could be felt with the election process. After brexit goes through, youre going to be bordering a non noneu country. How are you going to handle that tension . This is probably the most difficult economic issue of the last 50 years. We have great relations with United Kingdom, trade of 1. 2 billion across the irish sea every week. But when uk leaves, ireland will be the only country with a land border internal to the european union. It brought with it sectarian violence and troubles. We dont want to go back there and we are not going back there. My political agreement with the British Government is that there would be no return to that hard border. Thats a political challenge but that foundation is one that we both agree on. If you drive from dublin to belfast today, you would not know that you crossed the border except when your phone goes click. Were not going back to that kind of border which brought sectarian problems in the past. Its a political challenge with which both governments agree. Prime minister enda kenny, were out of time. A lot of this conversation will be available on cnbc. Com later in the day. My privilege. Thank you very much. Carl, back over to you. Our thanks to you, eamon javers. A fabulous friend ireland is and how Prime Minister kenny is one more person part of the irish miracle. I remember when i went to ireland during the actual depression and you could there were just homes shuddered and everything has come back. U. S. Based corporations have made their home in ireland. Its a remarkably welleducated population. I love going there. Its probably my favorite place to visit and it is they are such great friends of ours. I think people have to go to realize, you really dont want to you have to go far to alienate the irish because they are real friends. Yes. You go there a lot. Its true. My wifes family and her uncle was an as bmbassador to ireland. Well get cramers mad dash as we look at the opening bell. Back in a moment. 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 minimums . 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. A modern approach to wealth management. 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. All right. Its a hump day, as we like to refer to it here. Man, its cold out there. Miserable. One of my absolute favorite companies, msci, some people saying that the s p, which is sp global, wants to buy them. They want 120. This company is ran by the legendary henry fernandez, an unbelievable ceo. Weve been recommending him forever on mad money. Weve been saying its the best way to play the emerging growth. China should be part of which index and they are the people that you have to use them. S p not that many years ago i have to tell you, candidly, on an earnest basis, no. This was totally in play. We recommend it in the 60s and 70s. If you really think the emerging markets are going to become more and more part of it, its a lowrisk way with no debt ran by a great guy. It looks like people want it. Henry is roughly my age, maybe a little younger. But this is a fantastic index in an Analytical Company and i dont think people ever really understood him but s p global would. Where is this story coming from . Were seeing press reports from overseas. So therefore, ive been schooled by you to be careful. I would not the idea that theres this talk that they want 120 or 130, i dont know where that comes from either. I would tell you, its doing fine on the earning basis here. Now youre in that world of speculating but its such a good company. Well, well be watching as we get to the opening bell in a few minutes. That big ring here at the ncse. Stay with us. Whats happening here . This is my new alert system for whenever anything happens in the market. But thinkorswim already lets you create custom alerts for all the things that are important to you. I guess we dont need the kid anymore. Custom alerts on thinkorswim. Only at td ameritrade. Yeah, i just saved a whole lot of money by swhuh. Ing to geico. We should take a closer look at geico. You know, geico insures way more than cars. Boats, motorcycles. Even rvs geico insures rvs . Whats an rv . Uh, the thing weve been stuck on for five years wait, im not a real moose . . Weve been over this, jeff. Were stickers im not a real moose . Give him some space. Deep breaths, jeff. Whats a sticker . . Take a closer look at geico. Great savings. And a whole lot more. Im vern, the orange money retirement rabbit, from voya. Im the money you save for retirement. Whos he . Hes green money, for spending today. Makes it easy to tell you apart. That, and i am better looking. I heard that. When its time to get organized for retirement, its time to get voya. Youre watching cnbcs squawk on the street. The opening bell is in two minutes. What a busy day. Its not just about the fed. Were going to keep our eye on the polls in the netherlands. Jim, this dutch election, the first of three in europe where these nationalists and antiimmigrants are trying to make a stand. When i heard that the nationalists could win in the netherlands, i said, give me a break. And then i started thinking brexit and trump and we cant call any of this anymore. The people who vote for nationalist candidates are not necessarily the people who are polled. So i think that weve got to pay very close attention. They may get the most votes but as one party but they are not going to control the government. A coalition of many different types. We just dont know. We dont think. Our weather is good over there. 13 million voters, clear skies. So they are looking for high turnout. We have to watch it because the euro i believe is undervalued. If Everyone Wants out of the euro, it wont be snap is going to open around 20. A nickel over 20. We have cantor today inniitiate underweight. At 17, i still think you want to buy it. Im a huge believer in the content model and i do like snap as an actual going to more than just message. But 17 is my price. [ applause ] thats where it became public. Right. Its the opening bell. Down here at the exchange this morning, ringing the bell, a Packaging Company r1 rcm, a cycle management company. We havent touched on retail sales which were in line january advised up but Department Stores down 5. 6 year on year. Department stores, whoa. I dont know. Department stores down 5. 6. Nonstore, up 13. Department stores are a dying institution. It just is. I do think that people have to recognize that its traffic. The traffic issue is so, so important. Because youve got to get to the mall in order to shop in the mall and amazon has defeated that. Look, raising numbers for amazon on a snow day. I mean, literally. How much did you buy from amazon yesterday . One package arrived. I dont know what was in it . How about 140 for me yesterday that i normally would have gone out to get it. Nothing was open in brooklyn. You needed to buy 140 of stuff yesterday . No, but i also got some interesting books. You did . Yeah. My nephew who writes my show said, listen, youve got to read this and this Neil Ferguson book and i cant believe you havent read them. Im going to be on a plane. Pretty good distribution mechanism for the written word. You know, speaking of malls and traffic, i have noticed Simon Property group, one of the largest owners, we were talking prior to the show, its up today but its finally started to suffer for quite some time it seemed immune to concerns about mall traffic. Right. And to their defense, they dont have that much exposure to jcp or macys. But there is this concern that when you lose two anchor tenants in a particular mall, if that is the case, thats when your other tenants typically pay pretty low rates. If you lose both, then the other tenants in your mall typically can have an opportunity to take their own rents down. Right. A vicious cycle down. Simon properties went up and this is a Shopping Center company just precipitously down, frp. I had them on a few months ago. Their rent is still going up because as you roll off, you have people coming in new and they are doing things to make it so that there is more than just a center. They are putting Residential Property next to it because of the idea that you want it now and they are filling with stores that cannot be amazon. Remember, this is a group in terms of 4 , simon group, 3 . Theres no its a strip mall and this theme is taken over not just the equity markets but the debt markets, people are looking for opportunities to shore what might be at least pools of mortgagebacked securities if they can find ones that have a good amount of exposure to retail. Theres something called the cmbx 6. What . 2012 vintage pool, 20 retail, 10 malls. Does it represent anything or more of the nonsense . No, its not mirroring another portfolio. Its the actual tranches thats where we are in terms of theme mall traffic. You look at the equity and debt and opportunities if youre an investor out there to take advantage of what seems to be a trend that is not going to change. When you talk about the border tax, one thing that i can say ive got to watch this. Ive been dealing with this thesis now and i think don wood, they saw the need and there are a lot of stores that cannot be amazon. Pet stores cannot be amazon yet. You mentioned gap, of course. Some people are still trying to work their way in. Kids clothes, kids changing size and trying stuff on, you order it online and they hate it and order it online you have to fit them in it but youre mentioning its so easy to return. Its very easy to return. Why are pet stores on amazon . You can get your food, leashes, toys. What are you talking about . Buying the actual dogs . No. People buy animals you cant send an animal. Thats not the main revenue producer for petsmart or petco. They are not selling the animal. We get all of our pet food on amazon. And our guys go through jesus, the stores are closed, im like, im going to amazon. Like, knock it off. This relief in oil, jim, is translating to the freeports of the world. People saying the dividend is fine at 3 . Its one of the most poorly run companies in the patch. Youve got to be careful. Its been the worst performer because they dont know what they are doing. But bank of america says dont worry about the dividend. Im worried. They have good cash flow and the permian is good but a lot of these guys have gotten it together. Twitter is worth watching. A couple of things. Highprofile accounts were hacked apparently by a foreign group, put racist symbols on accounts. The other one is a longtime investor tweeted yesterday, not only is funds selling when jack returned but personally selling all of his shares. Yeah, thats not an endorsement, jack did buy stock. And i happen to be fascinated by lacrosse because my kids went to a nationally ranked high school but these kinds of things. Niche programming, not just nfl football, when you do lacrosse league, thats what ive been telling them to do. Stay a little more niche with these sports that are growing and anthony is doing that and i think that we forget that they are just not sitting there getting walloped every day. That doesnt necessarily move the needle. Its not like they are sitting there saying, what are we doing now . They are doing things. Intel is the dow laggard. Call it is a Better Company than a stock after the mobile ideal. I dont know. I mean, to me, this is such a good idea. You cant just have this company be so much pc. I think Autonomous Car is so big. A brilliant acquisition. They needed a preemptive bid. But there is a school of thought, jim, that says they were getting caught on an innovation front by a number of competitors, Even Companies that you did not know because they were not public. Things are moving quickly when it comes to autonomy, the symbols of mobileye. They say they are not using the chips because they are too expensive. They are using their own. What i think is happening is theres amazon and google and youve got really kind of some wonder, did intel know that competitors were starting to arrive at its front door. The deal is expected to close on a shorter timeline. It doesnt need chinese it does not . It does not. As opposed to qualcomm and nspi. Thats one of the reasons that qualcomm bought them. I continue to believe that the winner in this space will be google. Because who has the most miles . Who has the most miles and fiat has teamed up with wamo. Its all about the data. Yes. Thank you. Youre finding new behaviors that you can then start to tweak your ai for. Just like digital marketing, speaking of which, did you see emarketer, u. S. Digital spend will be up 16 this year. The lions share of that is going to how much more facebook and google are going to get year over year and that literally is everybody else is getting hurt. Its almost like every other site is losing to those two. Google, because its that point of purchase that you want, and facebook because the ads are so embedded in a way that people like and so clever. Those two companies, i dont know. I think its kind of game set match against everybody else. The johnson piece made me feel like if youre in this business and living off the ad revenue, well, youre going to be its not good. Its not good. Two guys, david. Two guys. Yes, they dominate. They dominate. They dominate. You actually agreed on something. I know. You know how he does that thing yes. Dows up 28. Lets get to bob pisani on the floor. Good morning, bob. Good morning, carl. Nice start to the day. Lets take a look at the sector moves and finally a bounce in energy. Weve been talking about those problems with oil recently to get a nice bounce we had the api last night showing a draw in crude. Thats helping oil, materials, banks, consumer staples. Threats to the market right now, let me point out, the energy etf down 8, 9 so far this year. A lot of oil stocks down double digits so far. Thats the main threat here. In terms of like broader macro threats, a lot of talk about the dutch election going on today. Well see how that ends up. I think the most important thing the two most important things is whether or not the fed is going to be hawk issue day and whether they changed the gdp forecast. Well talk about that later in the day. And, of course, concerns about slowing and maybe derailed trump agenda. The market is not showing any signs of being concerned about that but it floats out there as a potential concern. In terms of where the market has been moving in the last few days, take a look at stuff thats off but not that much. Energy is the big issue. Its not necessarily related to those issues. Its related to the drop in oil but banks, transports, all 5 off of the highs. Im talking about the recent march highs, the historic highs. Russell 2000 up 4 . I wouldnt call this any lastminute worries about a correction but are you ready for a correction . Do you know what a 10 correction is these days . Its about 2,000 points in the dow. The historic dow, 21,115. A typical 10 correction is now 2,111 points. That sounds remarkable but thats how high these numbers have become. Heres a bigger number. How about 3,000 points. The average intraday move in the stock market for the last 30 years from the high to the low has been about 14. 3 . So do that for the dow. 14. 3 of the do you is a 3,000point decline. I have no idea if thats going to happen but thats the historical average, high to the low, in a oneyear period in the last 30 years. Bear that in mind. Big numbers that were talking about right now. Ipo is starting to get more active. Weve got several going on here. Of course, were waiting for glass container to open on the upside. Canada goose, talking about them, trade here at the nyse tomorrow. This is going to list on the Toronto Stock Exchange as well. A very highend outerwear. Mulsoft, that was an up great at 14 to 16 a share. Its a Software Business here. The one im most interested in, were going to have an energy ipo. Were going to have propetro holdings, which is fracking services in the United States, 20 million shares, 16 to 19. You know whats going on, there are several energy ipos that are floating out there. Three or four that were set up when oil prices were a lot better a short while ago. Thats going to be a very interesting one to watch to see how it prices down here at the new york stock exchange. Right now, the dow is up 43 points. Carl, back to you. Bob, thank you. Lets go to Rick Santelli at the cme. Hey, rick. Good morning, carl. Its Pretty Amazing when you consider the inflation data that weve had. Granted, it has been hotter. When you look at the macro entirety, the yearoveryear numbers are definitely on the luke warm side but yet the market doesnt Pay Attention. Maybe thats because in front of them there are a lot of hurdles, whether its the f1c Committee Even though march is, for all practical purposes, built in, french elections, dutch elections. So when i look at one week of 10s, i see a range. Its the crowning achievement of changes because its at the top of the range. You know like a nail on the top of a chart thats significant and then look at all of the other markets in a relative fashion. Lets do that right now. Lets put up july 2014 as the day. Lets look at our tenyear note. You can see theres a lot of important tops here. This is such an important boundary line. Now, how did two year look in the context of this . Wow. They have come up. Makes sense. And when you consider were going to most likely continue to always have to stack on 25 base points on the short maturities, it explains a lot. You contrast that with the longend of the curve which unlike 10s and 30s, its a downward sloping which shows you the curve. Plications as of late. When you look at bund yields, its more aggressive. Mario draghi has been trying to push down these rates for a long time but, hey, who knows what happens when they have a flush or an exit. Things could get messy. Dollar index from the same period. Boy, it really has come a long way and we get so microabout it. Yes, its down on the year but definitely bold on that chart. Of course, the euro versus the dollar. All right. Back in the game. Rick, thank you very much. Still to come, the trump effect on the Auto Industry. Well talk to former chrysler ceo bob nardelli. Oil is up 63 cents. 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. Is it because so many go after it the same way . Chasing after short term returns. Instead if getting caught up with the crowd, the Investment Managers at pgim take a long term view, teaming specialized active investing with riskmanagement rigor, to seek out global opportunities. We manage over a trillion dollars this way, attracting many of the worlds leading investors. Partner with pgim. The Global Investment management businesses of prudential we can find out later today who was behind the yahoo hack that impacted millions of customers. The doj will make a formal announcement about the hackers potentially with ties to russia as the s. E. C. Looks into why it took so long for them to disclose it. Someone who was an original dotcommer, one of the things you heard about was russia was always hacking from day one. The russians were inflating and doing crazy things with the web almost instantly from when the web started. So i find these things to be like, are you kidding me . Are you that surprised . Why dont you monitor everything they do since theyve been messing with the web since the web became the web. The russians arent coming. They have been. They have been here. They are getting bigger all the time. As for yahoo, its getting smaller and changing its name, as we know. The deal should close in april, if not sooner. And then youre left with alternative baba, as i like to call it. Its going to be regulated as an Investment Company with alibaba and a lot of cash. And then the question is how do they go about managing that portfolio, what do they do with the cash. And thats it. See you later. I believe at some point well hear from verizon that they have done something but verizon is still trapped with not a lot of growth. You dont hear much about that, do you . No, you dont. And i know fios is making it easier to verizon is still, in the end, a cell phone company, as opposed to apple which is a revenue stream from services. All that and were watching the market up. Dow is up 41. Stock trading with jim in a moment. Kevin, meet your father. Kevin Kevin Kevin Kevin Kevin Kevin Kevin Kevin Kevin Kevin trusted advice for life. Kevin, hows your mom . Life well planned. See what a Raymond James Financial Advisor can do for you. Im ricardo, a sales and Service Consultant here at the xfinity store in bellevue, washington. Here at the store, we offer internet, tv, phone, customer service, home security. Every situation is a little different. It could be about billing, simple questions like changing the phone number. Sometimes, they want to upgrade, downgrade, but at the end of the day, you want to take care of the customer. One of the great things about comcast, theres always room to move up. Of course, it depends on you, how hard you work. Time for cramer. The market sells off of the fed is now amgen and they have a meeting on friday and they have a better pipeline than people realize. Keep in mind, im looking for situations that are not fed rate sensitive and what a Great Company they are. Repatriation as well . Oh, my, absolutely. In terms of the market cap versus how much cash thank you for reminding me of that. Theres a pipeline there that is fantastic. I really like that company. Whats on mad tonight . Great bank in texas well talk about rates but just talk about them. People who short that company just havent ever done theyve never looked at an annual or Quarterly Report or done anything except for just say, well, they are in texas. They must be idiots. Who survived all of the big downturns . Actually, an amazing story. That is. Great guys. Well see you tonight, jim. Thank you. 6 00 p. M. Eastern time. When we come back, the trump economy and well talk to the chief adviser under president obama. Plus, ceo of chrysler, bob nardelli. Dow is up 44. Fees . What did you have in mind . I dont know. 4. 95 per trade . Uhhh. And i was wondering if your brokerage offers some sort of guarantee . Guarantee . Where we can get our fees and commissions back if were not happy. So can you offer me what schwab is offering . Whats with all the questions . Ask your broker if theyre offering 4. 95 online equity trades and a satisfaction guarantee. If you dont like their answer, ask again at schwab. Its a very simple procedure, mr. Diaz. Were just going to make one small incision here, then were gonna go in and remove your 67 corvette. My vette . Its just a gall bladder you dont have. Aflac paying you cash, so you might have to sell that sweet little muscle machine just to cover your rent. More funny juice. But my papa gave me. That. Car. What do you wish you had . Aflac. Ohh, i love doing that. Health can change, but the life you love doesnt have to. Keep your lifestyle healthy with aflac why pause a spontaneous moment . Cialis for daily use treats ed and the urinary symptoms of bph. Tell your doctor about your medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain, or adempas® for pulmonary hypertension, as this may cause an unsafe drop in Blood Pressure. Do not drink alcohol in excess. To avoid longterm injury, get medical help right away for an erection lasting more than four hours. If you have a sudden decrease or loss of hearing or vision, or an allergic reaction, stop taking cialis and get medical help right away. Ask your doctor about cialis. 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. Good wednesday morning. Welcome back to squawk on the street. Im joined by jim cramer and sar sarah eisen. Were watching the fed today, retail sales and a lot more. Lets get over to Rick Santelli in chicago. Rick . Absolutely. Our january read on business inventories, we were expecting the number around 310. Spot on. Analysts, kudos. And ill tell you what, thats in the solid numbers considering. 8 goes back to january 2013 which is the number we had in november. All right, now, if we want to know a more current read, how about march for National Association home Builder Sentiment . For that, ill toss it to diana olick. Wells fargo monthly index showing the highest level in 12 years as in before the housing crash and President Trump is behind the surge. Builders say the renewed confidence is all about the president s actions on regulatory reform, particularly the executive order to rescind or revise environmental rules. Builders say 25 of the cost of a new home today is regulatory compliance. The current Sales Conditions increased 7 points to 78. Sales expectations in the next six months rose five points and jumping eight points to 54. The builders caution they are still facing challenges including rising material cost and rising Mortgage Rates and sho shortages of labor. It feels like the home Builder Sentiment is tracking investor sentiment. Very excited about the trump policy and ignoring the higher Interest Rates which is likely to happen today. Its already built in. We started to see them rise last week and thats why the builders are even saying this was a bump and a moment of excitement that well moderate back. Diana olick, thank you very much. That brings us to the markets. Its fed day. Investors are buying today. Dow up 48 points. S p 500 up a third of a percent. The discussion around the fed not so much about what happens today. The Interest Rate hike pretty much banked into the cake. If theres a shift in tone, is that going to come as a surprise . Is that going to be a jolt for the markets . And can the markets handle, say, four hikes instead of the projected three hikes from the Federal Reserve . Is that going to matter with so much focus on washington and fiscal policy . Indeed. A cnbc survey, interesting, 60 of respondents saw three hikes. 25 see four hikes. Well see if that fourhike number starts to go up. What would represent a change in tone . What will Steve Liesman be telling us when we see that statement . Basically, its the forecast from the individual fed members on how many Interest Rate hikes they think they can do this year. The last time we got this, it was in december when they raised rates and they were three for the year. If they change it to four, they are responding to the improved tone and outlook on the economy, jump in markets and look at language like gradual to be removed when it comes to the pace of raising Interest Rates. We got the message that they want to see the hard data and the proof. They are not going to speculate about fiscal policy or the bump in confidence. Well, we are starting to get hard data in the form of better jobs data. Both adp and the government report. Is it enough to shift the center of the fed if were thinking about faster Interest Rate hikes . Well see. She was asked about Balance Sheet normalization. She said she wanted the rate cycle to be under way before they had that discussion. You saw goldman which upped their forecast for when the fed would begin that process from mid2018 to the Fourth Quarter of this year. Yellen will be asked about that. The Balance Sheet, Interest Rate spike and politics. Meantime, speaking of politics, President Trump referencing the business round table survey yesterday. Ceos most optimistic since 2009. It will only get better as we continue to slash unnecessary regulations and when we begin our big tax cut. Business leaders are concerned about trumps trade policies, that they may drag us into a trade war. Our jackie deangeles joins us with more on the results. What did we find . There is a concern out there. These cfos represent some of the Largest Companies in the world. Collectively, they manage more than 4 trillion in market cap. In this survey, we asked them to weigh in on a number of key trump proposals. They dont believe that were going to see anything tangible in the near future. The ceos we spoke to are confident that we wont see the border wall or repatriation by the end of the year. They are concerned that trumps hawkish stance will spark a trade war with china. And then when asked where u. S. Trade policy uncertainly falls on their companys biggest external risk list, roughly 18 said its the biggest one that they face. That came in second only could consumer demand. They oppose the border adjustment tax. Go to cnbc. Com for more. They were talking about rate hikes and where they think the stock market goes from here and share thoughts on trumps proposed tax plan as well. Jackie, just one question. How much of the cfos that we survey are from the Multinational Companies that do business abroad that would be worried about broad versus domesticoriented ones. Its across the board. We try to make it fair and balanced in that sense. We looked at global conglomerate corporations. Jackie deangelis, thank you. Yep. Our Steve Liesman is joining us from washington. We had a discussion about all of the data weve gotten in the past 48 hours or so and how thats going to play out this afternoon. Its been pretty good, pretty decent. The question is the Market Reaction. Its put on notice by officials that a rate hike is coming and from all appearances you think the market is ready but is it really . The fed funds probability of a rate hike is that 94 for the hike and the fed works to make sure it doesnt surprise the market. Now take a look here at this chart. So far, the market has been very well behaved. First, its priced in a rate mike in march and priced in a third rate hike. Youre looking at the rise of the fed funds probability but look how well behaved the s p has been. It hasnt gone up much but it hasnt tanked. The fed hasnt surprised the market since 1993. Sometimes, even when the market knows what is going to happen, it acts like its surprised. We want back and looked at the stock Market Reaction in all of 2016. Only the last one took action by raising rates. Look how volatile the market can be even when its completely telegraphed in and knows what is going to happen. They didnt think there would be a heek ike in january or septem. And then, of course, on the day when it did hike, there was more volatility and the market went down. Well see if there are any surprises today. The fed is hiking because it says it is at or close to hitting its jobs and inflation targets and the economy operating close to its potential. That creates a possible conflict together with military spending and taxes and infrastructure. So today we listened for hints about possible fourth rate hike this year about how close the fed is to thinking about reducing that 4. 1 trillion Balance Sheet and how fed chair janet yellen thinks it should react if President Trump gets those policies through congress. Steve, thank you. Were looking forward to an interesting afternoon. Of course, republican senators taking a pause on the Gop Health Care bill offered by the house suggesting changes after that critical report by cbo. Were joined this morning by the former chairman of the council of economic advisers and deputy nac director jason furman. Good to be here. Its nice to have you on and answer a fed question that you can answer. Whats your take on whether or not they are at an Inflection Point here . You know, were going to we all know what they are going to do today. The bigger question is what they signal for the rest of the year. And im not that worried about that signal because theyve been so data dependent. If the rest of the year is great, then maybe they hike the rate three more times. If its softer, maybe they only do one. In the middle, its two. So i think youre not going to have some situation where they are going to add some instability. They are going to be leaning against whatever else is going on in the company thats data dependent. What do you think of some of these sentiment numbers . Were digesting Housing Sentiment just now but its rare that that number beats by the margin it did and the times it has happened, its come in the last few months. Youve seen a lot of optimism across the board, large businesses, Small Businesses, home builders, consumers. My only hope is that the optimism is proved justified. I worrisome of it is based on thinking that everything that would be good for gdp that the president has talked about is going to happen and everything bad, like the trade restrictions, immigration restrictions, some of the unpredictability about how he deals with businesses wont be materi materializing and its a little more optimistic than id be about him but well see. You mentioned that the fed should take it by the data, which is what they do. When it comes to striking the right tone today, how optimistic should janet yellen be and place faith in the confidence readings and some of the job numbers weve got . I think the fed should feel great about the job numbers. 4. 7 unemployment and participation and bouncing back over the last couple of years. At the same time, we got inflation today and saw inflation is pretty much at the feds target. Janet gave the speech about running the economy a bit hot and running through that and being open to that. Thats certainly what i hope their orientation is. Thats not inconsistent with rates being a little bit higher. It will be an expansionary stance, just not as expansionary as it would have been without the rate hike. Jason, larry kudlow joins us on the set. Buckle up for that. Larry, i dont know if you want to start. Jason is an old friend of mine. Its a pleasure. Its a little hard getting here. Little late than never. Health care, process, what . It sounds like i agree with jason the fed. I think they are making the right move here. Weve seen a bump up in Commodity Prices and a bump up in inflation and it may prove to be temporary. I want the fed to normalize, albeit slowly. I guess they are going to start drawing down their Balance Sheet soon enough. Im fine with all of that stuff. What im not fine with is the logic. Youve heard me say this before. I dont think more people working and a little bit higher wages are inflationary. I dont buy that. I never have. Im not a phillips curve guy but i think this moment is right for them and theyll probably do it a couple more times and what the fed really needs is broadbased Corporate Income tax cut. Its shocking to hear that from me. That will grow the economy a little faster and led the fed normalize faster. Does that happen on the calendar we expect given all of the drama over health care this week . What is drama over health care . Look, i think the the Republican Party is going to get this done. Thats my first point. My second point is, the gop may have to practice bipartisanship with its self. Okay . That is very important. With itself. I think youre seeing that, by the way. President trump is now on the phone in some of the meetings and i believe they will get a bill through the house. The ryan bill needs some changes. Definitely needs some changes. We can talk about that, if you want. But basically, i think youre going to get it done and its going to take another couple of months to get it through. I will argue this case, jason may disagree, but technically, im still saying this, technically, you can draft a nice simple threestep business tax cut for large and Small Businesses onto the health care reconciliation. Technically, that could be done this spring and it would be a home run. Although, nobody really is talking about that, are they, jason . Dont you have to have arent they talking about health care before tax cuts and now we have this health care mess. Can investors and economists draw any conclusions about what that means for Corporate Tax reform . I think its a real shame for an economic strategy. The president had an opportunity to put Business Tax Reform and Infrastructure Investment first. Could have squoined the two of those and been, you know, midstream working together with democrats right now and instead hes doing this health thing. I dont think hes going to succeed on it. It certainly wouldnt be, you know, particularly good for the economy if de. And its a distraction. I agree with everything larry said. If he can just change one word, Corporate Tax cut, he made that Corporate Tax reform. He made it revenue neutral. Thats what the people in the house have called for. Larry, id even do some dynamic scoring as long as we left it to the cbo to do it. That would be great for our economy. This is not the first time that jason and i have nearly agreed with each other. I just wanted to note that. Im for dynamic story. You know i am. Theres no surprise there. I would have preferred, by the way, i think jason is right, the business tax cuts be first. Absolutely. On the other hand, sara, i just want to correct you, with all of the greatest respect, i dont think this is a health care mess. What im going to call the ryan bill for the moment, ryan 1 or ryan 2, look, this thing does a lot of good. A lot of good. It opens up choice and competition. Its going to have major reforms on medicaid, its going to repeal 13 tax increases which is good for the economy. I wasnt talking about the policy itself, to be clear. I was talking about exposing the factions within the Republican Party. Well, thats called democracy. As i said, the gop has to practice. Theyve got to practice some kind of bipartisanship with t m themselves. By the way, my opinion, were giving too many tax credits to the upper end, not enough to the lower end. Were giving the Insurance Company this 30 addon penalty if youre a little late. I think thats nuts. I think medicaid, which is controversial, needs some reform. On the other hand, heres the key point, youve got to separate out the healthy from the ill. I just want to make this as quickly as i can. We must take care of the ill. Absolutely. You must take care of the ill. And if the government has to, it should stand behind and guarantee a risk pool. A subsidy of a risk pool. Now, if you do that, you take the healthy out of the Insurance Company, take it out. And if you do that, youre going to see plunging i mean, plunging premiums which actually will increase the enrollment, contrary to what the cbo is saying. That is a package that can be done and i hope it is done. In later years, in ten years or sooner . The whole period. Look, the whole issue here is premiums. And, of course, deductibles, too. But they go together. Premiums. So the Insurance Companies dont want to pay for all the ill. They cant do it. They need government lets just take that out. Create a massive risk pool or you can give them vouchers, let them choose themselves. But were a generous nation. We must take care of the ill. Dont get me wrong. But once you do that, you open the door for vastly lower premiums and that, in turn, opens the door with new choice and access on the part of the exchanges to what may be a recordbreaking enrollment. To me, thats just as plausible as the cbo. Larry, use a little bit of commonsense here. This legislation gets rid of a requirement that you buy Health Insurance and it cuts subsidies for Health Insurance but for medicaid and for the tax credits by over a trillion dollars. Of course youre going to have more uninsured. Of course youre going to cover fewer people. The cbo, you know, maybe the number is 22 million, maybe the number is 26 million. Maybe its exactly the 24 million they just said. But theres no doubt that the number of uninshired hured has p when thats the structure in your plan. This bill actually doesnt have cost control in it. The one bipartisan cost measure that economists on both sides of the aisle agree on is either, you know, taxing Health Insurance in some form, ending the exclusion, having a cadillac tax, thats delayed five years. Thats going to drive up the cost of health care. And the other problem here is premiums and deductibles dont go together. They go in opposite directions. This plan is all about higher e deductibles. Theyve been talking about lower deductibles and the cbo said correctly that this plan would raise those deductibles. Jason, i would just say to you, if the premiums come down as much as i believe they can come down, if we do this risk pooling for the ill and the sick, i think youll see the deductibles come down as well. Its a defensive measure by the Insurance Companies. They might not need that. On the subsidy point, jason, i guess well just agree to disagree. An interesting point here, first of all, there have got to be limits to medicaid. All of obamacare was about medicaid care. Thats where the increases came from. It did not come from the private exchanges. The cbo is saying youre going to increase 22, 23 Million People a year on the private exchanges. The number came in around ten. They cant estimate that. Right. Weve flirted with this going back, jason, one of your older bosses, bill clinton, took a look at this in the middle 90s when we had welfare reform. Unfortunately, we didnt get to the medicaid piece. A lot of people talked about the cpi limit. I think that would be very wise. A lot of people talked about giving the state flexibility. A lot of people talked about, as the ryan plan does, by putting these refundable tax credits in, i would put them at the low end. Not the high end. I dont want to give them the 150,000 people. Age adjusted, income adjusted, okay, but put them at the low end, get them out of the poverty trap and youve got to worry about a mandate, i understand that, but to me the subsidies should be focused around 40, 50, 60,000, not 150,000. So im not getting rid of the subsidies. Im just saying id like to lower them. Im actually more liberal on this point than a lot of my friends are. Larry, you should take a look at something called the Affordable Care act. Thats what it does with the subsidies. You might actually like it. Jason, dont, dont, dont. Weve got to go. There were parts of that i was okay with but not many. But you know that. Jason, larry, thank you so much. My pleasure. When we come back, republican senator david perdue is with us. Thoughts about a possible border tax and the Gop Health Care bill. And why the fed is expected to raise Interest Rates at this afternoons meeting but are the markets ready . Well here from former fed governor mark olson. The dow is up 36 points. After this break. Your path to retirement may not always be clear. But at t. Rowe price, we can help guide your retirement savings. So wherever your Retirement Journey takes you, we can help you reach your goals. Call us or your advisor t. Rowe price. Invest with confidence. Experience exciting offers on sales event is here. Our most thrilling models ever. Get up to 2,500 customer cash on select 2017 models for these terms. Experience amazing at your lexus dealer. There are parts of the Republican Party that are questioning the divide in the gop. Joining us is congressman perdue. Are there issues like Corporate Tax reform because of the splits were starting to see in your party . Reporter sar sara, they are anticipating what this president is proposing will actually work. Look, business knows that is going to work and ill tell you the other thing, Consumer Confidence is ebbing up ever so slightly. Were on the cusp of a real turnaround, sara. But when it comes to the divisions in the party, can you address that . Its happening on health care and on the very issue that you speak of with the border adjustment tax. Youre not in favor of it but members of your party, including House Speaker ryan, is. Our president has been in office for seven weeks now. If we can implement his agenda, well get this economy going. What we have going on in the senate, though, im concerned about people who are so concerned about getting to perfect that were not going to get to an 80 solution to get this economy going. I believe health care and taxes are the two issues of the day that will get the economy going, in addition to pulling regulations back. So what weve got to do in the senate is put selfinterests aside and focus on the national interests. What really will be necessary to grow this economy . Its not that complicated. Yes. So you know how the sausage gets made. Lets talk about the border adjustment tax. Youve called it regressive, hammers consumers and will grow the federal government. How are you going to convince your fellow republicans of that and how does tax reform and lower Corporate Taxes get paid for . I think weve already convinced the senate that the border adjustment tax is a bad idea. Ive watched this in europe. I lived over there. When they did something similarly, it caused the economy to shut down and also the government dramatically. This would pay for the corporate rate reduction, elimination of repatriation and reduction of individuals rates. There are ways that we can deal with that but i just think we should not put a bad idea along with these great ideas that the president wants to implement because that will cause us to really shut down this opportunity that we have to really change our tax structure and get this economy going again. Senator, proponents would say we faced this all the time in the form of a b. A. T. Thats a shallow argument. Heres the reality. What we should be talking about is trade. Individual tax reform, Corporate Tax reform, repatriation and bilateral trade will put us on a level playing field. We dont need to do it in our own Corporate Tax structure. Ill tell you why, it wont give us a level playing field. That said, we had gary cohen on on friday about this being deficit neutral, that being tax reform overall if we get there. How do we get to a deficit neutral . Even if we assume a higher gdp growth rate, how do we get there if we dont have a significant revenueraising portion of tax reform . You just highlighted what is really wrong in the process. The budget process since 1974, weve only funded the government four times under this process. In the last 42 years, weve only passed 2 1 2 appropriation bills. This is ridiculous. Its binding our hands right now. The United Kingdom in 2009 eliminated the repatriation tax and they are about to do it again and their economy came out just like ours will. So what this is is an accommodation to a very bad budget policy and weve got to get around that and there are ways to do that. Finally, i wanted to ask you about the fed. Its fed day, a huge deal for us. Were expecting higher Interest Rates this afternoon. Third since the financial crisis. Do you think that that is going to hurt the economic reform agenda if the fed picks up the pace of its tightening, strengthening the dollar and getting in the way of all of this optimism . I really dont. I think we have enthusiasm out there that is not going to turn around. The president has ignited this renewed spirit of optimism out there. This one Interest Rate change is not going to change that. Let me tell you what im concerned about. This 20 trillion of debt. The increase of rates in the last 15 months means weve got a tremendous increase, 150 billion of new interest were going to have to face up to. Weve got to fix this budget process and get our spending under control. This debt is phase 2 and the president is talking about that right now. He mentioned it in his speech to congress. Right now weve got to get the economy going, fix our tax system, solve the health care problem, pull back on regulations and, by the way, were going to nominate and confirm a Supreme Court justice which will calm the market. Senator perdue, if you fthanr joining us. Carl . Lets get over to Courtney Reagan for an update at this hour. Good morning, carl. Heres your cnbc news update at this hour. Polling booth opened across netherlands. The elections are being watched for a possible indicator of the strength of far right populism ahead of votes in france and germany later this year. Secretary of state Rex Tillerson arriving in japan for the first leg of his threenation trip to asia. High on the agenda, forging cooperation with japan, south korea and china against the Nuclear Threat against north korea. At t has won approval for its planned 85 billion purchase of time warner. And washington, d. C. ,s Cherry Blossoms are in real trouble. For the first time in close to a century, the blooms may not happen because many of the flowers were coated in ice. Thats your update at this hour. Lets head over to jackie deangelis. Jackie . For crude we had a draw down of 237,000 and for gasoline, a draw down of 3. 1 million. Its really the gasoline number supporting the market here. We saw a bounce in oil after the api data and crude numbers are in line with that. Were trading at 48. 55 at the moment. Its been a rough trade in eight days and you definitely have some buy in the dip here. Goldman underscoring the importance of opec at the compliance that we see. We were down 9 in a month. Down 3. 5 in a week. Not unlikely to see a dip here but still trading back to 50. Jackie, thank you for that. With the dow holding on to its gains close to session highs led by caterpillar, were back in just a moment. Manage my portfolio. E i td since i added futures, i have access to the oil markets and gold markets. Okay. 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Snap priced at 17 almost two weeks ago but opened for trade at 24. Its trading right around 20 a share. Much more ahead. Stay with us. This car is traveling over 200 miles per hour. To win, every millisecond matters. Both on the track and thousands of miles away. With the help of at t, Red Bull Racing can share critical information about every inch of the car from virtually anywhere. Brakes are getting warm. Confirmed, daniel you need to cool your brakes. Understood, brake bias back 2 clicks. Giving them the agility to have speed precision. Because no one knows like at t. The Federal Reserve is expected to hike Interest Rates in a few hours. Are markets ready . Joining us now, barclays head of research and managing director and bank of america head of economic global research. Welcome to you both. What could really rattle the markets today, ethan . I think what will rattle them is the socalled dots move a lot. Right now, the fed is forecasting only three hikes this year and next. People will be watching to see whether that median dot moves up to four. I think well be watching very closely what yellen says in the press conference. Everyone agrees that the economy is looking better. The question is, does she try to dampen that optimism in the press conference . Thats where the action will be, not on whether they hike or not, which is virtually certain. So its the actual projections that the members of the fed make when it comes to how many Interest Rate hikes they think they will do this year, et thhan. Do you expect that to change at all in todays announcement . Everyone focuses on the median dot, the middle of the committee. The median dot is three for this year. Its very hard for it to move up to four. Four members have to become more hawkish in order to move to four. That probably doesnt happen. But for next year, all you need is two people to move and then the median dot moves from three to four. And so that would be where you might get some interesting action in the feds announcement. I wonder, michael, if the fed is caught between a rock and a hard place because, on one hand, if they dont do anything, then they might be accused of not responding to this great market surge that weve seen since the election as we look at the u. S. Economy under President Trump and then they get criticized for skrumpi jumping the gun and potentially ruining the optimism. Ethan is right. Youre going to get a blend, that they will respond to what theyve seen in the soft data. The sentiment is stronger, equity markets have moved stronger. Perhaps its altered their balance of risk and therefore warrants a rate hike in march. I agree, the curve is not going to steepen all that much. We could get a median of 4 in 2018. It will be hard to get that this year but the average funds rate across the curve should be higher. So i think youll get a modest boost there. I agree. I dont think were looking for a sharp upward move in the dot chart which could have negative implications on sentiment. Ethan, a couple of trends are getting peoples attention. One is lower yearonyear loans and subprimes related to lending and housing. How much of that is on your radar . There are some headwinds in the economy but if you look generally at what is going on, we see growth pick up late and not just in the u. S. But globally. That momentum seems to continue into the new year with the latest two employment reports. So, yeah, were seeing a little bit of issues around subprime. Thats something weve been waiting to see and with c i lending but generally its on a healthy growth track. Not disputing that. But there was an oped written today for cnn that it is ignoring the precrisis number ts. How mu how much of this do we have to Pay Attention to . Normally housing would be prime for a pullback right now. Really only about 2 or 50 reporting banks in the feds Senior Loan Officers surveyed said they made subprime loans. I dont think the problem is in the housing market. I think you could point to autos where that would be a problem, 30 to 35 of new auto loans are subprime in nature. I think i would look to autos more than housing. Housing looks balanced at this point. I dont think the major potential contraction is in housing as it is in other areas. Were going to look for commentary this afternoon from janet yellen on housing, the outlook on fiscal policy. Give us a sense of the language which would really stand out to you. Well, shes going to sound cautiously optimistic the way she has in recent speeches and other fed officials have. But shes not going to promise anything specific on timing of next rate hikes. Shes going to want to keep her options pretty wide open. And, you know, right now the reason the fed was so clear going into this meeting is not because they are super hawkish right now. Its more that they want to avoid political criticism and avoid surprising the market. So i dont think that they are like bound and determined to go at every press conference meeting. I think they want to keep their options open Going Forward and thats the kind of tone i would expect out of janet yellen. It raises the question about the Communications Policy which we know this fed in particular has worked very hard on. I mean, look, was it three weeks ago that the market was not pricing in an Interest Rate hike for today . They totally successfully changed that mentality but it makes you wonder why all of this guessing and is the market going to be okay with it Going Forward . I think the market will be. Its just the state of the world that were in. And, yes, i actually looked for a stronger message coming out of the january meeting. We didnt get it. I was kind of where the markets were, around 30 to 40 and then obviously we got the communication. The fed just doesnt like to have a lot of uncertainty to resolve on the day of the move. So there was a coordinated message that got markets up to expecting a march hike. Theres not a lot of resolution or uncertainty to resolve on the day and then its more about the future path, what do you think about the Balance Sheet, so on and so forth. Its just where we are with fed communications and its a little tricky. Weve got the soft data doing well. Markets rallying. The hard data immediamediocre ae waiting on the data of the fiscal policy. Some of this is feel as you go. So far, investors are playing it all pretty cool. Gentlemen, well leave it there. Thank you, michael and ethan. When we come back, former fed governor mark olson will talk to us about the fed meeting. Dow remains in a tight range of 41 points. Hey gary, what are you doing . Oh hey john, im connecting our brains so we can share our amazing trading knowledge. Thats a great idea, but why dont you just go to thinkorswims chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders . I know. Your brain told my brain before you told my face. Mmm, blueberry . Tap into the knowledge of other traders on thinkorswim. Only at td ameritrade. More squawk on the street is coming up. In a little less than an hour, we may find out who is behind the yahoo hack that impacted millions of users. A top official says the hacking to be discussed was, quote, done with the backing of a nation state with others saying the nation involved is russia and as cramer and david said in the 9 00 a. M. Hour, russians arent necessarily coming. They have already been here. They have. He pointed that out. In 95 they were concerned about the russians. Yahoo was lowered the price of its core business by a small amount, given the liability it faced and the concerns overall. It didnt seem to impact, though, the business in a significant way. Were going to find out more about that later on this morning, obviously. Dow is up 37. Lets check in with jon fortt. Good morning. Were going to track what President Trump is doing with the Auto Industry in detroit. Well bring you that and then reed hoffman joining the microsoft board. Why thats important for microsofts transformation. Finally, well track that news from the doj about yahoo and more on squawk hour coming right up. Welcome back to squawk on the street. Now its time to go to Rick Santelli in chicago with the santelli exchange. Happy fed day, rick. Yes happy fed day, sara, and happy fed day, thats why we have our guest, mark olson. Thanks for taking the time, mark. Thank you, rick. Always good to be with you. All right, i want to hit on all the fed topics, but real briefly, we had the National Association of homebuilders Sentiment Index at 71, best of june of 05. It matches other feelgood indexes like Consumer Sentiment from the Conference Board in michigan. Weve had data on inflation, retail sales. Were talking about 50 and 100year bonds. Do you want to weigh in on any of that quickly . Sure. I think briefly, the consumer has been a very active participant in this rally, and i think that the markets, the stock markets, the equity markets have had something to do with it, but i think the underlying sentiment is simply strong. Now, the source of this, rick, is not entirely clear to me, but its also reflected, for example, in the jobs number. We have 1. 5 million more people employed today than we did a year ago, and so, i think that theres some underlying real strength there, and the consumer Sentiment Indexes all support that. All right, now lets get to the heart of the matter. Fed meeting today, second day. Seems to be builtin quarter point, 75 to 100 the new target range. Your thoughts. Weigh in. I think the only thing that they havent done is have a brass band go down constitution avenue announcing it. It would be a huge surprise if they dont go up a quarter. And i think its unlikely that theyll go more than a quarter. So, i think it will be up a quarter. The more important point, i think, is two things. Number one, what chair yellin suggested at her press conference, what they might do in the future, and what the statement says about the underlying economy. Those are the important things to watch. All right, listen, im going to go back to the well of information youve given me many years ago along with robert heller, an associate of yours the Balance Sheet lower the size, make the Balance Sheet smaller, reduce it. Dig into that for me, mark. Sure. Thats long overdue, but i think understandably put on the back burner, because i think that the markets would have the other name for that, as you know, rick, is passive tightening. But i think and what chairman yellen said in her congressional testimony is that were going to start having advances in the rate first. Then well address the Balance Sheet. So, i think well get some signal of it, but what i anticipate happening starting this year is maturing instruments will be allowed to roll off and not be replaced, and well return the Balance Sheet to some degree of normality over the course of this year. And i think that those will begin first with future rate hikes. Perfect. We have one minute left. And in that last minute, you know, we have bank of england tomorrow, bank of canada, bank of japan, a lot of Central Banks top of the pyramid. The bottom of the pyramid, the real base, we have dutch elections, french elections, ultimately german elections. Weigh in on the global side and weigh in how and if in any way that should impact the decisions of our Federal Reserve. Sure. There are implications, i think particularly in europe, particularly as a result of the elections that are coming up. The level of uncertainty in europe has to be very high right now. In terms of the impact of the Central Banks on the u. S. Market, i think it will be of interest but not of any significant consequence. Mark olson, board of governor from 2001 to 2006, i thank you for your time on this second day of meetings. upstate new york is a good place to pursue your dreams. At vicarious visions, i get to be creative, work with awesome people, and we get to make great games. what i like about the area, feels like Everybody Knows each other. And i can go to my local coffee shop and they know who i am. Its really cool. New york state is filled with bright minds like lisas. To find the companies and talent of tomorrow, search for our page, jobsinnewyorkstate on linkedin. And the wolf huffed like you do sometimes, grandpa . Well, when you have copd, it can be hard to breathe. It can be hard to get air out, which can make it hard to get air in. So i talked to my doctor. She said. Symbicort could help you breathe better, starting within 5 minutes. Symbicort doesnt replace a rescue inhaler for sudden symptoms. Symbicort helps provide significant improvement of your lung function. Symbicort is for copd, including chronic bronchitis and emphysema. It should not be taken more than twice a day. Symbicort contains formoterol. Medicines like formoterol increase the risk of death from asthma problems. Symbicort may increase your risk of lung infections, osteoporosis, and some eye problems. You should tell your doctor if you have a heart condition or high Blood Pressure before taking it. Symbicort could mean a day with better breathing. Watch out, piggies child giggles symbicort. Breathe better starting within 5 minutes. Get symbicort free for up to one year. Visit saveonsymbicort. Com today to learn more. Welcome back to squawk on the street. Im morgan brennan. Homebuilding stocks Building Momentum after a monthly reading on Builder Sentiment jumped to the highest level in 12 years. D. R. Horton, pultegroup, lennar and kb home gaining 1 or more, though starting to come off the morning highs right now. The spdr homebuilding etf and fhb up as builder confidence has strengthened on hopes that deregulation will cut construction costs. So, with that, ill send it back over to carl and the gang to start squawk alley. Carl . Morgan, thank you very much. Good morning. It is 8 00 a. M. At yahoo headquarters in sunnyvale, california, 11 00 a. M. On wall street, and squawk alley is live. Good wednesday morning. Welcome to squawk alley. Im Carl Quintanilla with sara eisen, jon fortt here at post 9. Market treading water ahead of the fed decision this afternoon. Our top story for this hour, the president is about to depart for michigan, where he will be meeting with auto ceos and Union Leaders to discuss his