We have somebody here who can give us icnsight into all of tha dow futures look to be down 35 points part of what happened in the market was because of tenyear yields topping 2. 96 right now the tenyear is at 2. 926 the 2year at 2. 2 26 . In asia, the nikkei off by 1 . Shanghai is up about 2 . In europe, the early trading there, the stock markets there are mostly in the red. Dax is off by 0. 8 ftse is down by almost 1 . Barclays shares are up sharply despite the uk Bank Reporting a big drop in 2017 profits. Barclays says it lost 2 2. 7 billion once again why would that happen . Yep. They its accounting for the u. S. Tax overhaul. But also a weaker dollar there were some bright spots Barclays Says its pretax profits rose 10 customer deposits were up and its doubling its didividend. Jeff staley says he is optimistic about the future. There are a number of tailwinds. During the next year and half we will be retiring a lot of debt Interest Rates are in a much better position than they were before weve closed noncore noncore was a significant drag on this bank in 2017 you take those things around taxes, noncore expenses, thats about 150 basis points of that 350. Then we have costs cost guidance of 13. 6 to 13. 9 billion for 2019 we have great visibility on how to get to that number. This bank dropped its costs by 5 billion pounds over the last few years. We know how to do that all youre talking about to get to that number, you have to believe we can increase earnings by 125 basis points. Staley also said he had no plans to leave the bank despite an Ongoing Investigation by investigators about his treatment of whistleblowers fords north american president has been ousted from the company. Ford fired raj nair effective yesterday after conducting an internal investigation into reports of inappropriate behavior thats all we know the specific allegations are not clear. The ford ceo said the firm is depositi deeply committed to providing and nurturing a safe and respectful culture and we expect our leaders to fully uphold these values. There have been allegations about a plant in the 90s and harassment of female employees hes been there 30 years in charge of Product Development for a long time. Its a loss they just got rid of fields. Shares did take a hit when the news broke late yesterday. Its time for the squawk planner. On the earnings agenda, hormel foods and blooming brands will post before the bell hewlettpackard enterprises, hp and intuit will post results after the close this afternoon then when you check out the data calendar, weekly jobless claims will be released at 8 30 a. M. Eastern time Randy Quarles and fed president bill dudley, Raphael Bostic and rob kaplan all have scheduled events today quarr quarrels made comments at a speaking event in tokyo overn t overnight, but we have somebody here live. Blooming brands, you know what that is blooming ononions a lot of casual dining f youre going to focus, what should they be known for those grease y beautiful onion rings. Bloomin brands. They have all these different things, if you want to define that company bloomin onion. You had one of those things theyre good. Wouldnt have too many of them the big thick ones, but these are just any way. Im totally distracted now lets get to our special guest, jim bullard is our guest host for the hour great to have you here the journal, the lead, fed gives bullish signals on the economy. A s that the correct determination . Brdz, a b, are you more convinced as a group that the 2 inflation target is coming sooner . And this did not cause you to change the path in Interest Rate hikes. Has the journal got all of those things right 2017 was a good year. U. S. Economy surprised to the upside Global Economy surprised to the upside that drove earnings. That drove a good year for u. S. Equities it was natural for us to be meeting in january and saying good things about 2017 that part is accurate. Weve got core pc inflation at 1. 5 market base core is at 1. 2 year over year. We have a ways to go on this inflation story. Inflation has been below target for a long time here i dont think we have to be in a hurry. I also think the market is doing our work for us with the tenyear moving up i dont think we have to chase the tenyear up. Except the tenyear moves every time one of you guys if your left eyebrow raises its not all of us. Thats true in january the cut isstalk i got more bullish than the previous projections i have a problem with main stre stream economists on how long it takes them to raise projections. You have all this stimulus, what i think are growth policy tass have been enacted, and deregulation yep the fed, it seems like you guys still look in the Rearview Mirror arent you supposed to anticipate growth . I think good things have happened i like the deregulatory agenda i think the tax plan has some chance of working ap find firinp investment but youre kicking and screaming. In the forecasting world things happen slowly youre better off inching up your forecast. Thats all thats going on there. I think people are optimistic and hopeful that well have another good year in 2018. Stock markets seem to get it before you guys. I will say this the idea that we have to go 100 basis points in 2018, that seems like a lot thats price for perfection. Everything would have to go just right. The economy would have to surprise to the upside a bunch of times im not sure if thats a good way to think about 2018. I remember when you kind of switched you found religion at some point. You wanted to raise rates for a while. You seem more hawkish, then suddenly about a year and a half ago you got very dovish based on inflation . We had a forecast but you, jim bullard. I used a forecast that was traditional. That inflation was going to move above target we had to get out in front of it that forecast turned out to be wrong for three or four years in a row. I decided to switch gears and were just in a low rate environment globally and one thing im concerned about is if a bunch of hikes this year fed policy will turn restrictive. Youre not used to thinking of it that way. Thats where we are. The neutral fed funds rate is pretty low if we go up 100 basis points in this environment you will be restricted in an environment where inflation is still below target if youre looking for growth you dont have to go that high just to get to neutral. You pointed out growth around the globe was stronger than expected relative to the u. S. , could you expect to see global Interest Rates coming up, which is what weve seen with the german bund, part of the reason why the market brought rates up here europe surprised to the upside if they have another good year, i would expect upward pressure on rates from that will they have another good year i dont know any better than anyone else. If the long end is moving up in tandem with better growth prospects, then the bond market is doing the work for us that doesnt mean the fed has to move to a restrictive stance you said basically all of us need to recalibrate what we think is high and low in terms of Interest Rates. Its not the absolute level t could be the relative level from where they were. Dalio and others have warned that a lot of people have borrowed a lot of money. And theyre paying a certain level of debt service right now. Even if its only back to what seems historically low levels, they have to pay more including the government. Yeah. Let me ask you this we recently had the well, first, the stock market is up 40 since the election i used to think a lot of the stock market was you guys. It was staying at zero, extraordinary measures, big Balance Sheet. Animal spirits, you tried doing asset value. They go up as you stay at zero, maybe it wasnt fundamentally based. Is there any truth to that do you think that you handed off the stock market baton to the real economy in the last year . I would say this. 2017 was not the fed definitely not then youre admitting before that it was the fed . It was a better argument a couple years ago when i was here last year it was really the Global Growth surprise as i was saying, it was bigger outside the u. S. That growth surprise than it was inside the u. S. But everyone was up. It was up simultaneously china was up japan was up europe was up. And naturally on equities, of course, 50 of the profits are coming from overseas that was a big driver for the market plus the deregulatory agenda the growth agenda. All good and that will help drive equities also just a banner year. You didnt have anything going wrong in 2017. Can i parse what you said a moment ago you said the idea that we have to go 100 basis points in 2018, you think the market is getting ahead of itself, because that would be price for perfection for that to happen i think yesterdays action, fwrant e granted this was knee jerk reaction, if you look at yesterdays market reaction, traders looked at this and thought, great, this is going well, there will be growth then they thought, gosh, things are going well, the fed will raise rates faster than anticipated. What you just said makes me think they jumped to the wrong conclusion yesterday afternoon iny the nthink there will be continuity, we have to give jay powell a chance to settle in, but this is all about continuity very deliberate. Very data dependant. You know, the idea that were going to go in lockstep without paying attention to the economy is too much. It will be data dependant. A lot of things would have to go right through 2018 to get the full 100 basis points coming in. For stock market investors, it was amazing for the last year you get a 40 move in stock prices so a 10 correction was welcomed by a lot of people not surprising but we all look for reasons. We all look for something under the surface that could 10 into 20, 25 or whatever everybody says theres no housing bubble theres no we dont have these crazy instruments that are totally leveraged. Theres nothing like that. I always come back to a fed policy mistake as the thing that people in the back of their mines are still worried about. The Balance Sheet is so big. You still have not extricated yourself from staying at zero for so long. Is there a potential for a policy mistake by the fed . Would it be either way would it be tightening too fast or staying low for too long . Could you screw up on either side im mostly scared about plowing ahead, raising rates thats the new bullard. Based on the conception of the 80s and 90s, which is not word were living in today were just living in a lower level of Interest Rates today. We dont have to do as much to get to naught raeutral supposedly its never been done, where you get one. How do you know youre not behind the curve you know, core pc inflation is 1. 5 . It will come up in march and april. So it wont surprise you. Thats not a surprise no were still below 2 at that point. These phillip curve effects are so weak. Even unemployment gap of 1200 basis points,you think the natural rate of employment is 5 , were at 4 . If you look at the estimates that will cause 7 basis points of inflation thats how flat the phillips curve is today the idea that you will all of a sudden inflation will be upon us in this world where we have not hit the inflation target for five years, thats a little much you are convinced what do they call that risk . Asymmetric as data comes in during the year, we can make a judgment i wouldnt pencil in well do these rate increases without you think the risk is not staying low too long you think the risk is changing and tightening too quickly yeah. The other aspect is were shrinking the size of our Balance Sheet and thats been gradual. But that will start to kick in during 2018. So you have that going on in the background so maybe just letting stuff roll off right maybe you dont have to do as much on rates since you have that aspect of the policy tightening going on. So for the year you would put gdp in the range of what for 2019 what would the range be you know, 2. 4, 2. 5 for the year for 2018. Yeah. Then slower after that in 2019 i hope its better i hope the growth agenda works my idea about that is that we can wait and see we dont have to get out in front of that. Wait and see if thats what happens. If it does and rates are naturally moving higher what have we been averaging the last eight years . 1. 5 to 2 2. 1 . So were back to that in 2019 . The potential growth is low for the u. S. Most people think labor force is not growing fast productivity has been low. What i need is the investment boom thats got to feed into productivity thats what you need so thats possible. Yeah. Absolutely then would have to raise 2019 but you dont have to get in front of that. You dont have to be preemptive. As the fed you have to react to things . I think shoe in thu you shous environment. I wouldnt be preemptive here. God, i can do that. You dont need to anticipate anything at the fed . You looked a what happened how much does it pay this environment thats the best way to go that served us well the last two years. Thank you youre going to be here is that okay yeah. Things are going well, dont you think. I think so but i think the markets need to sit up and listen to what jim is saying it was down 100 earlier this morning. Down 20 a second ago i dont know who you are i thought i knew you you should not be dogmatic in this business. You have to change your opinion. Jim will be with us for the rest of the hour when we come back, well talk more about what hes been seeing our guest host at the top of the next hour is david novak, the former yum ceo hes tackling the Biggest Challenges to American Business leaders. Well also talk to brian cornell, the chairman and ceo of target well talk about the tough retail landscape, competing with amazon and what we heard there wa from walmart this week first, andrew, what do you have coming up . The american women are hockey champions once again beating canada in a huge nail biter, decided by a shootout. If you stayed up late enough you might have seen it highlights when squawk box continues. Tomorrow, its a day filled with promise and new beginnings, challenges and opportunities. At ameriprise financial, we cant predict what tomorrow will bring. But our comprehensive approach to Financial Planning can help make sure youre prepared for whats expected and even whats not. And that kind of Financial Confidence can help you sleep better at night. With the right financial advisor, life can be brilliant. Wow record time. S. At cognizant, were helping todays leading Life Sciences companies go beyond developing prescriptions to offering subscriptions with personalized, realtime advice for lifelong, healthy living. Honey . You almost done . Nope. Get ready, because were helping leading companies see it and see it throughwith digital. Welcome back to squawk box. Commerce secretary wilbur ross is taking the lead on the trump administrations push to open up the commercial space race. A new wall street journal article calls secretary ross in its words the deregulation czar of the serheavens. The Commerce Department tapped to be the prime cattalyst for loosening controls over rocket launches to asset mining, which we need for cobalt or the lithium for our cell phones and for our cars cobalt and lithium oxide. Secretary ross will join us live at 8 30 a. M. Eastern time to talk about that and what else is happening in his neck of the woods. His part of the world. Check it out. Lets look at futures this morning as jim bullard was speaking he turns the s p futures positive theyre looking up by almost 3 points dow futures still down, just barely down 8 points. The nasdaq is off by 2 points. This comes after that hectic day of trading at the end of the session where we saw the big swing in the last 90 minutes of trading as traders were die justing what thjus digesting what they heard from the fed yesterday. Andrew is live in south korea. Exciting times last night. We finally have some good news some u. S. Good news. The curse is officially broken the u. S. Womens team, hockity Team Emerging victorious in what was a remarkable nail biter. Lamoureuxdavidson scoring the winning goal in a dramatic shootout the usa pulled off a thrilling 32 comeback and it wasnt known until the bitter end this is team usas first olympi championship in 20 years the game was a near mirror image of the last matchup four years ago when the canadians tied the game at 2 and then won it in overtime everybody here erupting about that news. Heres how the team reacted to the win. Im just so happy i could help in any way possible i pictured it, visualized moments like that thousands of times. For me to get the nod, coach throwing me out there, there was no doubt it was going to go our way. After i scored, i knew maddie would stop it. I knew it would happen big day for team usa. Mikaela shiffrin, well talk about what she did and look at standings. The u. S. Was not on this screen about a day ago. We have moved up now to number four we have 21 netherlands at 16. Norway with the top spot at 33 thats whats going on here. Its been quite a day and a lot more to come well show you more footage throughout before i go from here, ive been listening to your conversation i have a question for mr. Bullard. Which is this, you talked about being reactive, that the strategies i want to know what it would take for you to decide you dont want to be in a reactive mode, you want to be in a pro active mode what would be the Tipping Point for you . Inflation would have to move up from where it is now. Get up to target Inflation Expectations would have to be higher than today they have moved up but theyre shy of where they need to be you would have to have the idea that well be tamp down on inflation moving back from the high side. Were not in that environment now. Core pc inflation at 1. 5 . If strategically the fed is in a reactive mode, isnt that a dangerous place to be . I think we all thought it was interesting to hear you say that we all think the fed has access to numbers that we dont have or knows something we dont and it is going to be ultimately be proactive. If you tell the market were sitting around looking at this stuff just like you and well wait and see, isnt that putting you in a tougher spot . If inflation was at 3 and threatening to go higher, i would be mr. Preemptive. I would