the trump rally, stock futures pointing to a slightly lower open after the dow extended that win streak to 11, but are markets in bubble territory? of course buffett ways in. >> and obamacare in the spotlight. president trump is set to discuss how to replace the law during a busy morning of meetings with the nation's governors and health insurance executives. >> and former e-bay ceo taking up a new job this time in the cloud. he'll join us live. futures mostly flat though with the dow coming off an 11-day win streak for the first time since '92. speaking this morning with "squawk box" in that three-hour special, berkshire hathaway's buffett weighs in on the price of stocks and if in fact we're in a bubble. >> measured against interest rates stocks actually are on the cheap side compared to historic valuations. but the risk always is that interest rates go up a lot and that brings stocks down. but i would say this, if a ten-year stays at 2.30 and would stay there for ten years, you wouldn't regret very much not having bought stocks now. we are not in a bubble territory or anything of the sort. now, if interest rates were 7% or 8% then these prices would like exceptionally high. but you'll have to measure everything against interest rates, basically. and interest rates act like gravity on valuations. >> just told becky and joe somewhat baffled by the quiet trading in bonds. >> yeah. >> but the overarching theme of that letter over the weekend is equities over bonds. >> this was a buffett weekend. and becky -- look, this was amazing. look, as someone who loves stocks all his life, i'm sitting there wrapped. this is just required. the letter was required. this was required. the man is unbelievable. i'm just going to say the thing that most impressed me, this is like the most humble gracious investor. there must have been a dozen times where he said, listen, i got that wrong or i don't know the answer. and it makes you feel in the end, yes, i'm a big believer that you can own "mad money" stocks but you should be in an index fund. and he just completely did a great job on that. but what i'm most struck by is he's just, listen, lighten up, basically. you're not going to get the exact time right, but buy over time. he made me feel fabulous. now, he's done that before. i felt fabulous. this was a different kind. what he really just said, look, it really doesn't matter about the white house. he didn't point-blank say that, but three hours together you get a pas teej of what he was saying, really impressive. >> he is always worth reading and listening to, articulate in both ways. i know reading his comments about index funds versus active managers particularly of course hedge fund managers. >> something with the numbers. >> saying things by the way we've been talking about for many years, i certainly have despite having so many friends in that business, things i've noted, but he can do it in a way that just eviscerates them. without being mean. >> it was brutal. he just had the numbers and just showed you how much people -- he talks about, look, there are great salespeople and they get you and rich people want a particular element where they want to be catered to and that costs a lot of money. i felt, look, anyone who reads that letter knows you can have an index fund and do great. when we look at individual stocks is that a null and void exercise? no, he talks about owning individual stocks. the thing he doesn't like about managers -- we actually had a threefold issue but the main was good ones get a lot of money and makes it so not that good and want to take the money in because of personal reasons. >> and move beyond their ability to manage where they had great expertise and the fact is there are only so many superstars and that man is probably the number one. >> right. >> and he is capable of making decisions over time that seem to be better than what the market is. but there are very, very, very, very few who can really do that. >> i found myself analogizing to, okay, it's the nba, he's in the nba. there's lebron. okay. couple other guys. and that's it. and it's just another profession of superstars where you get to a level and there's only a couple people who can play. >> right. i've always made the -- i've always had the contention in the hedge fund industry everyone's a superstar. >> and they're not. look, i watched westbrook this weekend. also saw russell westbrook this weekend, the other westbrook. and i watched someone like him and i say, oh, that's a buffett. but there's like five buffetts. and that's it. at any given time. and this was miraculous to hear the humility of being the greatest of all-time. there was a discussion between 6:00 and 6:13 about apple and it was riveting. it talked about how it's a great consumer product and go into dairy queen with 11 kids and all take out their apple phone and say i got to own this stock. >> he has doubled his stake since the end of the year. now 113 million shares. he did talk about the sticky product, how he doesn't own an iphone and a lot more. take a listen. >> apple strikes me as having quite a sticky product. and enormously useful product to people that use it. not that i do. tim cook's always kidding me about that. but it's a decision based -- but again, it gets down to the future earning power of apple when you get down to it. and i think tim has done a terrific job. i think he's been very intelligent about capital deployment. and i don't know what goes on inside the research labs or anything of the sort. i do know what goes on in their customers' minds because i spend a lot of time talking to them. >> he said if any company has a shot at a $1 trillion valuation that's his bet. and echoed what you've said for a long time now, that it should be valued as a consumer product not a tech. >> the man knows consumer products than anyone. great discussion about kraft heinz and what people like. when you speak to tim cook, when i had him on "mad money" at 93, he said, jim, we make a great consumer product and that's what people have to look at. this idea of best days are over people can't live without the iphone. he wasn't being that hyperbole but saying, listen, it's a love product. there's warren buffett saying it's an inexpensive stock that produces -- with a company that produces a loved product. the analysts cover from the point of view of whether it's service now the fastest growing tech company i follow, koi coincidentally. >> who is now replacing their ceo. >> right. how can you possibly compare this company to arista networks? how would we put this in the same breath as google, alphabet, facebook? he doesn't think like that. he says this is maybe the greatest consumer product of our time and the kids love it. the scuttlebutt theory is what he talked about. >> where you gather sort of anecdotal gut feels. >> right. he talked about all these great books and frantically scribbling down what he says. but in the end comes down to tim cook is right, putting out a superior product, people want it. but it was such a different analysis. if you go on the conference call it's just a lot of pseudo mud slinging at tim. when you say somebody's best days are behind him and he's on the call and you imply that. those calls are untoward. untoward. and i'm listening to buffett and he's saying this is a company that sells inexpensively and a great product and that's kind of really the story. >> that's true. and when it comes to technology one of the few areas that he has not made money and is ibm for example, a stock he's own for a long time basically break even when you look at the letter. maybe up a little bit since the letter was written. >> he's saying this is not a tech company. not point-blank but, you don't walk around with your ibm in your hand. >> so you would warn people off from asking that age old question, well, what other tech might he get into now? >> i just think there wasn't anything about a discussion with apple that was about tech. it was really about how you have a product that really has kind of an ecosystem, didn't use the term, but just basically said, look, this is the product people want. i rarely ever seen somebody want this. this is a man who knows gillette. okay. he knows gillette. >> is that a razor blade business? >> that's what i'm saying he realizes. that apple is the ultimate razor, because the razor costs a fortune and the blades now a service fee. >> this is a point you're making about the subscription, service fees and that ecosystem because that's where it's going to have to grow, jim, quickly because replacement cycle is important but being able to continue to grow rapidly is still the question for some investors. >> oh, absolutely. >> even as they move strongly into india and perhaps new population centers that don't really have these iphones. >> couldn't agree more. but certainly it's an easier path for them than most. i thought the analogy, just to really press it, what he said was like when apple runs out to get the new apple. when gillette, how many times have i bought a new gillette razor? i've got one now, it's like machine learning, knows don't go there. mr. cramer, don't go to that part. i'm listening to him and he is basically saying this is learned what people want. >> yeah. >> i found the discussion i don't want to spend too much time on apple because what happened is there are discussions throughout this that are great. >> we're going to get to all of it. believe me. another busy day in washington. the president will meet with governors this morning at the white house. he'll then host the chief executives of some big health insurers including cigna, humana, aetna and more. meeting comes ahead of the address tomorrow night in joint session of congress. among other areas he says he'll offer details on how he would like to overhaul obamacare, look for a ramp up in defense spending, some cuts to the epa and state department. journal and a lot of others have argued for days now a lot is riding on this speech for the markets. >> well, the people are frantically buying the best stocks in the best charge in the book. general dynamics, l3, really doesn't matter, northrop. if you go back to reagan and the navy he never built there was a gigantic run up and then you had to sell them after the speech because there was no way you could spend the money and congress wasn't about to spend the money. >> let's not forget oftentimes the budget presented by the white house is doa. certainly was in the obama years. of course it's the legislative body that's going to make the key decisions. >> right. >> but it is interesting to see in terms of priorities defense taki taking precedence. and as carl said at least some reports in the times and journal have the epa budget and state department budget being cut substantially. of course the key entitlements are not going to be cut. and so that does not leave a lot of discretionary spending. the president has said many times that our military is not in good shape even though we do spend, i believe it's at least the equivalent of the six or seven nations trailing us combined in terms of defense outlooks. >> also there's a theme of the paper saying this is the isis war that he's going to defeat isis with this. i think a lot of people are kind of trying to make money off the speech. i mean he's meeting with health care people today. the one thing i would say is anybody it's like rotation, meets the pharma guys, go buy, it is insane how they track. it is a little -- i'm not being facetious. when you look when he met with the drug guys, he dropped his antagonism but it was because they all decided pretty much to a person that they're going to limit the price increases. he won. he won on that. >> by the way, "the wall street journal" has a good story today on price increases, jim. while they have been somewhat -- >> muted. >> yes. they're still not insignificant. still talking 9% a year. >> that's a really good point. >> that's way above inflation. >> you're not going to get that. most products do not go up like that year after year. >> no. >> and what's amazing is typically we're accustom to a new product being introduced and its price going down over time as opposed to up. think about a consumer product, right? your tv. >> yeah, the tv, the 70-incher cost what my 40-incher cost. >> yeah, if only drugs went that way. >> good point. >> when we come back, buffett of course on a lot of other topics including kraft heinz, unilever, amazon, airlines, self-driving cars. we'll get to all of that. a new gig for the former ceo of e-bay, john donahoe. we'll get to goldman call on tesla, goldman's call on nvidia today. a lot to get to on a monday when "squawk on the street" comes right back. say carl, we have a question about your brokerage fees. fees? what did you have in mind? i don't know. $6.95 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 we're not happy. so can you offer me what schwab is offering? what's with all the questions? ask your broker if they're offering $6.95 online equity trades and a satisfaction guarantee. if you don't like their answer, ask again at schwab. ♪ warren buffett this morning speaking on kraft heinz's bid for unilever. the big question of course is now that kraft heinz has dropped its bid, does buffett have a backup deal in the works? >> there isn't a backup deal. i mean, there was -- that was the only one that certainly i seriously thought about that made sense. so, no. will there be another deal with kraft heinz some day? my guess is yes, but who knows when. there's no backup deal. and, again, it would have to be friendly. and frankly, the prices in that deal make it very, very tough to make an intelligent deal. >> maybe more interesting, guys, is $86 billion in cash, nothing close in his words. >> wasn't that something? she asked him point-blank are you itching, no. the stocks, kimberly, clorox and colgate have had monster moves since that deal. those should come down. >> yeah, there's also a belief that unilever potentially will be in the marketplace to try to get larger. but i think the idea they would need to do a defensive acquisition is not as apparent as it would have been had kraft heinz moved ahead with an unsolicited bid over the 28 days that they had in which to bring it to shareholders. or make a decision as to whether they wanted to bring it to shareholders. but colgate as you say has been up dramatically. don't forget you've got kraft heinz which includes mr. buffett and as he said is clearly not going to go hostile again in any way, or even be judged in any way to be remotely unsolicited in whatever it may do next. it's got to be friendly from beginning to end. but there's been speculation as i've reported of course the likelihood 3g may go for another vertical. that's separate from kraft heinz. doesn't niecely mean it would include buffett money. >> good point. >> they damaged themselves at kraft heinz/3g with the screw up in unilever. there's no other way to put it. >> my travel trust cut it in half. i said amateur hour, people said how could you say that. >> guys thought to be infallible executed poorly. buffett kind of gave them an out saying maybe they didn't -- maybe there was a cultural difference. he pointed out that alex's second language is english. come on, the guy speaks perfect english. it's not clear to me. i will tell you i know that unilever was prepared to go on a scorched earth program if kraft heinz had kept the pressure up and certainly mr. buffett wanted no part of that. >> didn't know that. that's interesting. well, i got to tell you, he did spend a lot of time praising their analytical ability, which is obviously not in jeopardy here. i thought to me what made it seem so counterintuitive, clearly unilever was never interested in selling. >> never. not once. it's been made clear to me why that signal missed is not clear. mr. buffett said, well, the initial -- the letter was sent and there was a presentation made. i'm telling you this, but he indicated that they thought maybe it was just about price and when it was clear it wasn't. but made very clear here initially no thank you. >> yeah. >> so not well done on kraft heinz part. >> no. here's my offer, senator. nothing. >> we'll get cramer's mad dash. we'll count down to the opening bell and take another look at the premarket on this monday. still a lot we've not gotten to. back in a moment. 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 at&t, red bull rang can share critical information about every inch of the car from virtually anywhere. brakes are getting warm. confirme daniel you need to cool your brakes. understood, brake bias back clicks. giving them the agility to have speed & precision. because no one knows like at&t. it's been over 100 years since the rst stock index was created, as a benchmark for avera. yet a lot of people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doinghat today requiresage. the art d expertise of high-conviction investing. translatn? why invest in average? oh hey john, i'm connecting our brains so we can share our amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswim's 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. it's a monday. it's a mad dash. we're counting down to the opening bell about six and a half -- call it about seven and a half minutes or so before we get there. you want to talk tesla. >> yeah, i don't know how much to read into this piece. this is goldman sachs going literally to a sell from a hold. and i'll say that because it says we downgrade shares of tesla to sell from neutral with 28% downside to six-month price target of 185, but price target had been 190. so in other words they missed the rally. at the same time they're really talking about execution risks. but what i find interesting about this, david, remember the company is going to do a financing. and this is where they were when they reported and they're talking their own stock down. and the finance is probably going to come around here. and i think a lot of people will then upgrade or send good things. so be aware that tesla, wish i'd asked warren buffett about, he talked about so much stuff, but this is one he praised amazon. and a lot of people feel like, look, this is the next amazon so it doesn't really matter. and maybe that's the case, but be aware that a lot of people are gunning for this one now. they really are. they thought musk got off too easy with that conference call. >> but, you know, people have come for him in the past and they just don't get him. >> no. my daughter said, dad, i want a model 3. i said, listen, we went to the car dealer, we bought a car, we all agreed you took a loan, you're paying back the loan it's more expensive -- she's like, dad, it's a model 3 tesla. this is the mindset of people, they can make 500,000 cars in 2018, obviously the stock is going higher. but it is loved and demand is there. >> what about solarcity? >> they talk about the idea that maybe that's just not great. they're saying basically let's see how that works, solarcity. it's funny there was an article about -- warren buffett, that iowa is the saudi arabia of wind. i find solar is not as powerful a theme as we thought, wind more powerful though we had an article about north carolina in terms of not liking wind, ge doing wind, these alternative power models are not as compelling given the fact that there is really natural gas falling through the floor. too warm. it was 70 degrees. >> yes, it was. we'll talk a bit more about some oil and natural gas prices as well as the dollar, interest rates and, oh yeah, that stock market which will begin trading about five minutes from now. ♪ 's not just a car, it's your ily treat. ♪ go ahead, spoil yourself. the es and es hybrid. experience amang. and her mobile weddinguces business.tte at first, getting paid was tough... unnow she sends invoices, seeswd and-ta-dahaid twice as fast for free. visit quickbooks-d-com. th*trade you see thin your way. ♪ ♪ you ha access to the right information at the right moment. ♪ ♪ and enou filter ohe noise, it's ea to turn your vision intoctio ♪ it's your tde. e*trade. ♪ ♪ you're watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell in just over two minutes. busy monday of course as we await snap's ipo later in the week, the president tomorrow night in front of congress. gotten to a lot of individual calls today. you did goldman on tesla, but goldman reiterating conviction buy nvidia. >> how about that. i mean, here's a stock that was in the grips of the shorts. nvidia had a fantastic quarter. i love people. they bought it at 110, they hate me. just understand nvidia one of the things that happened they do have the great gaming chips and fabulous automotive chips, but intel's been running this campaign saying 98% of the data center is run on intel. implying who else has it? well, if you look at the goldman piece they talk about how nvidia is also data center. so it does have all the momentum in the world. it has lagged the group, so goldman's picking a good time, i think, to recommend the stock. the one that i think is probably got more momentum right now is broadcom, which reports next week. a bunch of guys, rbc and keybanc say you have to buy broadcom ahead of the quarter, but this has been the hottest group out there other than the defense stocks. >> right. but the call is essentially saying it's the pullback you've been waiting for. >> yes. it's interesting to overlay everything on what buffett says. buffett would never buy a stock like nvidia, very highly valued. but he says, listen, periodically you get these chances and goldman is saying that, again, i don't want to conflate, but they're saying, look, it hasn't come down for a long time, now it comes down everybody hates it. that's wrong. and i like the piece. i thought it was very smart. >> yeah. you mentioned buffett, he did say bezos probably the best manager he's ever seen. >> wasn't that something? >> that he never understood the model. missed it big time in his words. >> whoever says that? that was one of those moments said, hey, i missed it. but did say he talked about walmart being everybody's challenged by amazon. [ bell ringing ] everybody in their sights is in trouble. >> there's the opening bell. s&p at the bottom of your screen. at the big board this morning diversified internet company leaf group and nasdaq feeding america, a nationwide network of 200 food banks. dow 12 straight, dow does match that now famous streak in '87. >> it's funny. i was watching sarah and wilf this morning. they were talking about hold up it has not been that robust. it's been this kind of sleeper for 11 days. i think that's important because i think what's happened it's not a parabolic move. there are some stocks parabolic, clearly. particularly the insurers. it's interesting if you read the note talk about how great geico's doing, but it's not a market that's seriously overbought. and i think that buffett was saying, hey, listen, it's cheap versus bonds. relatively cheap, i should caveat that. and i think that's what a lot of people are looking they're saying, listen, interest rates run from 2.5 to 2.3, i can now start buying the bond market equivalent stocks again. i don't have to sell the international stocks because they're doing quite well. you did feel not complacent from buffett but he's basically saying, look, it's not a runaway crazed locomotive. >> right. medals have come off the podium stand. >> big. >> the journal we mentioned the idea bonds and stocks trading in tandem, reflation trade is fading. you say it's more rotation. >> yeah. i mean, i think when interest rates went down you had the bond market equivalents, real estate investor utilities doing well but international companies are doing well because frankly they're very international. when you look at the breakup, i was doing some just because i was fascinating by what's happening, if you look at the makeup of what's rallying on the industrial said, they've become 50% and 60% overseas business whether asia pacific or europe is strong. i had a company, cbre on friday, that's the largest commercial real estate company. and asia's on fire for them. the best market. and when i hear that i think does anyone realize that all these other markets are up? many of them up more than us. many of these markets are doing great. the emerging markets are doing great. be aware american companies that are industrial that do international business are giving -- are singing to their own tune. >> a good list of the 40 best stocks since election day. >> oh. >> only two of the top five are u.s. >> is that something? >> it's mitsubishi, it's nomura, csx in the top five. >> and that's -- >> right, that's a special situation. >> there you go. >> that's a great idea. and the rails have been strong. but the idea that all those international companies do well, people have to overlay that on what's happening here and realize that those are not going up because of trump. they're not going up because of deregulation. and they're not going up because of corporate tax relief. they're going up because business is better and that does matter. >> meanwhile people have been buying bonds. so we've seen the yield come down. >> yes. >> and so you have a situation where bonds prices are going up as are stock prices. >> right. but what did you think about warren buffett saying only a fool would be buying those? interesting, huh? >> it was. >> just stark. >> it was. >> he's willing to say -- i love the fact he's just willing to say what a dumb thing to buy bonds. i mean usually people caveat that and say, wait a second. becky was talking about how there was one broker, i'll leave their name out but said you realize it's dangerous to be in stocks, you should be in bonds. and buffett said that's wrong. he didn't say, well, i understand and i get -- he said that's wrong. wow. his clarity is incredible. >> it is incredible. particularly -- i'm always astonished just on -- i mean, the man is in his mid 80s. it's incredible. >> did you read the last line? >> not to mention charlie monger, his partner -- >> and on a self-admitted diet that isn't by traditional standards. >> yeah, not there. but he did say he could give you methusula who by the way lived for 900 years. >> monger 93, buffett 86. >> talks about buying a stock during the period when the japanese looked like they were going to win. >> they are marvels in so many ways including just cheating time, i guess. i mean, wow. >> have you been out there? >> never. >> i have to admit he's talked about you can play ping-pong, play bridge, there's a lot going on there that sounds like an awful lot of fun. and i thought one of the things he said was really great was his favorite business book of last year "shoe dog." by phil buck knight which i recommend everyone read. it was so great that buffett pushed that book. >> he had some interesting thoughts. looking at berkshire's history as a textile company, right? >> yes. >> starting with just 2,000 workers in textiles. >> right. >> workers who were displaced by free trade. >> yeah. >> his point on tax reform is largely that republicans know time is of the essence and that it's going to be very hard in his words to get '86 style change. it's going to be more what's possible here and now. >> but he did say if you -- if they were able to do buybacks there's nothing wrong with buybacks. i know you and i have talked about, well, what happens if you repatriate the money and they just do buybacks, he said somehow people view buybacks as un-american. >> right. in his letter he went into detail saying there's a good time to buy back a stock and a bad time. >> yeah. buy, buy, buy. >> right. why aren't you being -- it's most important asset purchase you're making when you buy another company. you're certainly looking at value, why aren't you doing it when you're buying back your own stock? he did make that point. >> i know people think probably over reverential, i'm telling you we are underreverential to what this man said and wrote. it's one of these things where when you read zuckerberg's stuff, i was watching kevin from instagram, boy, i didn't come up for that but this i should have been able to think of. i'm in the business for a long time and i'm like, wow, that is unbelievable, i can't believe i didn't know that. >> finally on buffett, i would note there is weakness in some of these consumer particularly in the food group. mondelez, he put together that basket of stocks that there was a lot of speculation on as in terms of what was the next target for kraft heinz. made it clear there's no backup plan as of now as i reported anything they would do in the future would have to be friendly from beginning to end. so it may be a while and we are seeing some weakness in some of those names. >> good point. >> let's get to bob pisani. dow's down 29 led by chevron. hey, bob. >> 11 days in a row on the upside for the dow. momentum is still on the bulls side right now. but we'll see if we can pull out 12 days in a row. sectors, energy has had a horrible month, just awful. we noted exxonmobil and the problem there. banks are small leaders as well. they've had a decent month. industrials have done pretty well. jim was talking about that. honeywell, dover, utx, only a day and a half left. materials also not bad overall. i call the markets right now a holding pattern. leave it right there. broadening on new highs, advance/deshrine line at new highs, volatility low, one worry for the stock is that the bond yields have been trending lower and stock guys are suspicious when that happens what do they know. some feel this combination of tax cuts and lower regulations and infrastructure spending is going to take a lot longer and the market's realizing that. some saying positive effects from tax and regulatory reform will be offset by trade and immigration. and will be slower process. look at ten-year yield 2.5% to 2.3%, stock guys tend to worry about stuff like that when it happens. so bond yields here we have trending lower in the last month. but you'd be hard pressed to point out if that's a big problem on the stock market. look at the kbe which are bank stocks, really no signs of deterioration, j.p. morgan's up 6% for the month, bank of america is up 6%. all of the regional banks are generally up 4% or 5% as well. no deterioration on the stock side. little worried about what's going on on the bond side overall. a lot riding on the trump speech tomorrow, but he may not give a lot more details. so a lot of discussion over the weekend about an increase in defense spending he'll be talking about, cuts to discretionary domestic programs, leaving entitlements unchanged. sounds like the deficit's going to go up here and that's before tax cuts and infrastructure. by the way, speaking of infrastructure, did you hear elaine chao, the transportation secretary? she made her first public appearance and they're basically soliciting ways to provide an infrastructure program and how to pay for it. everyone wants a better transportation system, but very few people want to pay for it and that's a big c conundrum. if you look at the guys, they've all fallen back, marietta and vulcan and guys that do the gigantic projects like jacobs and aecom, they've pulled back a little as well. finally on a separate note, mention what's going on in europe, london stock exchange is poised to merge with the deutsche boards in a very short period of time, a matter of weeks. but there may be a serious problem here. regulators in brussels said they wanted to sell a very small unit, italian based fixed trading platform and say this may not be able to happen, whole deal is in jeopardy. not clear if this is a smoke screen for broader concerns about the deal. so the company may be based in london. that may be a big problem now. some people don't like that deal now that london -- that the uk is heading out and voting to leave the eu. so more on that as we come closer to details. right now the dow down 41 points. guys, back to you. >> bob, thanks so much. bob pisani. let's get to the bond pits and check in with rick santelli at the cme. good morning, rick. >> good morning, carl. two-day of tens couple things you should look at, first of all at 8:30 eastern we had durable goods data. headline wasn't bad. internals a bit on the weak side. and you can clearly see that it turned a bit lower in the form of yields. but also note that we seem to have a double top from the action at 2.34, an area to pay close attention to. bunds, the other side of the planet our durable goods and their durable goods but certainly at 8:30 eastern is when their rate peaked and turned down as well. and if we look at a december 1st of tens minus bunds, keep that pa pattern in your mind because obviously it seems to be comfortable right above 2.10 but also a very similar pattern to the dollar index and that makes sense. many are pondering some of the weakness in yields, especially on the schatz, the two-year in europe, as it approached close to minus 100 last week and yet the euro currency itself doesn't seem to be stalling nearly as much as many think. that is indeed something to pay very close attention to. and speaking of that two-year, that schatz, let's look at a one-week chart. it has come back a bit. it looks like it's going back up towards minus 90 versus minus 100. but of course we need to pay close attention as time moves on. and front running in front of ecb purchases very negative securities continues. and finally, there's so much talk today about the direction of equities and how it measures up to the treasury complex who's right, who's wrong, listen, forgetting all the issues of the day and how the stock market may be looking at what the administration and their tax policy if you look at both of those together on the same chart from the beginning of november, november we saw rates and equities move up for most of december and january. flat lining together in a good way consolidation pattern. but as of late since about the 7th of february we see the stock market is hugging all-time highs whereas interest rates are definitely giving up some ground. there's a lot of reasons globally. there's buyers in tens and the treasury complex as a whole. and i'm not so sure that it's giving us an insight into the economy. it might be giving us an insight into the negative outlook of negative interest rates. carl, jim, david, back to you. >> great analysis. >> okay. thank you very much, mr. santelli. did want to get what was some breaking news this morning from servicenow, a cloud based software company announced john donahoe, former president and ceo of e-bay, will be taking over as the ceo of that company from frank slootman, slootman will continue as the company's chairman when he steps down from his management role on april 3rd. john donahoe and frank slooten join us now from our san francisco bureau. nice to have both of you gentlemen. and mr. donahoe, let me begin with you. our viewers may recall when you and i sat down talking about your plan to split e-bay into e-bay and paypal, of course a split that's been in existence now for some time. you surprisingly at the time, and i was at least surprised, said i'm not going to take a role with either one of these companies. i'm going off into the sunset, i guess. now you're back. why are you back as a ceo? and why servicenow given i would assume you had perhaps a number of companies you might have been able to choose from? >> well, david, over the past year i've had a great opportunity to step back and survey the landscape. and the trend that just stood out is the role the cloud is having on both consumers and enterprise. in the consumer world i had a chance to see this firsthand where cloud based operations like e-bay, paypal, uber and airbnb are fundamentally changing how consumers behave, but that's also happening in the enterprise world where companies born in the cloud, like servicenow and workday and salesforce are fundamentally transforming how companies operate. i first came in contact with servicenow as a customer at e-bay, a very satisfied customer. and the more i've learned about this company, the more excited i've become. it is the fastest growing enterprise software company at scale. it grew 38% in the fourth quarter on real scale over $1 billion. and the opportunity is enormous. so i'm very excited because i think servicenow's got a chance at being one of the great enterprise software companies of this era. >> all right, well, want to talk to you more about that opportunity, but mr. slootman, let me turn to you. my colleague, jim cramer, has done nothing but praise you at least to me and tell me what a great company this is. you've been ceo for six years, why step down? >> well, david, this is not about me. this is about, you know, us really being very proactive, very strategic, very forward looking about ceo succession. you know, as most people know it's very, very tricky to have a successful succession and you don't have to strike while the iron is hot. it's a good day any day we can bring john donahoe on as ceo of the company. >> well, frank, jim cramer, yeah. i mean, we often talk when you come on "mad money," i always say should i say congratulations to someone after a quarter? we always say no, that's what the analysts say. on the january 26th meeting when i saw you i said congratulations, 52% of growth, it really was the best quarter of any technology company i cover from scale. and i wanted to ask you, you have just rolled out some really unbelievable work flow management expertise hr, finance, marketing, other departments, maybe stay for like another year to do this and then -- i mean, i'm kind of confused. you're only 57, man. >> well, i'm 58 going on 59, jim. but that said, you know, a year from now john's not going to be around. as i said, you got to strike while the iron is hot. and it's not a time based event. it's really driven by the availability of a terrific candidate like john and we'll make room and move on. so age is really not the factor. it's really the opportunity to do what's right for the company. >> so how long did it take you? did you have to woo him for a while? my understanding, mr. slootman, it was you who sort of led this charge. is that correct? if so, did you have to convince donahoe? john, give us background here as to how this came about? >> well, john takes his time. you know, i'm -- he's more of eisenhower, i'm more of a p patton. we have different styles. but we had time. this is a good thing. we didn't have a gun to our heads. so it's really great to be able to run a succession process this way when you're not under the gun to do something by a certain time. >> yeah, well, john, you are taking over of course for as jim said a company that's had great success. you say and you said the opportunity's enormous but also named a number of your competitors. it's certainly as though that opportunity is not lost on other companies as well. why do you have the confidence that you can continue what mr. slootman's been doing? >> well, first of all much like the consumer world this is not a zero sum game between the companies i named. the enterprises are increasingly dealing with huge amounts of complexity. where you've got an explosion of the number of devices that are being brought into the enterprise, an explosion in number of software applications. what that means for most company ss growing complexity. a platform like servicenow helps simplify that environment, streamline, automate so enterprises can operate with greater simplicity, greater productivity and greater efficiency. and servicenow's done a fabulous job of migrating, as jim said a minute ago, from a single product company to being a platform company with multiple cloud services. so i think there's huge opportunity to build on the momentum that's been created and then expand and elevate the opportunity. >> frank, i by no means mean to slight the man -- i've been a huge fan of john for years. i just am kind of taken aback. i was going over my notes about what you've done. and we did speak once in the october conference call about the notion of how hard the treadmill is. you actually addressed it. that you're never allowed to miss a quarter in one of these high multiple businesses. did you think that maybe there isn't really a way to continue to do that and enjoy life? >> yeah, i mean, there's that aspect as well, jim. but at the end of the day we do not really view it as from a personal perspective. we try to do what's right by the company. in silicon valley it's often very hard to get a ceo out of a company. they stay too long. and most of the time it becomes a reflux or reactive thing where your hand is forced and you have to find a ceo in a short period of time. we didn't want to be in that position. we wanted to be very proactive. we wanted to have a conviction buy here when we do the transition. so it really didn't matter that much, you know, what my personal circumstances were or were not. we really wanted to get behind a candidate and think this really sets the company up very, very well for our next growth phase. >> and finally, john, i mean, as you spent time sort of, i would assume not working nearly as hard as you did when you were running e-bay and dealing with the likes of carl icahn, any big takeaways for us both from the business world and perhaps beyond? >> well, i just say that as much as technology's impacted our lives in the last ten years, i still think we're at the early -- in the early innings. the acceleration of change that we're seeing in our day-to-day experiences both as consumers is also going to be happening as employees and in the enterprise. so i think it's going to be a tremendously exciting period over the next three to five to ten years and i'm excited to be on the playing field to help drive that future. >> we'll be following closely. nice to see both of you. thank you for being with us. john donahoe, incoming ceo of servicenow and -- slootman. >> when we come back, the president meeting at the white house. dow down 34 to start the week. don't go away. opportunities aren't always obvious. sometimes they just drop in. 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. across new york state, from long island to buffalo, from rochester to the hudson valley, from albany to utica, creative business incentives, infrastructure investment, university partnerships, and the lowest taxes in decades are creating a stronger economy and the right environment in new york state for business to thrive. let us help grow your company's tomorrow - today at esd.ny.gov won't replace the full value of your totaled new car. the guy says you picked the wrong insurance plan. no, i picked the wrong insurance company. with liberty mutual new car replacement™, you won't have to worry about replacing your car because you'll get the full value back including depreciation. and if you have more than one liberty mutual policy, you qualify for a multi-policy discount, saving you money on your car and home coverage. call for a free quote today. liberty stands with you™. liberty mutual insurance. first time since '87, but a little bit of wood to chop at the open. currently down 30 points. we'll get stop trading with jim after a break. we have a question about your brokerage fees. fees? what did you have in mind? i don't know. $6.95 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 we're not happy. so can you offer me what schwab is offering? what's with all the questions? ask your broker if they're offering $6.95 online equity trades and a satisfaction guarantee. if you don't like their answer, ask again at schwab. waiting for some tape playback with the president meeting with the nation's governors this morning. but a few headlines making the wires. first up, president saying budget increases in defense will be offset by savings elsewhere. administration in his words going to be moving quickly, very quickly on regulatory reform. and that the budget will be public safety and national security budget with focus on rebuilding the depleted military. sort of confirming what we've seen out of other readouts elsewhere. >> depleted military, it's very hard to get into the military. they're only recruiting a certain number of people because they've got maybe wants to expand the size of the humans, which i've always felt is the right thing to do, but that's my own view. got some interesting people on tonight in terms of trump. martin marietta materials, this is the company that would be maybe the wall company. okay. workday reports tonight. that's another company almost as fast growing as servicenow, great booking, david. and 52-week high been a remarkable stock, people love timeshares. i love this show. god that was good with the donahoo and slooten. >> that was good. tonight looks good too. >> yeah, good lineup. >> frank's the best. >> we'll see you tonight, jim. 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'98 that's the one. you got it! nothing stops us from doing right by our customers. ally. do it right. let's get out of that water. ♪ good monday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen, david faber at the new york stock exchange. markets down 11 coming off of some early lows. a lot happening today. of course buffett on cnbc making a lot of comments. still awaiting comments from the president this morning meeting with the nation's governors. >> and that is where we begin our roadmap for the hour with berkshire hathaway's warren buffett sitting down exclusively with cnbc. what the oracle of omaha has to say about stocks, the president, apple and more. >> as we said, big day in washington. the president meeting with governors and health insurer ceos, got all the latest. >> and with the world congress underway in barcelona, the gigantic tech show revealing some top products this year. kwa >> let's get to diana olick. >> pending home sales down 2.8% down month to month in the lowest level in a year. the street was surprised. pending home sales are a measure of contracts signed in january. so they represent closings in february and march. this is a weak start to the year. and the realtors are saying it's all about affordability and lack of supply. home prices gaining very strongly because there's strong demand and near record low supply. and as you recall we saw mortgage rates jump sharply after the presidential election, so january would have been really the first month people were out shopping with those higher rates and those higher prices. you can see it in the regional look. northeast sales up 2.3% for the month, but in the midwest down 5%, which is surprising given that the midwest has the cheapest homes. in the south sales up just 0.4%, but in the west where homes are most expensive and in the least supply, pending home sales down 9.8% for the month and down 0.4% for the year. again, we saw that weak disappointing sales in new home sales last week and now starting off the year for existing homes. not a great sign going into spring. back to you guys. >> diana, thank you very much. as we said earlier warren buffett joins "squawk box" this morning. our becky quick is in omaha and joins us with highlights from an amazing three hours. good morning, beck. >> hey, good morning, carl. great to see you. yeah, this morning we talked about a lot of different things but probably the number one question on most investors' mind is what warren buffett thinks about the stock market overall. obviously we've seen huge gains in the market with the dow up double digits just since the election. you're now talking about the dow past 20,000 and that has a lot of people wondering if things have gotten too expensive too fast. when you ask warren buffett about it, the oracle of omaha, he says in his mind we are not in bubble territory. >> measured against interest rates, stocks actually are on the cheap side compared to historic valuations, but the risk always is is that interest rates go up a lot. and that brings stocks down. but i would say this, if the ten-year stays at 2.30 and would stay there for ten years, you wouldn't regret very much not having bought stocks now. >> now, of course buffett always clarifies that he doesn't know what's going to happen to stocks tomorrow, next week, next month, next year, but in general things are not overpriced at these levels and he has in the past when things were overpriced. we talked about a lot of the different holdings he has and brought some news this morning on cnbc when he started talking about his shares of apple. apple is a new stock for berkshire hathaway. we found out two weeks ago they'd been buying apple very heavily into the end of last year. at the end of last year berkshire hathaway owned $7 billion worth of apple shares. that made it its fifth largest holding of all the major holdings berkshire has. this morning on air warren buffett talked about how they were buying up until the beginning of the year. they stopped when got more expensive, but the earnings report apple had earlier this month came out and bought another $10 billion worth of apple shares. so it's now a $17 billion position. that makes it its second largest position, second only to wells fargo, just about neck and neck with coca-cola but ekes out just a little more than that. he talked about how he looks at this stock and how he does research for it. he goes around and even in places like nebraska furniture mart, right here, this is one of the berkshire companies, he'll be looking at people seeing what they're coming in and buying and trading in phones what they're trading them in for, but he says this isn't the only place he does his research. >> when i take my great grandchildren to dairy queen, they bring along friends sometimes. they've all got an iphone. i ask them what they could do with it and whether they live without it and when they trade it in what they're going to do with it and i see when they come to the furniture mart that people have this incredible stickiness with the product. i mean, if they bring in an iphone, they buy a new iphone. it just has that quality that gets built into their lives. that doesn't mean something can't come along that will disrupt it. but the continuity of the product is huge. and the degree to which the lives center around it is huge. >> yeah, the interesting thing about this is warren buffett doesn't even own an iphone. in fact, he pulled out his flip phone today when he was talking about this investment. he's not somebody who's ever looked at technology stocks. he says he hasn't understood them. but now when you look at top holdings both apple and ibm are among those shares. sara. >> yeah, that was quite a powerful statement, becky. were you surprised that he didn't really change his tune after the election of president donald trump? i know he was a big hillary supporter, but so many investors we talk to are now bullish on the economy, bullish on stocks in a way they haven't been in years. i thought it was interesting how he sort of played that down a bit. >> yeah, i mean, he made a point of saying that investors who let their politics get in the way clouding their investment decisions are crazy. that they're never going to make the right decisions on these issues. he says he's been looking at this. he's very optimistic about american economy. very optimistic about where we're headed and again made a point of saying you should never let your politics color your investment decisions. in fact, by the way, sara, he said i think he has spent $20 billion since the election. he's plowed back into the market. we thought it was a lot when we heard $12 billion. it's $20 billion. >> right. so actions speak louder than words. interesting that he's going to judge the president on his track record on safety. becky, great stuff. great interview. we all watched all three hours. >> thank you. >> we'll see you later. becky quick in omaha. meantime, the national governors association meeting with president trump this morning at the white house. headlines crossing as we speak as we await the tape playback we'll share with you from that meeting let's get some of the headlines. elon moin joins us with more. >> reporter: good morning. trump announced during the address to governors that he will have a big statement on infrastructure in tuesday's speech before congress. he also said, quote, we are going to start spending on infrastructure big. trump also spoke about his budget going forward. he said budget increases in defense will be offset with spending decreases elsewhere. he talked about regulatory reform saying that they're going to be moving very quickly on that issue. and that his budget will focus on public safety and national security as well. when it comes to health care, he said there is a really, really good solution forthcoming. that that is an area that has provided a major riff between republican governors and the white house, about a dozen republican governors had expanded medicaid in their state. now they're worried about losing federal funding and their constituents are worried about losing their insurance possibly as well. now, these governors have been talking with the white house and with hhs secretary tom price over the weekend about the house republican plan. now, that plan would provide tax credits to individuals based on age rather than subsidies based on income. it would also limit funding to states either through block grants or through per capita caps. there's news that this federal spending could be reduced by as much as $1.5 trillion over the next decade if this house plan from republicans is enacted. that would probably blow a hole in state budgets. now, wisconsin governor scott walker has been one of the leading governors on this issue having a working lunch with president trump over the weekend to discuss the path forward on obamacare. we will be following this very closely throughout the day. the governors will be headed over to capitol hill after this meeting here at the white house. they're going to be pushing this issue with lawmakers as well. back to you. >> elon, thank you. as we await those pictures and some sound from inside that meeting. likely a key topic of conversation here between the governors and the trump administration today, global trade policy. billionaire investor warren buffett also weighed in on that this morning on "squawk box." take a listen. >> free trade is wonderful for the world and for the united states. but its benefits are diffused among 320 million people. you buy your bananas cheaper because we don't try to produce them in the united states. but the penalties from free trade are terrible to specific industries. and as an investor i can own -- make a dumb decision on owning a shoe company, but if i own a good insurance company, i can diversify away the problems. if you're a 55-year-old steel worker, you can't diversify away your talents. >> it is a complex issue. joining us now, ian bremmer and tony, pimco's vice president and portfolio manager. welcome, gentlemen. >> thank you. >> so buffett clearly outlined this argument for free trade and against free trade, how do governors approach it? this is key for filling budgets but also approaching job growth. >> depends on which states you're in. if you're in california rieght now. you want to make sure you're getting the top talent from globalization of people to ensure that all of silicon valley those engineers aren't going elsewhere. and they're very upset with trump as a consequence. but if you're talking the rust belt and manufacturers where jobs have been going away, you're feeling less good about global trade. the one thing of course warren didn't say is if you look at manufacturing including the steel he's talking about since 2000, 86% of the job loss in the united states is about efficiency. it's automation. it's a.i. it's not about jobs going to china. and that's not something that trump -- >> where do you get that 86% number? >> i think it came out of harvard about a week ago. but it was a well known study that economists contributed to. it's been overwhelmingly over the last 10, 20 years the gains that you're seeing have to do with not people moving from country to country. a lot of money and investment is going to come back to the united states. a lot of that is going to be jobless. so far i don't see a lot from the trump administration or from the democratic side addressing that. >> we asked the nam last week about this on the show and they argued automation has to require jobs, you have to build the robot and maintain the robot, the question is if we're set up structurally for that. >> correct. in the end what we're talking about for the united states is productivity, in the end defines a change in the nation's standard of living. forging changes in productivity require big changes in investment, by companies, by governments, not only the federal government but also by local government. and we haven't seen that. in fact that's the weak part, the weak link in the recent productivity data. the amount of capital in place unit of labor -- decline for the first time since 1953. compare a company today of 100 people and perhaps has 50 computers five years ago may have had 55 computers. that's what i mean by decline in capital intensity. that's what's occurred. so it's more difficult to get more production out of people in terms of goods and services because there hasn't been meaningful amounts of investment. that's the key thing to focus on for the administration and of course the states' local governments. >> but he's making the point automation has replaced the jobs as opposed to them going elsewhere for cheaper labor. but productivity hasn't actually mirrored that then is what you're saying. >> in recent years. >> we see more productivity gains if that was the case, right? >> right. a lot of hiring of course for a number of years. we've seen payroll gains of about 200,000 persons per month and labor force only grown about 100,000 persons per month. as that slows down naturally since the u.s. is closer to full employment, the productivity numbers probably will rebound somewhat. and you're right, david, the figures of the past five years show productivity growing only 0.5% per year in the united states typically grows around 2%. so there probably will be a pickup, but to cause a change permanently in the trajectory on growth and productivity requires this investment i speak to. >> ian, one thing about you, you talk to a lot of foreign leaders, you're very plugged in globally. what is the rest of the world saying at this point? is it wait and see mode? or are there measures being taken and precautions being taken in advance of any potential import tax or tariff retaliation moves from the u.s. on trade? >> it depends on the leader, right? i mean, there's no question that the united states irrespective of whether you think of trump as being, you know, a massive protectionist or unilateralist or someone that's a threat, the united states is still the world's only super power. and there are a lot of countries out there who are so dependent on the u.s., japan for security purposes, for example, not to mention the treasuries holding, mexico because their entire economy is the united states and canada, the uk because of brexit, that when trump says jump, they're going to say how high, how often. but there are other countries out there, thinking germany and continental europeans that have been strongly aligned with the united states and now are thinking, wow, this isn't going to work for us much longer. we need to do more ourselves in terms of defense. we'll see how real that is. we also need to work much more closely with chinese and others on economics and on multilateral institutions and structure. so it's not like trump becomes president and everyone just says we're not working with the u.s. the u.s. has a lot of influence globally. but it is required -- there are some major nerves among countries that feel like they do have choices. >> tony, this idea of capital investment that you raise, that it may be lacking. i mean, if we get tax reform and includes being able to writeoff capital investment year one, maybe you see more of it. but i'm curious as to what your predictions are in terms of that, in terms of willingness to actually spend more capital given i guess you're saying there hasn't been as much. >> we would say have a show me mindset with respect to the government initiatives on infrastructure spending and in terms of boosting productivity gains in the economy. for example, on infrastructure, it seems the president is planning a big announcement tomorrow, perhaps. but the amount of direct money spent by the federal government probably will only be $10 billion or $15 billion over the next 20 years. they'll tout the amount of spending might accumulate to be about $1 trillion, but that will include assumptions about the involvement of the private sector and of course some multipliers. so in other words they'll be saying we could see six, seven, eight times value on our money invested over the next ten years. we'd be skeptical of that. so just really quickly to compare the amount of spending we spent recently versus years ago, in 2009 there was $50 billion spent on infrastructure in the american recovery and reinvestment act but widely known to have been toward projects states would have otherwise engaged in to projects very low added. one has to be skeptical that the government can engage in projects that produce more goods and services. >> someone's got to pay for it, all of it. we've got to leave it there. thank you for dealing with. we have some breaking news as we await the governors at the white house. tony, as always good to see you, pimco, ian bremmer. >> when we do come back, the border tax will cripple companies according to our next guest. the founder and executive chairman of casabela holdings. we hope to get tape playback with the governors after this break. we take you to the white house, the president meeting with the nation's governors. >> wonderful to work with. he's a real talent, a real guy, and he is central casting, do we agree? central casting. he's been great. good morning everybody and welcome back to the white house. the first lady and i were very, very happy last night to host you. we saw some real talent, military talent, musicians who were fantastic and everybody enjoyed it. [ applause ] i'm very proud to have so many former governors in my cabinet. vice president pence, as you know, big governor from a very great state, state i like very much, indiana. nikki haley at the u.n., is nikki here some place? yes. we have rick perry, we're trying to get people approved but can't get them out, but rick is going to do a fantastic job. sonny purdue will be joining the cabinet very soon. terry branstad will be our ambassador to china. every time i spoke in iowa, he'd say please don't say anything bad about china. i said what do you mean? what do you mean? he said, i like china. and we do a lot of business with china. and really just -- and i said, huh. so when it came time to pick an ambassador i called him up, i said you like china. and i can tell you china is very, very happy with that choice. so we made everybody happy. right? [ applause ] these governors -- thank you. and thank you, terry. these governors have been bold reformers. and their success shows why we need to make states the laboratories of democracy once again. many of you have shared past frustrations with waiting for permission from federal government and agencies, and i understand that, and i've had many people tell me about it, and it's been catastrophic for some of your states. you know your citizens and you know they want things done, but they don't get things done. and it's not your fault. sometimes it's your fault. but they understand that. but sometimes it's not your fault. we're going to speed it up. because that's not how a partnership is supposed to work. the government should not stand in your way in delivering needed reforms and services. and it won't. we're going to move very, very quickly. environmentally with scott and so many others that are involved in the process of regulation. we are going to be cutting. we are going to be doing the right thing. we are going to be protecting people environmentally and safety wise, but we're going to be moving it quickly, very quickly. [ applause ] and speaking of that i know many of you and i've spoken to some of you last night about it have many projects that are entirely -- i mean just literally tied up because of environmental concerns and it's been in for years and years and years the project your state wants, great for employment, everybody wants them and they couldn't get them out of environmental protection. and we will get them out. that doesn't mean they're going to be approved. but they'll be rejected quickly. one way or the other. they'll either be rejected quickly or they're going to get approved. i would say most would be approved, but you know you're not going to wait nine years or 11 years, some of the horror stories i've heard. under my administration we're going to have a true partnership of collaboration and cooperation. we will get to the answers and we will get them quickly. and the flexibility you need to implement the reforms that you are going to have in order to make decision making proper and decision making fast. so we're going to do both those things, proper and fast. one of the most important responsibilities for the federal government is the budget of the united states. my first budget will be submitted to the congress next month. this budget will be a public safety and national security budget. very much based on those two, with plenty of other things. but very strong. and it will include a historic increase in defense spending to rebuild the depleted military of the united states of america at a time we most need it. [ applause ] and you'll be hearing about that tomorrow night in great detail. this is a landmark event, a message to the world in these dangerous times of american strength, security and resolve. we must ensure that our courageous servicemen and women have the tools they need to deter war, and when called upon to fight in our name only do one thing, win. we have to win. we have to start winning wars again. i have to say when i was young in high school, in college, everybody used to say we never lost a war. we never lost a war. you remember. some of you were right there with me and you remember, we never lost a war. america never lost. and now we never win a war. we never win. and we doen't fight to win. so we either got to win or don't fight it at all. but where we are 17 years, almost 17 years of fighting in the middle east. we're up -- i saw a chart the other day as of about a month ago, $6 trillion we've spent in the middle east. $6 trillion. and i want to tell you that's just unacceptable. and we're nowhere. actually if you think about it we're less than nowhere. the middle east is far worse than it was 16, 17 years ago. there's not even a contest. so we've spent $6 trillion, we have a hornet's nest. it's a mess like you've never seen before. we're nowhere. so we're going to straighten it out. this defense spending increase will be offset and paid for by finding greater savings and efficiencies across the federal government. we're going to do more with less. i got involved in an airplane contract, i got involved in some other contracts, and we cut the hell out of the prices. i mean, we saved a lot of money. tremendous amount of money. beyond anything that the generals that were involved they said they've never seen anything like this before. on one plane on a small order of one plane i saved $725 million. and i would say i devoted about if i added it up all of calls probably about an hour. so i think that might be my highest and best use. because if we can do that, our budget will be -- might be my best use. and there are many other places it's all the same. and in one way that's a good thing because we have an answer. david is going to do a fantastic job. david is sitting there shaking his head. stand up, david. [ applause ] so we can't get our people through cabinet, but he went through was it 95-0? how the hell did you do that? boy, oh boy, he must be good. you were the one. 100-0. wow. shows you, hey, we can do it. but we do we have still quite a few cabinet members and they're just in limbo waiting, waiting. it's like obstruction. it's obstruction. but eventually we'll get them and they'll put their people in and we'll get those agencies, et cetera to work. we're going to do more with less and make the government lean and accountable to the people. we can do so much more with the money we spend. with the $20 trillion in debt, can you imagine that? the government must learn to tighten its belt. something families all across the country have had to learn to do, unfortunately. but they've had to learn to do it. and they've done it well. my budget increases spending and the increase in all spending for federal law enforcement also and activities having to do with law enforcement will be substantially increased, and we will fight violent crime. you look at what's happening in our cities, you look at what's happening in chicago, what's going on in chicago? we will fight violent crime. and we will win. and we'll win that one fairly quickly. once we give the local police, local law enforcement the right to go in and fight it. and we back them monetarily and also otherwise, we're going to win that one. we're going to win it fairly quickly, i believe. my budget also puts america first by keeping tax dollars in america to help veterans and first responders. so important. this budget follows through on my promise to focus on keeping americans safe, keeping out terrorists, keeping out criminals and putting violent offenders behind bars or removing them from our country altogether. and i must say that we've been treated very well, very, very well on the job that general kelly's done at the border. it's tough. it's strong. i was talking last night to terry mccullough and he said you have to mention this because he met with -- where is terry? he's around here some place. he met with general kelly, and i think i can say you were impressed with general kelly. and he said you have to get the point out that they're removing the bad ones. and that's where our focus is. it's the bad ones. we're getting some very, very bad players out of this country. drug lords, gang members, heads of gangs, killers, murderers, we're getting them out. that's what we're focused on. the press isn't covering that, unfortunately. but it is something that's very important. we're getting the bad ones out. that's always where i said i was going to start. i was going to start with these bad players. and they are bad. they are rough and tough and we're getting them the hell out of our country. and we're bringing them to where they started out. let their country do what they have to do with them. so the budget, which is going to be a very big part of tomorrow night's speech is going to be, i think, a budget of great rationality but it's going to have to do with military, safety, economic development and things such as that. great detail tomorrow night. we're also going to do whatever we can to restore the authority of the states when that is the appropriate thing to do. we're going to give you back a lot of the powers that have been taken away from states skprks gre, and great people and great governors and you can control it better than the federal government because you're right on top of it. you have something that's controllable. so i think that's going to be very important. you see that already taking effect. we have to let the states compete and to see who has the best solutions. they know the best how to spend their dollars and how to take care of the people within each state. and states are different. and people are different. so the governors are going to have a lot more decision making ability than they have right now. all states will benefit from our economic agenda. we will reduce taxes very, very substantially and simplify the tax code. we're also going to make taxes between countries much more fair. we're one of the only countries in the world that can -- people can sell their products into us and have no tax, no nothing. and they get rich. and yet if you want to do business with them, you'll have taxes i've seen as high as 100%. so they sell into us, no problem. we sell into them because we don't sell in because the tax is so high that they don't want us to sell in to them. so i know that's always been a point of contention. but to me it's just fair. it's just fair. it's ri accept ro kal. it's fair. and so we're going to be doing a lot of work on that. and that's becoming a very, very important factor, fairness. because i believe in free trade. i want so much trade. somebody said, oh, maybe he's a total nationalist, which i am in a true sense, but i want trade. i want great trade between countries. but the word free is very deceiving because it's good for them. it's not good for us. i want fair trade. and if we're going to be taxed, they should be taxed at the same amount, the other countries. and one of two things is going to happen. we're going to make a lot of money, or the other country's going to get rid of its tax, and that's good too because now the product, like harley davidson, i was talking to them, the product will now flow into other countries where right now they can't do it. so we're going to make it easier for states to invest in infrastructure. and i'm going to have a big statement tomorrow night on infrastructure. we spend $6 trillion in the middle east and we have potholes all over our highways and our roads. i have a friend who's in the trucking business. he said my trucks are destroyed going from new york to los angeles. they're destroyed. he said i'm not going to get the good trucks anymore. he always prided himself on buying the best equipment. he said the roads are so bad that by the time we make the journey from new york to los angeles, or back, he said the equipment is just beat to hell. i said when has it been like that before, he said he's been in the business for 40 years he said it's never been like that. 40 years. never been like that. so we're going to take care of that, infrastructure. we're going to start spending on infrastructure big. not like we have a choice. it's not like, oh, gee, let's hold it off. our highways, our bridges are unsafe, our tunnels -- i mean, we have tunnels in new york where the tiles are on the ceiling and you see many tiles missing. and you wonder, you know, you're driving 40 miles an hour, 50 miles an hour through a tunnel, you take a look at the lincoln tunnel and the queens midtown tunnel and you're driving and see all this loose material that's heavy. it was made many years ago, so it's heavy. today it's light. used to be better, the problem is you got to hold it up. and i say to myself every time i drive through i say i wonder how many people are hurt or injured when they're driving at 40 or 50 miles an hour through a tunnel and a tile falls off. and there's so many missing tiles. and such loose concrete. so we have to fix our infrastructure. it's not like we have a choice. we have no choice. and we're going to do it. and it also happens to mean jobs, which is a good thing. we're going to repeal and replace obamacare and get states the flexibility that they need to make the end result really, really good for them, very complicated issue. we have tom price just got confirmed sitting here. [ applause ] stand up, tom. and i spent a lot of time with governor walker and governor rick scott the other day talking abt. they're really very expert on the subject and i want to thank them. they spent a lot of time with me. governor christie's here some place. where's chris? thank you. we have a lot of talent and a lot of expertise here, i will tell you. and we have come up with a solution that's really, really, i think, very good. now, i have to tell you it's an unbelievably complex subject. nobody knew that health care could be so complicated, and statutorily and for budget purposes as you know we have to do health care before we do the tax cut. the tax cut is going to be major. it's going to be simple. and the whole tax plan is wonderful, but i can't do it until we do health care because we have to know what the health care's going to cost and statutorily that's the way it is. for those people that say, oh, gee, i wish we could do the tax first. it just doesn't work that way. i would like to do that first. actually, tax cutting has never been that easy, but it's a tiny little ant compared to what we're talking about with obamacare. and you have to remember, and i say this to democrats in the room of which we have many, obamacare has failed. if you go to minnesota where they had a 66% increase and the governor of minnesota who's with us today said obamacare, the affordable care act is no longer affordable, something to that effect, i think that might be it exactly, but the affordable care act is no longer affordable, obamacare has failed. i say to the republicans, if you really want to do politically something good, don't do anything. sit back for a period of two years because '17 is going to be a disaster. a disaster for obamacare if we don't do something. let it be a disaster. because we can blame that on the dems that are in our room, and we can blame that in the democrats and president obama. let it implode. and then let it implode in '18 even worse. don't do anything. and they will come begging for us to do something. but that's not the fair thing to do for the people. not the fair thing. politically i think it would be a great solution. because as soon as we touch it, if we do the most minute thing, tiny change, what's going to happen? they're going to say it's the republicans' problem. that's the way it is. but we have to do what's right because obamacare is a failed disaster. and it's interesting, it's sort of like when you see it, you see it with politicians, you see it with president obama. when you know he's getting out of office and the clock is ticking and he's not going to be there his approval rating goes way up, even though not that active in the last period of time, the approval rating goes up. that's not him, that's like almost everybody. i see it happening with obamacare. people hate it, but now they see that the end is coming and they're saying, oh, maybe we love it. there's nothing to love. it's a disaster, folks, okay. so you have to remember that. and very importantly we are going to work to restore local control to our nation's education system, betsy's here some place, and she is going to be, i think, fantastic. i think she's going to be fantastic. stand up, betsy. [ applause ] betsy feels so strongly and she's had such support from so many people. you know, you don't see that too much because you see the anti. you never see the positive. but i can tell you i've had so many calls while she was going through that horrible process, that was a tough, tough, nasty process and she hung in. she was as strong as you get. but so many people are calling betsy saying you will do such a fantastic job once you get it. it's like sometimes i would say it's much tougher to get into harvard than it is to stay there. does that make sense? it's tougher to get into the wharton school of finance, you can't get in, but if you get in, it's fine, you get through, right? i think you're going to do a fantastic job and we're proud of you and you took a lot of heat, but you're going to do great. she wants to bring decision making powers back to parents, back to the families and back to the states where they can really control education. and just finally, i'm looking forward to working with you on these projects. and so much more. we're going to do these projects and so many more. and i thank all again for being here. it's going to be a really productive discussion, so productive that i'm going to ask the press to start leaving because i wouldn't want them to see any great productive session. but they'll be seeing it and hearing about it. again, thank you very much all for being at the white house. >> that is the president. several headlines that the market's going to be very interested in even though the index is largely unchanged during that appearance with the nation's governors. first and foremost of course is an increase in defense spending. $54 billion in the president's words that the pentagon will decide how to spend. boeing, lockheed, all popping to all-time highs. then infrastructure, caterpillar zooms to the top of the dow component list, martin marietta, vulcan, new corp on that element, of course added complication of health care, he says much more complicated than many people expected he argues and that's going to delay the timeline for tax reform. elon at the white house watching all of this, kayla tausche as well. elon, you first. >> reporter: one of the things that really struck me listening to the president's speech was how much his budget reflects some of his favorite things of the campaign trail including cutting government spending, cutting regulations, focusing instead on national security and public safety. and as you saw in the budget those are the things he plans to spend money on, again as you said increasing defense spending by about 10%, telling the state gr governors he is going to help them end violence in their major cities. but just injecting on the timetable he said budget would be coming out mid march, that puts it on a collision course in capitol hill for the same time as his release of his plan to repeal and replace obamacare, the same time as he plans to release a tax reform plan. so three giant legislative hurdles that the president plans to try to clear just in one month alone. so by the time he gets around to infrastructure, it may be a while before we see actual movement in that arena. >> yeah, question of whether congress can move as fast as his administration can. kayla, what stood out to me, you know, i've been all over the trade issue. he talked up trade said i want so much trade, i want great trade, i want fair trade. if we're going to get taxed, then they're going to have to get taxed. he also sort of softened his tone a little bit on china when he talked about governor terry branstad as his ambassador to china. i wonder overall if he's trying to put some of those fears to ease about him as an anti-free trader even though he did call himself a nationalist. >> yeah, i was going to pick up just on that point, sara. he might be softening some of the rhetoric but he did say some people think i'm a total nationalist, which i am in some senses. so he did come back around to that theme. and as elon mentioned a lot of those themes are present in the budget or at least the budget blueprint that we are expecting to get from the office of management and budget in early march. i just got off a call with an omb official that reporters were on where they detailed the increase in security spending of $54 billion which will predominantly go to the pentagon. and they're saying that nondiscretionary spend -- or cessi discretionary spending will be reduced by the same amount dollar for dollar there will be a large reduction in foreign aid. the budget will expect the rest of the world to step up. and also saying that you could expect cuts across the board to federal agencies though this official declined to say exactly which agencies could see the deepest cuts there. they said the white house is beginning conversations with some of those agencies that will be seeing reductions in spending trying to negotiate exactly what they need and where to allocate some of this spending but that mandatory spending and any tax issues will come after this blueprint comes out. of course this is going to be, sara, a very big topic in the president's speech to a joint session of congress tomorrow night. so it's not surprising that the white house would want to get some of these details out there in the public ahead of time. >> yeah. kayla, $54 billion is a fairly large amount for nondefense discretionary spending when you look at the overall budget, i believe. i think it's about 10% increase in defense, not quite, we're at $596 billion or so, but taking $54 billion out of what's left not touching entitlements is a big number, isn't it? >> it is a big number and it's unclear, david, exactly where that will go. this official said that the defense department will be given discretion over exactly how to spend it. they'll be coming back to the white house with clear directives about how to allocate some of that money and where they see the need for it. it is a 10% very large increase, but this official said the president wants his budget to reflect what he promised on the campaign trail and that's exactly what he's doing. >> all right. well, kayla, thank you. of course we'll be watching and listening as we move along. president trump also promising to reduce taxes, simplify the tax code. you heard him just say in fact those things just now. he also said them on squawk -- or i should say on "squawk box" this morning warren buffett called proposed border adjustment tax the equivalent of a big sales tax. our next guest says it would cripple companies such as his. joining us now at post nine, founder and ceo and executive chairman of the new york-based housewares company, casa bella, why would that be the case? >> well, add 20% to our cost of goods. and we think it's crazy. and will effect our whole industry. what i think people don't understand is it's very difficult to make product in this country right now. we innovate here. we have product designers, graphic designers, we do assembly, and we make product all over the world. i cannot find manufacturers here to make product. you know, that has really gone away. so if we decide to make some product here, i wouldn't even know where to go to. we do make plastic buckets and sponges -- >> right, supply chain. i want to get back to the 20% number because a lot of people in your position keep using it. your cost of goods sold no longer going to be deductible. >> right. >> but tax rate will go down a lot. it's not 20% necessarily. >> it will never make up the difference. >> but the dollar is supposed to rise and that is supposed to make up the difference. >> that is a big bet. that's a bet consumers will take. you can't bet on the dollar. you really can't. i mean no one knows where the dollar's going to go. i really don't. i mean, it's just -- i think what we need to understand is the model has changed so dramatically that look at apple. a lot bigger than my company obviously, but you know everything is outsourced. innovate here and and jobs are done here and made elsewhere and we make product where we can go. we make product in europe. is that a bad thing? we make product in italy. we make product in mexico, in china and pitchfield, massachusetts. so our whole theory and my whole industry, it's an $85 billion industry and 90% or so is imported. some part of -- >> the idea is to get the supply chain back to this country. you don't think that that's a logical or reality based solution? >> i think it's going to be very, very difficult at this time. and do we really want it? i just came back from china. these factories are so automated right now it's amazing. it is really amazing. their workforce is decreased in the factories. it's an amazing thing to see. so when we bring back manufacturing, what are we bringing back? these factories are going to be completely automated. >> let's just pretend quickly for a moment that there was a supply chain here, have you done work on how much you could boost your prices and not kill your service? >> we can't find any product -- i can't even cost it out. even to i felt it was important, i felt i'm not the bad guy, but this is reality right now. you can't find contract manufacturers to make product. it's just not there. again, a piece of plastic with a handle on a label, you know, that is not efficient to ship from china because of the costs of freight is easy, but to find anything that has different kinds of material or complicated to make, i mean, i'd be really -- we just can't find companies to make. so it is really -- it just doesn't exist. and just to add 20% to the consumer to pay i don't think it right. >> all right. well, we're going to be following this story. we look forward to hearing your voice again as we see what actually comes out of the white house and congress. and thanks for your patience by the way as we sat and listened to the president. >> thanks for having me. >> when we come back, we're going to go live to the mobile world, congress in barcelona. we've got a cnbc exclusive for you, qualcomm ceo steven mollenkopf. 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[vo] quickbooks introduces rodney. he has a new business teaching lessons. rodney wanted to know how his business was doing... ...so he got quickbooks. it organizes all his accounts, so he knows where he stands. ahhh...that's a profit. way to grow, rodney! visit quickbooks.com. ♪ to err is human. to anticipate is lexus. experience the lexus rx with advanced safety standard. experience amazing. welcome back to "squawk on the street." the mobile world's largest event, mobile world congress, under way in barcelona. our jon fortt is there and joins us now with a special guest. jon? >> thanks, david. yeah, steve mollenkopf, ceo of qualcomm, thanks for joining us once again. >> thanks, jon. >> i want to key off on something the president was touching a few minutes ago. has the case for globalization changed in this new era where we've got nationalist movements across europe, and some would say in the u.s. as well? >> well, i think for our business, the answer would be no. we are, i think, integral to a global supply chain that supports electronics, actually quite good for america in terms if you look at a company like qualcomm, we're a big exporter. we essentially have tremendous revenue offshore and large employment onshore. so, it's -- and i think it's very difficult to make big changes in that. i also think stability or success in american business or overseas success in american business i think is a great stabilizing force for the country as a whole, and we think we have a role to play there. >> now, we're finally getting a timeline on 5g. i mean, we've been talking about 4g and lte for a long time, but you guys have said that you're leading a group of 22 companies, i believe, accelerating the deployment of 5g and r to 2019 versus 2020, where we expected it to be before. does that mean that in two years, we're actually going to see some real-live tests in the field of what this technology can do. >> you will. you'll actually see the beginning part of '19, the first half of '19, you'll see products on the shelf with the full specification of the new radio for 5g. i think it's going to be an exciting time. a number of new industries will be able to take advantage of it, and it's moving to become real. if you look behind me, actually, you'll see a prototype that we're giving demos on with that technology, an early version of that technology. so, the industry momentum is happening. >> tim cook on apple's conference call used an interesting metaphor to try to come at you guys, and of course, this billion-dollar suit that they're pushing at qualcomm, saying, arguing that you're overcharging on royalties, saying that you're charging a different price for a couch depending on whose house you're putting it in. i was begging, just dying to know your thoughts on the couch analogy when he said that. >> well, for us, we're probably not going to engage in that type of discussion. i mean, we're not going to win the case or lose the case based on, you know, the strength of a metaphor. we have 30 years of history of licensing our technology. i think we have an extremely strong position that we're very integral in creating the industries that a lot of people come in and they're successful, and we're actually very happy that that occurs. so, i think, you know, we're probably not going to engage in a battle of press, but i think we have a very strong case, and we think as we start to respond formally, people will start to hear a different narrative. >> i want to ask you about snap. we expect to see the ipo of snapchat's parent this week, and i think it might be the first big ipo of a company entirely born on mobile. i mean, yes, facebook is big on mobile, but they were a pc company at the ipo point. twitter started on the pc. how significant is snap in your eyes from the position of a company that enables this sort of technology? >> well, you know, we look and we say what's our business model? our business model is to invest early in the core technologies that enable new industries, mobile being one of them, and we try to deliver them in scale so that people can use them to create new industries that didn't exist before. snap is a good example of it. uber is a good example of it, where the core technologies we create and others create enable new business models to happen. for example, in uber or snap's case, you couldn't do that without connected devices in your pocket, the ability to have a high-quality camera connected to the cloud at all times, or the ability to have position location. we've been working on those technologies for 20 years so that it's easy for these folks to come into the industry and to have successful business. we laud it. we think it's great. there's going to be many more over the next two decades and we're going to be a part of that as well. >> i'm hearing lots of buzz about india and southeast asia here as big potential growth markets. do you have a projection on when the middle class in those areas reaches a level that growth really hits another leg? >> well, i think there's pretty good evidence for that in india right now. if you look at reliance and their geo service, i think it just surpassed 100 million subscribers in an incredibly short period of time with the demographics that exist in india right now. if you look at wireless penetrations, if you look at the number of connections worldwide and you look at the percentage of those that are using lte, it's still less than a quarter of those connections. so, there's a lot of room left in the emerging markets for people to take advantage of this wireless revolution, and we're trying to fuel that. >> all right, steve. i appreciate you joining us here. i don't see any couches in this booth, so i guess people are going to be walking around looking at the technology. guys, back to you. >> all right, jon. good to see you in barcelona. a lot more from jon later this morning. the dow and s&p at intraday record highs. dow's up 11. we're back after this. is a mobe trading desk, so i can take my trading platform wherever i go. you know that thinkorswim seamlessly syncs across all your devices. the market's hot. sync your platform on any device with thinkorswim. only at td ameritrade. welcome back to "squawk on the street." stocks now positive, erasing earlier losses after president trump made brief remarks about infrastructure spending, health care and tax reform. infrastructure stocks surging after trump announced he will deliver a big statement on infrastructure tomorrow. he said, "we're going to start spending on infrastructure big." watching materials, lime, summit, eagle materials all between 2% and 3% higher. martin marietta leading the way up nearly 4% so far. now let's send it to carl and the gang over at "squawk alley." over to you guys. >> thank you so much, dom. good morning. it is 5:00 p.m. at the global world congress in barcelona, it's 11:00 a.m. on wall street, and "squawk alley" is live. ♪

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