the snack was found in a bag of flaming hot cheetohs. we are collectively in -- >> we didn't believe this story. is this fake news? it is from "usa today." >> it also resembles every gorilla, not just harambe. >> thank you so much for joining us today. that does it for us. join us tomorrow. now, it is time for "squawk on the street." good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber. today, earnings for gm and michael kors, europe is mixed. ten-year got down to 2.39, approaching what many say are levels to watch.

goldman sachs says the risk of a trade war is escalating, in which china says a war both will lose and neither can afford. general motors on the move. the auto maker ahead of expectations with earnings, launching a pre-tax north american profit. coors misses. first up, china's foreign minister is speaking out on u.s./china relations, saying there cannot be conflict between china and the united states, as both sides will lose and both sides cannot afford that. that plus a new note out from goldman sachs saying, quote, the trump administration is likely to make an announcement on china's currency policy and impose unilateral tariffs on a number of products. we expect this administration to be active in using existing trade enforcement tools than recent administrations. on the immigration side, elon musk's tesla and spacex joining the brief filed by nearly 100 tech companies. a federal appeals court will hear arguments today 6:00 p.m.

eastern time on the president's immigration order. three judges are going to hear the hearings by phone. one is a carter appointee. one from george w. bush. one from obama. we'll find out what happens around dinnertime. >> when you attack a federal judge, the judiciary tends to find ways to be in favor of the federal judge. it is not something that -- look, i think there are a lot of things you can do, but when you deliberately attack a federal judge, it does -- these people are union. they can change their mind based on the idea that the judiciary has standing in the checks and balances, kind of something that happened, a marbury versus madison thing. go back there. we can go back there. >> marbury was up against madison, didn't know that. >> 18th century thing. >> got it. >> yes. >> interesting, speaking of

china and mar pubury -- >> that's true. >> we may need him to help negotiate. >> being a constitutional lawyer is cool to be. >> i was invoking precedent but it was a mistake. it is about how the pacers are hotter than people realize. >> jim, a memo this morning, a pickup and concern that tax reform could be pushed back to 2018. >> it has to be pushed back. it is too difficult. >> really? >> i just think that, first, we have to do tariffs, aca, tax reform. there's too many firsts. america is first. but there is too many firsts. >> i think the plan is still -- speaker ryan's plan, based on what i hear from various people out of d.c., because that's where the action is these days, and everybody is focused on it so i have been, too, is still to try to bring something up in april. let call it early spring. >> right. >> there is this belief though, you have to get aca done in some way to at least be able to put

on paper some of the savings you would have in order to move ahead with tax reform, given you would do it under reconciliation and it would have to be budget neutral. this gets into the rules there. >> i just don't think they have the ability to get it through. >> a 51 vote. >> then you have the president on with bill o'reilly on tax cuts by year end. i would like to say yes. aca, i would like to say by the end of the year, at least the rudiments. we're not talking about the first 100 days. >> i was preparing for tonight, and i can't wait until what they say. i don't think you can solve aca quickly. they are complex. >> without a doubt, aca and a replacement for is complex, and tax reform, as you might imagine, is going to have ramifications for every business. not to mention, they want to do it with individual, also. they want to do them together. because you have so many

individuals who are pass throughs, and you can't do one without the other. >> that's like the democrats and republicans. back to that thing. >> it is going to be difficult. but they're certainly going to try. no one expected that you would see a vote on tax reform until later in the year. >> okay. >> you can get the contours of what we're dealing with sooner than that. that will at least enable investors and businesses to make decisions based on what looks more likely to happen. >> right. >> but, yeah, nobody said, you know -- the expectation is it won't be until late in the year in terms ofgetting to the senate and house. >> i don't hear you saying it is a disappointment. >> emerson electric had a good quarter. if i owned emerson, do i care about tax reform? i mooean, no. some of the businesses are better. every day, a company is reporting a better number, that is a better industrial. >> you think this is based on the fundamentals of improving

earnings and not on the pull ahead of the benefits of tax reform? >> i think that deregulation is playing a big role because the financials are a huge part. i think -- and also oil and gas, a huge part. i think there is tremendous underlying strength in europe that nobody wants to talk about that is producing fantastic numbers. really fantastic numbers. and there are the fang stocks and the semiconductors, very much involved in the secular change. somebody was talking about bmw. there are five brains in a bmw filled with chips, okay? one of them goes down, i mean, you know, it is the car with five brains. you have to put all these chips in. all these things are secular and can't be stopped by border tax and can't be stopped by trump. it is progress. progress is demanding that you have more advanced microchips. i stipulate, i no longer want to be known as jim. i'm anvidia.

>> you jumped from making a good argument to talking about chips. >> i just am -- okay. i was trying to give you sector by sector. >> okay. >> all right. i just say, there are a lot of sectors that are doing quite well. do you think jpmorgan is at 87 just because of dereg? the economy is a little better. the tenure is disturbing. i need it at 2.7 for my thesis to come true. >> harker is on board. >> saying march should be considered that the economy is doing well. >> remember it used to be for lower stock prices? do you think apple is controlled by -- are you going to say apple's repatriation or eps? this is the debate i have within my head. my cranium is exploding between eps versus trump. >> if you tell me apple, with $230 billion in overseas cash is not, in some way, benefitting

from the belief they can take it back as a reduced rate and what they may do with it, it's got to be in some of these stocks. >> icing. >> icing? >> gravy. >> gravy, yes. tomato gravy if you're from philadelphia. >> speaking of europe, gm did report earnings. they beat on the top and the bottom line. posted fourth quarter profit of $1.28. revenue, $43.9 billion, above estimates. listen to what was said on "squawk box" about tax reform. >> we are in support of tax reform and potentially a border adjusted tax could be part of the tax reform. what we want to do is work constructively with the administration around tax reform that helps bolster and build a strong manufacturing presence, helps the u.s. economy. >> europe, still not profitable, but if not for brexit, they might have broke even. >> yeah. i was surprised europe isn't profitable. the german car registrations were up 10%, the strongest

country on earth when it came to car registrations. it takes my breath away, to know gm and ford had so much struggle in europe. europe is so strong. spain is so strong. >> when you say that, what are you -- give me something to go on. >> back to where they were before 2011. when you hear we're back to 2006/2007 -- >> in terms of spending? >> yes. in terms of spending. that's exactly the category. >> yeah. >> i think that what i'm seeing is that when i go over everybody's quarter, it is like the bright spot is europe for consumer spending. if you look at pvh, let's use that because they have a virtual ties on insurance. tommy hilfiger, a strength, is in europe, and europe is very good for them. that's because, well, you can say the euro is too weak and people travel there and buy. they don't do it here. but i think when you go over -- look, when you go over to cou e

michael kors, it was bad everywhere. >> kors was rough. $1.64. revenue is a miss. they warn for the fiscal year -- >> they used the word disappointing. when a company says disappointed, you can't say, they're being negative. it is like, wow, it is disappointing. >> they chose that word. >> they chose the word disappointing. don't ever mention the mall either. >> if they had an opportunity, they would have chosen differently. clearly, they felt fenced? >> suboptimal. but disappointing -- >> are we in a kors/under armor economy or a hasbro? >> when i had the ceo of hasbro on, he was talking about being a entertainment company, not a mall-based company. anybody being part of the mall is being mauled. m-a-u-l. mall is pronounced like maul.

murry christmas. so mall is being mauled. >> i'm with you. >> have you ever been to a mall? >> yes. >> when? 1963? >> i went to the mall in the last year. >> where? >> there's one up in westches r westchester. the westchester mall up 287. i went there. >> the old navy? the numbers were good. >> crate and barrel there. we had to buy some stuff. >> been to a crate and barrel? >> i sat outside on the couch. >> meanwhile, morgan stanley has a big note about whether -- the title is, what if amazon is your next neighborhood groeshe groch. >> whole foods reports this week. it could be tough. this is one of those pieces where when people see this -- i saw someone say amazon buying macy's. amazon wants to use the self-checkout.

not the ridiculous one at cvs. can you come over here? i can't figure this out. >> this is not working. i don't want the bag. how does this work? >> cvs, if i have to go to the self-checkout again and say to my wife, can you fix it? no, i have to get the -- no. if you use your apple iphone and just breeze in and breeze out, you don't need no checkers. 3 million people who are checkers. 3 million checkers in this country. what is trump going to do about the checkers? what about the checker industry? >> well, he'll have to worry about the drivers, too, when they wipe out the driving industry. a lot of other things with robotics. watch amazon, what they're doing. whether it is in a supermarket or in their distribution centers where they're replacing people with machines. you still can't have a machine that can do this effectively. reach for a book, reach for the -- okay. but they'll get there. they're constantly pushing. doesn't mean they're going to go into this business. they try different things. >> right. >> because once they find something, as we said so many times, they can innovate at

scale the way others are incapable of doing. >> have you looked at -- >> it makes them -- >> the shares on your existence business from all of that additional -- >> i'll tell ya, i love monit monitoring where my amazon -- it was placed in your mailbox ten minutes ago. do you see the granularity of where they put it? >> it didn't start with als, let's start a system for the world. it started internally. >> apple system revenue is something they backed into and now is a highlight. you need to see the scale because of the gross margins. i don't think they started out by saying, we have an ecosystem. let's capitalize. do you check off each month, like you spend money on apple and -- i don't pay attention to it. >> apple or amazon? >> amazon is free. that's prime. >> yeah, yeah. >> apple, you pay for extra memory and -- i just check off that. almost likely verizon bill. you ever look at the bills?

>> i do actually. that runs about $192 a month for me. >> hideous bill. >> yeah. >> get john ledger on. maybe he can take my bill and adjust every bill. >> spectrum, that's coming in high, too. >> yeah, i know. every month. every month i pay for -- amazon should provide all that for free. >> i have the same provider in two different places now. >> fios, comcast, optimum and directv. i have all four. you never know what's going to go down. wait till we come back. it is a big week for media earnings. disney tonight after the bell. we'll watch that. also ahead, the former chairman and ceo of saks, stephen sadove. look at the pre-market as we are awaiting a potential vote in the senate for devos at noon. don't go away.

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where -- i was talking yesterday on "halftime," where they have kevin plank today. we all agree that it is ratcheting up. it has great momentum. i like the movie slate. i would love to hear august spn bamtech will be combined into a great technology part of the company. we have to worry about declining subscribers. we get that wrapped into a snow white/alice inwonder fland, hi-ho, it'll be good. >> i don't know we'll get information on succession plans. >> 2018 with tax reform. >> what about it? >> you have -- >> discuss in benefit for them? >> a company that has been attached to it. >> without a doubt. >> morgan stanley with a note yesterday about comcast, our parent, and benefits of free cash flow out of corporate tax

reform. talking 30% gains. >> enormous. >> as i said before, and i know it is not playing the homer here, but comcast benefits from the write-off of capital investment, benefits from, obviously, a lower tax rate. domestic corporation, largely. exports are the only thing it does in terms of movies. it benefits on virtually every front when you talk about it. >> it is funny because -- >> deductibility of interest because there is a lot of debt. >> that was some conference call. really good. somebody was worried about x1 rollout. give me a break. plus, net neutrality. >> the other thing. which is happening. we can talk about tax reform and when it happens and if it happens, but at the fcc, they're moving full steam with rolling back net neutrality. >> you know, i don't know. you felt like you couldn't talk

about it. >> as for fox, guys, i haven't seen an indication. doesn't look like it is going to move much this morning. >> they sold political. there is no political season right now. >> not much attention to the sky deal they announced. which, obviously, will be, in a good way, dilute the revenues from advertising that overall fox takes in, which is something they want, potentially. turning a non-earning asset into an earning asset, sky itself. and they are four times levered over at fox. >> i just think the media -- people are excited about via com. cbs, they're excited. i'm not that excited. >> you're not? >> we'll get cramer's mad dash in a moment. countdown to the opening bell. look at the pre-market. back after a break.

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we got about seven minutes before the opening bell this morning. we talked a bit of kors but didn't get to the positive story at gap. >> i was in rome last summer. i bought myself a beautiful swim suit. my daughter bought all sorts of clothes in rome. it was jammed, gap stories. looking for 1%. whatever they're doing overseas they ought to bring here. banana republic was light, as always. jeffrey says it is time to take action. some think it is time to take action ceo. old navy, inkconsistent, but it is a retail that got it up. guide up, guide down, guide up, guide down. you see a pattern? >> yes. i do. >> yeah. so there you go.

gap stores, inconsistent. today, it is up. tomorrow, they'll be down. >> you don't want to own it? >> no. but i do wish they would do what i saw in roma. >> which is what? >> beautiful, lit stores. cheap, beautiful manufacture. fashion forward. jammed place. then i go here, and it is like, oh. >> what explains that? >> i don't know. but the roma thing is so good. >> maybe because it is rome. >> a fancy hotel. i say, where do we get swim suits? they're like $300. they said, go to gap. they have the same thing for $9. wow. they were right. >> nice. >> right by the spanish steps. >> overrated. good place for lunch. >> rome, let's go sometime. >> let's go to rome. >> let's go to tuscany. >> i'll be there. tell me when. we have an opening bell first before we get on our plane and

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on the street," live from the financial capital of the world. the opening bell in two minutes. busy tuesday with some economic data but a busy day for the president. intel briefing. meeting with some county sheriffs. a veterans affairs listening session before meeting with rex tillerson later today. it is weird, yesterday, the news flow compared to the last couple of weeks was moderate. hard to get back to that pace. >> i went home last night, and there, of course, no monday night football. i say, let's go over what happened. where are the conference calls? wow, i mean, it was a vacuum. it was really weird because it was like the first day there was a vacuum in a long time. i went over to the hasbro call. you must get out of the mall. you look at this quarter going down and down. hanes just uniquely impacted. not immune from sekicular head winds. it means sell.

you can't defeat it. the world has changed. anyone who is connected even with traffic, street traffic, not doing that well. >> the story in retail last few days has been management change at ralph lauren, tiffany, abercrombie. today is a different sector. executive chairman is interim ceo. >> we'll talk about teva later. there is more to the story than just that potentially, in terms of the debt load and everything else at teva. worth noting, the stock is down. >> new guy in for now. >> it is so interesting and this is what i want to touch on later. the relationship between teva and myelin and allergan. they're all connected. >> oil is the other story this morning.

down about 75 cents after some reports show hedge funds with a record net long position trying to play the production cards, geopolitics with iran. >> i still like oil. i'm going against it right now. i'm willing to stay on. >> there's the opening bell and the s&p at the bottom of the screen. varian highlighting its fight against cancer. at the nasdaq, the institute kicking off the gender diversity forum today in new york city. we'll keep an eye on gm to start. we should mention record pre-tax profit in north america. 18% share in north america. >> gm, one of those things where it is almost boilerplate caution we're getting from a lot of companies. it's what they have to do. the world is an uncertain place. i see a lot of stocks that, you know, there is an upgrade of caterpillar today by barclays.

saying, look, you have to get in now. things are going to get better. i don't think -- but, remember, how many times has cat told you it is not getting better? you have to go against sometimes. you have to go against what the companies are saying. that makes it really tough. tough to say on a cyclical, listen, we don't see the world better. the analysts say, wait a second, you're too negative tif. that's the story of the caterpillar. >> this back and forth with arconic, which you've been over, continues. pacific advisers is in favor of the elliott. >> is that early that someone is siding with elliott? >> maybe a little. arconic itself coming out with a statement saying elliott is restating its own financial analysis. >> lowered -- >> posted no fewer than five versions of the shareholder presentations, each with restated calculations. this will go on, the back and forth here. it is sort of a -- i don't want to call it a sideshow, but the

question is, is klaus kleinfeld in trouble? >> i think -- remember dupont, when you had all those different, like, kind of auto pilot guys? if the auto pilot guys stay on auto pilot, i'd say no. if the auto pilot, big, passives? >> the index funds, passive investors who own the most of any of these companies but don't really -- they outsource the corporate governance, well, play. >> he's safe if that is the case, even though there are lots of -- first pacifica was big. i got their letter. they're against klaus kleinfeld. this change in the valuation of what elliott is using, i regard it as minor. arconic is playing it up very big. i do say if -- you need some of these passive or less interested fund managers to come out. i don't think they have the numbers right now. >> as you're talking, guys, nasdaq record high and the dow

joining it. hitting 21,025 or so, a fresh record for the dow. largely on the back of caterpillar, which got an upgrade today to overweight by barclays. >> it was amazing. look at this, boeing. some of these companies, i don't think people realize, because i think a lot of them just say, look, trump, trump, trump, and trump is weak. right now, it is a bad week for trump. we grade trump every day. the fact is, boeing has huge cash flow. the cash flow is the determinant of this quarter. boeing's cash flow, comcast, caterpill caterpillar's surprising cash flow. >> we started off the show with the comments from the chinese foreign minister th. boeing needs china. they split the orders 50/50 right now. airbus boeing. what if that changed? >> it would be very big. >> suboptimal, wouldn't it? >> ill advised, if you were going to come down on the chinese in terms of boeing.

i think trump is interested in saving certain industries or bringing back manufacturing. but boeing is the great manufacturer of this country. be careful. that's me saying, be careful. >> right. but that is a key consideration, isn't it, where things are going to go with the u.s. and china, in terms of relations. >> i always felt boeing is a superior company versus airbus, but airbus is a subsidized institution. some people say boeing, and i think they do it on brains. i'm pro-boeing. it was controversial in terms of aerospace. i'm that boeing is the leader time and again in the market. united technologies keeps going up. i just think you've got to stay focused on some of these plain, old industrials, which just keep delivering. they're shocking. look at that united tech. i mean, that's where honeywell

was going to buy it. over. >> it is true. >> honeywell keeps going up. >> it does. ge doesn't. >> no. it doesn't go up, no. >> ge had a rough year, down 6% after those earnings. >> people didn't like the quarter. >> yeah. >> i'll talk to jeff tomorrow. try to get some clarity. >> we will? >> on "squawk"? >> on "mad money." >> no kidding, he's coming on "mad money"? thanks for letting us know. >> i just let you know. >> okay, appreciate that. >> right in the middle of the sm show, you're letting me know? >> he's one of your guys and i felt you should let you know right now. i was giving you the business, like that ref. >> you beat me down all the time on these guest bookings. >> he takes it personally. he has -- >> i saw the promo. >> do i say anything? no. it is business, david. >> really? >> it is business. >> it is business. >> all right? >> i hear ya. no hard feelings. >> thank you.

>> lose again. >> disney is the laggard this morning. worst performing dou ining dow . down 1/3 of a percent. >> what about apple? a couple guys, we got a guy raising the price target of apple. we got steve, one of the faux, faux, f-a-u-x, f-a-u-x, comes out and says it looks like it'll be smoother. smoother? thanks a lot. he throws bombs on the conference calls. maybe he's coming around. >> 130. remember when getting past 120 was a big hill? >> that was because the best days are behind them. >> innovation dead space? >> it is dead. i'm buying it but it is dead. pry my iphone away from me, you're crushed. but apple is dead, dead, dead. worst days, best days. i mean, the whole narrative of apple at 93 was basically, this company is going bankrupt but it

has $40 billion in cash. $40 in cash. it is going bankrupt but -- >> okay, all right. i know. you were steadfast in that support. >> i was steadfast. i was no sunshine patriot. i was not the enemies of thomas payne. >> you were not. >> didn't go with, like, t-pain. not t-pain, buy me a drank, but t-payne, summer soldier. >> it is $130 a share now. >> moving up. >> yes, it is. you think it is well-positioned? >> it is very inexpensive. >> market value approaching $700 billion. >> but is service revenue, david -- >> it is growing quickly. and it is enormous but it is still a small base when compared to iphone revenue. >> right. my new nickname is about to break out. nvidia. they cannot be stopped. it is a bird. it is a plane. no, it is nvidia.

faster than a speeding nasdaq stock. more power than apple. able to leap facebook with a single bound. nvidia. >> that's another -- not quite a record high at the moment. >> machine learning, gaming, artificial intelligence. it is rock, paper and scissors. >> 119, just about 20, 30 cents away from a record. >> going to keep going. >> after the regrets investors had in not buying in mid-'16. >> almost a double fund now so they report this week. you go to twitter, all they want to know, is it too late for nvidia? did i miss nvidia? the guy from audi told me to buy it. >> audi. >> this car has more nvidia chips than anybody else has chips. that was it. i went out with it. that was the buy signal. >> momentum there but it is not a game you necessarily want to

play. >> uber, momentum. >> what's travis up to? >> getting more press today. >> isn't he? >> in the narrative that is somehow a broader population of corporate america is turning against the president. >> how does musk -- >> musk goes to the brief. the ad is in the super bowl. >> musk is charmed. get the rub off a little, musk. he ought to have a perfume. he should go to fragrances to get a musk perfume. >> musk by musk. >> that's what they can call it. >> what was the greatest selling perfume in history? >> chanel no. 5. >> white diamonds. >> darn, you know it. i thought that was a really good one. even watson doesn't know it. you got it. you're watson. >> i don't know it. >> i need you.

>> classy. >> did you ever see national velvet? >> butterfly eight? >> that was an exchange, a phone exchange. >> i'm aware. i was born a long time ago, also. not during the revolution like you -- >> coffvering all the bases. >> record for the s&p. let's get to bob. >> not quite there yet, but still up on the upside. asia to the downside. europe, generally to the upside. europe, remember we made a big thing yesterday about germany closing at new lows for the year. a lot of concerns about political issues there, despite better economic issues. populist parties, netherlands with an election march 15th. france shortly thereafter. it's been weighing on the markets. a little recovery at least in germany. in the u.s., led to early ons early but industries and financials, the groups that matter, along with tech, and

materials are weighing on the markets. they're a small part of the market. i want to talk about bulk in materials. one of the material names we're all interested in. vulcan did disappoint. their numbers were light on earnings and revenues. their guidance was also below expectations, bringing down a lot of the group here, including martin marietta. talking crushed stones, concrete, anything with highways, railroads, any infrastructure, they're going to be very involved in. unfortunately, they didn't say much. this is the pattern of most of these companies about the impact of lower tax cuts as well as infrastructure. the ceo did comment here. he said, our expectations for the full year is driven by a continuing recovery in shipments with higher levels of publicly funded construction activity. that is a nod towards infrastructure. the conference call via 11:00, we'll be listen ing in and givig you more information.

good numbers for ice. this company is diverse. transaction services, trading today, is really 41%. they make big money on data services, selling information like the data that comes out of here to people like us, making money on it. that's almost half their business. if you look at the transaction services, trading, most of it is on commodities trading. financials trading. options. u.s. equity is 12%. so trading at the nyc, only 12% of the revenue. big company, a lot of business interests. they're getting a notice from the scc regarding the halt in trading. it means they may bring in enforcement action around that. we'll get you more as soon as we have information. you heard about gap. the good news here is they did raise their guidance overall. bad news is, comps for january were below expectation. you see it is down not that

much. rest of the group down a little bit here. the positives here, well, they have a full months of positive comps here. old navy has been up. the bad news, banana republic is struggling. it is more expensive than gap. no one pays up for it because they can find cheaper alternatives elsewhere. i'm not sure how much you can extrapolate from this report. they've been promotional. gap recently, endless 40% off sales all the time. finally, jose cuervo is going public but not here. tomorrow on the mexican stock exchange. biggest tequila maker in the world. 30% of the global market share and 70% of the revenue in the united states. that's an issue. when you talk about border adjustment taxes and things like that, it could have an impact on a company like jose cuervo. now, the dow up 81 points. back to you. >> thank you very much, bob. i'll take it. we'll get to some stories today that are inter connected in some ways. start with teva, which we mentioned earlier. its current ceo stepping down. right now, they've got an

interim ceo replacing him. the stock is down near its lows but not quite at the recent lows for teva. this is a company that had no shortage of challenges. over the last few years, as they've seen consistent change, it is possible to say that, in the ceo position. remember germalevin, a bristol- executive who wanted to turn it into a pharma company, didn't go over well with the israelis. put their guy back in. didn't seem to have a big risk appetite. then they went after myelin. all these related companies should have been one. we'll pay 82% for mylan. they said no way. remember the netherlands, the basically ability for mylan to protect themselves from a

takeover it is not interested in forever? remember, mylan went after perrigo. 75% share in cash. 2.51 shares of mylan. perrigo should have taken that team. mylan should have taken that deal. the only one that came out well was allergan, which teva would pay $40 billion for the generics business of. the deal took forever to get done, given a longer regulatory review than people anticipated. during the period, the market for generics changed. teva had all sorts of debt. now, they're looking at that debt load, trying to figure out how to restructure it to a certain extent. some asset sales may take place at the company. they produce a lot of cash flow so there is no danger in the larger context for teva. they do want to restructure a

debt. so back to today's announcement there. let's not forget perrigo, that star board wins basically a nice settlement. jeff smith, who runs star board, the activist fund you may remember from the battles taking place at yahoo! he'll step on to the board along with two other members. including, did you see jeff kinler, former ceo of pfizer, he'll be on the board. they have plenty ahead to figure out at perrigo. >> oh, my, yes. >> they want to evaluate the generics business. they have work to do in the european business. they made the omega deal that didn't go well. they have to figure out a lot of things at perrigo. the hope is, at least on the part of mr. smith, of course, that being on the board will help them do that with management. don't forget, they changed ce,oceos. joe papa fought off mylan.

don't take the $75 and 2.1 shares and he goes. that brings them together. other than allergan, they're not stocks you would have ever wanted to own. >> now up 40 points. kind of a jamie diamond buy, i might say. >> let's get to the bond pits now. rick santelli joins us from chicago. >> if you were to look at ten-year rates or any treasury rates before midnight or slightly thereafter outside of our trading time zone, you would have seen under 240. but we've done a bit of a u-turn. look at the one week. little lower. we closed out 2015, not last year, 2015 for 227. that was the high for all 20 16

until mid-november. we'll have to be patient and see. let's look at a combination chart. this is a one-year chart. ten minus bund, holding 200. the dollar index at 100. see how similar they are? that's important. keep that chart close by. if you look at the dollar index in an isolated since november, we're toying with the line of what looks like a head and shoulders could turn into something else. pay attention to any closes above or below 100 the next several days. overseas, two-year greek notes, close to ten. spanish at 175. finally, how do you spell frexit? it is moving higher. the national front party getting publici publicity. will it be another brexit? investors are a little concerned. dau david, jim, carl? >> thank you very much. goldman sachs chief equity strategy david kostin is with

us. later on the "halftime report," kevin plank. dow, a fresh record for that index and the nasdaq. s&p is almost there, too. back in a minute. so with our ally cashback credit card, you get rewarded for buying stuff. like what? like a second bee helmet with protective netting. or like a balm? you know? or a cooling ointment for the skin. how about a motorcycle? or some bee repellant. i'm just spit-balling here.

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record highs for the dow and the nasdaq this morning. the dow led higher by caterpillar, up 2% on the back of an upgrade to overweight at barclays. s&p, 2.5 points from its own record. stop trading with jim 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 of at&t, red bull racing can share critical information about every inch of the car from virtually anywhere. brakes are getting warm. confirmed, daniel you need to cool your brakes.

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and add phone and tv for only $34.90 more a month. call today. comcast business. built for business. time for cramer and top trading. >> yeah, it is jim nvidia. thank you for that. nvidia reports and you don't see this move but a lot of people are trying to get ahead of what happened november 10th of 2016. where they revealed a re-rating basically of how much they are not just a cell phone chip company or something pedestrian. i think people are saying, listen, they'll do it again because they're the chip company for all the things that are really cool. it is the internet of things. everyone wants that. they don't want intel, despite the fact that intel did cool commercials. be aware that if you're coming in now, you better hope for the blow out of all time. you better hope for a goat.

greatest of all time. needs to be a tom brady level. >> micron trying to have a nice level. >> new ceo. people say i hated it, yeah, until they fixed the balance sheet. that can go higher. be aware that tech is back. bigger than ever. here it comes again. is that trump? i don't know. or anti-trump? they have 100 guys anti-trump and it is going up. you can't attack them all. >> can't get in the way of progress. >> what's on "mad" tonight? >> centene. this company is deeply involved with the -- mr. neidorff will tell you about where things are with aca. he is never shy about talking about where aca is going. you should tune in if you want to know. jim vidia. >> all right, jim, thank you. >> what a show. >> "mad money," 6:00 p.m. eastern. when when he come back, financial deregulation under

president trump. we'll talk to former sec commissioner.

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♪ good tuesday morning. welcome back to "squawk on the street." i'm carl can i nquintanilla wit eisen and david faber. oil is down 1.5%. watching earnings out of gm and kors. speaker ryan at a leadership conference. tape of the president meeting with sheriffs. the road map begin s with a corporate pushback against the president on trade. the former ceo of saks fifth avenue will tell us about the adjustments on the consumer and retail. we'll be joined to talk about the trump administration. leading the way under president trump's regulation rollback, we'll talk to paul

atkins. we start with president trump proposing a border adjustment tax policy that is sending retailers to capitol hill. the proposed plan is actually the gop proposed plan. doesn't come from the president. could hit retail and consumers hard. joining us now to discuss that is steve sato, former fifth ssah chairman. good to see you again. >> good to see you. >> what kind of fight are retailers preparing for on the border adjustment tax? >> i think it is an existential threat to the retailers. it could have a major impact on the consumer. the consumer could have to pay as much as $1700 a year more for their products. i don't believe that the retailers are going to be able to pass that kind of an increase on to all of the consumers. their profitability is going to be killed. even if the tax rates come down, there's not going to be any profits to tax. i think the retailers are viewing this as a major, major

threat. >> i just am wondering, it is already a tough time for retail. when you say existential threat, can you be a little more specific? who is most at risk here? >> i think the entire industry is at threat. a number of companies aren't going to be making any profit. they're under a disruptive period already. you saw the earnings coming out for the fourth quarter. the sales are really under pressure. you've got this change going on towards the internet to gravitating towards the amazons of the world. brick and mortar are under fire. you compound that with a major threat to your profitability through the border adjustment tax, and i think you're going to see a number of them accelerating the rate of closures that you're seeing in the brick and more torre storta. it will also have a major effect on the consumer. >> the people crafting this bill would say, we expect the dollar will adjust to a certain extent to offset some of the increased cost for the consumer. also, they're going to phase

this in. this is not something that'll happen day one. they'll give it a number of years. the idea is to move the supply chain back here. does that sound reasonable to you, given how retail works? you could hope over a three year period, you move the supply chain back to the u.s.? >> let's take apparel or electronics. it is 997% of apparel is overseas. 90% of electronics is overseas. it isn't going to be able to move to the u.s. in a quick manner. i'm not sure you could ever move the apparel industry entirely to the united states. i think it is a little unrealistic. i also think there is theory relative to the shift in the currencies, in terms of the stronger dollar that may or may not happen. certainly at the speed that some people are talking about. so there is a lot of uncertainty that we're dealing with to risk 1/4 of jobs in this country tied to retail. to think we can move that quickly in terms of shifting production, shifting the

currencies, i think it is a very high risk. we shouldn't be playing with that kind of risk. >> another benefit, steve, that the proponents tout is it is going to raise a lot of money. more than $1 trillion that would allow for some of the president trump's tax cuts that he promised for corporate tax cuts. how else do you get the tax savings within some sort of reform plan? >> i think it is a fair question. remember, the beneficiaries of some of the tax cuts are the large exporters. that'll be on the shoulders of the mid and lower-income consumers. but i do think you're going to see -- i think everybody is in favor of tax reform. so it is not a question that tax reform shouldn't happen. in fact, i think the retailers are very supportive of the idea we need tax reform on the internet because you still have internet retailers not paying sales tax. that's a major problem. i do think we need modifications that we're going to need to see some adjustments in the

deductions. the lowering of the high-end rates. i don't think that the trillion dollars, and that's about $100 billion a year that we're talking about, should come at the expense of the mid and lower income consumers. >> as far as washington goes, steve, we're watching senate republicans to see who is going to carry the water to push back, if anyone, against the house plan. who is that in the senate, as far as you're concerned? >> well, i think when you start to see the impact on the consumer being the mid-tier consumer, i think the democrats are actually going to be pushing back on some of this. this is not favorable for the consumer. it is also, in some senses, like a vat tax. we already have sales taxes. we're now going to be putting a 15%, 20% increase in terms of tax on top of the state sales taxes that we have. so i think that there is a lower income consumer impact, and

pushing back on some of this. >> i wanted to ask about retail broadly. we've had a number of stories in the news this morning. michael kors, the stock is getting slammed on weaker sales number and weaker guidance. if you look at the bottom of the s&p for this year, underarmor is there, tough quarter. kohl's. ceos are departing. at this point, is it name specific, or can you put all of retail in one basket? you got better numbers out of gap. >> yeah, i think that you have an underlying, disruptive period in retail going on. the department stores are selling at half the price that they were a couple of years ago. the names that you mentioned are being hurt because the mall traffic is down substantially. you've got this shift to the internet. you've got a period of dislocation. companies are having to change their business models. the consumer is thinking differently. they're looking more at expeeps -- experiences than at stuff.

the companies have to adjust. i think the good ones are adjusting. they're investing in the technology and analytics. you're going to see winners coming out of this. you're also going to see losers. it is not one size fits all. i think this is the period of opportunity where if you pick the winners correctly, retail is not going away. if you look at the national retail federation numbers in the fourth quarter, the consumer actually was growing by 4% versus their 3.6% forecast. the consumer is healthy. they're just buying differently. they're buying different kinds of products. you need to see major adjustments. that's why you see ceo changes going on right now. it is because companies are recognizing the old rules don't work. they're going to have to do things differently. you are going to see winners coming out of this. >> some would say, well, gee, sounds like there should be consolidation, but not sure that really works, does it? i mean, maybe when you have two companies that have a lot of rael

real estate, there's some value that could be garnered. putting retailers together, steve, what are your thoughts about the benefits of consolidation in this, given the pressures these retailers are facing? >> in my mind, there is going to be continue to be consolidation. retail has been a history, especially in the department store space, for 100 years, it's been a story of consolidation. and getting the synergies of putting the companies together. i think you'll continue to see it. i don't know which ones are going to consolidate. when we sold sax, it was a story -- there was consolidation that took place there. i think you'll continue to see it. i think that real estate monetization is a story that is out there right now and continues to play. you're going to, i think, take advantage of the rates that are out there. i do think you'll see consolidation. >> the guys you sold sak to at hudson bay at one meeting with macy's, trying to convince them of a benefits between those two. does that make sense to you?

>> oh, i don't know whether it makes sense or doesn't make sensement there sense. macy's owns half of their real estate. unlocking the value of that real estate is important. whether it is herold square in new york, union square in san francis francisco, there is real estate value. the key though, you can get your real estate, do sale lease backs on real estate, but ultimately, a retailer has to sell product. you're obligated to pay -- you have a rent or mortgage, interest. ultimately, you have to sell product and grow the business. that's what all of the retailers have to focus on. you can play with the balance sheet, but ultimately, you've got to grow. >> finally, steve, you talk about bringing the supply chain home and how difficult that would be. doesn't technology ameliorate some of that, whether it is a 3-d printer or whatever. the textile business isn't what

it was when we sent it overseas. >> no question technology can play into this and you can bring some product back. pick diamond mining. you're not going to bring diamond mining into the u.s. we don't have diamonds. i'm using that as an example. there are some products that can't come into the u.s. i think other products, it is a very complicated supply chain. automobiles is an example. very complicated, integrated, worldwide supply chain. you probably have somewhere in the neighborhood of a $5,000 increase if you were to start taxing them at 20% on the imports. yeah, there can be some brought back in, but i think it is not easy. i think it is not a simple issue, as being portrayed. >> steve, good to talk to you. on a have r we'll see where the border adjustment tax ends up. steve sadove. 21st century fox, the company beat expectations last

night. revenue comes in below forecast. coming up next, record highs in stocks. we'll talk to goldman sachs u.s. equity strategist david kostin on whether the trump rally is sustainable in 2017. back in a minute. hey gary. oh. what's with the dog-sized horse? i'm crazy stressed trying to figure out this complex trade so i brought in my comfort pony, warren, to help me deal. isn't that right warren? well, you could get support from thinkorswim's in-app chat. it lets you chat and share your screen directly with a live person right from the app, so you don't need a comfort pony. oh, so what about my motivational meerkat? in-app chat on thinkorswim. only at td ameritrade.

speaker ryan making comments at a house leadership conference. we're monitoring this q&a. already talked about a media over or under reporting something. he says, i can't speak to that. that's your job. if we get headlines out of this, we'll go to it. the nasdaq and dow hit highs. s&p a few points away. where should you put your money in this market? joining us exclusively is equity strategist david kostin. the discussion has been centered around policy expectations, whether the market was anticipating too much, too fast. where is goldman at this moment? >> my view is the point of maximum optimism is somewhere in the next month. the idea that investors are focused so much on the potential tax reform, tax reform is likely

to happen in 2017, but it is more likely or not to be pushed out later this year. taking effect in 2018. as a result, the market now at 2,300, that is the target for the end of the year. the next 11 months, there will be investment opportunities around that. from an absolute level of the market, we're at a high level. trading relative to where the interest rate environment is. >> how can you be specific about the next month? what is it that happens in the next month? >> in march, there is likely to be the house budget proposals and you get much more details about the exact tax reform and the trade off between revenue neutrality and just how much congress -- is there enough votes to enact some of the tax legislation? we start after the election back in november, and all of the enthusiasm around investors about the potential for tax reform. the number one question was, how

much lower would corporate taxes go, and what that would do for higher earnings. for the last several years, earnings have been flat. it's all been about a higher valuation in the market with a low interest rate environment. no one is discussing valuation increasing. it is more, what is the path for lower earnings but the track of higher earnings comes from lower taxes. that's great except that comes at a cost for the deficit. that's why, the answer to your question, why is the time frame at the end of this quarter, that would be the time frame to look at it. >> how much does repatriation at foreign cash, you've been looking at buyback, dividends, how much is playing into your forecast and the expectation we'll get more policy with fewer taxes there? >> one of the various proposals is to have a redeposition -- deemed repatriation and

encouraging companies to bring back more cash to the united states. my view is most would be used to repurchase shares, a positive. that is not a story until third, probably the fourth quarter, once the tax legislation comes to pass. remember, on the calendar, you don't get tax reform, most likely, until the beginning of the new fiscal year, in october. >> that's true. david, starting, let's call it july 1st, you'll have a lot of investors focused on '18 earnings. >> right. >> and '18 earnings, conceivably, will include tax adjusted numbered that are looking a lot better. >> absolutely. that's 2018 and that's july. between now and july, there's a more negative news or more uncertainty. let's think about it that way. vicks is at extraordinary low levels. a level that has maybe 1% in the time in the last 25 years been at this level. volatility is extremely low. the likelihood of uncertainty between the next several months until you get more clarity is reason for a lower valuation.

as a portfolio manager, there are ways to combat this. the number one issue is avoid politics. avoid the questions about trade or about tax reform and focus on secular growth. these are companies growing their top line revenues at double digit levels, have been for a while and are expected to do so. the key is make sure you do not pay too much for the companies. if you're growing, that's great. if the valuation is too high, 7.5 times, enterprise value of sales is a key threshold. above that time, companies rarely, if ever, grow into the valuation. one year, two year, five years later, they don't grow the sales. look at google, look at al fa b -- alphabet, amazon, there are companies we work with analysts at goldman have have strong, top-line revenue going, that is a strategy that doesn't depend on donald trump and the administration. that's a key issue, to remove the risk from your portfolio.

>> how about relying on the fed. does the trade in financials right now crowded? >> the likelihood is the fed, based on my colleague who was here on friday, is you get three interest rate hikes. june, september and december. that would basically be a positive for financials, higher inflation. also good for financials. within the market sector wise, that's an area where we like to see -- encourage portfolio managers to foe the kcus. >> you're not that positive. >> i'm always positive. >> you have to be. that's in the contract, isn't it, david? >> where you find optimism or pessimism. where are the opportunities? talked about secular growth. the other idea is companies that pay high taxes. to your point, if you're paying high taxes, the probability of tax reform, we think, is pretty high, that that is passed and the companies are likely to benefit and from higher earnings last year as a result of reduced corporate taxes. >> what if it is a fail on tax

reform? >> the companies with a lot of cash overseas would be repatriating some. >> does the market suffer as a result? let's say we get to september and it is clear all we're going to manage is something like that? >> 50% of the cash that's held overseas is held by 20 companies. it is a very chunky, concentrated area, mostly technology. some health care companies. that's the bulk of it. if you think about the companies that are domestically facing that have revenues that are generated inside the united states, they don't have the risk of trade protectionism. their revenues are generated here. that is an area of focus. wage inflation, wage inflation as a potential risk for lower margins. there are opportunities inside the market. an absolute level, the market trades at the 90th percentile for the index and for the stock, 99th percentile. >> you've been saying that for months. >> the market is trading at

2,300. >> you mentioned the note from friday. one of the other things was infrastructure. basically, an expectation for $25 billion, which is the trickle compared to what some people expect. should cat eerpillar will leadi the way it is today? >> the idea on tax reform, i think investors are focused on the potential it happens and the risk it doesn't happen is not priced into the market. that's why the valuation is high. people are with optimist -- optimistic. >> the stocks that generate revenues domestically, look at adp, paychecks, companies generating revenues domestically, discover, those are the companies to have in the portfolio. >> goldman got this note, predicting unilateral targeted actions from the administration when it comes to trade.

you expect this to pick up? >> the concern about trade is likely to grow, not decline, as the idea of, how do you get tax reform and how is that revenue neutral or not, and where are the potential offsetings? the tariff, some concerns about -- >> talking about border adjustment. >> assign a low probability that is passed in that fashion. >> covered a lot of ground. david, thank you. david kostin. up nooext, g mrkm faces pre for its manufacturing strategy. marry b mary barra, part of the president's council. we're up on all the major averages.

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and add phone and tv for only $34.90 more a month. call today. comcast business. built for business. gm reported earnings before the bell. phil has more. >> david, seen the stock today? this is one of the cases of, what skr yhave you done for me lately? general motors reported strong profits and thanked record profitability for all 2016. earns at $1.28, above the $1.17. revenue at $43.9 billion. general motors delivered more than 10 million vehicles for the first time ever. what was driving products in the fourth quarter, strong sales in the united states. the rich, profitable vehicles was driving earnings per share. they are being dogged by the

questions about what's going to happen with future north american production. general motors is adamant, it is not changing its production plans in mexico. here's the cfo earlier today on "squawk box." >> we are in support of tax reform and potentially a border adjustment tax could be part of the tax reform. what we want to do is work constructively with the administration around tax reform that helps bolster and build a strong manufacturing presence, helps the u.s. economy. >> that was chuck stephens in response to whether or not they'd change their production plans in mexico. the reason i asked that question, general motors is number one in terms of the number of vehicles built in mexico and then sold in the u.s. david, as we talked about, those aren't small cars only that they're building down there. yeah, some of those, but you're also talking about high content, high profitability pickup trucks built down there. it is concerns over that

production, as well as things slowing down eventually, that have investors saying, let's hold off on general motors. >> not to mention the supply chain, phil. i don't know if you've done work on it, but the border tax adjustment being phased in over a number of years if, in fact, it sees the light of day, the idea would be to bring the supply chain back. that's got to be a huge undertaking, also. >> right. what many believe will ultimately happen, if they're able to work this through, if the trump administration is able to work this through, is try to get some kind of requirement or a threshold for the amount of parts coming from u.s. manufacturing facilities. in other words, right now, you have to have 62% of the content built in nafta countries. what they may try to do is say, instead of that, we want 40% or 45% coming from u.s. manufacturing plants. not just nafta but u.s. plants. that's the idea that people are floating around in the auto industry right now.

>> art of the deal. mary barra had a lot of face time with president trump. she's been at the white house, seated next to him, as we've all seen. >> right. >> what is she pushing for in exchange for, say, building more cars and transferring plants from mexico to the u.s.? what is the auto industry wanting from this administration? >> they want certainty in terms of what is going to happen with the tax policy. look, if you're going to change nafta, if you're an auto maker, you want to know exactly what's going to happen. is mexico going to go to a most favored nation tax status, which is 2.5%, something like that? tell them what it is going to be. otherwise, they can't shift around production that quickly. i mean, this is a -- as you know, it is a capital intensive, long-range plan. for them to say, gee, maybe we can't build in mexico anymore, let's build a plant in ohio, it is not going to happen. it's not going to happen. by the time the plant got online, you're looking at two and a half, three years down the road. is donald trump even the

president? they want to know with certainty what is going to happen with trade policy and tax policy. >> yeah, i wonder how much they're getting of that. for now, phil -- >> nothing right now. >> -- thank you. >> you bet. as we head to break, tale of two retailers. gap up for a change after a strong holiday season. stocks not getting much of a lift though. michael kors missing on expectations, on revenue, lowering the earnings guidance. the stock is hammered, down 14%. next, he's got president trump's ear when it comes to financial regulatory reform. former sec commissioner paul atkins will join us and talk dodd/frank. more "squawk on the street y" ia moment.

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good morning, everybody. i'm sue herera. here's your news update at this hour. senate democrats mounting a marathon senate session to

derail the nomination of betsy devos to secretary of education. the senate vote comes at noon today. two republicans are expected to join all 48 democrats to vote against devos, who would force that -- force vice president pence to cast the tie breaking vote. twitter begun identifying people banned for abusive accounts and will stop them from creating new accounts. israel's parliament passing a law meant to legalize thousands of west bank settlement homes built unlawfully on private palestinian land. this follows a debate in which opposition lawmakers shouted their displeasure. the u.n. mideast envoy said they crossed a thick red line. richard branson inviting former president obama and his wife michelle to his private island on the british virgin islands for sun and fun. the two set up a challenge. could mr. obama learn to kite

surf before branson learned to foil board surf? the winner, the former president, barack obama. that's the news update this morn. carl, i think you're familiar with kite surfing, are you not? i seem to remember that. >> i tried it once. >> there you go. >> oh, yeah. >> that was for a prime time special on sports. >> that's cold. >> extraordinarily difficult. >> it is really hard. >> yes. >> i watched my husband try it. i chickened out. there's no way you would get me to do that. why did they start you out on the sand? don't you start in the water? >> that's where you start out and then you try to do this baby step thing. they take you into the water. i never got up on my feet. kudos to president obama. >> i know. listen, that was a great special. i remember it. there you go. >> thanks for the reminder, sue. >> we especially liked it. >> sue herera back at hq.

let's goo to to a market fl >> motorola solutions down as much as 5% on heavy volume. this after a tweet from the short-selling firm targeting them as the next candidate. the research report says it has a price target of $45 per share. again, carl, we will wait because sitron founder will be on the "halftime report." you can assume they'll talk about this as well as his other shorts. an interview we won't want to miss. back over to you guys. >> going to be a big show on "half." thank you very much. the trump administration beginning to push to dismantle business and financial regulations. the acting head of the sec cig calling the requirements for the pay gap between ceos and employees. suggestions for rolling dodd/frank back in 120 days.

>> i was offended by aig going so deeply in debt, but i did what i thought was right for the country. i'm sorry to see people try to trivialize it. it is not an ego thing. >> joining us this morning, former sec commissioner, paul atki atkins. t good to have you. good morning. >> thanks for having me. >> you were in the meeting on friday. can you tell us a bit about the conversation as it pertains to thin rig? >> we covered a lot of topics. it was good the president and vice president stayed for two hours. it shows commitment to discussing issues with a lot of people from the private sector. i really welcome all of that. i think it was a good, healthy

discussion. >> what about these newer requirements that companies have to disclose the payout between chief executives and employees? how much do companies hate this? how much is the trump administration planning to change it? >> well, we'll see once we get a new sec chairman. the acting chairman indicated that that will be looked at again. they'll take another look at that. the thing with that particular provision has basically nothing as part of dodd/frank, basically nothing to do with the financial crisis. it was thrown in there at the behest of special interests. so was the way it was adopted. the sec chose one of the most burdensome ways of implementing that provision. it is very costly for companies, especially international ones, with lots of different employees to comply with. >> well, isn't it also meant to try to tackle income inequality,

which has become a big problem in our society? >> well, is that the way the sec disclosure should be geared? i think it should be geared toward investors who are trying to decide whether to buy, sell or hold a particular stock. to have social aspects come into sec disclosure policy is not the best way for the agency or disclosure system. >> i'm curious, i mean, you make a good point, but burdensome? can't they just -- isn't there a software program that can figure out the salary of every person at the company and figure out what the 50% number is and then you've got the ceo's salary? why is it burdensome? >> just think about it. you have part-timers. you have -- especially a company with operations in many countries, you have the currency exchange rate shieissues. between all of that, it becomes

complicated. the sec didn't provide a lot of guidance in this particular ruling. that's what people are trying to deal with. and this is a disclosure and, you know, unfortunately, there's a lot of litigation around it in our society. especially with respect to corporate disclosures for, you know, sec purposes. there often is a lot of litigation around that. i think that's what has people nervous about it and why it cost so much money to comply with. >> larry summers, former treasury secretary this morning says the discussion around fin reg on friday sounded like a cocktail party than serious reform. no telling what he was referring to. it was mentioned a bit that the president talked about his friends no longer being able to give loans as easily. did the conversation sound more anecdotal than policy focus snd. >> well, you know, first

meetings with always general. let me focus on some of the real stats that we have in the united states. for example, right now versus 20 years ago, there are half the number of public companies registered and listed on stock exchanges. that means fewer types of companies for real investors to invest in. and if you look back 20 years ago at the high water mark of ipos, about 700 per year that were coming out back in '96, around that time. now it is maybe 100 last year. look at the number of banks that we have. in the last eight year, we have half the number of banks we had in 2008. that's not because they all failed. that's because there has been a policy by the bank regulators to either merge them out or drive them out of business. so that has a real effect, especially on the community banking side, with small businesses. if you look at small business loans, up until 2008, the growth

of commercial industrial loans above $1 million and below $1 million were pretty much consistent. after 2008, there's been a divergence of loans above $1 million, increased by 40%, loans below $1 million have decreased by 15%. it is harder for small businesses to get loans because it is more costly for banks to originate and service the smaller loans than the big ones because of all the paperwork, all the regulation that have been imposed upon them by the bank regulators in the wake of dodd/fra dodd/frank. all of that has a real effect on our economy. that's what is called the non-recovery recovery. the growth of gdp of 1.0 whatever percent is not a sustainable thing for our economy. >> i get that certainly has been

the white house line of thinking. banks lending, small business moving again. paul, you're close to the administration. is there any talk about the politics of all of this? president trump ran to help the forgotten men and women in this country. so far, the biggest beneficiary in the stock market has been the bank stocks. there's all this talk of deregulating wall street. there's all been engineered by the former number two banker at goldman sachs. the optics and politics behind this, is that being discussed? >> you have to remember that financial service it is the life blood of our economy. that's where capital is originated for companies. and through the stock market and through loans from banks. now, we have alternative sources of funds through private equity and venture capital and other things like that. but, you know, it all needs to function well together. we need to wring out unnecessary

costs and unnecessary burdens. i think you're looking at just too short of a term to say, oh, well, the bank stocks have been the winners here over the last couple months. what i think we have to keep an eye on is for the next four, eight, twelve years, and that's what we need to build a firm foundation so that businesses of all sizes can build and go forth. >> paul, good answers to some serious questions. really appreciate your time. paul atkins joining us. former sec commissioner, member of the strategic and policy couns counsel. the president asked, how long will you take this immigration fight? >> we're going to take it through the system. it is very important for the country, regardless of me or whoever succeeds at a later date. we have to have security in our country. we have to have the ability. when you take some place like syria, you take all of the different people -- and if you

remember, isis said, we are going to infiltrate the united states and other countries through the migration. then we're not allowed to be tough on the people coming in? explain that one. so we'll see what happens. we have a big court case. we're well represented. we're going to see what happens. >> will it go to the supreme court you think? >> it could. we'll see. hopefully it doesn't have to. it is common sense. co some things are law and i'm in favor of it. some things are common sense. this is common sense. >> mr. president, if it is unreported or under reported, unreported is the phrase you used yesterday, but if it is under reported, why do you think the media is not reporting, or americans -- >> i don't have to -- i have to know because i'm reported on possibly more than anybody in the world. i don't think they'll say anything about that. i happen to know how dishonest the media is. i happen to know that stories about me that should be good or

bad, you know, i don't mind a bad story if it is true, but i don't like bad stories that aren't. a story that should be positive and they make it negative, i understand the dishonesty of the media better than anybody. i let people know it. the media is a very, very dishonest arm, and we'll see what happens. not everybody. i have to say that. i always say not everybody. but there is tremendous dishonesty. pure, outright dishonesty from the media. let's go into the white house. >> two important topics covered there briefly by the president. obviously, first, the immigration order, saying the government is well represented. saying this is common sense. he'll take it all the way through the system before commenting on the media. saying i understand the total dishonesty of the media better than anybody. john harwood is in washington watching what we got out of that. your thoughts? >> well, you have the president

and he has been for several days trying to undercut elements of the -- either the government or the country that he thinks are challenging him or providing static, pushback against his policies. he opened that event with the sheriffs saying, i can't believe i'm having to go to court to keep the country safe. he described his travel ban as being tough with opponents. that it is common sense. of course, a federal judge in washington has ruled to block it on constitutional grounds. now, he's facing that court argument. the question is going to be, how does he react if he loses the case? paul ryan had a press conference earlier today. he said he wasn't going to defend or engage about the president's remarks about the judge, who he called the so-called judge, but said he is respecting the process.

he is abiding by the ruling. i think that is what we're, of course, all going to be watching at the end of the case. the other thing, as you mentioned, carl, is saying the media is dishonest and trying to delegitimize stories that challenge him. that's a pattern that he followed for some time and repeated again today. >> we've seen it in his tweets lately, also, john. on the corporate backlash, more companies signing on to this legal brief in support of the challenge to the immigration order. have we heard anything from the white house on all these companies' opposition? >> no. but i expect that if the president loses this appeal in the 9th circuit, we may hear something about those companies as part of the forces arrayed against him. this is just two weeks into his presidency. he's learning how difficult governing is, especially when your objectives are as bold as president trump's objectives

are. and how he reacts to that and then how both republicans and democrats on capitol hill react to him zboiis going to be one oe dramas of the first several months of his presidency. we've seen a shifting response by democrats to his nominees. hence this all night protest against betsy devos. she's likely to be confirmed anyway but worth watching. >> certainly showdowns to come, perhaps. if not with congressional allies and rifvals, perhaps ceos and te judiciary. we'll find out. thank you very much. when we come back, the president continuing to put the pressure on ceos and industry leaders. we'll talk to former chrysler and home depot ceo bob nardelli. the dow with a gain of 76 points. don't go away.

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billions of dollars have been flooded into the commodities market lately. is that a good sign or the sign

of a top? find out at trading nation. more "squawk on the street" coming up.

let's get out to rick santelli. good morning, rick. >> good morning, thank you, i would like to welcome andy rothman. thank you for taking the time to talk china today. >> good morning, rick. >> we had data out, i believe chinese reserves fell under $3 trillion for the first time since winter of 2011. january in particular was down over $12 billion to bring it to 2.998 or just below. first of all, is it soley -- are we going to look at bigger

numbers down the road? >> i think the reserve number will continue to fall. it fell last year and the year before, but it's not really an important number. the point is not to have the most possible reserves, it's to have enough, china only needs about two trillion, japan needs about one trillion. >> so the activity behind the number, i could agree with that, so the activity behind the number is a key top take is retweaking global trade. how does the reserves in this case, the amount, not important or the action, how will china deal with the trump administration. >> i don't think dealing with the trump administration will bring the reserves in.

the fact that more chinese companies are investing overseas. if we're talking about how the trump administration might deal with china, we have to acknowledge that getting into a trade war with one or our biggest trading partners is just crazy. >> let me stop you right there. many of my friends go to banks to refi their mortgages. when they go to do it, or adjust the contract and it's terms, they don't necessarily say we're going to go have war with our bank, they're going to refinance. i understand that words are important here, but tweaking the relationship is not necessarily a bad thing. >> tweaking the relationship with china is a fascinating idea, but this has not been a

losing relationship for us. >> listen, it sounds like we have breaking news, andy, i'm going to have to cut it short, i really want to revisit this, so of course we'll have you back. something seems to be moving. >> all right, let's go to sarah and find out what it is. >> stocks at record highs, the dows and the nasdaq. we'll have it covered for you when we come back. instead if getting caught up with the crowd, the investment managers at pgim take a long term view, teaming specialized active investing with risk-management rigor, to seek out global opportunities. we manage over a trillion dollars this way, attracting many of the world's leading investors. partner with pgim. the global investment management businesses of prudential

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market reaction to disney easte earnings. should you own a piece of the kingdom? tomorrow on cnbc. >> welcome back to "squawk on the street." check out the shares of us aero space and defense. it is up 5% after posting stronger earnings like transdigm. republican citron founder ann rue left will be a guest today on "halftime report." now to you and the crew at "squawk alley." >> good morning, 8:00 a.m. tesla headquarters, 11:00 a.m. on wall street. this is