where business never sleeps, this is "squawk box." >> good morning, everybody. welcome to "squawk box" everybo welcome to "squawk box" here on cnbc live from times square. i'm becky quick along with andrew serkin. research of bank of america merrill lynch. >> we have a theme song for him. >> you were expecting this, david. >> ever since you got the ph.d. you've heard this, have you not? >> joe is going to serenade you with it. >> we don't call many ph.d.s doctor. >> in this case we'll make an excepti exception. >> unless you can remove a gallbladder, we're not calling you doctor. in your case we're making an exception. >> welcome, david. great to see you. the u.s. equity futures,

markets were up again yesterday. new highs once again friday for the s&p 500, the dow, and the nass being da. the dow up by 1% last week. the nasdaq up by 1.2%. in fact, the s&p 500 has set its fifth record of the year and the benchmark index is to cross $20 trillion for the first time ever today. >> time for the don't chase the rally. today, i think. >> probably. >> i think the journal had that piece. >> we have santelli coming on. >> "the journal" has something similar. >> perfect. i like it. every november 9th it started, 10th, 11th, 12th a don't chase the rally. we'll try it again. every time we hit a new top, they're going to trot out that piece because someone thinks of it. >> do you know the first piece i ever got assigned when i started working here as an assignment reporter or general assignment, it was capitulation, where

everyone finally said, okay, time to run in. >> where is the s&p this morning? it will be up, which is perfect. i got the guest list followthrough he day and that was a don't chase the rally piece. already they're off by 40 points on the dow today. they're already behind by 40. >> 23,016 was the close. the dow future is up by another 36 points. nasdaq four points. s&p a few points higher as well. you saw in asia things closed up higher . in europe, the early trade, we'll look at the asian markets, the nikkei was up. in europe markets also are up at this point with the dax up over half a percentage point, the ftse is flat. if you look at crude oil prices this morning, right now you'll see after oil was relatively flat at 53.86, wti at 53.60.

brent crude at 56.42. >> we have a couple of other big stories we're watching this morning. the first is a developing story this morning in northern california. at least 188,000 people have been told to evacuate because of damage of a spillway. they warn the secondary spillway at the oroville dam could unleash flood waters on the towns below, 150 miles from san francisco. winter storm warnings are in effect across the northeast. blizzard conditions and up to two feet of snow possible in some areas. roads slick in many states are lowered speed limits. forecasters say boston could get up to 11 more inches of snow. on the economic agenda, tomorrow we'll get january ppi. fed chair janet yellen will deliver her semiannual report on monetary policy. that happens at 10:00 a.m. eastern time.

on wednesday yellen will testify before the house financial services committee. we have january retail sales, cpi and industrial production. on thursday you have to look for jobless claims, housing starts, and the philly fed survey. and we have more than 50 companies in the s&p 500 reporting results this week. that list includes cisco, pepsico and campbell's soup among them. >> the dam, there was erosion -- because we were in northern california. >> and you evacuated to new york. >> there was some rain. that's all i'm going to tell you. >> i saw the rain. >> and there had been rain two weeks ago, too, that people thought, good it, it's out of the way for the tournament. >> the roads shut down all over the place. >> i'm still wet. i will tell you something about rain gear. it fails. have you ever tried -- oh, i have my rain gear. i have my rain gear. it goes through finally. it fails. it fails, andrew.

it fails. and the failure comes complete to the underwear. >> and that's when you saw capitulation. >> that's capitulation. >> okay, i'm wet. that's it. >> i'm wondering about, the drought, california will never get any rain. i read something last week about lake tahoe, literally billions and billions and billions of gallons were added to lake tahoe. i'm wondering, is this erosion at the dam or does it have to do with all the rain. >> it has to do with all the water. they found holes because there's so much pressure. >> unbelievable amount of rain out there but, as we know, it's something to expect. both things are very, very likely. rain or snow, we're in a period it's very likely. verizon, you made a very good -- that was a good joke. what's their thing, can you hear me now? >> can you hear me -- do you hear me now is this can you hear me now?

>> i guess that was like an off the record type of thing. >> it was. >> that was a good joke. i can't really explain it, though. bad. i have nowhere to go except to the actual teleprompter. verizon is bringing back an unlimited data plan today, the first one in more than five years. the news comes amid a rise in competition between wireless carriers. the new offer costs $80 for data and text. verizon said it wasn't looking at unlimited plans when asked by analysts whether to be more aggressive in the market. why did they say that? >> i don't know. >> did they not know that they were going to do this? were they lying, andrew? do you know? >> did they say they weren't going to do it? >> they weren't going to do it and now they are, a month later. >> they weren't looking at it. >> things can change. >> that would be like lying.

>> you go back to the answer of the morning, capitulation. all the competitors are doing it. >> they could have changed their mind, recognized the competitive -- >> as a woman, i change my mind. >> they didn't want to telegraph their plans. >> there's a lot of nuances. >> a month later something else. >> it looks bad, i think. >> a guy named flynn did something like that. >> he may be gone. >> is it better to cut your losses -- >> i don't know. >> or stick with them and say everything is great? >> i don't know. >> mike pence is not happy. >> you can't be happy if, in fact, he was lied to, which it sounds like he was . >> mike pence was. >> if that's the case -- >> listening to the calls -- >> it's hard to do business with people like that. >> he didn't say, yeah, we are. they just talked about it. he did not say -- >> we should probably explain what the conversation is. >> no, no, no. we would have to go back and

explain becky's joke. we have other news because it was a busy weekend. president trump at the winter white house, trump 's mar-a-lago resort. he has a lot of updates about what took place over the weekend. eamon? >> reporter: a weekend of diplomacy. president trump and the prime minister of japan, shinzo abe, continued their negotiating session through the weekend but it was interrupted on saturday night surprisingly by a north korean test launch of an intermediate range nuclear capable ballistic missile that prompted the two leaders to come out before the cameras to make a statement. here is what the president had to say on saturday. >> i just want everybody to understand and fully know that the you sats of america stands behind japan, its great ally, 100%.

>> reporter: so a strong statement by the president. suggestion he didn't mention two particular countries in that statement. he didn't mention north korea or south korea, america's other ally in the region which is obviously intensely affected by any north korean saber rattling at all. today, guys, the president is back in washington. he arrived last night and will be meeting with canadian prime minister justin trudeau. they will be meeting with female entrepreneurial business executives. that expected at the white house later on this morning. another round of international diplomacy at the white house today. >> okay, thank you so much. do we have any more political debates from over the weekend? >> i called trudeau hunky. we do have double standards.

>> you could not have said that -- >> i think -- >> if you said something nice about teresa may. >> true. really, i should probably apologize for objectifying trudeau. >> he might let you go with it. >> but in a perfect world, and we know how perfect we're trying to make it right now, everybody in terms of triggering and all that stuff, and you rue, i'm going to just apologize in advance for, in any way, mentioning his looks or anything. let me just get that out of the way. i take it back. >> i'll say it. he's a handsome man. keep going. >> i said hunky. >> you're always brave about saying stuff. you are. you're willing to go out on a limb and say attaboy.

some weekend fed speak to tell but. central bank chairman stanley fisher, a decent looking guy, says there's significant uncertainty about u.s. fiscal policy under the trump administration but he pledges the fed will be strict in meeting targets of creating full employment and of getting inflation at 2%. speaking at an economic summit fischer said he doesn't think dodd frank will be repealed as a who whole. and the king of fed regulation, federal governor tarullo is stepping down about five years before the end of his term. my twitter feed, things just said don't let the door hit you. but those are my people. there are people that send stuff to me. >> probably not unexpected that he's stepping down. >> he was the king, as i said, the king of financial regulations. in an interview with "the wall street journal" tarullo said he had a strong presumption before

the election that he would resign early this year. we had him on long before he became a fed head on the show, and the trump administration had not asked him to leave. >> but there had been speculation he would be stepping down soon. >> that, to me, is probably more important than just about anything that's happened thus far when it comes to banking regulation. >> that he's stepping down. >> people talk about dodd/frank, virtually any policy that has not been enacted or not thus far, this is probably the most important thing that's actually happened. >> right. >> it will change the dynamic. >> how they are actually enforced will tell you a lot. >> when it comes to the stress test, having a different person in that role will be different. >> imf head lagarde cautions rising rates and a strengthening dollar will challenge global trade and squeeze intermaggs markets.

lagarde made those comments in dubai. >> the little we hear we have reasons to be optimistic about economy growth in the united states. it's likely that there will be a tax reform. it's likely that there will be additional investment in infrastructure. and as a result of that it's very likely that growth will be up in the u.s. >> lagarde said she was mindful of president trump's attempts to roll back dodd/frank regulation. she urged regulators not to undue the framework put in place after the 2008 financial crisis. the federal reserve's in focus hthis week as it is just about every week. markets will be looking for clues about the next interest rate hike. joining us now mark lehman, president of jmp securities and covering currencies. our guest host david wu.

gentlemen, thank you. lehman, huh? >> i have two ends. >> did you add the end? >> been there for generations? >> a little stigma. who is calling it? >> i think the markets. you have excitement and obviously wind at the back of the market that we haven't seen for some time now. the fed is in a watch mode. i don't think we've seen enough data to change anything. the market is dictating what's going on. i see that the next couple of quarters. >> the stock market, the equity market, continues to do well. part of it is how well behaved both currencies and interest rates have been over the past six weeks or so because after the initial moves where we thought, oh, my gosh, it's

moderated and orderly and hasn't done anything. >> it hasn't. and the market, like you said, has been very benign for some time now. i called the market rise during the regulation the most in history. i will call the market the least participated market. we've had -- >> the stock market? >> the stock market. down 30% in january, so it hasn't come with volume and people, i guess, admitting to the rally. >> who is making money on it? >> people who have made the allocations to the market already and i think you need to see that followthrough and volume to show that kind of larger rally. >> when you begin 40% off the highs, you're doubling it back to where you were, maybe that's why it wasn't the most. since 1999 the market has doubled and that's 4% a year. it's not gangbusters. >> i think that's the new real

i, right. >> i hope we can do better. >> coming off interest rates that were much higher. >> they had return expectations of almost 10% as they started to tell their retirees. that's not going to happen probably for the next generation or so. >> for the rest of -- for the next rest of my life and the next 40 years or whatever, i want better than 4% a year. >> i concur that everybody wants that. >> david, you're a currency expert. been fairly benign, as we said. is it surprising given that -- i think look iing at all the fisc stimulus with tax cuts, less regulation, isn't that saying something that rates have stayed low, maybe held down by the rest of the world? >> you hit the nail on the head because, to me, the big story is the decoupling from the stock market. the stock market is getting b l

bullish on trump. i would say the fixed income market is not. when you think about this, at the start of the year, ten-year treasury right now 4.2%. at the start of the year pricing in two had hikes for this year. today the market is only pricing two hikes for this year. but what is actually belying this basically boringness is the fact we're seeing dramatic change of rates. i'll give you an example. we've seen a dramatic recup willing between the real yields. ten-year break-evens has gone up ten basis points. what it's telling you is the market thinks inflation expectations are going up while growth is going down. i think the market is really telling you that there's a stagflation going up which is totally unjustified but that's the point. the point the market is absolutely scared that somehow we'll get bogged down by obamacare, that trump will not

be able to move more quickly on fiscal stimulus. i think there's a lot of pessimism that's now priced into the u.s. fixed income market which i think is entirely unjustified. i think that's the story the next three or four weeks. >> the bond market is so much bigger. in this case you're saying the stock market has it right. >> i think so. the truth is -- when i think it about trade war, it's a good example. what i take great comfort in you know the only item in trump 's 100-day plan that he has so far reneged on is his promise to label china as a manipulator his first day in office. what's most interesting about the whole episode with mexico was the fact three days after the mexican president canceled his trip to washington that reince priebus was on cbs talking about let's maybe go out to the mexican drug cartels to have them basically pay for the

wall, which was welcome d by th mexican side. my point here is the market is not willing to look beyond the noise, to look at what really is very much happening. i think from that point of view this administration, at least -- >> the equity market clearly has. >> i agree. what's striking, you think about it this, the fed says they're going to hike three times this year and three times next year. the market rate is pricing less than four hikes for the next 24 months. it's a pretty amazing thing, you ask me, that the market, the fixed income market, is convinced we're going to get a massive delay. we just published a survey this morning. only 25% of our clients think we might get this fiscal thing done before the summer recess which is what paul ryan says he wants to get done. >> when you look at government bonds, that part of the market, it's a much more attractive yield and it's luring in buyers who wouldn't necessarily be there otherwise.

that keeps yields down, too. >> i think that's true to some extent. that was certainly true in december. now we know the japanese have been big sellers of treasuries over the last four weeks. we hadn't seen much foreign buying. and also foreign buying affects the low man on the curve. it doesn't affect the short end of the curve. what really has been going on, what we're seeing is an inflation expectation going through the roof over the next three or four years during basically trump 's four-year presidency. so people somehow are worried that we're going to get more information than growth under trump which, again, i think is entirely justified. fixed income market is probably spending more time on the tax proposal than the stock market. it's understandable why the market may be thinking this way about the tax being inflationary but not doing enough for growth. i think that's, again, misreading i think the political viability basically of the adjustment tax. there is no way the republicans will do anything that will cause

prices to go up big time next year, just ahead of the mid-term election. >> we have an election coming up. we do. we have an election coming up. >> mark cuban. if mark is going to run for president, why can't i? do you think maybe -- why not? i might just decide that i'm going to -- >> if mark is going to run for president? >> i'm thinking about it. >> because trump won half the world thinks they should run. >> that's what i mean. mark cuban also thought he could do the benefactor and do an apprentice and it was like watching grass -- watching paint grow. one of the things you said which was interesting, think about it, look at israel, watch on the settlements. one china policy. i'm with that. the trade wars, he campaigned one way. i think he has people around him saying -- i don't think the trade thing will ever really

necessarily happen. i think you're right. thank you, mark lehmann, with two ns. becky? >> price hikes at disney. we will tell you how much it will cost to you get in there. mobility is very important to me. that's why i use e*trade mobile. it's on all my mobile devices, so it suits my mobile lifestyle. and it keeps my investments fully mobile... even when i'm on the move. sign up at etrade.com and get up to six hundred dollars.

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welcome back, everybody. we're in chairs this morning. disney is raising ticket prices for its u.s. theme parks by as much as $5 for single day passes. a one day adult ticket will now cost between $107 and $124 depending on the time of year. at disneyland in anaheim $97 to $124. last year disney started using a three-tier structure charging more during peak times and holidays. >> i don't believe the price is an increase if you buy the multi day. >> the park hopper or whatever it's called. >> did you that finally but you did not -- right? recently. you didn't go on the yeti. >> the boys are too young for that. >> you know what we did do -- >> animal kingdom. >> the tower of terror. we did -- >> they did that? >> yes. >> holy cow. >> that's fairly new. >> that's a scary, scary.

>> it just drops you. my son kept asking me, when is it over? >> you should take him to harry potter. >> the roller coaster gets higher and higher and you're hurtling to the track is broken and it ends. >> we did that. >> and then it goes backwards. >> with one of my guys. the other was too scared. >> 6 years old. >> it has nothing to do with age. my wife cried after that. there's no crying at disney. there's no crying in baseball. i kind of wanted to cry at golf. >> we'll talk about golf in a second. a miniature superhero movie came out on top at the box office. my kids saw this thursday night. i was going to go with them but had a terrible cold. >> what? you had a terrible what? >> cold. oop what about your nasal spray? >> you missed the show on wednesday. >> what about your saline solution? >> i brought my saline solution on the show and we talked all about how i was getting a cold

and how it still works and i'm still a believer. let me tell you about batman. it debuted with $55.6 million, and "fifty shades darker" opened with $47 million. the reviews on that were terrible. the first time in seven years three movies opened to more than $30 million on the same weekend. my homeopathic x clear -- >> it's a placebo. >> i've done more research and talked to more doctors including a guy at mayo who will tell you that xylitol, the main ingredient in it, prevents bacteria from sticking inside your nasal passages. >> that's what you said all along. >> i have done some serious research.

there are scientists in australia now using it instead of antibiotics, it's that good. >> antibiotics don't do anything for your cold. >> i understand that, but it makes it harder for a virus or bacteria to stick inside your nostrils, therefore -- >> i don't know whether i believe the virus part. >> i'm going to send you some of the research, dr. kernan. big win -- this is like if the ceo of at&t -- >> couldn't have scripted it better. >> plus, on the final round it's like people that didn't watch thursday and friday -- pebble beach is beautiful. look at the sun. it was so pristine yesterday. it's what you think, the greatest place on earth. big win for jordan spieth at the at&t pro-am over the weekend. the second youngest player to win his ninth tournament on the pga tour. this is since world war ii. the seventh straight won by a player in his 20s and tied a record. it was one month after tiger won

his ninth. the day before he shot the low round of anyone. >> he's only had 100 outlingsings and has won nine of those. >> yes. it was saturday he shot 65. he's just the greatest putter, and a great kid, too. he's a map now. he's looking more like, if you look at his face, more like a man. and it's a great event. it's the best venue in golf. >> who was the best scoring celebrity? >> my pro i loved was 7 over, it matters if your pro -- 6 under. so i improved on it and it took a while, believe me. i went to the first 14 or 15 holes and i had the same score as my pro which means i did nothing and, of course our people, some of our viewers,

they write in, hey, joe, your pro is playing alone and your golf skills are the same as your broadcasting skills and i hate trump. and it ends with that. it's like everybody is watching in this it day and age watching it, but it's nice to be out there in the pouring rain, freezing, sucking, and then have someone write in, hey, you really do suck. >> spreading the sunshine. >> a little encouragement. >> take your game out to galleries, rain, cameras, competing, inside the ropes. >> you're not on twitter in between holes? >> most people were. there are those certain people. i shouldn't tell you the names. twitter is a hellscape. >> yeah, yeah, yeah. >> it's a cesspool. it is. it's a cesspool. >> which is why we read everything on it. >> inhabited by horrific individuals in many cases.

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welcome back. you're watching "squawk box" live from the nasdaq market site in times square. good morning, everybody, welcome back to "squawk box." record highs once again. let's find out where investors can find the next big opportunity. mark grant, chief strategist. and, mark, you were right for a long time about the direction of the ten-year yield and you've been right since election day about where the stock market were going to head to. we're looking at the major indices up better than 9%. what do you think happens now? >> i think we stay the course. i think we'll have even higher returns in equities. it was interesting for me to listen to david's comment, i

respect him greatly. >> which comment? >> the one about the bad and what the expectations are. the one comment i would make in my opinion which is slightly different the fed of today is not going to be the fed of tomorr tomorrow. i think what the fed says is for all practical purposes irrelevant because mr. trump is going to be able to appoint three members of the fed. they will be business people and the days of an economic will be over. >> david woo is our guest host. what do you think? >> i think it's clear. the biggest challenge is finding a larger budget deficit and to secure that borrowing at an attractive rate. the fears trump will come in and appoint hawkish people to replace yellen is less likely to

happen. >> advantage or no advantage to have a look around the table. austan goolsbee, is that a problem for you? is that good for you? what do you think about that? >> i don't think so. what's much more interesting is the fact that you just played this a moment ago. investment will be up, growth will be up, and yet said yesterday there's still a lot of uncertainty about the outlook. from that point of view i think the fed is behind the curve. >> with apologies to ms. lagarde, joe would point out she has been wrong. i'm surprise d you haven't made this comment about how this might be the opposite, opposite day. >> they asked her about it and she said it will be armageddon if that happens. she's like an elite. mark, would you listen to anything she said other than to do the opposite?

>> the only thing i listen to when lagarde speaks is her friend. she's right twice a day. >> i don't even think twice a day. it's the only clock that isn't even right twice a day which is almost impossible. >> i wasn't intending to create a pile-on effect. >> our don't chase the rally piece at 7:00. how many have we seen between november 8 and now? we've had that many somewhere whether it's "usa today," "wall street journal," and we're going to get another one today. when we stop getting them that's when we'll worry. >> people are saying nonsense. we've had, as you point out in three months, over 9% rise in

equity and the bond market which everybody said was going to go to hell in a hand basket is doing just fine. we had a small correction. trump and company as i called him know as they put in the infrastructure project the military expansion there's going to be a balance to the balance sheet and david is 100% correct that the new people on the fed are going to keep interest rates low. in my opinion it's baloney. >> calling the brexit, the election here -- >> and the rally since. >> it wouldn't be the end of the world for the markets. maybe you're due for a fall,

though, now that i think about it. >> thanks, joe. i love you, too. >> what would you tell investors to do? if you believe this it rally will continue would you tell people to invest in the stock market? >> i think the stock market in general whether you're in the index fund, if you want to get into particular sectors i think american oil and energy companies, the banks are very attractive, the regional banks, the big construction companies are very attractive. looking at what the cuts in taxes will do to various companies and on the flip side i think there are some companies that will have their taxes raised and we've been looking at that. i think there's a risk of pr privatization and i've been

telling institutions to stay out of those. >> exciting and really interesting. i'm upbeat and optimistic and maybe i've even changed andrew's view of me that i'm always a pessimist these days. >> andrew, has it worked? >> so far. >> i've been with you before. mark, we've been together. i don't understand. the past couple of years. >> i'm just teasing you. >> you'll never be together philosophically. mark, you know that. andrew, you're not 40? >> not yet. >> there's hope, mark. he's young sill. you know the saying, there's hope, right? hope springs eternal. that's what i say. >> that's right. >> mark, come back soon. >> great to be with all of you. >> the world's most innovative companies will be revealed, robert safian with the new list

next. later president trump set to meet with the canadian prime minister. we'll talk trade with bruce heyman. america's changing relationship with russia. chess master garry kasparov.

welcome back to "squawk box." time for the executive edge. the annual list of the world's most innovative companies. joining us is the editor of "fast company magazine." this year mark the tenth anniversary of the most innovative company rankings. do you want to do it backwards? well, we just gave it away. that's the cover so you know who is at the top of the list. >> so ten years, ten years of doing this, our biggest project, more resources into this, the world's most innovative companies, top of the list for the first time is amazon at the

top of the list. >> i can't believe it's the first time. >> first time amazon gets the number one spot. >> which spot do they get historically? >> in the last ten years only two companies have been on the list every year. do you want to guess them? >> google -- >> google and? >> apple. >> facebook. what was facebook doing ten years ago? >> they were just getting started ten years ago. we wrote about them but they weren't on the list yet. amazon. why amazon on the top of the list? they are driving the conversation for everybody in retail, and they continue to do that. everyone at the high end and the low end has to react to them. at the same time they're moving into hard good projects. i'm sure you have an amazon echo at home listening to alexa telling you what to do, amazon web services is the driving backbone of so much of the economy from netflix to lots of small business and startups. and then there's the entertainment size of it. they continue to evolve and be agile as a large company.

>> i can't believe this is the first time you have put them as number one. >> they have been on the list but not at the very top. >> uber number three. >> uber at number three. >> where were they last year or the year before? >> uber was on the list last year. only 12 repeats from last year. there are only 12 companies that repeat from the year before. and the question with uber is on the one hand they closed down their china business and at the same time doubled down and they start moving into self-driving cars. so this is another sort of signature element of being part of the innovation. the companies that continue to move at a pace that make the rest -- >> are you long you uber? it's not a public company but would you be long -- >> it's a valuation question for you, right? is this a business that's going be around for a while? i think it will be around for a while. what valuation do you get in on it is a different story. that's a different kind of question. >> okay. i'm going off here, chobani.

>> compelling in many ways, a ruthless, hard driving businessman who has a real compassionate soul to him. that combination makes it special. >> he's compassionate when we've seen him. >> he's done attack ads against general mills and dannon, they fouled lawsuits. he runs his business in a very hard driving way. maybe ruthless is strong. he has built from scratch -- he's an immigrant himself. a multibillion dollar interest. >> playing the socially responsible is part of the ruthlessness. >> part and parcel. you don't realize that it's all pr? >> hard to see.

>> you think he's just a ruthless man? >> no, he's very charming. i think he has a real -- we'll come back and talk about him more later. i want to point out one other thing and that's the predominance of companies from china, six different companies from china on the list. that was not something we went out to look for but from the bottom up we saw it and really the innovation going on in china is extraordinary. >> do i have to say it on a day trump is meeting with trudeau about women in the work place none of your top ten innovative companies have women at the head. >> facebook, sheryl sandberg may not be the ceo but is a person running a lot of facebook's operations. she is on the list. she is pictured in the magazine if you ever want to open that up. >> final question, snap chat at five with its ipo coming up, do you like -- do you endorse the structure in which he's going to control the entire thing himself? >> i think if you could get away with that as a found er, you do

that. i'm not sure as an investor i would necessarily love that. but i think snap is a company that is easy for people of older generations to under appreciate, and i think there's a lot there. >> we're looking at you. >> bob, thank you. >> check out the issue. the issue. coming up, parting shots on the markets from our guest host as we head to break. a quick check on what's happening in the european markets right now. this car is traveling over 200 miles per hour. to win, every millisecond matters. both on the track and thousands of miles away. with the help of at&t, red bull racing can share critical information about every inch of the car from virtually anywhere. brakes are getting warm. confirmed, daniel you need to cool your brakes. understood, brake bias back 2 clicks. giving them the agility to have speed & precision.

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♪ >> i like this. >> isn't this -- >> woo-hoo. >> got my hash pipe. what do you mean it's for david? oh, the woo. get back to our guest, global rates and currency research and bank of america merrill lynch. back to your main tenet here is the bond market seems to have

concerns you think are unjustified. what that says to me, you think rates should be higher based on the kind of economic activity the trump administration might be able to ebb gender. isn't that negative long-term rates would be higher. i would rather look at it the point becky made, held down global and coming here because rates are higher. not a negative just a reality of the situation that people are -- we could have low rates and not deserve low rates but have them and get the growth at the same time. >> i think that's true. but i would also say, you know what, right now country the 3% gdp growth in the first quarter. about to get huge stimulus. for me to think the market is thinking 15% chance the fed is going to hike rates in march i think is really underpricing. i think the outlook for growth

he here. from that point of view, i'm not saying rates through the roof. my forecast for ten-year treasury yields, peak somewhere around 3%. a huge difference between 2.4 and 3%. that's what i'm talking about. the bond market too pessimistic about the growth outlook. >> for good reason, we've been waiting for that for eight years. >> at the same time i think the biggest thing, probably too early to talk about this at 7:00 in the morgue, i'm telling you next two or three years the big thing about adjustment tax. that's going to carry tremendous uncertainty. >> thank you. >> wen we come back, janet yellen prepares to testify before congress. we'll talk strategy after the break. later, donald trump's weekend with the prime minister. stick around. "squawk" will be right back.

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a big week for the markets. green arrows across asia and europe overnight. u.s. equity futures pointing to a higher open here at home. earnings again in focus this week. what you need to watch is straight ahead. washington watch. after a weekend with japanese prime minister shinzo abe, president trump will welcome canada's leader to the white house today. we'll talk trade relation wall street our neighbors. plus an interest night at the grammys. highlights and a list of the big winners straight ahead as the second hour of "squawk box" begins right now. >> live from the beating heart of business, new york city, this is "squawk box."

good morning. back to "squawk box," live in markets in times square. becky quick and joe kernen. take a look on monday. dow opens up about 49 points higher, rounding up there. nasdaq up a little over 6 1/2 points and s&p 500 close to 4 points. check out europe overnight. here is what's been going on there. looking at pretty much green arrows across the board with cac and france up 1%, same story in italy as well. becky has some of the other headlines for you. >> that's right. tell you what's happening this monday morning. president trump likely to see confirmation of another key member of his cabinet today. confirmation vote for treasury secretary nominee steve mnuchin today. that would leave six cabinet nominees still to confirm. assets ativan guard reached $4 trillion mark for the first time. that follows $3 billion in inflows for vanguard during 2016

in what's seen as increase in preference by investors towards passive management. vanguard, of course, was a pioneer in index funds. gasoline prices down $0.05 over the last three weeks. analyst lindbergh said the price at $2.31. los angeles has the highest gas prices in the nation and cleveland has the lowest. today in washington president trump will be meeting with canadian prime minister justin trudeau. those two leaders are expected to discuss common economic interests like jobs, economic growth and trade. but they are also expected to talk about things they agree on including global trade, immigration and refugee policy mpl we'll have more on today's meeting in a bit. >> hey, andre. >> yes, sir. >> we just did that mnuchin story. he's going to be today. >> probably. >> in the journal -- >> which piece? >> goldman veteran takes lead for trump. >> yes. >> two pieces this weekend. >> weird anecdotal stuff about

coen presiding over things and mnuchin being there. >> i said this on the air. >> we all have been talking about power. can you think of historical precedents. >> before that he ran -- >> who was secretary -- >> during that time he was -- >> who was -- >> white -- >> who was treasury secretary at that time. >> i will get thank you information. >> reuben started before he became treasury secretary. >> clinton created that agency. it didn't exist before. he created the sort of super structure. >> for reuben. >> but later became treasury secretary. >> of course now speculation is long-term whether he'll end up -- >> i'm getting nailed this is a good shot for me when i hold this up. people writing in that's really

good -- my makeup loose good. >> i'm not disabusing you of that notion. i do think the quotes in these articles which talk about the with trump originally, at one point he says maybe i should gunfire you the job instead of mnuchin. in another point shows all trump's guys out to launch and gary -- i don't think that helps gary cohen's efforts with trump or brand. >> the stories. >>ic the-- i think these storie have created more inside the white house than helped. it helps gary cohen's profile. >> externally. >> but undermines a little bit of the relationships internally. >> who is going to be in charge? you think still -- who is going to be setting economic policy? >> at the moment gary cohen setting all policy, mnuchin. ross is not confirmed.

>> once they are all confirmed is cohen going to be the most powerful. >> i think he still is. >> interesting. >> lloyd benson. >> lloyd benson. >> was the treasury secretary at the time. >> he was before. snow. >> i remember paul o'neil went off so fast. >> john snow. >> always had that expression. >> fed news. stepping down before his term leader on financial regulations. in an interview he said he had a fairly strong presumption before the election he would resign early this year and that the trump administration did not ask him to leave. >> stephen wood, federated

investo investors cio, equities. stephen and steve. spelled differently. >> i'm ph. >> you're a ph, too. >> i am, joe. good catholic kid. >> nieeither one of you. both have phs but no d brf i have d. >> good. here we go again, thursday, friday, today market keeps going up in the face of people saying it shouldn't be going up. do you think it keeps going up or is it ready -- it's gone too far too fast. >> short-term goes up. >> what does that mean, short-term? >> today? >> look at today. >> what is short-term, next monday. >> one to three, upward bias in the momentum in markets. in the u.s. equity space, however, valuations are set. we've been talking about this at least since the election for the bulk of 2016. as one moves into three- to

four-year time horizon val weighings become powerful. this market overvalued for over a year. this is a great opportunity not to panic. but planful and trim some of the winner. pull back. u.s. celebrating eight years of raging bull market. be planful, methodical, europe globally where valuations are not so oppressive. >> i'll go back to what i keep brigging up. since 1999 it took eight years for the market to double. why is it so expensive here. why expensive when you get 4% for 8 years. it took forever to double. doesn't seem like -- >> takes less than forever. >> you're absolutely right, joe. >> thanks. >> the market, we just entered the third stage of the -- we think the market has gone a lot high higher.

we think it's cheap when earnings are much higher. 140 on s&p as a result of a lot of structural reforms trump is putting in place. >> 140. >> on earnings, beyond that didn't go higher. we think you want to be overweight here. a little stretch we could have a dip but we're buying the dips here. >> i'm overweight here unfortunately. >> just a false choice a lot of people force themselves into. our global equity position would be the same. we're just saying u.s. valuationers stretched. would have a different number -- >> either stretched or it's not. at 140 -- what's pe at 140, steve? >> at 140 we're like 16 times. we're thinking the long bond ends up, joe, somewhere around 4% this cycle, maybe 4 1/2. we think 18 if you look at it

historically market could hold a multiple in that environment. you get to 150, 18 times 150, you know, or even 20 times. you can get up to 3,000 on the s&p if you look out three or four years. so we think you can't trade your self out of this position. we've been telling our investors by the dips, we're not massively overweighted here. there should be a pullback, fine. we keep adding to equities if we do get pullbacks. it's a little about the attitude. if you think you're in a bear market, you're ready to sell the rally. we think we're actually in the third stage of the secular -- we haven't gone that far since 1989. sometimes it's hard to get their hands on because they keep waiting for the big correction that never comes. >> well, when we get near the top, we usually aren't doing seg mebts on don't chase the

rallies. that's usually not what we're doing. you're in this effervescent sort of -- >> frenzy. >> you're -- uber drivers since we don't take cabs anymore, uber drivers are asking you about the snap. i don't know if we're in the final stage. >> if you look at u.s. we don't see a recession for 2017 but there's a lot of perfection priced into the policy environment right now. you were talking earlier about there was at least a little bit of differing opinion. are we going to get everything promised? >> the half empty view. >> half empty, half empty priced over, half full anything pro business, private sector, less regulation, anything after the last eight years is going to be an uptick. >> in this stage of the economic cycle. >> really a key point is the psychology of the market has changed. the psychology of the market has

changed. you can see the confidence everywhere you go in the economy. we're calling it wall of hope rather than wall of worry. suddenly -- >> self-fulfilling. >> cap ex has been flat lined for eight years. >> self fulfilling. >> this economy can still go further. there's a lot of pent up demand and investment. >> all right. both phs. stephen and steve. do you go by stephen. >> in writing but in person steve. >> okay. and you go by steve or stephen? >> i also go by steve. >> next time we're just going to steve one and steve two, then we'll switch. is that like thing one and -- >> thing one and thing two. >> wear a little sweatshirt like them. >> coming up, when we return distinguished fellow on counsel of foreign relations will join

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box." the agenda is full of economic governing reports as well as capitol hill appearances by janet yellen. tomorrow tell you what's on the calendar. january ppi, yellin goes before senate banking committee to deliver semiannual report on monetary policy. that happens 10:00 a.m. eastern time. you've got to watch for wednesday. yellin is going to give the same testimony to house of financial services committee. also january retail sales cpi, industrial production. come thursday, you've got to look for jobless claims, housing starts and philly fed survey. in addition to all of that, we have more than 50 companies in the s&p 500 reporting results this week. among them cisco, pepsico, craft, heinz, cvs, marriott and campbell's soup. president trump hosting japanese prime minister shinzo abe in florida.

with trump's move to withdraw u.s. from trans-pacific partnership agreement there could be new ideas object economic relationship between japan and the united states. joining us right now for more is michael froman, distinguished fellow council of foreign relations and most recent umbrellas trade representative under president obama. michael, thank you for being here today. >> good to be here. >> interesting to watch the relationship with shinzo abe this weekend after trump decided to withdraw from tpp where did that leave us and what kind of bead language did you read this weekend? >> there a lot going on in the relationship right now. you've got security issues like north korea and missile tests. you've got china flexing its muscles on maritime security. of course japan wants to make sure on the economic front it's got the strongest possible relationship with the united states. president trump's announcement of his withdrawal from tpp, prime minister abe is looking to see what might come next. he's invested in enormous effort, enormous political capital in tpp, both getting it

done and getting it through his parliament. it's been a key part of his economic strategy and has strong interest making sure rules of tpp continue to move forward in one form or another without the united states. >> you invested a lot of capital in that tpp, too. what were the rules in terms of what it would mean for japan and what it would be mean for our trade relationship with japan. >> well, it would open up japan's agriculture market to our exports, beef, pork, a whole range of products we're global competitive in but haven't been able to get into japan because of their protection. we'd open up their manufacturing market for us eliminating scores of nontariff barriers they have to our autos and our auto parts. it would upset a set of rules for region around intellectual property rights or disciplines on government-owned corporations. make sure strong labor and environmental protections throughout the region very much in the interest of both japan

and the united states. >> what does japan get out of the deal. you talk about all the markets you open up for us, sounds like a good deal for us. why would japan be so eager to get the deal done? >> we are already an open market. we are applied tariff or tax on imports is less than 1 1/2%. other countries have access to the u.s. market. what was in it for japan and many other countries is they agreed with us that it was important to have high standard rules for the road for trade in the asia-pacific region, that at a time when china is putting forward an alternative model having disciplines on state-owned corporations or making sure there's rules around digital economy that allow the internet to remain open and free, making sure again they are a strong labor and environmental provisions, no intellectual property rights protected. those are things, interests we share with japan across the region and closely with japan to put in place. >> michael what we're talking about are bilateral agreements.

the rub has been, at least the talk has been, we get a raw deal when we sign massive trade agreements because the lowest common denominator is what you end up with. if we already have low tariffs and want to get into their markets, how do we do this on bilateral basis? >> that's a very good question. i think, by the way, that's misreading of negotiating dynamic around asia-pacific. because we already open and because we already have trade agreements with half tpp cubs, the way we got other countries to raise their standards was to help them get access, for example, to japan. they rode on our coattails to get into japan and other markets. if you make this a series of plat ral agreements, you're going to lose some of that negotiating leverage. the trump administration has made it clear it prefers plat ral approach. it's now set up economic dialogue between the vice president and deputy prime minister of japan. it will now have to sit down and figure out what is it they do do that builds on tpp or goes

beyond tpp to address issues between us. >> michael, we can talk about bilateral ranges but ultimately one of the big conversations in washington is the possibility of border adjustment tax that won't be bilateral at all. what do you think the implications of that will be across the board and what do you think the practicality of it in terms of actually happening really are at this point? >> well, there are a lot of different ideas out there. it's very much tied in with the broader issue of tax reform. i think it really depends on how it's done. if, in effect, it penalizes imports and subs dieses and promotes exports, there may be international trade implications to it. and it makes some pretty heroic assumptions about how quickly countries will adjust, economies will adjust, currencies will adjust. i think economists have to take a hard look at that and see whether that's really realistic. >> in washington, read the tea leaves. do you think it's going to

happen? >> i think there's an awful lot of opposition to it among the business community. the speaker of the house paul ryan is very much in favor, and we have to see how it plays out. >> michael, want to thank you very much for joining us and hope to see you again soon. >> thanks very much. >> thank you. >> he didn't know he kept saying pp then do do, what they do do, pp. did you notice -- how old is the baby. >> four months. but i heard it. >> dominating at pebble beach. check out futures at this hour. bulls dominating again. up another 60 this morning.

i'm vern, the orange money retirement rabbit, from voya. i'm the money you save for retirement. who's he? he's green money, for spending today. makes it easy to tell you apart. that, and i am better looking. i heard that. when it's time to get organized for retirement, it's time to get voya. cruising this weekend. this time at at&t pro-am at pebble beach. spieth started the day at 17 under after shooting a 7 under 65 the day before at pebble. it was a six-shot lead over two-time pebble beach winner brandt snedeker. spieth clinched ninth pga tour.

now the youngest player to have nine wins under the age of 24 since tiger woods. you see his under armour stuff. that was a brilliant move. did that in college. at&t he became the most prominent sponsor -- not sponsor but sponsoree of at&t and then he wins the tournament. the venue itself out there, there's great courses but it's one of the best venues other than a major it's one of the best tournaments. >> i don't golf and i love those venues. i'll walk those. >> pebble is an open venue. representedly you have it happening u.s. open. >> get asked at all -- i don't know if you saw the whole debate about the comments made about president trump and then saw stefan curry come back. >> i saw the rock -- >> did he end up saying something about that? >> of course not.

what was divisive about what kevin plank said other than i think trump will do well for the economy. why would you think about -- what's there for someone to have a problem with other than admitting trump is a legitimate statement. i saw chris rock say i'm not going to do this under arm endorsement because what kevin plank said was divisive. i looked at what he said and he said nothing divisive at all. of course jordan spieth -- >> he might have asked about it the way steph curry. >> you weren't there so he wasn't asked about it. >> when we come back can president trump fix the fed. former fed insider is joining us to talk about her new book and why she says federal reserve is bad for america. danielle difficulty mmartino bo

guest. a look at futures, dow up 60, nasdaq up 8.5 after all three set records once again object friday.

good morning, everyone, and welcome back to "squawk box" on kr cnbc. we are live from market site in times square. among stories front and center united auto workers has been approached by tesla workers about joining the union. it's rejecting claim by elon musk that a worker who publicly criticized working conditions was paid by uaw. the worker complained about an excessive amount of mandatory overtime among other things. dow component dupont settled lawsuit about chemicals in western virginia. dupont will pay half of the settlement. the company has spinned off last year will pay the other half.

both companies deny wrongdoing. prince's music back on pandora and spotify. prince pulled with the exception of jay z title within a year of his death last april. there are reports his estate owes $100 million in taxes making new business deals more urgent. a developing story this morning in northern california. at least 188,000 people have been told to evacuate, damage to an emergency spillway at the nation's largest dam, largest dam. state officials warn the spillway at the oroville van is in danger of failing due to erosion. that could release floodwaters below. the dam located 150 miles from san francisco. >> the tallest. >> not the biggest. >> i don't know how you measure but it is tallest. >> which way from san francisco, west, north, east. >> closer to sacramento. >> northeast of san francisco. >> not where we were.

>> yeah. >> close enough. >> there's a little rain out there we did notice. >> markets run to a record high last week, widespread calls from pullback after three-month 10% gain. mike santoli joins us with how investors need to be patient. >> always good to be patient, look at a chart of s&p 500, very impressive. a sturdy rally. we broke 2/4% into territory, a level that capped the market only a couple weeks. this also suppressed volatility. the vix index, 10 or 11, that's a function of common markets as opposed to being an outright warning sign. what i'm basically taking a look at is whether a rally at these levels with these kbs that's worth chasing. one thing about that long period of calm i mentioned, we've gone 84 straight trading sessions, down 1%, longest since 2006. before that mid-90s. one thing i will mention, those

long periods have not been at the very peak of markets. it's not as if this is a sign of an important peak but next substantial move is obvious a shake out to the downside. also people talking last week, even bullish investors, commentators talking about a thinning out of the market. this has not been all-inclusive rise. last week we actually saw lower, less than half the volume. hit a new high. these are tactical indicators. plus macroeconomic surprise in decks, a tail wind, economic data, outperforming forecast. that's perhaps about to flatten out or roll over. so basically the question is if you care about the next couple 3% not up, up, and away on indicators. specifically what i'm saying bullish investors, people with high targets, 25, 2600 s&p 500 flatten out or down from here in the next couple of months at least by a lot of these indicators. in her latest book danielle

2316, you're already down 10 points today probably, mike, from where we opened. >> couple months let's talk. >> just that is the market due for a selloff. we should keep that in the master rundown from wherever you're on. keep it down there. >> for me? >> just for people. >> you should be happy about the wall of worry, remains in place. >> that's true. thanks for doing your part. danielle di martino booth is going to explore what she calls toxic culture in the fed, another financial crisis brewing, how trump could solve this. danielle joins us this morning. she's author of "feddup" insiders taking on why the federal reserve is bad for america. if you're of a certain political persuasion you look up, acdem ex that never held a real job most of them. most of them never made payroll, private sector.

>> vast majority. >> they are deciding how to do this. the only problem is we can never test counter-factials. this is a railinging argument between people who think the feds should have gone behind the curve and should have gone up and people, usually on the left, that think we should even still be doing quantitative easing. >> more and more and more. >> remember qe infinity. >> people on the right, larry summers, global growth remained slow and there has been no inflation, which is what all the bears said we're going to have from this skpabsive monetary policy. growth still show, no expansion. they are saying the fed was right to stay where they are. >> how can there be inflation as long as you build debt levels and you build debt levels globally you're going to have a debt to service. you're going to have a dampen on

inflation. it doesn't hold water. the reason i wrote this book, richard said to me -- >> from dallas fed. >> i used to call hill boss. he said remember winston churnl hill's wisdom if you want history to remember you favorably, you need to rewrite it. i think this book, because i came from wall street, because i have a different type of experience, we're both mbas in finance, that's why he brought me on. i'm able to connect the dots and help the outside person jump into this big black box and understand exactly what's going on. there's no mystery to what's going on. >> the basic tenet, they have written about this, santoli, our own, no price discovery the markets capital isn't allocated properly. >> sure. >> no saviors, people for eight years, they have basically been -- >> how do you instill in your

children the whole idea of compounding interest in it's they a theoretical. >> asset holders as they try to engender economic activity staying at zero. >> what do i tell my 70-year-old mother. gee, mom, go buy some junk bonds and you'll help me sleep at night. really? >> what if the fed had raised rates and the dollar was stronger than it is now, why wouldn't that put a damper on the weak economic activity we already have. we could be below 1% if the dollar was stronger. >> it's disingenuous to suggest there's a silver bullet. in 2012 janet yellen's favorite labor market indicator was suggesting the job market, shouldn't have been discussing taper but raising interest rates. instead they are all up in washington going 10 billion, 15 billion a month, how much reduce -- that was the wrong discussion to be having at the time and fisher and jeremy stein

and a few other voices of reason, charlie plosser, they were arguing it wasn't a taper but should be normalizing rates. junk bond spreads dictated as much. >> this view might come back into vogue but it's been difficult because we're globalless and we see rates are lower around the globe. in this country when corporations can make more money because we're at 0, more money buying back stock. >> borrow buy, borrow buy, reduce your float. increase your bonus. >> don't make long-term decisions. maybe if rates -- i guess your thesis is if rates had gone up, they would go back to business as usual. >> might have a recession by now. might be out of a recession by now. >> expectation in a trump administration that's going to put in a much more hawkish fed. he's talked about that. though if you talk to people internally once us in that office, your mind-set changes very quickly. >> i've got my rosary beads

handy every night. there's a high probably brainard follows tourillo and you're talking june of 2018, six of the seven openings, two vacancies, soon to be three, six of the seven people on the federal reserve board that can be replaced by june, by next summer. will he? darn good question. last i checked infrastructure, tax cuts, all these things aren't free. it's really going to come down to whether or not he's got the gumpgs gumption to change the makeup of the federal reserve board. these are hard decisions. >> a real estate guy, likes low rates. >> you can still put people on the federal reserve board that don't think no is a four-letter word, actually dissent. it's a culture where you're not allowed to raise your hand and say, you know what, there's something wrong with this picture. >> what did you call yellin, a

radical leftist from san francisco. >> uc berkeley phd, you know. so is bill dudley. >> how could someone have a problem with that. >> i didn't say problem. >> i'm saying how could someone have a problem saying that's radical left wing -- a phd -- she's gone you figure? >> i can't see these first two appointments making her comfy. >> you think richard fisher in the mix for fed chief. >> one can hope. >> you probably think your former boss would be the best. >> the best. >> real quickly. we talked to people who said even if people come into the fed the trump administration aren't going to want people that are hawkish with interest rates. they still want low rates with all they want to accomplish. >> i'm not an advocate for being a dove or hawk, i'm an advocate

for being rational. part of what is endemic and part of the issue we have or still have at the fed is we push situations out for too long. it's not so much do we need to throw the economy into recession and invert the yield curve immediately, that's not the situation. i understand if the economy is weakening we need to have low interrates. i got that. but since greenspan was in office, we're going on 30 years now we have these lower for longer cycles that tend to create boom and bust cycles. it's not good for the economy long-term. >> we have to go but a weak or strong economy right now? >> i think right now we have a very neutral economy. i wouldn't call it -- i would not call it strong. if you look at a lot of labor market indicators they are peaking and rolling over. >> prestrong. prestrong. >> ish. >> danielle, thank you. the author of "fed up." it's good, i get it, "fed up." there it is. thanks for joining us.

be sure to head to cnbc.com to read danielle's op-ed. you do see you what mean and mean what you say in this thing, too. it's called the fed is bad for america. but getting rid of it isn't the answer. just need maybe some real world people that might benefit from that. thank you. >> thanks, danielle. when we come back, lots of buzz in the retail space last week after nordstrom's dropped ivanka's apparel. a back and forth with the president. meantime check out the futures after closing at new highs once again on friday the s&p 500 indicated up another 4 points this morning, dow up by 50 points, nasdaq up by just over 7 points. stick around, "squawk box" will be right back. wo about trading. so i trade with e*trade, where true traders trade on a trademarked trade platform that has all the... get off the computer traitor! i won't. (cannon sound)

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. welcome back to "squawk box." futures less, dow up 60 points, come back a little from there, up 47 and change, nasdaq up 8,

s&p indicated up 4 so far. >> no shortage of disruptive forces jolting retail, intense political pressure uneven and more uncertain future. joining us more on the retail industry landscape is kathy lenha lenhart. good morning. >> good morning. >> i was saying during break, feels like nothing good happening in retail right now. is there anything good to say about retail? >> some sectors performing, whether strong value proposition we see some companies performing. interestingly those companies are performing in store without relying on, you know the superhero digital growth. there are some. >> who is a winner. >> like a costco, tjx, think value. those are the retailer winning in this environment. >> in terms of political pressure one of the big issues for retail is the question about whether there's going to be a border adjustment tax.

i know walmart -- doug in with the president a few weeks ago trying to push away from that. a lot of retailers doing that right now. what do you think a prospect is for border adjustment tax? >> i think it would be disastrous first and foremost for the retail sector. i think when you look at border tax adjustment, which has been much discussed in the market, it creates winners and losers. that's certainly an unintended consequence. you don't want that. any kind of law that creates winners and losers. if you look at it, i represent retail industry and they would clearly be a loser. >> net loser. any winner within the retail industry? anybody just manufacturing everything united u.s. >> winners and losers. sectors with lo margin negatively impacted. just as you said mass market

retailers walmart, grocery store retailers, wearing apparel. on the other hand higher margin businesses like tech and pharma would be much less impacted. this is clearly bad for the retail industry. >> where are you on m and a in retail. we have this macy's deal hanging out there. does that happen? >> we don't comment on specific situations because we might be wrong. you know, i think there are head winds and tail winds in the retail sector. certainly when we look at this, this political uncertainty and economic uncertainty creates challenges to doing deals, right? if you're levered and you're staying down barrel of border tax adjustment you won't do it. >> retailers? >> i'm not sure the market has a great deal of certainty this is going to happen. i think there's just a general level of uncertainty. as we look at this negative

sentiment in retail since 2008. we call it the retail fluke. >> everything on sale and this is a great deal because something is about to happen? >> you can't get great leverage so debt markets don't like retail sector with the exception of home improvement, there's sections they will underwrite. they have been very conservative. >> they suggest these are trends that are going to turn around and you'll improve and get better. are you convinced of that? >> i'm counting on it. >> i look at the way i shop. i've changed the way i shop. so much of it is online now. honestly, i think there is this virtuous cycle. >> but you're still shopping. >> i go into stores because there's not enough retail in stock and nobody to help you because they are punished by online retail sales. there's this cyclical situation, walking in can't get the retail you want, can't get everyone to help me. >> retail environment has to

work. you have to have good service. >> my point is they don't. because they are under stress they are cutting back on a lot of these things that used to be a better experience. >> they have got to fix that to be successful. what's fundamental in the retail industry is traffic is declining in most store formats and online growth, their own online growth is not enough to offset that because there's so much competition to your point. >> how political -- we've got to run in a second but how political buying decisions are. the ivanka trump in terms of what nordstrom's was doing. kevin plank under armour, steph curry saying something. all this happening. do you think customer walks in and makes a decision based on this stuff? >> it seems like it. i think brands and retailers are being pulled into these partisan arguments and it's frightening. if you're a retailer or brand, stay away from it. that's my advice, as far as you

can. because customers are hard to get. they are expensive to acquire and you don't want to lose them. >> cathy, thank you. appreciate it. >> when we come back, stocks to watch this morning, plus doing business with our neighbors to the north. president trump meeting with canadian prime minister justin trudeau to talk trade. a preview with whether or not that meeting is all about straight ahead with the former u.s. ambassador to canada. a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley

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. couple of stocks to watch, teva, $1.48 a share, above estimates, boost acquisition of the activist drug business. restaurant brands international beat estimates by $0.02 with quarterly profit of $0.44 a share. who is that? the parent of burger king and tim hortons saw profit from a year earlier. transaction processor cain above estimates, earnings of $0.39 a share. first data stock up nearly 70%, 70% over past 12 months. >> verizon bringing back unlimited data plan, first in

five years. news coming amid rising competition between wireless carriers. no offer cost $80 a month for data, talk, text for first line and $45 for additional lines. last month verizon said it wasn't looking at unlimited plans when asked by analysts whether it should be more aggressive in the markets. if you get into details what this package might look like, if you're big data user, most don't use over 5 whatever -- what am i looking at 5 mega -- what it is. i'm sorry, anything if you go over 22, they will start throttling you. >> throttling you. >> slow down. it is all you eat but it will go slower. what's the phrase i'm looking for 22 gigs. >> gigabytes. >> gigs. >> not mega. >> i don't know. that's a phrase.

>> gigabytes is where i was going with that. >> in the '50s. couple of names in barron's, macy's looking to turn its business around by downsizing its physical store operations and reinvesting in online presence. barron's mentioning abbott labs, thanks to $25 billion acquisition of st. jude medical. the paper suggests the company has a good shot of continuing double digit earnings growth adding 20% return is possible. coming up when we return, a crucial meeting for president trump and prime minister justin trudeau. their first face-to-face meeting to talk trade and putting women in the workforce. a preview ahead. check out futures at this hour. the dow looks like it would open up higher, 57.5, nasdaq up 10, s&p 500 up about 5 points. "squawk box" returns in a moment.

new this morning president trump meets canadian prime minister justin trudeau. morning the issues, trade and immigration. former u.s. ambassador to join us. >> janet yellen fed chair will

face republican congress. what that means for congress straight ahead. >> plus checkmate. chess grandmaster and political activist garry kasparov will weigh in. final hour of "squawk box" begins now. ♪ ♪ >> announcer: live from the most powerful city in the world, new york, this is "squawk box." ♪ ♪ good morning and welcome back to "squawk box" here on cnbc live from nasdaq market site in times square. i'm joe kernen with becky quick and andrew ross sorkin. futures strong up 53 on the dow. s&p up about 5. nasdaq up 9 1/4. europe strong, asia positive after setting a series of records in this country in the equity markets last week. ten-year behaving, 243 is where the ten-year is this morning with 30 year at just over 3%. >> couple big headlines for you this morning. a new report from opec

suggesting global demand for oil could outdo ten-year average. among reasons improving global economy and demand. take a quick look, price barrel wti crude 5346 right now. speaking of energy gasoline prices down per diluted share 05 over the past three weeks. analyst lundberg said down. in washington steve mnuchin expected to be confirmed at treasury secretary. a vote expected around 7:00 p.m. canadian prime minister justin trudeau will meet with president trump at the white house today. kayla with more on the agenda. great to see you. >> great to you as well. the first meeting of the two leaders since president trump elected. sean spicer said it would cover trade, security, commerce. a portion, bilateral roundtable of female executives followed by working lunch and joint press

conference. interestingly trade looms the largest with huge changes to nafta expected any day now. canada remained largely out of the spotlight because trade with u.s. is in balance compared to trade partners of the u.s. prime minister did offer some vague criticism on immigration orders out of the u.s. but highlighted the importance of the relationship and the two countries working together. >> our economies are interwoven, interdependent. canada is the number one export destination for 35 different american states. and this is something that we have emphasized already a number of times to the incoming administration. >> it had been emphasized by trudeau himself but one official in particular who in canada will be charged with maintaining that relationship. you see here meeting with

secretary of state rex tillerson, newly appointed minister of foreign affairs in canada and already working some of these officials to make sure canada's agenda and its priorities known. you might recognize her name because she's the former u.s. editor for financial times, so she's very familiar with the market, media savvy. it will be interesting to see how that appointment plays out but also interesting to see exactly what the two leaders talk about. prime minister trudeau and president obama were notoriously chummy. prime minister trudeau last came to the white house nearly a year ago but it's not like president trump and the prime minister don't have some policies in common. president trump's pursuit of the keystone pipeline was something taken very favorably in canada but we'll see exactly what materially is discussed in that meeting. andrew, back to you. >> capital looks good next to you, kayla, a good like. like it's meant to be. been like that forever, i think. >> thank you, joe. that's very kind of you to say.

i'm enjoying my time here and there's a lot of work to do. >> a lot happening. a good place to be. washington is always kind of -- actually in the last eight years that's where all the jobs were obviously. now it's the epicenter for a different reason, isn't it? it should be fun. >> it will. i'll see you on the air from the white house today. >> epicenter of business. used to think new york was epicenter of business. it has become epicenter. i like her shoutout. remember when she used to come on the show? sort of ab aman amazing thing. meantime talk about u.s. and canada, served as u.s. ambassador to canada, worked for goldman sachs 33 years, a partner for a decade prior to his diplomatic career. ambassador, thank you for joining us this morning. single biggest issue. >> good morning. >> good morning. single biggest issue with

relationship we're going to have with canada with trump and i imagine it's going to be about border adjustment tax and what that means. no? >> yeah, i think that is an issue coming up. i think that would really stress the trading relationship. you know, you've mentioned it, but canada is our number one trading partner in goods and services. if you see average americans and ask them who the number one trading partner is with the united states rarely do they mention canada. the reality is millions of u.s. jobs are created as a result of this relationship, and it's in balance. not only in balance but running a surplus with our trade relationship with canada. this would really put a lot of stress on that relationship a border adjustment tax. >> if you were advising donald trump, which i know you're not, if you were you would tell him what? >> canada is the most important relationship that you have. if not the most, there are none that are more important than

canada. based on the trading relationship which i just mentioned as the largest, energy relationship they are a largest supplier of energy outside of the united states by a very large factor, 3.4 million barrels a day of oil. you can take the next five countries together and add them up and you don't get to 3.4, 3.5 million barrels a day. we protect north america together through norad. that's a very unique structure where canadians and americans protect north american airspace. >> ask you one thing. a report out a couple days ago, cbc news saying you're outgoing ambassador to canada, not as critical as some believe for leaders to have a warm relationship but it helps. >> it helps. >> what do you mean? >> well, look, when you sit down and you talk together, and you can work on an enhanced relationship, you can get a lot more done. that being said, last year there

were 10,000 u.s. government physicians at different levels that came to canada to work on various levels of interactivity, food safety, rail safety, transportation safety, border safety. the foundation of the relationship is strong. regardless of who sits at the prime minister's home or the white house, i think this relationship will last and endure for a long time. if they get along well, i think we can get a lot more accomplished clearly. >> what is your take on what's doing on with the state department right now? there's been a lot of commotion across the board about what's happening internally inside the state department and relationships with ambassadors around the world. >> i think it's slow going. i think it's unfortunate. i think that the president who issued a number of executive orders very quickly did not

engage the margin part of infrastructure of the u.s. government before releasing some of these executive orders, which i think is causing him some difficulties now and either backtracking or legal difficulties or rewriting. i think there are so many competent people working around the world on behalf of the state department that should be engaged in conversation, dialogue and briefing before executing so many of these things. you know, we're sitting without ambassadors in probably 30 or 40 of our top capitals as we sit here today. >> as you saw rex tillerson's choice for his deputy not taken, how do you think that's going to play out? >> i'm sure rex is frustrated. but you know, let's see how it plays out a little further on who is selected and how well that working relationship is. i think the president should utilize the knowledge base that

we have in the various departments. homeland security, department of defense, state department, all of these agencies i work very closely with over the last three years. as you mentioned, i worked at goldman sachs 33 years. the capabilities and qualities of the people i interacted with at the embassy and highest levels of the u.s. government are as good as any people i've worked with anywhere in the world. so i think this is a resource for the white house to tap into and i think it's a mistake not to tap into them. >> bruce, thanks so much. great to see you. >> you're welcome. good to see you. >> a lot still ahead on "squawk box." up next why california's proposed bullet train could be in for a speed buffer. plus janet yellen will testify before congress this week. we'll tell you what to expect. later former world chess champion garry kasparov will join us. stay tuned. you're watching "squawk box" on cnbc.

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vagabonds. i got to pick that. andrew will be featuring a medley of busta rhymes tunes. >> the guy that said president agent orange. >> you can play busta rhymes, i'm playing -- >> i'm not that political as you know. >> i know, i know. i see that. >> the futures right now, let's take a quick look. futures indicated up 56 points or so, about 58 now as i speak, going up even more. s&p up just under six and nasdaq up about 10.61 this morning.

allergan buying zeltiq. so you get the botox in your forehead in your eyes, fat reducing treatments in eyes. nobody puts botox in eyes? >> around the eyes. >> it does do something in your eye but it's a procedure not everyone is comfortable with. >> any time needles in my eyes. >> yeah. >> use that expression a lot. did you watch the grammys? no, i'd rather stick needles in my mind. >> that will change your mind. >> worth 56.50 a share compared to zeltiq. did you watch the oscars. no, i'd rather -- finish the thought. >> get a root canal. >> see my proctologist. or colonoscopy, though those are pretty pleasant. >> watch it live. >> not the night before.

>> it's a cleansing thing the night before. it is. >> new year's resolution. >> wow, you've got to go when you're 50. you do. you've got to. men and women, too. >> agreed. agreed. now let's get to developing story in the morning. in california crews are working to repair an eroding dam, thousands of residents forced to evacuate. nbc's miguel almaguer is there. he has the latest on this. miguel, we've been watching this pretty closely. what can you tell us? >> guys, good morning, emergency crews have been here overnight and into early morning hours keeping a close eye on what they call a fluid situation here. they are concerned about the lake oroville emergency spillway. that is an area that is off of the regular -- adjacent to regular spillway. they have been using emergency spillway because so much water in the reservoir, officials began to fear late last night spillway, emergency spillway could breach sending a wave, 30 foot wave of water cascading into communities downstream.

they immediately evacuated 188,000 people, evacuating those folks as quickly as they can, sending them to safer ground. meantime officials at this hour are still trying to shore up that emergency spillway. they are going to send a crew out to examine it in a short time when the light comes up, sun comes up here to figure out exactly the extent, potential of this damage, they are optimistic with big boulders behind me. they will be able to shore up a portion of the spillway but quite possible there could be serious damage here, so it's unclear if 188,000 people who are told to leave in a frenzy late last night when or if they will be allowed to come back home. the work here continuing around the clock. of course we'll have much more when the sunrises and officials have an estimate on what kind of damage they are looking at. back to you guys. >> miguel, we see you're in oroville but you're not downstream from this area, are you? >> actually adjacent to the dam. the dam is just below us a couple of feet. we're above the dam. the dam itself is not in

jeopardy. the dam is stable. it's the tallest dam in north america, 70 feet. that is considered safe. it's the spillway, which is adjacent to the dam, an area about a couple feet of concrete above an earthen dam that is the area potential breach. that area is much further south where we are standing at. that area is the the area of concern today, guys. >> great. i know there's been consternation about trying to evacuate so many people but better safe than sorry in this situation. >> absolutely. >> right. miguel, thank you very much for joining us. a couple of stocks to watch this morning, guys. a note from ubs apple service business undervalued, firm estimates shares will be 10% higher. things like icloud and how people play overvalued the way paypal was or is rather. jcpenney upgrated equal weight

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parts of the northeast bracing for high winds and blizzards p mike joins us from massachusetts. good morning. >> this is what happens in eastern massachusetts when you have two big storms since thursday, in four days. some places with no place to pile snow. still have high wind warnings and high winds all the way down to laguardia, logan airport. a few minutes ago had runways closed down was pilots reporting of nil traction. they have now reopened runways so hopefully that won't be a big impact on the airport, although 300 flights already canceled. impacts for snow will be primarily east maine, bangor, harbor, bar harbor rather, new england, a foot of snow.

some parts of cumberland county with 20 inches of snow from this particular storm. we've got wind today, the snow winding down and more major travel issues at the northeastern airports. temperatures right now in the mid-20s. another storm on the docket, guys, for wednesday night and thursday. right now it seems more likely that will be more of an impact in maine than anywhere south of new york and boston. andrew, becky, joe. joe, i know you know the north shore. back to you. >> certainly do. i like when people say down east. that shows a true local that knows that's what it's called up there. i don't know why. it's like down south, down west, down east. >> exactly. >> that's a cool drift you're on. >> eastern part and it's down east. >> eastern part and it's down east. you're right. look at you go. oh, my god. >> throw a snowball, mike.

well done. >> you predicted it, mike. more snow, more or less snow coming. that's a crappy snowball. >> he's working. >> that's because it's in the mid-20s. it's too cold, too cold out here. speaking of global warming, an unbelievable stat in saturday oklahoma southwestern part of the state, guys, hit 100 degrees in february. talk about global warming. >> back to you. there you go. looking at it right behind you. >> thanks, mike. president trump recently talked about high-speed rail with airline executives. california has already begun construction on what could become the nation's high-speed rail line. live in central california with the story. good morning. >> good morning to you, becky. that's right. this is one of the construction sites for california's high-speed rail system. the train would actually go over that overpass being built.

commuters one day could travel between san francisco and los angeles. in fewer than three hours. president trump is hoping they will take notice of their pitch. in fact, the president mentioned high-speed rail when they met with airline execs. >> go to china, fast trains all over. we don't have one. i don't want to compete with your business but we don't have one fast train. >> high-speed rail is one of the infrastructure projects on california's wish list that the governor's office just submitted. the project, which is expected to be done by 2029 would create up to 66,000 jobs over 15 years. that's according to california high-speed rail authority. the price taking is $64 billion and all the manufacturing components have to be made in america. the director of the rail authority's board said the project would cause some of the housing and traffic congestion problems plaguing the state.

>> the opportunity for our companies in silicon valley who are having a very difficult time attracting talent because of the high housing cost there, suddenly they will see that people can live in our central valley and commute to work in 40 or 45 minutes on high-speed rail, it's going to be a major transformational program. >> but skeptics like house majority leader kevin mccarthy say high-speed rail is fraught with cost overruns, delays and simply doesn't have money to come to fruition. rail authority tells us despite all of those challenges, the project is still the cheapest and best option available. guys, back to you. >> thank you, aditi. coming up, janet yellen will head to the hill this week and face new republican congress for the very first time. we'll tell you what's at stake. first, though, as we head to break, take a look at u.s. equity futures pretty solid all morning. close to the high. 66 points on the do you.

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"squawk box" live on cnbc. we're at the nasdaq market at times square. among stories front and center, natural productsmaker slammed following news investigating accounting practices. company says it's cooperating fully with the probe. the audit committee found no evidence of wrongdoing when it looked into issues last year. we heard a little about this over some time but this news putting us in serious pressure on stock now down 9% premarket. gasoline prices down $0.05 over past three weeks. lundberg survey showing average price of unleaded regular gas around the country $2.31 per gallon, cheaper in new jersey. right, guys? i imagine. finally the lego batman movie topped the box office, follow up to 2014 lego movie took opinion

$56 million, universal's 50 shades darker, the sequel to "fifty shades of grey" came in second. >> janet yellen set to face leaders this week. steve liesman here with what's happening on capitol hill. >> there are many. fed chairman janet yellen faces new republican congress and there's much to discuss. much repeating comments fed close to meeting job and inflation mandates from congress. that's doing to at least support forecast of three fed hikes. when did they start and could there be four. first thing looking guidance march rate hike. the debate here, folks, is whether or not they do one and get it done when things are quiet and/or the idea of leaving themselves the option of doing four and waiting until three in a row. she'll be factoring trump's policy. to the extent she does that the fed has wait add while to do

that while others factored in the market. fed like the bond market, more circumspect. defending dodd/frank, moisture suggest some room for reform there. calls for fed reform. this has been the puzzle, this next chart. this 17% probability of a rate hike in march. a lot of economists think the market is undersuggesting the fed will hike, think it ought to be quite a bit higher. it fell a lot during last jobs report because of that low wage number. some people don't believe that. over the weekend fed advice chair stan fisher suggested significant uncertainty in u.s. policies suggest fed more likely to wait than pro actively hike. i think what you have is a situation where you guys were talking earlier, is pressurery going to leave or national economic council. there's some normal sorting out to be done here. we'll see which one. that means a little bit of a

delay in terms of economic policies going forward. >> someone earlier, someone we both know, someone we love and listen to pointed out the forecast that the fed made about where unemployment would be and as a result where fed funds would be at the same time. so in 2015 they are forecasting 4.95. they beat that on unemployment. the fed funds supposed to be 3 1/4 by then. got where they were supposed to be and skipped nine opportunities to raise rates. all nine. absolutely no correlation between what they said they would do given certain employment parameters they hit and what they actually d now, how does that happen where they decide to forego? gdp, they look and its too weak? other mandates. >> without defending the fed, what they would first of all say put out in the forecast, it's a forecast not a promise.

the second thing they would point out is as they went to raise rates, what they saw was that more people were actually coming into the workforce. >> they should have known that, though. they should have looked at the participation rate and known that was a possibility. they should have factored that in. what it seems to indicate is they are afraid, feckless, don't have the courage to follow through on what they said they were going to do. it's always hard to raise rates. it's always hard to raise rate. >> put it one of two ways, feckless or prudent in the sense they didn't know what to do. >> if the employment rate is that high, how do we know they are finally setting us up. i'm seeing companies not invest, buy back stock and borrow money. i see -- >> controversial idea which you subscribe to that i do not, which you think qe ensure buybacks. >> we've heard from several people today including mark who we spoke to earlier, don't pay attention to fed, watch policy.

policy dictating terms. >> that was my number one prediction of the year. my situation -- >> i said that a congressional staffer on the ways and means committee right now has more power to move markets than a fed president. >> that's interesting. >> that to me -- by the way, that's what you hear the fed saying, we're going to wait and price in economic policies from trump before we change. >> by the way, they are probably relieved to not be the only game in town anymore. >>ic they are happy about that. i think they are concerned about the types of policies coming. are they things that dramatically change potential or juice the economy for a short period of time. >> you know, for most of new england if you sail with the prevailing winds south and east you'll sail down east.

>> sailing down wind. >> from other parts of new england sail east you get to maine. >> bar harbor. >> down east, where does that term come from. >> a place in maine called down east. >> people are messaging. >> open maine, down east. >> steve, stick around. >> i was going to and trying to be quiet. >> bring in conrad, founding partner and senior economist at rdq economics. i've heard both sides of what we just talked about argued fairly forcefully. i don't know. did you have an opinion? >> i'm of the view the markets are underestimating the odds of a hike in march. i think to answer the question you just asked, one of the reasons why the fed sort of ignored the rate path they projected, even though unemployment rate was -- was the inflation side of the picture. that's something that's changed. that's why i think the markets

underestimating the path of the fed, why the fed this time around might follow the path they laid out. before inflation wasn't there yet. now we're going to get inflation close to 2.5%, 2.4, historically consistient with rate. that's pretty close to their target. i think the change in the inflation figure is what makes them more likely to follow that path. >> it would be nice to know that the only negative to staying to accommodate too long would be price inflation. nice to know. it could be asset inflation. causing corporations to do things they wouldn't normally do. what about the housing bubble in you could have looked at regular inflation and said everything is great. if you figure stay at zero until someone tells you not to with inflation you can build up all kinds of dislocation. >> i absolutely agree with that if we're talking about prudent, prudent doesn't mean not doing it. >> leaving flood gates open and

punch bowl spiked forever. that's not prudent. >> one of my concerns is that the fed takes a pass when data are suggesting we're pretty close to their targets. the markets are very calm right now. who knows what situation we'll be down the road. i know there's a lot of uncertainty about fiscal policy. but the uncertainty isn't whether fiscal policy is tighter or easier, we know it's going to be easier. it's just a question of how much easier. >> conrad, isn't the prudent story the one where the fed said, you know what, we're way more worried about deflationary spiral than bad inflation. we don't have a problem wrong on the upside, we have a big problem being wrong on the downside. when it came to decisions -- brexit is a good example. so far not a lot of fall out when it comes from the economy from britain or united states. if i'm going to be wrong about something, i want to be wrong in a way that makes rates lower rather than higher so i don't

have to first of all reverse myself and second of all buy deflation. >> i think so that's the reason why they have done what they have done. the question is if they fall behind. they don't think they are behind. i think they are. if they fall behind that process of catching up is not benign for the markets. it's not necessarily a good thing. it's okay if inflation runs a little bit and we'll catch up. i don't think that's a scenario markets will be comfortable with. >> i think to get down to the thing that really markets are focused on this week it's whether or not janet yellen this week turns the market's attention towards march in a way that starts to move that probability towards 50%. i don't think she's in a position of front-runner committee on this. i've not heard enough from the committee to say she is already ready to go there. >> absolutely. she doesn't want to prejudge the discussion in march but i think she wants to have a discussion in march.

if the markets are saying 17% there's no point having a discussion because you're not going to surprise the market. i think the objective -- >> wait a second. if you wait for markets to call this whole thing, at some point you have to lead the market to water if you're planning on raising rates. wouldn't this be the good tile to do it. >> that's the point i'm making. her objective is trying to get the markets closer to saying 50/50, depending on reports we have between now and march meeting. you can't leave your self in a position where the markets are saying no way. once you get to the march meeting, and you don't want to surprise the markets, then your hands are sort of tied. we have an employment report coming out five days before they meet. it's within their communication blackout period. >> you think that makes it more likely she's more hawkish in her tone. >> i think so so. closer to 50/50. >> then it gets tricky, right? what you're saying, if she's going to be more hawkish to bring back flexibility, not necessarily for the rate hike

itself. >> you get accused if you're hawkish and don't follow through with it, you get accused of wimping out and tricking the market once again. >> which i think means they are late. i think what they should have done is spoken earlier to bring that probability up. fisher didn't do anything in my opinion to move that probability at all. >> that doesn't surprise me, though. we know janet yellen is speaking this week. it would have lacked decorum to come out front of janet yellen. yellen's testimony, this is traditionally covering entire committee not hers alone. they wanted to send a message. >> i don't know if we have to go. we would be wrong to let conrad go and not get his economic outlook. >> i think we're looking at another growth year similar to last year. i think we are going to get fiscal stimulus. but we are getting fiscal stimulus in an economy close to

capacity. we don't have production to meet demand. we're probably going to see a wide trade deficit. numbers might be better but not significantly so. >> that means 2.2? >> 2.25 is our estimate. that kind of growth and the type of job creation we're looking at and labor force participation trends we're looking at 4.25% by the end of the year. >> can i do a commercial. >> no. we're going to actual commercial. >> last time somebody tried to do a commercial. >> they got in trouble. i read rdq, conrad and john and after a number comes out i read conrad. >> i'll have to counsel you. you'll be counselled. >> i prefer to be your counselor. that's what kellyanne said in response. >> fair enough. >> you read john and conrad? >> i'm sorry? >> you read john and conrad? you should read their stuff on

commercial. >> thank you. >> pleasure. >> when we return, it's been 20 years since world chess champion garry kasparov met his match with ibm computer. he's going to join us after the break to talk man versus machine, putin and what the game can teach us about politics next. okay, so what's our latest data say? our customer is a 21-year-old female. heavily into basketball. wait. data just changed... now she's into disc sports. ah, no she's not. since when? since now. she's into tai chi. she found disc sports too stressful. hold on. let me ask you this... what's she gonna like six months from now?

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welcome back to "squawk box." stocks to wamp. talking to garry kasparov about russian literature. you have new stuff to read. >> almost 100 years. >> crime and punishment is awesome. >> it's psychology, yes, but crime and punishment is different. it's a philosophy. crime and punishment is almost immortal because talks about -- doesn't change whether you have truth or not. >> you know, we're going to get to you, garry, but first revenues, up $0.20, shares a provider of transaction processing technology rising in the news. told you about beating the street top and bottom line drugmakers got a boost from allergan's drug last year. >> president trump playing host

to a number of world leaders. japanese prime minister abe now canadian prime minister this week. trickiest relationship could be with russian president vladimir putin. joining us right now is garry kasparov, chairman of human righ rights, former chess champion. if you want to know his author he's author of "winter is coming, why vladimir putin and leaders of the free world need to be stopped." garry, thank you so much for being here. we appreciate it. we hear crazy stories about the relationship between trump and putin, we see the tweets but where do you think we stand in the relationship between russia and united states. >> all these crazy stories fueled by we don't know enough. the conclusion. probably most likely there were connections between trump and russian oligarch in 2008, 2009,

maximum amount of russian investment that helped him stay afloat. probably stories in 2013 when he was in moscow but we don't know. also see quite a few people in trump's administration that have global ties to russia, rex tillerson, and ross also ties with russian oligarch, joint venture was bank of cypress and also trump comments, the bizarre compliments too complimentary to have had mire putin even at the expense of u.s. worldwide image. >> we're trying to figure out if our relationship will changef there will ab warming going on. just overnight we heard president trump in favor of a new member joining nato over protestations of the russians. should we read into some of these signs as maybe it's too soon.

>> russian propaganda you can see in the last couple of weeks the speed of change in the way they treated trump administration because big expectations about bargain and deal. >> immediately. >> at the expense. this deal in putin's mind at the expense of nato, european union. putin keeps attacking. he's steg up attacks with other european democracies, elections in holland, france, italy. his main target angela merkel. when trump made some diminishing comments about angela merkel, it was -- somehow i feel they are not so sure trump is ready to move on with this grand bargain, which means, you know, putin might be looking for new ways of complicated situation. >> in terms of trying to put a little pressure on trump. >> we saw the infighting in eastern ukraine. i believe putin will be looking for new targets. the question putin is not if he

attacks, the question is when and where he attacks. by the way, i think one of the reasons trump was convinced by i'm sure general mattis and navy commanders to bring montenegro because one of putin's recent activities in balkans. see rising tension between croatia. hot heads taking over, scenario. they realized balkans could be another point of trouble on the european map. >> conspiracy theorists and democrats in congress think russia and putin, that they have something on trump. you have no idea -- >> look, i don't know. what i know is that putin's propaganda machine supported trump. but i think the reason they supported him was not for him to win -- they doesn't expect him to win but they wanted to discredit american democracy,

the elections. the ideal scenario, hillary wins, narrow margins. that's what i read on both sides. >> you don't know if they are holding something over his head. >> probably. >> they are? >> it's likely because, again, the way putin behaved, the way he spoke. that's why i believe it's very important that this administration supports a full investigation. we know there was an attempt to influence u.s. elections. russia interfered. and it's very important to understand, you know, stand. >> putin's a chess player, what's his next move? >> putin is not a chess player. puttin put putin's a poker player. even if he has a weak hand, he knows how to bluff. that's why we can expect putin's bluff. i don't know whether it will be the middle east, i would look a libya, another potential point of putin's foreign policy

aggression. but new consulate in europe, elections in european countries and he'll try to support alternate groups. >> so anything to weaken. but what's his end game? what do you think he wants? >> his end game is staying in power as long as he can because he has no way out. so that's why he will do absolutely everything to sort of strengthen his grip in power at home. and let's not forget anti-american propaganda was and still is a core domestic item. >> if michael flynn gets fired, what does putin think of that? >> i think great news for the united states because it's going to show that institutions are working and no one, even national security advisor in position to violate the rules. i think that will be clear message to putin that, you know, no matter what he has on trump, what he thinks of trump, no matter what trump says, u.s. administration is administration will follow the traditional lines, you know, supporting

american allies and not sacrificing his interests. >> so when putin antagonist comes to an untimely demise, do you think that the decision on something like that goes all the way up to putin? when they ask -- people say he's a killer, you have no doubt in your mind? >> you have people who kill others, but you have dictators who are responsible for -- >> has he pushed a button on people? journalists? pushes buttons on journalists? >> i don't know how mafia works but i think most likely kind of a signal. it's not only journalists, you know. my late friend and colleague boris killed -- >> you think that reaches putin? >> no doubt about it. so this is the way it works. why this man is just making so much noise, again, we know it from history.

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. jim cramer is in san francisco this morning. we're like ships passing in the night, i kind of think, jim. you're on your way -- why are you out there? >> oops. geez. okay. we are doing our manufacturing -- well, it's

about what makes america great. we're doing a lot of technology. we're doing a lot of different companies that are only here, cisco, twitter, intel, i mean, obviously some pretty big ones. >> good. so coming up today what will we be seeing on "squawk on the street"? >> okay. you're going to see intel. and i think intel after the super bowl is kind of seemed like a different company. i know they're doing a lot of different things. got to talk about where they're positioned versus say nvidia, where they're positioned versus like a qualcomm and how much is cell phone, how much is going to be personal computer. there's a lot of different things that are happening in intel very quickly. and i know brian krzanich met with the president last week and want to figure out where they fit in in terms of the new regime. >> all right, jim, we'll keep it short today. we'll be watching. thank you. >> thank you. >> see you at the top of the hour. "squawk box" will be right back. it's not a banner that goes on a wall. it's not something you do now and then. or when it's convenient.

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from $17 a pill to $750. he'll be speaking at an event organized by the harvard financial analyst club. last week a judge approved his trip to massachusetts. >> i'm surprised -- we'll see are there going to be protests on campus? >> you might guess. >> but they invited him. anyway, markets indicated higher. so we're not going to have time to look at it but -- >> make sure you join us tomorrow. "squawk on the street" begins right now. ♪ good monday morning. welcome to "squawk on the street." i'm carl quintanilla with david faber at the new york stock exchange. cramer is live at one market in san francisco. a lot from jim this morning out there. premarket pretty solid ahead of a busy week of earnings from consumer products companies, some foreign policy meetings for the president including canada's prime minister today. green arrows in europe. dollar is little changed after that 1% gain last week. the roadmap begins with trump, trudeau and trade, the