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 canadian

prime minister set to visit the white house this morning. the global economy and future of nafta set to top today's agenda. >> apple is rising, goldman and ibs give the iphone maker a buz as shares close in on the all-time high. >> and verizon getting back in the unlimited data plan game as it seeks a competitive edge with at&t, t-mobile and sprint. first up, president trump immediating with canadian prime minister justin trudeau today. the two leaders are expected to discuss jobs, economic growth and immigration after the president spent the weekend with the prime minister of japan, shinzo abe, at mar-a-lago in florida. we know reports of that ballistic missile test out of north korea over the weekend complicating matters as the president has to weigh national security with some of these trade issues. >> right. it's the first time i think a lot of the mainstream press is saying this is the first real test. i want to point out that i know trudeau's going to be speaking

with the president but that the president very much wants to get this pipeline going. it will be very interesting because the pipeline is very controversial everywhere. do we really need it in the united states? it's obviously the dirtiest oil in canada. but the jobs that would come from bringing this pipeline down and making it so it completes with the southern half i think is going to be on the agenda. and i think that means the environment's going to be an agenda and that's not what anybody's talked about with the president yet. >> does it get -- does any of this get clouded with some of the immigration stuff obviously as we await more clarity from the judicial branch on that order? >> well, i mean, i think that if you were to let's say move to canada and come in from these countries and then come in from canada, i think the president would like to have like an ironclad north meamerican ban. i don't think that's likely at all. i think this might be the most tense of let's say the in-person meetings with heads of state. at the same time remember there is canadian companies want very

much to do more business with us. and it's not like they're taking share. i've never heard anyone say the canadian companies are robbing our jobs. that makes the talk a little bit easier. >> of course the week's not over by a long shot as netanyahu, david, comes later in the week. potus has busy day calls with nigeria, south africa, rnc chairs, maureen scalia on the anniversary of scalia's passing. if you can believe it it's been a year since he died. it's going to intersect with this business news, national security, immigration and trade stuff. >> without a doubt. and of course the questions will be how much does that agenda supersede the domestic agenda when it comes to those who follow business closely and want to see dereg, tax reform and those key pillars in terms of building, well, what has been this big rally in the market. >> we'll talk more about gary ri cohn's influence that got written about over the weekend.

right now let's get to kayla tausche live at the white house. >> reporter: good morning, carl. it will be a busy day for the first meeting between president trump and prime minister trudeau since trump won election in november. there's a very tense backdrop as you guys were just discussing that center stage issues will of course be trade. canada has said some 9 million u.s. jobs and 2.5 million jobs in canada are directly tied to trade between the two countries, about $2 billion of goods change between the countries every single day. we did have a trade deficit of about $11 billion with canada in the last year, but certainly that is roughly on balance compared to the way that we have other larger deficits with some of our other trading partners. the prime minister of canada last week tweeting, strong canada-u.s. ties help the middle class in both our countries. monday i'll meet @therealdonald

trump next week. mexico has already begun a 90-day clock to begin renegotiating that 23-year-old trade agreement. meanwhile, the u.s. and canada have not formally begun that clock. so whether there will be a u.s.-canada trade deal like the predecessor to nafta that remains in place, that is certainly something that will be on the table today. but trudeau has largely stayed out of this debate publicly although he did emphasize the importance of the relationship. he has appointed his former international trade minister to be the minister of foreign affairs to spearhead the maintenance of the u.s.-canada relationship. of course the meeting today will kick off with a roundtable of female executives talking about empowerment both in u.s. and canada. but of course that working lunch will largely concern trade, guys. >> and, kayla, how much do we know about this roundtable regarding womens issues and ivanka trump? >> well, we're just getting some details this morning, carl, but

it does look like mostly canadian companies, energy companies, grocery companies. but you do have the regional heads of general electric, general motors and accensur. you can bet they're talking about what to do to spur entrepreneurship on both sides of the bortder. as we have more details we'll bring them to you. >> all right. kayla, we'll talk to you soon. kayla tausche in downtown d.c. double good news for apple. citing a stronger iphone 8 cycle, meanwhile ubs has a node saying apple services business probably undervalued by the market adding shares will be about 10% higher if services were valued similar to paypal. jim, goldman's thesis is largely around iphone 8 and likelihood

of ugh maugmented reality conte >> this is the first time that i felt that apple has something that would make it so we really could be surprised by what it is. i don't think anyone expected real surprises in 7, but here's what i don't like about that call. what that call is basically saying there will be a valley before we get to the now i'm starting to call a super cycle call without using super cycle call, i like steve melanovich. he's been a false bull, i have felt. his questions somewhat critical of what tim cook might be doing. this is the idea there's an ecosystem, it is the first time i've seen a guy kind of lukewarm on apple really give you an edge. he uses a paypal analogy. i don't know. paypal's been stuck at 40. i don't know how good that is. but i would say that the service revenue is going to be as big as

a fortune 100 company. i still continue to think it's undervalued. and these pieces are not about all the money, david, that can come in and be repatriated, which i think a lot of people are saying is the reason why the stock is still cheap at 14 times earnings. >> yeah. well, we know $246 billion i think in total cash, $230 billion in marketable securities. $230 billion of that, jim, is overseas for apple. that has not stopped them obviously from being able to borrow here against that enormous cash pile. we've pointed out in the past by the way they do have very good timing. their big bond deals seemingly always done right near the lows. and the question is not just for apple, jim, i think the larger question as we continue to talk about repatriation as a possibility maybe later this year or in '18, what are all these companies going to do with that money if they choose to as expected bring it back at a very low tax rate? will they just end up buying back stock? will they embark on m&a?

what will they actually choose to do with the proceeds? >> it will be interesting to see because we know the last time -- a lot of people feel the repatriation was a failure because the money was returned to shareholders. a lot of this has to do with i think the core principles of the trump administration versus previous administrations. there was nothing wrong at the time with giving money back to shareholders. either buybacks or dividends. people kind of felt, you know what, that's just a nice reward. they are shareholders. now seems there's an imperative from the trump administration which is some sort of give to get. you want that money back, you've got to build here. and that is going to severely limit if that is pressed, severely limit what we'll be able to do with the money because not a lot of companies want to take that money and start building here, because this is not where the demand is. >> right. >> so it will be interesting if there are strings attached. >> yeah. of course, carl, the key still will be to this repatriation part of a larger package of tax reform, to jim's point, if you were to get the blue point from house ways and means to actually

become reality, your capital investment could be written off in year one which might lead you to say, okay, we will use that money because we're never going to pay taxing again if we keep spending it each year to build things. at the same time, we'll see where we end up on tax reform. it's a very difficult thing to figure out at this point. >> walking into the office this morning the conversation is so much about how little the conversation has moved forward in the past few days. as for a.r., guys, tim cook, you know, he's been making this tour around europe. he did talk to the independent, jim. he goes in terms of a.r., i regard it as a big idea like the smartphone. he goes onto say i think a.r. is that big. it's huge. i get excited because of the things that could be done that could improve a lot of lives. he says i think of it the way i think of other core technology in the phone. that's pretty big talk. >> well, look, a.r., the most sophisticated science research centers people are using a.r. to look inside the brain, which is rather amazing.

i don't think you necessarily would be able to use a cell phone to look in the brain, but you never know. because where this technology's going to go. i think that the underrated part of this is the 440 million people who game. 3d is much more in sync than the next generation of pokemon go. could be in sync with the idea of 5g, david, we've talked about how far that's going to be out. and 3g, i think it's going to be absolutely huge, huge battery burner. and if that's the case and the self-charging battery -- or something let's just say that cannot -- that can offset the gigantic amount of battery life that is used by anything 3d would be most welcome. or i think that's going to be the big complaint. >> all right. we're going to find out hopefully more in the near-term, but for now we got goldman's note to go on. when we come back, verizon as we said deciding to go with an unlimited data plan. we'll talk about what that means for the wireless wars. obviously s&p, nasdaq are going

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unlimited data plans today for the first time since 2011. the move comes amid intense competition in the wireless industry, rival at&t for example having offered unlimited data plans for customer who is sign up for the company's directv service. and we all know how aggressive sprint and t-mobile have been in terms of courting verizon's customers with their own low priced unlimited data plans. as we said, verizon had not offered such a plan in six years, had removed that unlimited option for new customers. of course you may recall verizon reported fourth quarter '16 earnings that were below expectations a few weeks back, went onto lower growth expectations for '17. the stock down over 8% just this year. and now they're back in the market with a plan, by the way, that is, well, priced pretty aggressively. $45 a line for four lines, about $180 for a family of four unlimited, jim. and interestingly simon flan ri, good analyst at morgan stanley, says as well what's most surprising to him, guys, he says

that verizon has gone all-in with a full nationwide rollout with full hd video. it did not try to resume unlimited fios bundles or in select areas. and now says increasing focus on how verizon's network can handle this traffic surge pointing out that in the fourth quarter lte traffic was already up 49% year over year. jim, that's one reason why dish shares probably will be up this morning, the idea that, well verizon's going to need more spectrum spectrum to get this done. >> yeah, i think people are going to be skeptical of this because not only does verizon need this more band wwidth, you know john legere reports this week where he's going to present verizon as desperate. there's also talk maybe this is a one-time introductory. one thing we need to remember is this is completely defensive. a lot of people were really

struck by the numbers verizon just kind of seemed like for the longest time, and david you can answer this directly, for the longest time there was a big difference qualitatively among verizon, sprint and t-mobile. what you just mentioned is going to be brought up again from the very aggressive sprint/t-mobile people saying, wait a second, verizon doesn't offer anything better than us and the quality of verizon's not better than us. and this has really struck a chord with millennials who simply seem to have some sort of aversion to verizon. so this will be a very interesting fight. i don't know how much verizon gets out of it. >> yeah. your point's a good one, jim. i think right now sprint will give you five lines of unlimited for $90 a month for one year. then it goes to $160 a month. t-mobile is unlimited, no taxes and fees $160 for four lines. so both below what verizon's offering to the point being verizon, you know, carl, has always relied on the network and the quality of the network.

the other question here also is, well, t-mobile and sprint, antitrust, i mean look at what competition has helped do by keeping those two companies separate. if you allow them to get together, would that be seen as more of a competitive threat for verizon or perhaps pulling back? >> yep. i'm looking at some stats now. a number of songs streamed in the u.s. this is audio and video. in 2013 about $100 billion. last year $431 billion. a piece in "new york post" this morning about bezos and amazon's aspirations quoting sources inside the company, whoever they may be. >> right. >> saying one day you'll see an amazon channel the way you now turn to hbo for just straight linear content. >> doesn't seem unlikely. although of course the post reporting on that supermarket weren't exactly accurate according to bezos. but, jim, this goes back to like

hd video not limiting you the quality of the video for this unlimited offering. >> yeah, look, i just think there's a lot of pie in the sky. one of the things i would take away though we have seen a tremendous move in a lot of the fiber stocks. whether it be -- off of the apple new phone, but also you've seen bubbling in sienna, in juniper, these stocks are all going to come into play because you really can't do everything you want to do right now without say a xy links. they would tell you you cannot get that last mile of really exciting video without us. these companies are all going to have to spend a lot of money. that also is going to hurt their margins. this may be a group that you don't want to be in right now, or let's put it this way, if verizon fails to stem the tide, i think t-mobile may be able to handle this, i think sprint may be able to handle it, but one thing certain these stocks are less investable the more this stuff goes on. >> very interesting. yeah, well, i mean, again of course we also have this possibility of consolidation as

this year moves on. what will we see? will it be one deal? will it be two? or any? but, carl, there's certainly a lot of questions about that. and the auction by the way, the spectrum auction more or less in its final phases now ended officially, now there's sort of a rest period and then they've got the final bit of it, but the point being about four weeks from now everybody's going to be freed up to talk. they will no longer be under the restrictions that did not allow them to talk if they were bidding in the auction. >> david. >> yes, jim. >> do you think it's possible what i just talked about, we're talking about an incredible array of things that have to happen for 5g, you see companies saying the amount of spend is so great we really do have to get together because it's a massive spend and we don't have the bandwidth to be able to go up against each other. >> you're right. i mean, it is a massive spend. massive. hundreds of billions perhaps over time, jim.

it's an interesting point if in fact t-mobile and sprint do try to get back together. you might expect them, carl, to make that argument, scale being the key component. >> guys, when we come back a west coast version of cramer's mad dash as he's at one market in san francisco. we'll count down to the opening bell, take another look at the premarket on this monday. kicking off a busy week. we're back in a minute. new bikes aren't selling guys... what are we gonna do? how about we pump more into promotions?

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all right. about six and a half minutes before the opening bell. we go crossing the country to do a mad dash this morning with jim. what do you got? >> well, you know what brent saunders keeps making these

acquisitions that people think are tuck-in acquisitions, i think complete the body. zell tech a body sculpting company usually done with plastic surgeons, $2.47 billion in cash spent by brent to be able to buy zel tech this completes the now face and body. remember, a lot of the face work is being done by plastic surgeons. brent is trying very hard to make people look young, stay young, whether it be botox, whether it be this. what i like about this deal, david, is once again it is accretive. so when he makes these acquisitions, your numbers go higher. he's already got the cheapest high growth company in big pharma. a lot of what he does, by the way, is with teva dividend money. and teva this morning reaffirmed his dividend off of what looked like a not great quarter but what really is because they reaffirmed guidance. saunders has a huge chunk of teva stock and a lot of cash from selling generics. i think the stock is going to be

down because people don't understand the deal initially, but this is part of brent's takeover, how you feel, how you look strategy, it's been working so far because it's with dermatologists and with the people who do plastic surgery. >> right. and the point we've made is they're not going for a big deal at allergan, they're going for what may be a never-ending series of smaller deals. >> look, it makes sense because one of the things he doesn't want to do is bet the house. but then again, you know, i always like to contrast what allergan is doing with what gilead's doing. gilead just let people down because they have neither a big nor small acquisition program so you're kind of stuck with a value trap. one of the things i think very much is involved with what brent's doing is he figures if you have new drugs or different drugs you can charge more. remember, a lot of this is how do you be able to please secretary price and raise prices or have some new drugs without running afoul of what trump wants to do. >> all right. jim, we'll see you in a couple of minutes because we got the opening bell coming up.

start trading here for the week at the new york stock exchange on "squawk on the street" right after this.

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world. busy day once again in washington as the president meeting with canadian prime minister trudeau. in the meantime a lot of retail news today, jim, whether it's this nordstrom story continuing. some reports on sears dropping their own versions of trump's line. some upgrades for jcp at morgan stanley. >> look, i think that what's happening is we had two good days of retail and a lot of that was because cross border tax seems like it might be on hold. people are just itching to get into a group that hasn't moved. i think as long as we're in a position where we don't get quarters, don't get reports, the animal spirits in that group are going to be able to keep up with some of the other stocks that have moved so much. notice the dollar tree, dollar general, those are my proxies because they import a lot of stuff from china. they're bubbling over. jc penney is often thought about as antidote to sears' problems. i'm more skeptical.

>> indeed. there's a couple other things of retail we'll get to in a minute. let's get the opening bell and s&p at the bottom of the screen. today cantel medical focus on prevention medicine. at the nasdaq insurance company arch celebrating its ipo. jim, along with jcp, goldman initiates hasbro with a buy and some barron's chatter saying you could see 50% upside on the takeover. >> that will be interesting to see. my reporting on macy's led me in speaking to people who were familiar with what was going on they were quite doubtful they'd be able to get to any sort of a deal at least when it came to this hudson bay overture, which basically was one meeting. this is at least as of last week between hudson bay's mr. baker

who runs that company and macy's. so, you know, carl, i don't know. israeli though continues to b a -- real estate is a well known -- has a number of people working for him trying to sort of create more efficiencies when it comes to real estate there. as for po ten shlg takeout at least reported by dow jones, journal, hudson bay, didn't seem likely based on the conversation i had with people familiar with what was going on. any number of challenges leverage taken on by combined companies being a concern. simply being able to get to the number to be able to make it necessary to make it happen. we'll see. >> jim, got record highs on all three indices again. >> yeah. >> dow's up 70. and by the way, if we hit 2324 and change on the s&p, that is 20 trillion in market cap for the first time.

our thanks to peter and howard on that one. >> let's use the hasbro call from goldman as an analog to what's going on. now, hasbro reported an amazing quarter. the ceo came on "mad money" a week ago, this is a lot of disney tie-in and princess toys but a lot changing. try to say more of a company that might reverse engineer and go into movies, but this hasbro upgrade is the kind of thing that has people saying, wait a second, we've got this president and we have to check twitter all the time. we have a president who is playing golf with prime minister of japan, is that kind of nutty, meets with trudeau, and i come back and say wait a second what the heck does that have to do with hasbro? so if you are a hedge fund manager, you're saying i've got to be more cautious. things are a little crazy in washington. you're going to miss to what amounts to an 83 to maybe 100 move for hasbro.

they just don't relate. and a lot of that's why managers i talk to, carl, are stuck on the idea of how could i buy a situation that may be improving when i don't know what's going to happen from the white house? and what i've been saying is stop it. think about the companies. there will be companies that can be impacted, but don't think about a company like hasbro and the president. they don't relate. >> although you would probably agree, i mean, look at new corps today, you saw this upgrade at morgan stanley. you could argue that some of these upgrades are built precisely around what people hope will happen in washington. >> yeah. i mean there's a kind of a dual reality going on, which is that because of some problems say in copper, a lot of people are looking at copper there's a breakout both with giant mine, escondido combined in chile, so copper is tightening.

we know that cliffs natural put out a piece saying that the chinese love clean iron. we know that they want clean coal. this is all about china shutting down some of their state-run plants because they're worried about pollution. and then you reverberate into the idea that perhaps steel will be protected. nucor doesn't really need protection. they've got the lowest costs. but those stocks have stalled. now people are saying a loft of the commentary is that stalling is your chance to get in once more to the great cyclical revolution that trump is going to get done. david, the cyclical revolution is much more a let's say a process on things happening in congress than it is a stroke of the pen. which may not work to help those stocks. >> yes. i think there are some people, jim, who believe a number of stocks have gotten ahead of themselves based on expectations for legislation that could be hard to come by. and, i mean, we are here now in the middle of february, so we've

got a lot of time to go. but the keys as you say in terms of fax reform and others, but you've made the point correctly the rollbacks in regulatory certainly could be as important for many companies, jim, and not to mention are easier to get accomplished with the stroke of a pen, aren't they? >> yes. and i think that one of the things that has always dogged the steel industry is what happens to the environment with the steel industry. a lot of the steel industry people would say, listen, the epa is all over us, nucor is not a complainer. they've been able to advance quickly because they use a scrap-based method. but i think the idea that our autos are going to be built with u.s.-made steel entirely is very much on people's mind. don't forget letter x, u.s. steel, they make pipe. and they make the pipe. we saw the rig count go up again on friday. they make pipe for oil country tube is the name of it if we're going to drill more, which we're drilling more, the mexicans have owned that business because the

mexican pipe is much cheaper than letter x. again, there you start thinking what happens if the president just says we're not going to let that pipe in. that would violate nafta. >> yeah. >> but at the same time i think the steel companies really are betting that they're going to win this business. >> guys, worth mentioning this morning hanes celestial down this morning. on friday night it let us know the s.e.c. has issued a formal order of investigation into the company. you may recall a couple of months back the company had initial focus on its internal accounting review which pertain to the evaluation, the timing of recognition of revenue associated with concessions that were granted to certain distributors and then they expanded that review to perform an analysis of previously issued financial information in order to identify and assess any errors. that's ongoing, but on friday night we learned that they've continued to provide information to the s.e.c. in an ongoing

basis and the s.e.c. is issued that formal order of investigation and issued a subpoena to the company seeking relevant documents. jim, this is a name you know pretty well. it's getting hammered. >> there were some very bad reporting when hain issued our audit committee says we're fine, once again therefore mainstream press, mainstream business press said, oh, hain must be okay. it does not work like that. the audit committee is regarded by the s.e.c. as very even though it's separate as very much a part of the company. so it's very rare that you see the audit committee bless it and the s.e.c. say, wow, you know what, the audit committee says yes. so there was no reason to think, none, that this stock should have stopped at 38.39. this is standard procedure. you absolutely have to bet that this thing's not done. and, you know, when you see the subpoena, that's also expected because the s.e.c. does not care what the audit committee says one bit.

that is just the kind of fiction that goes on in the press. audit committee's promise -- what, are they going to throw over the ceo, that has happened periodically, very rarely, audit committee has its own counsel. this is where the stock finally gets into the nitty grit of of who has to go. who has to go. and that i think is what you're going to have to watch. >> jim, we have noticed that the russell which for a long time here has not been joining the record high party, does exactly that today. and we're still apple within a dollar of an all-time high. tesla's within a stone's throw of an all-time closing high today. so a lot of interesting levels to watch. >> yeah. watch the financials. they have been resting. now they're coming back. a lot of the smaller biotechs can go up off something say an allergan does even though sdel tech is not -- one of the reasons i'm out here i think a

lot of tech companies are doing quite well and anything china related, a lot of people are taking a call from cummins, they just called the bottom. i think there's a real delayed reaction going on. cliffs calls the bottom in iron. cummins calls the bottom in mining and also just in general commerce china. we're not ready for that because see baltic freight's been going down, haven't heard anything from china, that makes people feel better, but the u.s. companies that do business in china are saying things are strong. they are getting stronger. and that plus the only country that seems to be weaker year over year is venezuela. i mean even brazil people are saying is flat year over year. be aware that this global growth story is very much intact and driving a lot of cyclicals. i cannot believe cummins can continue to go higher just on a call we think things are bottoming but their comments are reverberating and working. the cyclicals remain a place to be. >> carl, with that 1% move up that apple has this morning its market value does eclipse $700

billion again. i guess it's a level it was once at briefly as well. but it is just something to look at on your screen. $701 billion. jim and i pointed out almost $250 billion of that is cash and marketable securities. they do have some debt, to be fair. >> i think one of the things that happened with apple is you're getting these people who really were trying to jump off the train. and if they didn't jump off the train before the 7 -- there were some jumped off right before and i'll leave his name out of it because it was so completely wrong, but you got a split camp. you have a camp says you can hold onto it because the service revenue, the razor, razor blade model is kicking in. and then the camp so frightened to downgrade the stock ahead of the 8 because we keep hearing things the 8's revolutionary. this is a good reason to own a company where people have gotten very underweighted in it betting that the 7 was going to be a bust. and the 7 wasn't a bust. it just wasn't. >> sure enough. last quarter proved that.

we'll see what the 8 brings. meanwhile, dow's up almost 100. and we're awfully close to that 2324 number again. s&p would have $20 trillion in market cap. let's get to bob pisani on the floor this morning. hey, bob. >> good morning, guys. happy monday everybody. we're at new highs right here and over in asia and europe too the markets have been up. trump mentioned tax reform issues would be brought up in the next couple weeks. last week we had our best volume day on thursday during a snowstorm, so there's the magic words here. and over in asia global markets were up, asian stocks didn't care about north korea's missile launch. japan's nikkei is up, hang seng is up, smaller markets like vietnam and malaysia also on the upside. in fact european emerging markets have been doing very well recently. europe's up as well. we've got some of the material names doing well. a lot of the steel names are up, rio tinto on the upside,

glencore having an amazing year, it was also strong in europe. here in the united states what you want leading the market, your banks, your materials and your industrial names. not a lot of new highs out there as carl mentioned. apple is essentially sitting right near a new high, but not a lot of new highs. but it's the ones you want leading the market there. there you go, three there, banks, industrials and materials leading the market. jim was talking about global growth and that's a very good point because that's what we're starting to see here. look at major reasons while u.s. is up 3.5%, the rest of the world is outperforming, emerging markets are having a great time. there was a number of analyst reports out over the weekend about this, goldman talking about higher inflation, talk about growth momentum in emerging markets as well, but japan with the weaker yen has been outperforming. and even europe the efa, you can buy that in exchange traded fund, is outperforming the united states. so there's a general feeling that global growth is improving

in general. meanwhile, let's talk about stocks here in the u.s. you see macy's on the upside, barron's did mention it although i would note at $32 macy's was $70 in july of last year. but there were some very interesting points. aside from the obvious sale which they felt would net a 50% upside for macy's, downsizing the physical stores could just by itself result in a 20% to 30% gain. and they are the sixth largest online retailer, which is a very good point barron's made. online sales are growing 15% a year. so independently of whether they're sold or not they're still making inroads generally above the rest of the retailers. certainly above the rest of the department stores right now. finally there was an article, i think a very interesting one in the journal about vanguard hitting $4 trillion in assets under management. that's certainly quite a feat. they are not number one, blackrock has been number one for a while. they have north of $5 trillion. that was the end of january. vanguard is beginning of february, but you see the

differences here how blackrock and vanguard and state street and fidelity are pulling away from the rest of the pack. j.p. morgan would be five here, but the point is vanguard's been doing so well it's doubled assets in five years. so about $2 trillion five years ago because of the growth of indexing. vanguard does have active management as well as indexing, but most of the money going into these funds these days are in the indexing side. and you can see of the top ten etfs that are out there vanguard has four of the top ten. here they are these are all index based total stock market which is essentially small, mid and large cap thrown together. the s&p 500 these are $90 billion. emerging markets and developing markets. so they essentially cover the globe here with four etfs that capture a huge part of the market. number one by the way still the s&p 500 ishares s&p 500 which is spy nearly $200 billion in assets. bottom line is indexing continue to win, vanguard continued to be the perception that they are very involved in indexing and

very involved in long term investing as well why they attracted so much money way back in january. right now the dow up 105 points. carl, back to you. >> bob, thank you very much. let's get to rick santelli too at the bond pits at the cme. good morning, rick. >> good morning, carl. it seems as though guns hot with respect to equities, stocks and rates. once again look at a two-day of tens. we've climbed we're up about three basis points on the day at 244. which by the way is unchanged on the year. let's stick with 11/1, beginning of november for the rest of the charts you can see the pattern on tens. seems to be turning back up. and it goes along with a lot of other related markets. let's look at the tens minus twos spread. it's resteepening. if we look at tens minus bunds, it's widening again as we distance ourselves from what's going on with the rising rates in europe. and that is significant. maybe it's handicapping a growth

spend, but whatever it is handicapping all of these lining up again seem to point up for rates, dollar and stocks. now, if we consider the dollar index on this chart a couple of things should jump out at us. it's been basically a month since we've closed with a 101 handle. we're about ready to cross over into 101 territory. and as far as what's going on with foreign relations and trade from a political standpoint, it seems as though the currency moves coordinate with visitation. look at how the dollar/yen, the dollar now at the lowest yefl -- excuse me, at the highest level as the yen moves down in about two weeks as we see that the yen moving a bit lower while abe is here is something to pay attention to along with some of the recent moves by the chinese currency. carl, david, jim, back to you. >> thank you very much, rick santelli. as bob said, dow's up 100 points. we got record highs across the board including the russell today. s&p 2324. back in just a moment.

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♪ the senate poised to vote tonight on the nomination of steven mnuchin to be secretary of the treasury. cleared a procedural hurdle in an early morning vote on friday. politico reporting mnuchin is looking to tap another goldman a alum jim donovan, others being included perhaps dav-- of cours widely reported over the weekend gary cohn, consolidating power, has the president's ear and has a voice in all kinds of things, infrastructure, warning the president the dollar strength remains the chief headwind to growth. >> and will be an important voice in potential tax reform as well moving into that vacuum.

but now mnuchin or when he gets confirmed, carl, the question will be do they align and where does the power lie. i guess that will be interesting to see. but we haven't heard from mr. mnuchin since his first interview on "squawk on the street" the day he was nominated, and shared some thoughts then that people are still focused on because really even in his -- during his hearing he didn't share any policy thoughts. >> yes. jim, how much does this all matter to us? >> i think it matters a lot. i agree we have no idea where mnuchin stands in the black box. gary cohn, when he came on on labor day when we got the non-farm payrolls, he came out forcefully basically saying here's the president's agenda. previous people in the obama administration did not use that forum as saying, look, this is what's going to happen. but i feel that gary -- look, he's a take charge guy from when he was at goldman. i'm not sure what mnuchin was like at goldman, but isn't it amazing that we're even talking

about what they were like at goldman when not that long ago we felt goldman would be on the outs? i feel it's somewhat incredible to think, okay, well the goldman team is being put together to be able to make it so something will happen. i do not see a lot of people from out here as part of the team. i do not see a lot of people from silicon valley as saying, look, here's what's going to happen. you have financial guys, which makes a lot of sense, but david, don't you find it interesting that we do not see the new form of manufacturers out here? >> yes. i think that is an interesting point, jim. what it means, i don't know at this point. >> we'll get stop trading with jim as he begins a week out at one market in just a moment. dow's up 93. ght now. the newly advanced gle can see in your blind spot. onboard cameras and radar detect danger all around you. driver assist systems pull you back into your lane if drifting.

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and add phone and tv for only $34.90 more a month. call today. comcast business. built for business. time for cramer and stop trading. >> carl, you tweeted something interesting which is companies dominant in market cap, number three was microsoft. microsoft has a continued theme out here, of course they're located up north, but they are involved with every single aspect of what people were doing down here. and i want to point out that their cloud work is what a lot of people fear.

i mean a lot of people fear amazon. we always know amazon's out there. but slowly but surely satya nadella has positioned microsoft as being far more than just a pc software company. and i think that their work on the cloud is being underestimated. i think that people have to start realizing that microsoft is a huge player and we got to stop thinking just about google and facebook and amazon. we have to put microsoft in the conversation. i'm not saying that they belong in f.a.n.g. i am saying that people are underestimating the $18 billion target. now i think far bigger target in cloud. microsoft's a very important player we're just not giving them the credit. >> that's a good take, jim. what do you got on mad tonight? >> well, i mean, one of the companies that i'm concerned about with microsoft is vmware, they don't do a lot of tv. microsoft wants to be able to be a player in the cloud. we've got a company that is i think very, very exciting called new relic which does a lot of what i regard as being, again, trying to figure out the web.

and then the most important guy probably is brian krzanich. don't want to take away from the other guests but he met with the president last week. brian krirz nic brian kirz nic brian krzanich -- a lot of people want his technology. let's see if that is here and now or whether it's something in the future. >> definitely a man in the news right now, jim, as are you. we can't wait for a great week from you out west. >> thank you. >> jim cramer at one market. >> appreciate it. >> when we come back we'll count down to the president's meeting with trudeau plus more on another record setting day for stocks. back in a minute. this is my headquarters. this is where i trade and manage my portfolio. since i added futures, i have access to the oil markets and gold markets. okay. i'm plugged into equities- trade confirmed- and i have global access 24/7. meaning i can do what i need to do,

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partner with pgim the global investment management businesses of prudential. ♪ congratulations adele going five for five last night. welcome back to "squawk on the street." aisle carl quintanilla with sara eisen and david faber at the new york stock exchange. record highs again across the board including the russell as the s&p and nasdaq are going for the fifth day of gains.

>> our roadmap for the hour begins with president trump meeting with canadian prime minister trudeau in just about an hour from now. economic interests and trade in focus. we'll take you live to the white house. >> wall street extends the record run, the dow, the nasdaq and s&p all hit fresh new highs. >> plus, trump branded products taking another hit and a big call on macy's. we've got all the details with a retail roundup. busy morning in washington, d.c. the president meets with canadian prime minister justin trudeau at the white house in less than an hour from now. our kayla tausche is there and joins us with the latest. good morning again, kayla. >> reporter: good morning, carl. you can see the honor guard assembling behind me at the white house as we await the arrival of prime minister trudeau. his first visit to the white house since march of 2016 when he met with president obama and discussed a handful of policy initiatives at that time. but to say the discussion today when he meets with president trump will be dramatically different as perhaps to put it lightly. here's what's expected to be on the agenda. first, the two powers will be creating a female business

executive working class group to talk about empowerment of women in the workforce. that will include mostly executives today from canadian companies but also regional heads of u.s. multinationals. then they'll be discussing how to empower the middle class, a priority for the administrations of both countries and something the prime minister trudeau himself said in a tweet would be something that he would want to talk about. but then perhaps the biggest elephants in the room are the positions of the u.s. on trade, energy and immigration which have been markedly different under the trump administration from the obama administration and especially speck tor of new trade agreement between mexico, the united states and canada is going to be top of mind. on immigration prime minister trudeau has refrained from being too vocal about that issue though he had vaguely criticized the administration's approach to immigration and canada has been trying to make overtures for companies to move there. but at a town hall in ontario last month prime minister trudeau was asked specifically by an attendee there about how

canada will work with the trump administration. >> our colonies 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. >> reporter: in terms of what the u.s. imports from canada, energy is going to be at the top of the agenda. the u.s. imports 3 million barrels of oil per week from canada. it's currently the largest energy trading partner with the u.s. and that's even before the completion of the keystone xl pipeline which president trump has already ordered. so you could see some near-term effects to the energy industry. all of these topics are likely to come up at the working lunch between the two leaders and we'll get a press conference later this afternoon on whether there's any substantive policy discussion of course will be top of mind for reporters attending. guys.

>> yeah, especially on trade, kayla. kayla tausche at the white house checking on stocks broadly another rally record heights for u.s. stocks. joining us with more on where the market goes from here, global quantitative strategist at wells fargo and brian, chief investment strategist at bimo. brian, is there potential to rattle the markets? canada is second biggest trading partner and we know president trump wants to go back and renegotiate nafta. if canada's collateral damage, could that be disruptive? >> good morning, sara. no, we don't think so. we don't think anything s substantive will actually come out of today's meetings. we would be surprised, remember on the other side the u.s. is canada's largest trading partner. so given the fact that we are both u.s. and canadian tr strategists, we've done a lot of work with respect to what's happening in canada, and as america goes so goes canada. so we think the two parties will be very friendly to each other.

remember, our call has been all along that trump needs a friend in the region, and we think president trump's going to find that friend from canada. we're already starting to see that with respect to what's happening on the energy front. so at the end of the day we think the more risk with the market quite frankly, sara, is around the tax cuts and what happens with respect to corporate taxes in terms of what everyone's expectations with respect to what the number's going to be. >> we're seeing another 100-point rally led for the financials. samir, what is your expectation right now? what do you think the market's is when it comes to that phenomenal tax plan that should be released by the white house shortly? >> you know, i think it will be helpful. anything that simplifies the tax code will be huge positive, especially for smaller and mid size companies. the tricky card's going to be what is the effective tax rate. because i think a lot of people fixate on that marginal tax rate of 35%, but in essence large u.s. companies pay something much lower than that. when people do the math and come back, all right, it's a benefit

from a transparency standpoint and simplicity standpoint, but the effective tax rate is not that much lower, i think people might walk away a little bit disappointed. >> brian, i'm just looking at the ten-year yield. it's been a big driver. yields are higher, which could be leading financials right now 2.44. but they are not breaking out. we're moving up to record tops on stocks, not quite the same in the bond market. how do you explain that discrepancy? >> we would say the financials aren't really rallying because of higher yields, sara. we think financials are rallying because of the debilitating regulations that we think are unwinding. you know, we've been clear that the 15-year bull market in compliance and financial services is over. that's why we think financials are rallying. the other thing too, sara, we believe clients around the world on the institutional side are massively underweight financials still the number one comment we receive from all of our clients when we meet with them is financials have gone up too much just like the market. when are they going to correct?

people are looking for a correction to add to financials and add to the market so the bond market with respect to what's happened was we really need to see more substantive growth from the gdp side. that's what we think will really trigger moves in the bond market. with respect to financials this is not about the yield curve. this is not about interest rates. this is about relglatigulations away on the financial side. >> sameer, do you agree with that? >> we would say it's a bit of both. it's hard to argue higher yields and steeper yield curve aren't good for financials. i would say a little bit of both and regulation side is actually the icing on top. we tend to be fundamentally driven and fundamentals are improving for banks and the regulation side is great. on the fixation side one thing that's holding down yields, remember the fed holds down the short part of the curve and also u.s. yields don't trade in a vacuum. they trade in a global marketplace and you have very low yields around the world. those are the two things holding down fixed income yields. >> yeah, i agree, some political risk in europe also could be weighing on that, brian.

with regard to your deregulation helping financials theme, we learned that tarullo is the latest to step down from the fed. financial regulator pushed for high capital levels, president trump is really going to get his chance to shape this fed. three open seats on the board out of seven. what does this look like? is this going to be a market friendly idea or not? >> to be clear anybody can buy financials, the thing about being a fundamental investor is look at wlast going to happen with respect to the fed become more growth friendly, more business friendly, more hawkish, which remember if interest rates go up the economy's going up. if the economy's going up, that means stock market's going up. we haven't been in a cycle like this since the '80s and '90s and many investors haven't been around to see this move. we think it's fundamentally driven to what's happening with the fed and less regulation across the board, not just financials but the fda, epa, fcc, this is the most positive

secular story with respect to what's happened with the platforms that president trump is putting forward. >> wow. super bowl. what's your target, brian? on the s&p. >> target right now is -- target right now is 2350. our best case scenario is 2500, sara. we would look for an opportunity to change things with respect to our target if we see some sort of a pullback in the market. we don't raise targets just because the market's going up. we raise targets because something fundamentally has become a little bit more clearer. and fundamentally things will get clearer if we start to see the absolute numbers with respect to the tax cuts. we'd feel a lot better about that. >> we'll see what happens. for now solidly rally mode, the dow is up 107. gentlemen, thank you. brian belski and sameer samana. >> when we come back president getting ready to meet with prime minister trudeau. former u.s. trade rep ambassador hill going to join us. plus barron's making big call on macy's over the weekend. talking about some significant upside on a would-be takeover.

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things we align on, but we're also going to talk about things we disagree on and do it in a respectful way. what might that be? >> i would say that the disagreement would be at anything that hindered the north america market, which has become one of the most competitive regions in the world. canada is our largest export destination, and mexico is our second largest. and i think the prime minister does not want that to be destroyed. but we can do more to be even more competitive. when we negotiated the north american free trade agreement, we didn't have energy on the table because mexico had a constitutional prohibition. we can address that. we didn't have digital flows. none of us had cell phones and that kind of thing. so there are a lot of things wektd do to make ourselves more competitive, but let's not tear down the structure that has given so much to each of us. >> one of the other stats on

trade, miss ambassador, is that 75% of canada's exports go to the united states while 18% of u.s. exports go to canada. so clearly canada's much more dependent on us than we are on them. what type of leverage do you think that will give president trump when he tries to reopen nafta and get some of these sort of modern improvements in that negotiation? >> i hope he knows that 80% of trade worldwide is done through supply chains. and our most efficient supply chains are in north america. when you ask states what do they import? it's intermediate goods. you ask the state of washington, what do you import, and they say airplane parts. what do you export? airplanes. you ask nebraska, what do you import? beef and cattle. what do you export? processed foods. and you go across the nation and if we were to cut off our supply

chains for imports, we would be far less competitive in terms of our exports. >> ambassador, i'm looking at a study that says the duration of u.s. free trade agreement negotiations is often at least four years from the launch date of negotiations to the actual implementation. given that that the average trade deal takes at least four years to actually get going, you know, what is your sense as to the president's ability to really change things? >> well, the president has ability to withdraw from the north american free trade agreement. there's a provision in the agreement that would permit that. but it would be the gravest mistake you could make economically for our nation. we have about 5 million jobs that rely upon the north american free trade agreement. what he ought to do is use it as a useful foundation and build upon it with the changes that have occurred in the last 23 years. and he could do that. and mexico and canada would be

amenable to that. so we have a partnership that really adds value to our nation's economy. >> ambassador, the news about north korea and their missile test on friday has some wondering whether or not national security clouds the trade argument, whether he can be -- whether he needs to moderate the views he had during the campaign because he needs partners like china to help fight against north korea's aspirations? >> i think trade has three aspects. it enhances your economy, but it also the most efficient development tool we have discovered. we found that out with the marshall plan. and it is also a magnificent security arrangement because poor countries that cannot enforce their laws often become havens for international crime and all sorts of things like disease. so we want to keep open markets.

and i do worry here in north america that yesterday there were protests in 18 cities in mexico. why? because they felt the united states did not show respect. and respect doesn't cost anything. it just requires that you follow our values. and i want us to do that. >> have you been encouraged then to see the diplomacy in action? this is the third foreign leader that's going to be visiting the trump white house, theresa may, shinzo abe and now justin trudeau, canada. >> i think it's wonderful that they are visiting. and i hope that their visits are constructive. and that the president reaches out and makes friends and tries to listen and tries to find ways that we can work together to make a real contribution to a

win-win situation. >> i also wanted to ask you, mrs. ambassador, about the border adjustment tax that's being considered right now in the gop house ways and means tax plan. do you see that as going against u.s. trade rules in the wto as it's being presented? >> it's unclear how it is being presented, but we cannot violate the rules that we have created either in the north american free trade agreement or under the world trade organization. and both institutions have contributed so very much to our growth. our nation is better off, there are calculations since we opened markets with the gat starting way back after the war in world war ii that our economy is a trillion dollars richer and that the average american is more

than $1,000 richer by reason of the north american free trade agreement and our opening of markets through the world trade organization. so let's keep that -- let's keep the markets open. let's keep thriving and having prosperity. let's reach out around the world and see whether by opening markets we not only enhance our economy, we enhance our security. and we can do it. >> although you'll acknowledge before we let you go, ambassador, that that world view is facing challenges not just here but in countries all around the world? >> i agree. i think populism and -- we're not gettinged facts out. so i look to the media, people like you, to explain how trade has enhanced our nation's circumstance economically and also that by reaching out to our neighbors do we really want a hostile neighbor on our southern border when there's hostility in

every continent of the world? mexico has been a great partner, a really truly great partner that has been a benefit to us. and they have grown since they've opened up. their middle class has increased and they have been benefitted. we want to keep their respect, their friendship and their support. and to do that we must work well with them. >> ambassador carla hills, we'll see if that is expressed at all in the meetings today. thanks again for your time. it's great to see you. >> pleasure to join you. when we come back, trump branded products taking another hit in the retail space. we'll fill you in. take another look at stocks here. record territory across the board. the dow, the s&p, the nasdaq and the russell 2000. dow's up 100 points. we'll be right back.

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♪ barron's making a big call over the weekend saying macy's could have 50% upside in a sale of the company. also sears just out with a statement saying that only a small number of trump-related products have been removed from its website, contrary to what it says weekend reports may have implied. for more on some of these retail developments we are joined right now by the ceo of worldwide enterprises and cnbc contributor jan niffen. great to see you, jan. >> great to see you. >> let's talk about macy's potential upside in the sale, does that sound optimistic? >> i was glad to see them at 50% upside, i was at 30% upside. i think there's likely to be a deal. i do think there's substantial upside. and, you know, 50% wouldn't surprise me. depends on if there's more than one person interested. >> what do you mean likely to be a deal? and how do you envision the sale of the actual department store, the retail brands versus the

real estate, which is at play both when you talk about hudson bay and macy's? >> well, if this deal really is with hudson's bay and they're what one-seventh the market cap of macy's. certainly a teal that would look unusual in the marketplace. however hudson's bay has been good about buying things with their own asset and been good at mortgaging, setting up real estate investment trusts to monetize the value of real estate. so i don't see why that couldn't be done with macy's. we've been expecting that to happen with macy's for a couple of years now. you know, starboard thought there was $20 million more or less of -- $20 billion of value there. i think there's at least eight of recognizable value. and that would pretty much fund the deal including accepting the debt of macy's because it's only about a $20 billion or so deal in total including premium on the equity. i think it can be done by hbc. you know, i was in the business back in the day of buying

companies with their own assets, so looks to me like it could be done. >> well, you know, jan, they did hire doug sessler last spring to join macy's as executive v.p. for real estate to do a lot of the things you're talking about without an outside party or a second party. i would also point out hudson bay, i'm curious to get your take actually, good on the real estate but having some tougher times on the actual retail business, aren't they? >> aren't we all? macy's is having some tough times on the actual retail business as well. and so are most brick and mortar retailers. so i don't disagree with you. but i don't think that changes the transaction. it wouldn't be like that macy's couldn't still be run by jeff gannett going forward. somebody's going to have to run that side in any event. i don't see that as the shiesh e issue. the issue is do you deal that recognizes the value of the real estate somehow? we've all that was going to happen, it's just a question of if macy's does it, private

equity firm or hudson bay, and right now looks like hudson bay would like to be involved and has expertise in the area. >> yeah, although i'll tell you levering up a combined company if it was not to be an all-cash deal even and macy's shareholders had some part of it or just levering up in general, you remember macy's, what was it, the old federated deal. >> turns out we only got -- and robert campo got the rest. absolutely we've seen deals like that. we've seen brad martin do similar transactions. there have been people on the real estate side doing deals in retail for a long time. some worked better than others. but if macy's leverages themselves up, i don't see how there's much difference in that. >> jan, we also wanted to get your take on the trump branded products. a lot of news here. over the weekend there were some headlines that sears and kmart

removed trump products from its website. sears responding saying, quote, any fair observer who searches for trump or ivanka trump on sears.com would find hundreds of products available for purchase. this is a predicament right now as nordstrom found out last week. do you agree with the retailer's call to get rid of the merchandise because they aren't selling whether it's for political reasons or not? >> well, certainly if it's not selling you have to agree to get rid of it, right? but the real question is, is it the boycott because the reason it's not selling or is it just not selling or did really these guys pull away because of political issues. i really think if you're a retailer what you're in the business of doing is selling product and making customers happy. you don't like controversy. so the fact that they've sort of dumbed down the display of ivanka trump product doesn't surprise me. they don't really want to be in a fight with their consumers on either side. they're trying to walk down the middle of the road. it's really hard to do. and it's easier to not be

involved on something that's a pretty small part of your business. as a matter of fact, it's an extraordinary small part of any of these retailers' business. do they really want to lose a lot of other business to a boycott in order to support that product? especially if it's not selling well anymore anyway because of the boycott? i just think they're doing what any retailer would do in the face of a boycott from a group of customers. >> but this is not any president, jan. do they really want to be targeted in a tweet by the president of the united states? >> no, but they would rather be targeted in a tweet than have half of their customers not shopping with them anymore and if that's their two choices, they're going to walk away from the product. we've done that all our lives, we've always had controversies, antiabortion, pro-abortion, anti-gun, pro-gun, you've always had some things affecting in-store operations and you're always not wanting to be there. so i think these people are just trying to get out of the way. they would like to not have the president mad at them. they would like to not have

ivanka mad at them and not have their customers mad at them. >> so, jan, by that logic, when starbucks howard schultz says something political on a tv show or says they're going to hire a bunch of refugees or when any of under armour's athletes take issue with anything plank says positively about the president -- >> i cringe. >> are they making missteps? >> well yeah. it makes it harder to sell the product. some of the people like it and maybe they buy a little more product. but probably not. some of the people hate it and they buy a lot less product. it's really hard to win in that kind of a situation. so what you want to do is be less controversial. and i know that we want people to be able to identify with the product, be closer to the people who are buying our product, but it's really hard when it comes to politics when all of your customers are not feeling the same way. >> i mean, it just adds to some of retails problems, jan, which we've been talking about and we've seen in some of the

numbers. where are you on where the pain is right now for the retailers and how much more is left when it comes to online shopping, losing traffic? are they doing the right things to turn it around? >> no, they're not doing the right things to turn it around because it's hard to find the right things. as you move product online, your returns are lower, it's hard to make as much money as you were making selling it in the store. so you have to go do that. but it's hurting the bottom line returns. and you're going to see a lot of stores close. you're going to see a change to the way we do retail. you're going to try to be more local feeling for your customers. you're going to try to be more socially conscious because that's what the customers want. and that's all really hard to get done. so the traditional brick and mortar retailers are certainly losing to online. amazon's gaining share. the old guys that are still not as old as the brick and mortar guys that i think of traditional like the off price guys who are only 20 years old are still gaining share. and it's putting enormous pressure on what have traditionally been the full price brick and mortar space,

mainly the mall based space. so that's been very difficult. it's just going to get harder. we're going to see more store closures. we're going to see more bankruptcies and more merger because that's what happens when you go through stress and retailing. >> is it still your call that sears makes some kind of important filing this summer? >> well, i didn't say this summer. i said some time between august and next spring. and i still believe that is likely to be the case. and i think that it will be a big change in retailing when it happens because you'll see a lot of boxes close. and that's not going to help the malls where a sears box closed and maybe a penney's box could close and maybe a macy's box could close. so it's very, very difficult in non-high end malls, if you're a c, a c-plus, a b minus mall, you could see a lot of pressure from some of these boxes going dark and trying to reconfigure them to bring back the business. i'm the guy that's been saying

for the last two years by 2030 50% of all non-bar, non-restaurant sales are going to be online. it's only about 15% today. so it's going to be an enormous change to the day -- to the way we do retailing. >> we'll talk to you in 2020. no, we'll talk to you before. jan, thank you. jan kniffen with macy's outperforming today it's up about 2.2%. always good to see you. >> i hope we do talk to him then. when we come back economic issues on the table as the president meets with canadian prime minister trudeau. we're going to the white house to see what's going on there. meanwhile, dow hanging onto its strong lead up 109. record gains across the board. don't go anywhere. your insurance company won't replace the full value of your totaled new car. the guy says you picked the wrong insurance plan.

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good morning everyone. i'm sue herera. here's your cnbc news update at this hour. start on the west coast. even as water levels drop, nearly 200,000 people remain under evacuation orders this

morning as california officials try to fix an emergency spillway at the nation's tallest dam. like oroville had water levels so high the spillway was used saturday for the first time in 50 years when engineers spotted a hole on the concrete lip. at least four people were killed following an avalanche at a french ski resort. five others remain missing. high levels of snow making it very hard to get to the missing people. north korean state tv showing a video reportedly showing the country's ballistic missile launch over the weekend. said leader kim jong-un inspected before watching the launch at an observation post. and heavy snow blanketing new england just days after the biggest storm of the season dumped up to 19 inches of snow on the region. another two feet of snow is still possible. and a high wind warning is in effect until tonight. that is the news update this hour. i will send it back downtown to you guys, david, i think i'm tossing it back to you. >> yes, you are, sue. thank you very much, sue herera.

president trump and canadian prime minister trudeau meeting at the white house just moments from now. front and center, trade and nafta. our susan li joins us now. >> for canada, david, the u.s. trade relationship is the most important. you can imagine the trudeau camp were eager to get in front of the new u.s. president. getting updates from inside the trudeau cabinet this morning, they tell me that the economy will be front and center in their discussions with the u.s. president. integration of the economy, as they say, which you can translate into nafta discussions since most of the integration between the two economies have been done through the 22-year-old trade pact. now, when i spoke to canadian prime minister justin trudeau in march last year and asked him if he was prepared to say renegotiate nafta in the future, he didn't seem too worried at the time. >> i think it's a concern, but i'm not worried that we're going to suddenly reopen nafta or other trade deals. the challenges once you reopen

it a little bit they all tend to unravel. and it's too important for both of our economies to continue to have a strong trading relationship. >> and now that canada is dealing with a new u.s. administration, a new u.s. president who wants to renegotiate, it's a whole new world. canada is the second largest trade partner with the united states. and a relationship that is worth over $660 billion. and given the rotation of the former trade minister into the foreign ministerial role, you can guess a future trade relations with america is probably canada's number one foreign policy priority right now. however, this opportunity to reopen nafta it could also mean that there's room to renegotiate and rediscuss exports of say canadian autos, energy, lumber and agriculture. >> susan li, susan, thank you. we will continue to keep our eye on the white house ahead of this meeting. now let's send it to the cme group in the meantime.

rick santelli with the "santelli exchange" in chicago. >> good morning, sara. like to welcome peter tur, thanks for taking the time, peter. >> thanks for having me, rick. >> if i look at equities, i see the dow up about 3% for the year, the s&p close to 4%, nasdaq up 7%. high yield securities when they come to the market you can't keep them on the shelves. leveraged loans are a hot commodity. and tens held the lower end of a range of 2.30 to 2.60 recently. but here ten years unchanged on the year why is the sovereign fixed income market a bit stuck while other sectors seem to be hot again, peter? >> you know, i think part of it has been what you've seen in europe with concerns about la pen. so you've had european yields remain low, more quantitative easing talked about, excuse me, so i think that's really held in yields here. and there's more concern whether we'll get the growth or not coming out of the u.s. >> all right. i look at stocks it certainly

looks as though they've been leading the way. one of the issues on the table is the repatriation and what strings may be attached and will there be taxes of course on things that are imported. so all in all that could change the dynamics of what funds things like acquisitions instead of all the issuance that's hot right now, maybe it will be that repatriated money. does that change the dynamic in a large way, peter, in your opinion? >> yeah, i think it changes it in a big way. normally i would be concerned that the correct markets can't rally will hold back the equity markets but i think we've seen complete animal spirits turned on where you have m&a activity, we were just talking about macy's in the earlier segment, if you see that, you can see equities do very, very well while credit kind of languishes. >> and then finally, when i look at the board of course and i see 30-year bonds back over 3%, tens getting close to 2.5, keeping it simple, isn't there just going

to be a more deeper demand for u.s. treasuries considering some of the issues you mentioned a few seconds ago like frexit, like italian banks, like greece and imf and bailouts, isn't that also just going to create a very simple form of demand that may keep an aggressive rise in rates a bit at bay? >> yeah, i think there's that. and also as pension funds get more on the equity return side, they can be comfortable holding long-term debt. so i think there is real demand for u.s. treasuries. i think we can go a bit higher, but i'm not certainly panicking that we're going to see 4%. my range is more 2.40 to 2.60, 2.75 on the ten-year. >> excellent. peter, thank you for your thoughts today. carl, back to you. >> thanks for having me, rick. >> rick, thank you very much. rick santelli. as we go to break this morning, take a look at shares of verizon. the company announcing it will start selling unlimited data plans amid intense competition in wireless. we are awaiting the arrival of canadian prime minister justin trudeau at the white house.

when he arrives we'll take you there live. dow close to session highs up 115. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities.

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trump's win has had a huge effect on the market that you might not have even noticed, and it could be great news for stock pickers. we dig in on tradingnation.cnbc.com. more "squawk on the street" coming up. ♪ we're drowning in information. where, in all of this, is the stuff that matters?

the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. morgan stanley. some live pictures of the white house this morning. we are awaiting the arrival of canadian prime minister justin trudeau. the two leaders expected to discuss common economic interests, but issues like trade, immigration and refugee policies could prove contentious. joining us this morning to talk about that meeting is the former assistant secretary of state for political affairs ambassador lincoln bloomfield. ambassador, good to have you back. >> thank you. >> arguing trudeau will bite his tongue on certain issues despite pressure from the left in his country, do you see it that way?

>> i don't know whether prime minister trudeau will be playing to his home crowd. what i think he's going to do is what prime minister theresa may and shinzo abe of japan did is to come and get on a good working level with the president. that seems to be a very good way to solve problems, to address things at the highest level and not allow them to be caught up in all these sideshows of contentious issues. so there will be problems, but hopefully the two men will get on the same page and have a rapport which they can draw upon head of state to head of state. >> doesn't he have to bite his tongue, mr. ambassador? because millions of canadian jobs are at stake if he does oppose president trump on things like immigration. >> i would be surprised if prime minister trudeau came in and had a sort of contentious meeting with president trump. it's clear from what we've seen so far in this presidency that leaders who come in and act as

sort of in a statesman like way, establish rapport at the highest level is strong insurance policy against specific issues that could be very difficult to manage. >> so with that in mind is there a way to renegotiate nafta as president trump had campaigned and promised to do without canada getting hurt in the process? >> i think it's safe to say that canada's interests is to try to stabilize the question of nafta, if they can. nafta was put to a vote in congress in the early '90s, there was implementing legislation in congress, so to change nafta would probably require legislation. there was a free trade agreement between the u.s. and canada in the late 1980s which they could fall back upon. but, again, this would not be a very quick process. and i think that canada's main interest is in sort of keeping the stability of the trade. they're each other's largest trading partners. and at the same time be able to

handle some sensitive issues like soft lumber and the other trade issues that are where there are disagreements. >> some folks are trying to write narratives that argue the president is taking a more measured view when it comes to foreign policy. the one china policy in the phone call with xi, embassies in jerusalem backing nato to a greater degree than he certainly did during the campaign. do you think the abes and trudeaus of the world sense that? >> absolutely. i think if you step back, which is hard to do when you're following it minute by minute, but if you step back you see what president trump did after being elected is to challenge a lot of this sort of existing relationships and a lot of existing policies. and say we need to change a few things around here. things are not performing well enough for some of the american people, the working class. so he has made that clear. and now i think he is settling down on certain relationships which have to stay the same. but at the same time look what's happening, people are coming to

washington and offering to invest in the united states, offering to bring their companies here. this is i think the way he's doing it. people are paying attention to american power. you can push it too far. and there are some side effects, but it seems to be the pattern that president trump has established. and i think prime minister trudeau will come here in a colegial frame of mind and he'll explain canada's positions and see whether the hardest issues can be overcome. >> so then where are the worry spots for you? if it's not in these direct face-to-face meetings with foreign leaders, is it more about internal issues, process, staffing, flynn, of course which is on the cover of all the major papers today. >> i'm struck by the fact that when president obama was in office he was known as no-drama obama. i think you could probably say that we won't be calling president trump no-drama trump. it's quite the opposite. look, canada has very important

relationships which must be preserved. they are wired into our defense structure. they are our northern command, norad which is air defense to incoming nuclear missiles to both canada and the united states, they're intimately wire there are many things that are important. canada was a major contributor per capita. their military stepped up in afghanistan and sacrificed alongside the coalition and u.s. forces. so, there's a lot there that we need to remember is the bedrock along with being each other's most important trading partner. immigration, we have a long border. you can check in for your flight at u.s. customs in canada. there's a lot that needs to be preserved. so, i think they have to tread carefully, and i don't expect a disruption in the relationship. >> i just wonder, mr mr. ambassador, if everyone's breathing a sigh of relief here a little bit too early? wilbur ross has yet to be confirmed as commerce secretary. he's going to be tasked with making sure our trading relationships with more fair, in

the words of the president. peter navarro is still the chief adviser in that white house on trade. he's talked tough on china and others. so, yes, we did see a lot of warmth between prime minister abe and president trump, hand-holding, et cetera, and the markets sort of got excited about that, but are we judging these trade relationships a little bit too early? >> i think that's a fair point, and we haven't got the ustr confirmed, either, the trade representative. so when they get to the table, there will be an agenda, a u.s. agenda, perhaps to look at adjustments in nafta. same with tpp in asia. i would expect a relook. but when that happens, it will be at the technical level, two or three levels below head of government. and i think that's really the point here, is that it shouldn't be the two heads of government making public comments that upset, that have huge collateral effects on the relationship. carla hills was on your program and mentioned what's happening in mexico with the

demonstrations. that's really not helpful at the end of the day. i think that the better path is to push it down to the professional level, put your adjustments on the table, see what you can negotiate, and i think president trump has made clear he's going to drive a hard bargain, and we may actually get something. the question is can we do it in a way that doesn't perturb important relations. >> certainly, that's the dynamic we're more used to dealing with. we'll see if that's what we get. mr. ambassador, thanks for your time. >> my pleasure. >> talk to you soon. with the dow here up about 117 points, let's send it out to jon fortt with a look at what's coming up next hour on "squawk alley." good morning, jon. >> good morning, sara. did you know apple is at all-time highs and a lot of analysts are counting on services to carry it higher. we'll dig into whether that's likely. also, new conflict between privacy and national security. we're going to look at what has perhaps shifted the balance there. and of course, our eyes continued to be on u.s. and canada trade with canada's prime minister visiting president trump at the white house. all that and more coming up on

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that is a live shot right now of the white house. we are awaiting the arrival of prime minister justin trudeau of

canada. he is there to meet with president trump. we think that is his motorcade there being stopped at the gate. and of course, we will keep it live for you, show a picture of him as he exits. he's there to talk about the economic ties, very close bond between canada and the u.s. word is they'll also, of course, talk about immigration after the latest immigration order, something that prime minister trudeau has not necessarily agreed on with president trump. he has opened canada's borders to thousands of syrian refugees. we'll see the body language, how heated this gets. but clearly, as we've heard from a number of our guests during this hour, including madam ambassador carla hills, that it is in both of these two leaders' interests to have a very friendly economic relationship, dependence on trade. canada's our second largest trade relationship. we are each other's biggest export markets. so, clearly, it's in everyone's interests to have a very friendly tone. and what we have been seeing, by the way, this is the third foreign leader to come visit

president trump at the white house. first theresa may, then proposal abe on friday. it's been what the "wall street journal" calls a moderation from president trump in terms of his diplomatic attitude. >> interestingly, guys, looking at a list of the five all-time canadian acquisitions in the u.s., four of the five have been announced in the past 12 months, specter embridge number one. so, there's been a lot of cross-border activity. kayla tausche's watching the arrival as we await the prime minister's approach to the gate. kayla, good morning once again to you. >> reporter: good morning, carl. well, the motorcade for prime minister trudeau is just behind us right here with the honor guard awaiting his arrival to the west wing of the white house. prime minister trudeau has argued that the economies of the two countries are inexorably connected. $2 billion in goods flow between the two countries every single day, 3.5 million barrels of oil also do the same, but there will be questions about just how freely people, ideas, business

will be flowing across that border. more than 5,000 miles long. of course, a harder stance being taken by the trump administration than the previous administration here at the white house. so, we'll keep you posted as we get more pictures from the white house, as we await the arrival of the prime minister of canada. >> in fact, as you're talking, kayla, we just got a handshake outside and they have gone inside the oval. we'll keep our eye out for headlines now that the meeting is about to begin. >> handshake, not a hug, i would say, after we did say we did see prime minister abe get a hug. and in fact, it's something that president trump mentioned in the news conference -- i grabbed him and i hugged him. we should also say that abe had visited trump tower before the inauguration, so they had maybe a little bit more familiarity. prime minister theresa may had a long handshake. i don't know. we'll measure the timing of this handshake. >> the trump handshake has been dissected backwards and forwards over the past three or four days, kayla, especially the way he sort of grabs the hand, pulls it in and sort of owns the

handshake. those are all, of course, physical optics, but what's going to be more interesting is when these first headlines start to come out and we find out which issues, kayla, they are going to choose to emphasize. >> reporter: yeah, that's exactly right, carl. well, they're going to be beginning at least the public portion of the day with a roundtable with female business leaders to talk about economic empowerment. but of course, there's so much economic cooperation at present between the two countries that, you know, it's no secret, or no surprise, rather, that there will be executives from grocery companies, from multinational corporations, about how exactly the countries and companies can work together. and on the body language point that you mentioned, it will not only be interesting to watch the body language between prime minister trudeau and president trump because of the body language detail that was paid over the weekend between prime minister abe as well, but also because there was a notoriously chummy relationship between prime minister trudeau and

president obama that was overanalyzed at that time, even though they did disagree on certain policy platforms, like the keystone pipeline, which is a policy that actually prime minister trudeau and trump now have in common. >> kayla, we'll come back to you in a little bit as we watch a lot of the pageantry around this meeting beginning right now. good morning. it is 11:00 a.m. in ottawa, canada, it's 11:00 a.m. on wall street, and "squawk alley" is live. ♪ ♪ good monday morning. welcome to