right now. ♪ live from new york where business never sleeps, this is "squawk box." >> good morning. welcome to "squawk box" here on cnbc. we're live from the nasdaq market site in times square. i'm andrew ross sorkin along with joe kernen, melissa lee is hang out with us. becky quick will join us live in washington one hour from now, she will be talking to steve mnuchin who will be joining us. first, a quick check of the markets. dow will open up higher, 14.5 points higher. we'll see where that all goes. >> up again. >> seeing what mr. mnuchin has to say. lots of questions about the tax policy, we talked about whether the markets have moved on a perspective tax policy or not. the s&p 500 up about a point and a half. nasdaq looking to open slightly down.

what you're looking at now overnight in asia is a marginally down picture. stocks in hong kong and china fell by a third of a percent. look at european equities. looking at a mixed picture. i will call this all quite marginal. a quick look at crude. bouncing back after a drop of more than 1% yesterday. a barrel will cost you 54.30. >> here are the big stories we're watching. tesla posting a wider than expected loss, but the model 3 is on track for volume production in september. musk also announcing the cfo has decided to leave, and he will be replaced by the first cfo. weekless jobless claims out at 8:30 a.m. eastern time. claims have been below 300,000 for 102 straight weeks, the longest stretch since 1970. a pair of fed officials are speaking today. atlanta fed president dennis lockhart and dallas fed president, robert kaplan.

as for earnings, hormel foods and kohl's report before the open, after the close, gap, close, hewlett-packard enterprise and nordstrom. in washington today president trump will meet with executives of manufacturing companies to discuss efforts to jump start the american economy. the focus is set to be on deregulation, work force training, infrastructure, taxes and trade. here's what the president said yesterday about the timeline for tax reform. >> before we do the tax, which is actually very well finalized, but we can't submit it until the healthcare statutorily or otherwise. we're doing the healthcare, moving along very well. sometime in the month of march, maybe mid to early march we'll be submitting something that i think people will be impressed by. >> better hurry, because treasury secretary says august for tax reform. that's what we'll be talking to steve mnuchin about. he said the trump administration is also targeting a goal of economic growth of 3% or higher.

there is a print interview, first print interview since confirmation in the "wall street journal," he said lower growth since the financial crisis was mostly an anomaly and self inflicted, a result of obama policies that could be reversed. mnuchin said the trump team is working with congressional republicans on tax policy and has an ambitious goal of passing a tax code overhaul by august. secretary mnuchin will join us in his first tv interview since taking the job. that's at 7:00 a.m. eastern. it's pointed out in the piece, there are plenty of naysayers that say you need a growth in the labor participation rate, increased productivity, these have been things that plagued the overall environment or demographics. that's what's been wrong for the past eight years, but mnuchin said, noshg, the things we're

talking about could improve those metrics. we're not stuck down here because of the baby boomers retiring, we're stuck down here because it's self-inflicted. >> we will debate that, i think -- >> we will have a debate in just a second. you know who will be with us? >> i do. >> howard dean. >> hode. >> i got it. >> he will argue about how difficult -- >> he has not been anti-tax reform. >> nobody is anti-tax reform. it's a matter of what form it is. >> even if it results in lower tax reform for corporations. >> but the question is does that get you to above 3% or 3.5% or by the way, 4% or 5% which is what was talked about during the campaign. >> we'll see. there are naysayers -- this is nine straight days now for the dow. this will be ten, if it's today. that comes after the

november/december move that supposedly was going to be all we get. >> okay. >> now, dom chu will tell us what we should expect to hear. >> that's what we're going to do. you can introduce him if you would like to. >> no let's do it formally. >> let's hear what wall street wants to hear from steve mnuchin when he talks to becky in less than an hour. >> i was listening to your conversation, the treasury department has a lot of oversight for financial matters, but it also does promote the economic and job growth profile of the u.s., that's one of their mishes, mandates. so as we talk about what's going to happen today with treasury st secretary mnuchin, there are three core things that could provide the linchpin for whatever policies go forward with regard to the trump administration. the first one is about tax reform. you guys mentioned it. it's not just border adjustments, it's about

corporate taxes, individual taxes. we went back to the tape to the last time you spoke to him, and commerce secretary wilbur ross about what the tax profile will be like and what we can expect to see. take a listen to what he said back then. >> we'll cut corporate taxes which will bring huge amounts of jobs back to the u.s. >> what do you think you can get to on that. >> we will get to 15%, and get a lot of cash back to the u.s. >> that sounds ambitious already, 15%, perhaps a lot to of cash back to the u.s. it's not just about the tax situation, also more clarity on what will happen with bank regulations, specifically dodd-frank and the treasury department has a lot to of oversight with regard to the financial system. listen to what he said back then. >> the number one problem with dodd-frank is it's way too complicated. it cuts back lending. so we want to strip back parts of dodd-frank that prevent banks from lending. that's the number one priority on the regulatory side. >> mentioned a regulator and the

words dodd-frank together, you get attention on wall street. and the dollar strength picture. decades now treasury secretaries have promoted dollar strength because it helps consumers, when you have a rebalancing of our economy to more manufacturing, made in the u.s., how does that dollar story play out? everything we'll be listening to with becky's interview later this morning. those are three things to watch. >> thank you for that, dom. >> it's an important position, treasury secretary. you need a treasury secretary at the beginning of an administration. a lot of ground to cover from tax reform to trade policy and the strength of the dollar. joining us for what's most important for the treasury secretary to address first, former vermont governor, howard

dean, and former virginia governor jim gilmore. i was worried, governor dean. the apocalyptic language that the left is using now, i worried about you a bit. i was going to throw it to you and let governor gilmore deal with it, seriously. i don't need it. but i remembered, you think we should lower -- governor dean, you think we should lower the corporate tax rate, right? you're not totally crazy own all issues. >> no, i'm very smart on all issues. you know i'm always right. here's the deal on the corporate tax. i always believed the corporate tax should go down substantia y substantially. there's no way to get it to 15%. if we can get it to 20%, you would repatriate more than a trillion dollars off shore. that's a good thing for the country. we have to be competitive with other countries. capital goes where capital gets a good deal. we need to come back to that. there are other things i have strong disagreements with. first of all, i think the

reduction of the corporate tax has to be paid for, it ought to be paid for by closing loon holes in the bill, that will be hard to do, but you can't pay for this by the border tax. that will really screw up our retailers, it's going to charge the american people basically going to raise taxes on the american people in order to lower corporate taxes. that's a bad idea. there's one big problem with all of this. what this is aimed at is improving the economy on wall street and for people already doing reasonably well. this does not address at all donald trump's constituency in places like west virginia and kentucky who have been left behind by globalization, that, we have to address. that will require investments in those counties left behind. it will require investments in tax changes, so we can advantage investments and places like that, and not have such great investment profile for people trading derivatives.

>> governor gilmore, i thought part of the reason for the border adjustment tax was to make it better to do -- better to do exports and imports, which would generated some jobs in some of the areas we talked about. no? >> absolutely. >> hold on, hode. i call you howard dean, hod. no yelling, either. >> no. no. >> i love being on with governor dean. >> and no listed states. >> he's not always right, he's usually left, but he's right this morning. the goal this morning is that the -- secretary will address is how we can super charge the economy and get growth going in the country. we've been growing between 0 and 2 during the obama administration tr administration, we need a goal to get our growth rate up above 3.2 rate, to 4 or 5 to recapture

what we lost in the great recession. the border adjustment tax is making it more effective to ek port. and the main thing is this, it's a philosophical change coming in with the treasury secretary. it's philosophy is grow the economy, encourage investment, great jobs, you will see a robust economy that will help those statement states that voted for donald trump and frankly everybody else in america. that's the goal and objective. i think we're getting ready to see a seat change. >> your rational is it would cost goods -- cost more for

goods at walmart, and that would hurt consumers? >> that's right. there's some other things here that concern me. you talk about dodd-frank. let me just say, that under barack obama, we had a hell of a recovery as a result of his coming in and doing a whole lot of different things on a bipartisan basis. secondly, i worry about -- i understand we want to deregulate. we do not want to set ourselves up for the position we were in 2008. let's be careful when we start changing dodd-frank. so we don't go back to the outrageous abuses that were going on that do not contribute to our economy. i'm -- oddly enough, i'm with the retailers. i do not want to raise prices substantially for exactly the people that voted for donald trump that have been left behind. these are people struggling. they do not need the prices at

wall martd to mart to go up 20% a border adjustment tax. >> we have not had a hell of a recovery. we have had a tepid recovery by historical standards. you have to grow at 3% or higher. we have not been doing that. you have not seen people getting jobs, jobs have been going overseas, that's what this president is getting ready to address. he will level the playing field. i hope he will level the playing field, most important thing is to do the regulations different. dodd-frank has been a big burden on our financial community. which has prevented us from lending the way we need to. you have to make capital available. you have to encourage investment. one thing i want to tell your listeners, investment means jobs. that's it you have to have investment to buy goods, hire people n order to make a buck and actually create a robust economy. we have to change things so we're encouraging investment.

if you don't have investment, you don't have growth, you don't have jobs. >> i think it matters where the investment is. that's the problem. if the investment is in lower manhattan and the ceo in chicago, that doesn't help the american people very much. >> that's marxist junk. >> donald trump got elected because of people in places like west virginia, that's where we need the help. not on wall street. >> that's marxist junk. all you're doing is saying people in manhattan, places like that we're talking about the freeing up of capitol from san francisco, to new york. >> last time we freed up capital, it didn't end up in southwest virginia, west virginia, kentucky or arkansas. we owe those states opportunities that we have in the east coast and the west

coast. >> we agree about that. >> i wanted to see indiana flourish. >> we agree with that. that's conservative howard talking there. >> someone should have thought about that -- someone should have told that to hillary. this whole decline of the democratic party started when you left the -- didn't you -- you got guys elected all over the place. this is your fault. i think in large part -- >> because i left? >> seriously. you were thinking about going back, but -- do you have any advice for the -- for your party? it sounds like you do, you're channeling trump, which is interesting. what's your advice? >> oh, my god. >> all these disenfranchised people. all hillary cared about were the very poor and the elitist, the deplorables she could careless about. now you're feeling for the deplorables, which is admirable. >> the one thing we share, we don't share political

philosophy, but we were both governor, we know everybody has to do well when the economy is good. that's basically our job to make sure everybody does well. not just a few people. we have a economy skewed -- this is a global problem. it's why brexit passed. >> i tie that to you leaving the dnc, even the brexit thing. that was the beginning of the slide. who should be the new guy, do you think? we're having debates, all kinds of stuff. who should be the new guy or gal at the dnc? >> i'm for pete, we need to bring the millennials into the party. we need a new approach. this guy served in afghanistan a couple terms, mayor of a small town in indiana. that's my guy. >> all right. we need the millennials too. we are trying to figure that out here. >> i just want to see the democrats nominate and elect the

most liberal possible chairman they can. >> the new head of the party, elizabeth warren, have you seen that -- >> i've heard it. >> they have no other foils. we have to get you back, governor dean. >> elizabeth and i agree on some of the things that i just said. >> i know. this is true. governors, thank mnuchin will join us at 7:00 a.m. eastern. that's a first on cnbc interview. up next, tesla posting a wider than expected loss, the stock moving higher premarket up 2%. we'll dig into a report with an analyst, that's up next. and becky quit will sit down with warren buffett on monday for the annual "ask warren show." send us your questions using #askwarren.

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welcome back to "squawk box." tesla reporting a wider than expected loss, 69 cents a share, but stronger sales pushed revenue above estimates, here to

break down the report is colin rush, senior analyst from oppenheimer. how happy, dare i say, or sad were you about the earnings? >> we're on the sidelines with this company. the real story is about whether they will get the model 3 out on time and what the leverage is. >> how are you handicapping that? >> it's hard to tell. a lot we can't see. we went to see the factory in january with the tour, and saw equipment about to run. same thing for the equipment getting installed for the model three now in fremont. >> this is a wait and see. so what do you have to see to get excited? >> for us? you need to see cars shipping and also demonstrating operating leverage. costs on the operating side were above what we expected. we had to take our spend up over the next several years. that's the concern for us, what's the earnings power of this company over three years.

>> how long you have rating on the stock? >> since the solarcity deal. >> in terms of waiting to see, at every juncture in the past six months or so, tesla defied expectations when it comes to delivery numbers, remaining on schedule. >> i disagree on that. they disappointed on delivery numbers the last couple of quarterers. that's something we saw in january when they announced delivery. i think what people are expecting here, they keep moving forward. if they're on their way towards the model 3 being a product and driv delivers gross margins, there's a story there, but the stock is moving on anticipation, but we're talking about fundamentals, not sentiment. sentiment has been bullish, we'll see what happens with fundamentals. >> you talked about seeing these

cars roll off the line. any signal prior to that that would give you hope? usually you want to buy on the rumor, sell on the news. is there a trigger at which point, you will know -- >> right now they need to raise money. they will spend $2.5 billions over the next three, four months. >> are you worried they are not going to raise the money? >> i'm not concerned about that at all. we wrote a note saying they would be smart to raise it. our concern is about fundamentals and earnings power for this company. as we go forward, the op expend goes higher. we're not seeing a gross profit until 2018, 2019. and only about $11 earning power. >> are you worried this is a stock that is sort of like the model of an amazon, where you can't necessarily use traditional metrics to alie to the move of the stocks and

you're leaving investors behind. >> we were kind of ahead of that. right now this is about trust in management. the solarcity deal was a turning point for us. in terms of allocation of capital, and we thought was a mistake where they put capital. now the story is shifting back to the autos. it moved in front of us, but i think you're right, this is an incentive driven story, and we have to look five, ten years out. but at some point you have to come back to reality, are you generating real returns on capital? we don't see that. >> collin, thank you. hp inc. beating the street on the top and bottom lines. revenue rose 4% from a year earlier. shares of l brands taking a hit after issuing first quarter and 2017 guidance that fell short of expectations. the parent company of victoria

secret saying comparative sales are likely to fall 20% this month. down 13%. jack in the box reporting a first quarter profit and revenue miss. the results due in part to lower than expected sales and margins of the qudoba franchise. >> just heard all the publicity about the soggy tacos at jack in the box. remember? >> yeah. you had it. you had it. >> some more of those sold than big macs. >> the dow logging its ninth straight close, up 13% since the november election. we'll talk market strategy at the break. and at the top of the hour, treasury secretary steve mnuchin will join us on a first on cnbc interview. before we head to the break, a look at yesterday's winners and losers.

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♪ welcome back. you're watching "squawk box" live from the nasdaq market site in times square. good morning. welcome back to "squawk box." just about 30 minutes away from our first cnbc interview with treasury secretary -- first on cnbc. becky quick is in washington to

ask him about tax reform, trade, china and president trump's economic agenda here's what mnuchin told us back in november when president trump picked him for the job. >> our most important priority is sustained economic growth. i think we can get to sustained 3% to 4% gdp. that's critical for the country. to get there the number one priority is tax reform. this will be the largest tax change since reagan. >> that interview at 7:00 a.m. a fuel lineup of experts ready to analyze that interview, the policy implications for the u.s. economy. in the meantime, the dow looking higher. it would open up about 13 1/2 points higher. the nasdaq off marginally. all of that could change depending on what mr. mnuchin has to say. >> some stocks to watch, square posting better than expected fourth quarter results. the company is thanking strong sales.

square shares are surging, up about 9.5% in the premarket. boston beer projecting disappointing results for 2017. the brewer of sam adams and angry orchard says this is due to a more challenging retail environment with more options for drinkers. cheesecake factory met profit forecasts for the fourth quarter, and continuing a seven-year positive sales streak. seeing comparable restaurant sales increase 1.1%. despite the hedge language in the fed minutes, the dow ending on a positive note for a ninth record close. great to have you guys with her. jason, starting off with you. we are looking forward to this interview with the treasury secretary. a couple things we don't know even though the administration put forth consistently a timeline, president trump said sometime after repeal an

replace, mid to late march. mnuchin said to the "journal" by august. we don't know the administration's position on a couple key things, whether or not the tax plan should be revenue neutral and what the position will be on the border tax. yet the markets continued to go higher on the tax reform in this time frame. how do you interpret this confidence in the markets yet we don't know what's in store here. >> we think something will come through. seems like at least the house and the administration are relatively aligned on a number of items. the actual details as to how that plays out and goes think -- if you think about budget reckon sill y reconciliation, it's hard to get something passed without a neutral budget basis. you violate reconciliation laws, and requirements, and you can't

get it passed with 60 votes, so you need the 50 vote minimum. to get that you need to be budget neutral. one of the key things to keep an eye on in the plans is the idea of the border adjustment taxation. it's something that's part of the house weighs and means plan for quite some time and could have a huge impact on companies, depending on the magnitude that comes through. >> are you confident we get this tax plan on time in some form, will we get some detail on it through the interview today or next week? >> i think we'll get more clarity on it, but our issue is the times of when this comes through. we're focusing on 2018 for the benefits to come in. the market is pricing it in, i would expect a higher volatility over the next few months as headlines and volatility comes

in. it's not a clear path to the benefits. when we talk to companies, they're looking for clarity. i think that could cause some pause in some investments out there. that's what we're watching. >> when you say winners or losers, you're talking about exporters winners, retailers -- >> correct. i think they're packaging it as pro-dizziness, which is great. consumer confidence is higher, business confidence. with very a pro business government in place now. it certainly won't be without the headline risk, that's the volatility. for long-term investors, take those opportunities and put the money to work. >> one thing to recognize, this is like other past cycles where you have replaced a two-term administration, we will probably see this similar thing this time around, the policy hike between election and inauguration tends to be strong, delivering around 7%, 8% return on the markets,

then you get a period of flatness as realism sets in that all these policies have been tossed out, we have to get down to the details. we have to negotiate the details. we have to find out what can pass in what time frame t tends to be a disappointment and absorption of a disappointment of when those plans come through and the timing of those plans. >> i don't think we've ever had an administration like the last one or an administration like this one. >> you can't do it. it's not apples to apples -- >> we never had a jimmy carder administration. that was four years, you saw what that was able to do. you saw when that pressure was lifted off the economy and the markets, you could see what happens. >> this is heading in the right direction, but the optimism surrounding the timeline of things getting done, like other periods, it's moving a bit too

optimist optimistic. >> just getting the regulations out of the way. when is the last time a company hired 50 people because of obamacare. >> relative to expectations, they had this long list of we'll get this, this, this, this, this done -- >> you just watch. >> you think we'll get that accomplished? >> you just watch. beaver boy. >> you have to bring that up again. >> after you pay that much for the degree, you get the ring. >> he also had to pay for the ring. >> ring was a small price by comparison. >> we have not mentioned the fed in this market discussion. are we underestimating a march hike? could than the next taper on the market? >> i would be surprised if we get a rate rise in march. we digested the last rate rise. we focus on small cap companies, and i focus on the high yield

market, which is still healthy as an investment area for large investors, it's been hanging in there nicely. we feel confident, but what we're seeing in the earnings season that those that are down are not down long. you have to watch, do your diligence before the earnings calls, buy the companies that you know and love. >> chris and jason, thank you. when we return, our first on cnbc interview with treasury secretary steve mnuchin, that's coming up at the top of the hour. after that, we will get lots of reaction from david walker, then from the business community, the ce of of eastman will weigh n and then we will ask david gerstenhaber how people should

think about the economic agenda. you're watching "squawk box" on cnbc.

welcome back to "squawk box." rex tillerson arriving in mexico

last night for meetings with top mexican officials. tillerson and homeland security secretary john kelly are trying to improve relations with mexico which have deteriorated a bit since president trump took office. mexico has called the new u.s. immigration guidelines hostile. the new rules could let officials send non-mexican migrants to mexico if they come through the country on their way to the u.s. the list of cities now vying for the 2024 olympics has gotten smaller. the hungarian government says that budapest will drop its bid to host the summer games. more than 260,000 people signed a petition against the plan. opponents say the money would be better spent elsewhere. boston, rome, hamburg, germany also backed out in recent years amid concerns about the billions of dollars required to host the games. this leaves paris and los

angeles in the running. the international olympic committee will decide the winner in -- >> september. >> september. i was looking at budapest. i have never been. >> gorgeous there. >> i have never been either. let's go. you guys should go, take a crew done the danube. >> we would have to get off at the same time. >> melissa and becky could hold down the fort. >> i've been here plenty of times when both you guys are gone. >> we could do the show from budapest. >> you could do a road trip from budapest. >> makes more sense that we leave at same time. when you're gone, it's just me, you know what show is. i just -- when i'm gone and it's just you, my twitter feed explodes. what happens? what do you -- what do you do? >> what do you mean what do i do? >> i get these crazy e-mails. i get e-mails. >> i balance you out. >> you balance him out as

opposed to him balancing you out. >> yes, we balance each other. when one of us is gone -- >> just evolves. >> time for the executive edge. president trump meeting with manufacturing ceos at the white house today. looking for ways to stimulate the economy. eamon javers joins us now with more. we got bernstein on today. he has no middle name. i used to use that -- i gave him that, which was a great gift, a great gift. and he didn't appreciate it. >> so you're regifting it to me? >> kind of regifting it you loved it when you heard it, you loved it. >> it's fine. >> what's going on? >> it's great. my mom is proud. so, today at the white house the president will have a couple of different sessions with a large group of ceos. he'll have a series of breakout meetings where they will go topic by topic and discuss ideas

to improve the economy. then they'll go to the white house and have a sit-down meeting in front of the media. i'll have an opportunity to go into the breakout sessions with the president and the ceos later today, so we can bring you some of what was discussed in the room. i'll have a chance to be a fly on the wall there and take notes. mike allen says they have gotten a list of which ceos go under which category. they have it done by taxes and trade. the first group, michael dell, dell tell knockgy. michael fields, ford ceo, kenneth frazier of merck and alex gorsky of johnson & johnson. the regulatory reform team, marilyn hewson, jeff fettgi mark sutton. and the infrastructure team,

doug oberhelman, wendell weeks, john ferriola, and the work force of the future team is andrew liveris, greg hayes, phebe novakovic, and lee stystlinger. the ceos of those companies meeting with the president and his top aides this morning and meeting one-on-one with the president. we'll get a sense later in the day of where they land with all this, and whether this is going to produce concrete policy ideas or just a listening tour by the president in terms of the business community. >> all right, eamon. this is -- did you send any questions for mnuchin? you have anything? >> i do. you know what i'd like to have asked? i'd like to ask him what the unemployment rate. just ask him what is the unemployment rate in the united states of america.

there's been question about what the trump administration thinks about fra sta tiederal statisti whether they agree with the base number. i would like to get a number from mnuchin on what he thinks the unemployment rate it at the start of the trump administration. >> there's that narrative that people are working three jobs to just get the same amount of money of one job. >> yeah what is the legitimate unemployment rate in the country. donald trump tweeted about it in the past. >> blaming baby boomers. like me, for what's happening, which -- that's a lot of guilt spread around. sorkin looks at me whenever the participation rate goes down. >> demo. >> the boomers are retiring. >> really? >> i say good riddance -- no, that's great.

>> two words for you, andy rooney. >> right? right? >> john mclaughlin. >> the entire cast of "60 minutes" they're all over 90. >> remember john mclaughlin? he was there on sunday, didn't feel so great, missed one show, then that was it. >> i think i have about 70 more years in this business then. this is assuming we don't make some great advances. i could never leave andrew. i could never leave the show. thanks. >> you bet. coming up, what is driving rateds for 2017? guy lebas will tell us what he wants to hear from treasury secretaonretary mnuchin after t break. to win, every millisecond matters.

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our next guest says forget the fed. u.s. and foreign politics will continue to drive the bond market. joining us now, the chief fixed income strategist at janney montgomery. you have a unique view that fed policy and interest rates dictate what happens with the dollar, it's that the dollar, everything pivots off where the dollar goes. if the dollar stays strong, interest rates are going to

rise. that's basically it? >> essentially. there's a complex interaction across those various factors, but overwhelmingly and definitely in the short term what we've seen is that political rhetoric from, for example, treasury secretary mnuchin, has been a large driver of the dollar. one of the other themes we're starting to observe is it seems like the federal reserve has a lot of power over long-term interest rates at the extremes of policy. for example, when we're at that zero lower bound, but that influence begins to fade as we move away from it. other more organic factors take power. >> how strong would the dollar get with a border adjustment tax, and what would that mean for interest rates? >> well, to be honest, everything in this respect is guesswork. we've heard a number of proposals, theoretical proposals about a border adjustment tax. no details. so it's hard to quantify what that might look like. this type of tax is not precisely known.

it's an economic variable we haven't seen before, so we don't have a good handle about how far that would move the dollar. the best guessed estimates are somewhere in the 7% to 12% range. that's enough to push interest rates up another 20 or 30 basis points. >> so treasury secretaries always say, at least in the past, have always said a strong dollar is in the best interest of the united states. there are some that think that the trump administration for exports might break with tradition on that. is that something we should watch? is it body language? >> absolutely. absolutely. that's a key, key question. but one of the things i would point out is that particularly when it comes to the strong dollar theme, there's been some different statements from various trump administration officials. secretary mnuchin indicated recently he favors a strong dollar policy, though there was some response as to congressional questions during his confirmation process that maybe doubted that theme a little bit. >> so then -- i mentioned body

language. what would give you an indication that maybe he says i want a strong dollar but maybe doesn't want a strong dollar. how would we be able to see that? >> well, i wouldn't read so clearly into his body language on that front one way or the other. what i would read into are differences among administration officials on that particular account. i'm no political expert, but what i have seen is that there's a very big difference between those who seem to want long-term influential policies and those who are a little more interested in short-term boosts. a weaker dollar in the very short term, you know, a period of months, even a year, a couple years, as we've seen is beneficial for s&p earnings, beneficial for a lot of other factors and will also help keep interest rates down. >> it's getting even weirder with the fed. now "the journal" says, oh, my god, they might start raising rates more quickly. it's like they're finally waking up and smelling the coffee. but then we're still at 22%. the markets don't believe them,

and i think the markets don't believe the fed because they've been so feckless and cowardly in the past about raising rates. >> well, i wouldn't phrase it that way. if you step back and took a 20,000-foot look at the u.s. economy, whether or not full employment is 4.8% or 4.7%, we're really close. whether or not the right number for inflation is 1.9% or 2.2%, we're really close there too. so on that basis, you'd expect to see some interest rate normalization. the thing that's missed in this discussion is the idea of a loss function. a loss function is something the fed talks about a great deal within their fomc meetings, and it basically identifies if we're wrong, which way do we want to be wrong. right now the loss function suggests that were the fed to raise too fast, too high, the do downsides are much worse than if they were to delay. i think that loss function is driving the slowness of rate increases despite the fact major economic variables would suggest

we're at a more normal level of interest rates. >> all right. thanks. appreciate your time. >> thank you. coming up, we are just minutes away from our live interview with treasury secretary steve mnuchin. also, a quick programming note. becky will be sitting down with warren buffett on monday for the annual "ask warren" show. send us your questions for the oracle of oklahoma. make sure to use the hashtag ask warren. say carl, we have a question about your brokerage fees. fees? what did you have in mind? i don't know. $6.95 per trade? uhhh- and i was wondering if your brokerage offers some sort of guarantee? guarantee? where we can get our fees and commissions back if we're not happy. so can you offer me what schwab is offering? what's with all the questions? ask your broker if they're offering $6.95 online equity trades and a satisfaction guarantee. if you don't like their answer, ask again at schwab.

what's critical thinking like? 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

"squawk box" news maker. treasury secretary steven mnuchin first on cnbc. tax reform, trade, the trump agenda, and what it means for

your money. plus, instant market reaction to comments from the house that hamilton built. a special hour of "squawk box" begins right now. ♪ live from the beating heart of business, new york city, this is "squawk box." good morning. welcome to "squawk box" here on cnbc. we're live from the nasdaq market site in times square. i'm andrew ross sorkin along with joe kernen and maielissa l. a check on the markets right now. right now we have some big news to get to, joseph. >> we do. oh, that's right. we do, we do, we do. becky quick. let's get to becky quick in washington with our news maker of the morning. treasury secretary steven mnuchin, first on cnbc.

becky, give me your top three questions so that they can prepare. no, do en't do that. we just had another gentleman on talking about how important just dollar rhetoric is, body language. and what does trump really want? if he wants exports, he wants a weaker dollar. if we do border adjustment, it's going to be a stronger dollar. i think you might mention the dollar. that would just be my suggestion. >> let me add that to my list. hadn't thought of that before, but that is a good suggestion. i think we will talk about that. guys, thank you very much. i want to thank the treasury secretary for taking this time to sit down with us. steven mnuchin is the new treasury secretary. this is your first sit-down television interview since taking over in that spot. i want to thank you very, very much for joining us and inviting us into the building. >> thank you. thank y

thank you for being here. >> as joe mentioned, there are a lot of questions people want to hear from you. there's been huge debate about these issues. one thing i'd like to clear up first and foremost is how you pronounce your name. i've heard it pronounced 15 different ways by people who swear they know your family. mnuchin? >> i'll go with mnuchin. perfect. >> just for the record so we clear it up and get it right. >> and steven. not steve. >> we have butchered it a few times through here. sir, i think the thing that's most important to the markets is what's happening with tax reform. yesterday president trump said we could expect to see a plan maybe the beginning to middle of march. he said it's very well finalized at this point. i just wonder, does it resemble the house plan? what can you tell us about the plan at this point? >> let me first say that our economic agenda, the number one issue is growth and the first, most important thing that will impact growth is a tax plan. so we are committed to pass tax reform. it will be very significant. it's going to be focused on middle income tax cuts, simplification, and making the

business tax competitive with the rest of the world, which has been a big problem and a lot of reasons why companies are leaving and cash is sitting offshore. so that's really our focus. we want to get this done by the august recess. we've been working closely with the leadership in the house and the senate, and we're working on a combined plan. >> let's break down some of the specifics you just mentioned. growth being the most important part. you've talked about how you think we can get back to 3% gdp, maybe better. how do we do that? >> i think it's very achievable. if you look at long-term growth, we have underperformed where we need to be. we believe we can be competitive and get back to sustainable growth at 3% or more. there's going to be a lot of things that will impact it. i think the first issue, as i mentioned, is going to be tax reform. i think the other issue is going to be regulatory relief. we need to cut back regulations that have prevented small and medium-sized businesses from being the engine of growth in this country. we're also focused, as you know, on dodd-frank and looking at

dodd-frank and making sure banks can lend. there's an incredible amount of liquidity out there. we want to make sure that banks put it to work. >> if we stick to your time frame and we see something passed before the august recess, do you think -- we've already seen regulatory reform start. do you think we'd see 3% plus gdp by next year? >> i think it's going to take time to get there. so i think it would be, you know, more towards the end -- seeing the growth towards the end of next year. i think by the time we pass tax reform, you see the impact on the economy, you see the impact of regulation, it's definitely going to take into next year to see an engine of growth. >> obviously a lot of people are looking at this, the fed and the cbo, and their growth projections are closer to 1.8%. what are they missing? they don't see any of this? >> i don't think they're missing anything. i think they're making those projections based on the status quo. that's where the economy has been. it's been actually lower than that under the obama administration. and i think we're looking at

significant economic changes. we have an unbelievable economic team. myself, gary cohn. i speak to gary many times a day. we were with nick mulvaney yesterday on the budget at omb. we have wilbur ross in commerce. we have a great economic team, and we're going to put forth policies that are going to really create growth in this country. >> let's talk about how you get a plan through congress because the house has its plan that paul ryan has shepherded that a lot of people understand very well. but there have been a number of republican senators -- i can name at least six dp-- who have said the idea of a border adjustment tax is dead on arrival, that they will not support. that makes up a huge portion, a trillion dollars in income. first of all, do you agree with the border adjustment tax as something that you think needs to be involved in tax reform? >> well, let me just say, i think there's a consensus on the majority of where we are on tax reform. we're looking closely at the

issues on the border adjusted tax. i spoke extensively with paul ryan and with chairman brady on this. we're looking at it. we think there's some interesting aspects. we think there's some concerns about it. i think one of the things, you know, we are all committed to do is make sure there is a combined plan that's a plan that is the administration's plan with the support of the house and the senate that we're all working together on one plan that gets passed. i think everybody's on the same page and doing that. >> business community obviously is looking very closely at a lot of these issues. you have major exporters like a boeing or a general electric who are adamant we see some sort of border adjustment. if not that sort of tax, but some other way of making the adjustment. american manufacturers are at a huge disadvantage. we're the only one of 35 oecd countries that don't do something like that. if you hear from the big retailers, somebody like a walmart or target, they say it would wipe out their profits

potentially and be a tax on consumers. which one of those camps do you have your own concerns more chose closely aligned? >> we're reaching out to business. not just big business, but small and medium sized businesses, and we're lening istening to what p have to say. as a matter of fact, this morning the president is hosting a group. we have about 30 executives from various manufacturers. i'll be going to the white house and participating in that. the president has already hosted the retail groups. so we're listening. we understand the concerns. we understand where people are, and we're going to have a plan that addresses these concerns. >> is it fair to say it's still a little too early to tell on these details? >> i would say it's a little too early to announce. we're working behind the scenes very carefully. we're running a lot of numbers. we're taking into account a lot of issues. as i said, you know, you're going to see something in the near future. we're committed to get this passed by august. >> does this plan need to be revenue neutral? >> well, i think one of the issues when you talk about revenue neutral, there's going to be the scoring that the joint

committee uses, then there's our own internal views at treasury and the administration. my guess is that our growth assumptions will be higher than what they use to score the plan. again, these are the types of things we're looking at. we're running a lot of numbers. i think you've heard me talk about we believe in dynamic, not static, scoring. i think that's something that's very important. and i'll tell you, my first week in treasury, i heard a lot about the incredible resources in this building. there's obviously an incredible history here, but there are just unbelievable resources. the staff is so talented. they're so focused on doing things. we have over a hundred people in the tax group and modeling area. they're working around the clock on running scenarios for us. >> it's a fair point. if you're using dynamic scoring, which is obviously if growth is coming in faster than expected, that's going to change all the different numbers. it always gets back to the question of who gets to be the arbiter of that, who's calling the shots, who's making those

decision. just to be clear, what you're saying is that you'll have your own internal scoring of all of this. it won't necessarily be something that matches up with cbo or another way of looking at things. >> well, again, there may be differences in growth projections. i think you've seen that in the past. i think as we've talked about, you know, we have growth projections based upon our plan that we think we're going to create significant amounts of growth and that's going to create jobs, create tax revenues. that's going to stimulate the economy. so we got a lot of people doing a lot of work. as i said, this is my number one agenda item. the president is very focused on this. the leadership is very focused on this, and we're going to get this done. >> you mentioned you're making sure this is going to bring tax breaks to middle class americans. when you sat down with us on "squawk box" back in november, you said even if wealthier people get a tax break, it's not going to be that they necessarily are paying less in taxes because the deductions, the loopholes would be closed as a result. do you stand by that now that

you're actually in the administration and in your position as treasury secretary? >> there's been a lot of comments on that. i actually think there's a rule. i think during my confirmation, it got named the mnuchin rule. i was very keen on that. there's a volcker rule and a mnuchin rule and a buffett rule. i feel like i have good company. as i've said before, we're primarily focused on a middle income tax cut and simplification for business. what we are focused is that on the high end, if there are tax cuts, that they are offset with reduction of deductions and other things. so it's something we're going to carefully look at. when we come out with the plan, we'll come obviously out with the distribution and how it impacts people and that's something we're very focused on. >> is that -- the mnuchin rule is not set in stone at this point, it's debatable? >> well, again, we haven't finalized the plan, but our objective and what i said before still stands. you know, kind of the devil is in the details when we run the numbers. the objective is this is a

middle income tax cut and this is tax simplification and this is making businesses more competitive. >> there have been a lot of questions about what the timing would be on this. do you expect that the tax reforms would be retroactive to take place in january of this year, or do you expect this is something that we would look for next year at the earliest? >> again, i can't comment on the specifics of when we roll this out. obviously those are the types of things that we'll be taking into account. regardless of when they go in place, this won't really impact the economy until next year when you begin to see changes in behavior. and it will take a couple years to get growth. but we're committed in this administration, and you can see this in the markets. you can see the stock market is up, the dollar is up. there's a lot of confidence in the trump administration and in the desire to invest in the u.s. this is a very competitive place to do business. we got great companies. you see that reflected in the markets. >> obviously the stock market has rallied significantly since president trump took office.

actually, since the election, and again since he took office. do you view that as a report card? >> absolutely, absolutely. this is a market to market business. >> if the market were to pullback -- you've watched the markets for a long time. do you expect a pullback at some point when you see things move so far, so quickly? >> i've always been focused in the markets on not day trading and where they are day to day. whether the market goes up or down on any given day, you know, i've given up figuring out why that is. >> smart man. >> but do i think that, you know, over the course of the year -- we're in an environment where there's very attractive investment opportunities in the u.s. i think that's reflective of the administration's goals and what the market thinks of it. >> you have said that you expect interest rates to remain relatively low for some period of time, but when we get to to this growth you're expecting of

3% or better, how quickly do you think interest rates will have to adjust to catch up with that to reflect a strong economy? >> well, let me say this is really more the fed's role and not my role. i do look forward -- i'm starting my weekly meetings with janet yellen at the fed. i look forward to spending time with her. i would comment again, we're in an environment where we're at historically low interest rates. i think if you look at this on a historical basis, we will probably have low interest rates for a long period of time. that doesn't mean that within that there's not the context that interest rates can go up and you've seen the fed signal that. again, i'm not going to speculate on what they're going to do. my comments are really about where we are not relative to just today but where we are relative to where interest rates have been over a long period of time. >> there were some market speculation yesterday that you might today announce plans for a longer term treasury bond, a 50-year and 100-year bond

because of just that, interest rates being low right now. have you given that serious thought, and is that something we should expect to see? >> i've said this before. we're in the going to make a formal -- we're not ready to make any formal announcement on whether we're going to have a 50-year or 100-year. i have said this before. i think it's something that we should seriously look at. i've already begun to talk to the staff about looking at that. again, we'll reach out to the market, investors, different people, but i think it's something that is a very serious issue of whether we should explore, whether we can raise 50 or 100-year money at a very slight premium. that's something that makes sense for treasury to look at. >> it does. yesterday you contacted christine lagarde at the imf and had some conversations with her about making sure the imf is policing the currency exchange rate policies of its members. is that a way of trying to monitor china and make sure that

they're treating things fairly without officially calling them currency manipulators? >> let me first say i had a terrific conversation with her. i think i've spoken to probably about 12 foreign leaders at this point. finance ministers and different people in the governments. i think i have the rest of my calls scheduled for next week. i'm looking forward to going to the g20 in march. so i think one of the important jobs in this role is to make sure i reach out to my counterparts and that we're focused on creating objectives that will create economic growth for us and sustained economic growth throughout the world. we've talked about this. currency are one of the things we look at, and that's something i've talked to a lot of my counterparts about. >> is it fair to say you're not going to be naming china a currency manipulator any time soon? >> again, what's fair to say is, first of all, i've had a terrific conversation with my counterparts there. i look forward to meeting them.

we have a process within treasury where we go through and look at currency manipulation across the board. we'll go through that process. we'll do that as we have in the past. we're not making any judgments until we continue that process. >> do you have any thoughts on the xm bank, the export/import bank? it's something that big exporters in the united states have hoped to see some support for. i don't know what your thoughts are on it. >> i've talked to the president about it. it's something we're looking at. you know, it's obviously stalled at the moment. i think there's a lot of concerns historically about the xm bank and is it just subsidizing certain large corporations. that's not something we're interested in doing. on the other hand, we're going to take a serious look at, and to the ek tent xtent we think t export/ export/import bank can be competitive in helping small and medium size businesses export. that's important. right now we have a situation

where they can make loans up to $10 million. they're doing that, doing plenty of them. i already have a team looking at what the impacting is on the economy if we expanded that. >> fannie and freddie. it's been a huge issue people have been swirling around. it's hard to say exactly where the administration stands on it, but you have been committed to housing finance reform. can you tell us how you come down on that and what sort of time frame we should expect. >> sure. so i mean, i'd say something i've already started working on. i met with mel watt this week. we've talked about various different issues. as i i've said before, i'm committed that under this administration we're going to have housing reform so that we don't just leave these entities the way they are. they've been sitting there for too long of a period of time. we need a solution. we're going to look at this. i think this will be one of the areas where hopefully we'll have a bipartisan solution. i think there's a lot of people

that share the view that we need to do something with them. there are different views. as i said, you know, i've already reached out to people. we have a team internally that we've already assigned. so this is something we're going to study carefully. i don't think you're going to see something right away from us, whereas tax reform is a near-term issue, but this is definitely on the agenda. we have a lot of things to do here. there's housing reform, there's cybersecurity. i spent a lot of time on technology. it's a big priority for me to make sure whether it's the irs that we protect people's records. we got to update the systems at the irs. we need to make sure that the banking infrastructure is safe. so there's a lot of things on my to-do list. >> obviously you have a huge to-do list, a very busy day. i want to thank you for your time. before we let you go, have you been working on your signature? >> i have indeed. my signature was great before

because nobody could ever copy it. >> it was a lot of loops. >> i was actually at a dinner, and everybody at the dinner like signed the menu and passed it around. someone said to me, whose signature is this? i realized it was mine that nobody could read. so my kids and others have encouraged me to have a new signature. i've been practicing it so it'll be nice and neat on the money. >> can you show us? i have a sharpie here. >> i can. >> here you go. >> this is a little dangerous. i don't want you copying it. >> no, no. >> i'll give you -- this is my old signature. and this is my new signature. >> much improved. let me just show the camera this. >> very different. >> that is a much improved signature. well, mr. mnuchin, i want to thank you very much for your time today. truly appreciate your being with us. obviously you have a lot of news to get to. we'll let you get to work. >> thank you for coming to visit. i hope to see you again here soon. >> thank you very much. again, steven mnuchin is the

77th treasury secretary. this is his first television interview. guys, back to you in the studio. sir, we appreciate your time. >> thank you. >> thanks, becky. we know that was important because of the jack lew stuff. he had some hie yrogliphics. let's get to our panel. our guest host for the rest of the hour, certainly last but not least, richard bernstein. he's ceo of richard bernstein advisers, which is your firm. >> it is my firm. >> it's not just a coincidence.

all right. so larry, you wrote something. you heard something about your hundred-year bond. >> loved it. i've been pushing this thing all summer and fall. i just learned that richard's college, hamilton college, sold a hundred-year bond, which is really totally cool. you sell long-term bonds, what you're doing is taking advantage of rock bottom interest rates, like any mortgage owner. you lock the low rate in. we probably won't see these rates for quite some time. so get it done. just get it done. i bet you they could go out at 3.5%, looking at what the united kingdom did. they're a lot like us. they speak the same language. this doesn't eliminate the debt problem. it just helps the debt service problem as a budget constraint and potential tax threat thing. i like that a lot. in fact, i liked a lot of what mr. mnuchin had to say this morning. steve moore and i and others worked very closely with him during the campaign. i think he was spot on. notice his emphasis right at the

beginning was tax reform. right at the beginning. low marginal tax rates, grow the economy at 3% to 3.5%, which i think they could even do better. these things can be turned around. and it is predominantly -- and i'm talking about corporate tax cuts -- a middle income wage earners tax cut, which will get us to 3.5%. >> we're going to -- hamilton college, where they wouldn't let the flag up? is that the same hamilton college? that's where you cut your teeth. david walker, you hear things you liked? >> yes, i did. first, let me say that when i was head of gao, we recommended over ten years ago that the treasury go to 50-plus year bonds. i guess better late than never. secondly, there's no question that we need pro growth tax reform that makes our system simpler, fairer, more competitive.

we also have to reduce public debt to gdp over time. i think we need to see what the numbers are. we need dynamic scoring. there's no question. but that will be a supplement to what they do on the hill with the gct. we need to recognize this. 70% of spending is on auto pilot. you cannot restore fiscal sustainability without addressing that 70%. we also have to redefine what's the proper role of government, who ought to do it, how does it get done, and how do we measure success. there's huge waste in government. >> all right. you're right. it was hampshire college. >> listen to what david walker is saying. they're running around, missing the point about reconciliation and trying to make this revenue neutral. fine. what mr. walker is saying is, hey, how about cutting spending. the trump administration says it's coming out with a large-scale, $10 trillion spending cut over ten years. that may never get through, but

it's the right approach. instead of raising taxes -- hang on. instead of raising taxes on consumers and imports, how about some spending cuts. >> look, to me the question for the markets today, having listened to that interview, is when does this happen, and does it happen. the question is, do you have any more confidence today than you did yesterday that a plan is actually going to not only come but actually get passed. meaning, when you heard him talk about dynamic scoring and how he plans to approach it relative to how the cbo is going to approach it, we didn't hear about where he lands on obamacare and whether that needs to be done tactically first in terms of taking a trillion dollars out to try to make it at least appear revenue neutral. how do you think the republicans are going to think about debt in all of this? that, to me, if i'm an investor, i'm sitting here trying to divine what's about to happen or not. >> i think, andrew, he avoided a

lot of the hot-button topics which would cause controversy. of course that's what he's going to do in this situation. one of the things i wrote down is he wants to get it done by the august recess. that's very important. something has to be done in place and show results by the midterms in 2018. if you're a congressman, coming into 2018, and you're saying it's going to happen, you're in trouble. they know that. so this has to be in effect with results by the midterms in 2018. so i think when he said i want to get this done by the august recess, he wouldn't comment whether it would be retroactive or not. my guess is it will be because they're going to want to see a lot of action, a lot of results fast. i think from that point of view, i thought that was one of the most, for the markets, important things. he wants that done by the august recess. >> you walk away more bullish in terms of your outlook. marginally more bullish. >> as i said, he avoided a lot of the hot-button topics. but just the notion -- >> at what point does the

avoidance of these issues make you think there's no consensus on the administration with certain keys a pec aspects of t reform? why aren't they starting to say, you know, this is where we stand on it. >> if you read between the lines -- >> okay, read between the lines for us because i don't know what they said. >> the b.a.t. is dead. he didn't say we're for the b.a.t. >> he said we're looking at the house plan. >> yes, we're looking at the house plan and many other issues related to it. >> the border adjustment is off the table. that's your read. >> that's the soft way of saying it's dead. >> right. >> who wants to talk? i've heard someone out there who hasn't spoken yet. who is it? go ahead. go ahead, rick. >> you know, first of all, i thought mr. mnuchin truly

sounded like investors are trading. there's a lot of pundits and media out there doing their job, kicking the tires. in the end, i think investors realize making sausage is going to take a while. all the questions that andrew is bringing up are good questions, but listen, nothing is going to be put on a big poster before it's done, as mr. mnuchin said. with regard to a 50 and 100-year bond, a lot of countries have them. czech, france, the uk. the uk, actually, it trades at a premium to the 30-year bonds. the problem i have, and he addressed it, i don't want to see another generation put into debt on a whim. you need a debt plan. you need a short, medium, and long-term plan to tackle the debt. as larry said, it has to include spending. but just another channel of debt isn't the way to go. in the here and now, you're going to be paying more to service the debt with a bigger coupon, whether it's a 3.5% 40.

and the big picture, will it work out, that's a market call. that's a market call. >> they should have done this. >> they should have done it a long time ago. >> i think you need to think about how you're going to get it done. >> should have done it with hamilton college. >> i like the duration of the u.s. portfolio to be a little longer. >> rick, question. he said to becky regarding interest rates, he said they're going to work with janet yellen and then he made this statement. he said, we understand what historic interest rates will be. i'm going to read that -- i'm going to ask richard for the stock market. i'm going to read that as saying the white house understands fed rates are going up. the white house understands stronger growth is going to move the fed rates up towards normalization, and they're not going to mess with it. he didn't attack her. he said i can't wait to fire her. i think that's very good.

>> that answer disappointed me the most. >> why? >> you know what, the fed reach isn't the entire yield curve. there's a whole market out there of interest rates, and i think -- >> i understand that. >> i think that's an issue as well. >> but the issue was will there be a massive confrontation between president trump and janet yellen. i think mr. mnuchin said very clearly no, there will not be. we understand the historics here and rates are going to rise and normalize. that's all i'm saying. >> and the only thing is static versus dynamic scoring. i'm glad that was touched on big time. i'll tell you what, to be revenue neutral, the border tax is supposedly the answer in air quotes. i'm not so sure i have strong feelings one way or the other. my guess is on the imports there's going to be a boat load of carveouts. things like medicine, food, fruit, maybe energy. but it's a complicated process. i don't care what anybody says. in the end, i think dynamic

scoring can go a long way to ameliorate the notion that revenue neutral is going to be instantaneous. i will go to my grave saying the static scores by cbo are as useless as a model t. they need to upgrade the system. >> right. >> i think if you're a bond investor, you assume it is not revenue neutral. if it is, all the better. i think the bond market has to assume it is not revenue neutral. >> it doesn't have to be. reconciliation, which we used in the reagan years a lot, that's how we drove his whole process. the rule that says it has to be deficit neutral or lower has been violated many times in recent years. the great thing about reconciliation is it can be whatever you want it to be. however, to andrew's point earlier, i didn't hear him tackle the issue of the rollback of obamacare and tax reform.

i think if they don't -- >> going in and out again. >> obamacare first. >> you've spoken. alex, go ahead. >> i think we need to be aware of what's going on in the health care front on affordable care act. there's only so much that congress can process at the same time. i was very pleased to hear the secretary put an emphasis and a priority on tax reform, an aggressive schedule of a bill signing in august. but we do need to recognize that there's a whole other conversation in washington about repeal and replace or repeal and repair that's potentially in conflict just from the days in the week, the number of days there are to do legislation. we have to do both the health care agenda and the tax reform agenda. >> alex, why can't you do both? basically, you're going to rollback obamacare, that meets the criteria of reconciliation. you're going to essentially cut

taxes. you're going to essentially cut mandates, which the supreme court says was a tax. remember all that judge roberts stuff. you're going to cut back on a lot of spending. then you could have the business tax reform. leave the personal stuff, individual, for next year. shove the business tax reform in. it's a fiscal bill. it's pro growth. it's all about tax cutting. it could be whatever you want it to be. >> curtis and robert frank in. curtis, you got -- oh, curtis is gone. good. then i don't need to worry. >> i'm here. >> oh, he's not gone. sorry, curtis. >> thanks. yeah, i thought it was a great interview. i thought it was a starting gun for the trump administration, talking about tax reform. i think it was very ambitious. i was glad to hear he had an ambitious goal line of august recess. put that in perspective, that's really 17 weeks from now. if you put out a plan in mid-march, that really gives you 14 weeks. while we could pass something quickly out of the house, when it gets to the senate, that's when things slow down. if you're going to use reconciliation t provides a lot of benefits.

for instance, just a 51-vote threshold, but it does have drawbacks. you can't add to the deficit outside the ten-year budget window. they're going to be constrained about what they can pass. maybe they have to limit it to corporate or one side of the coin and worry about it later when they have a super majority in 2018. democrats are going to defend 23 states, ten of those won by trump during the last election. maybe they should wait until that time frame. >> if they don't get the business tax cuts -- i'm not talking about the individual. i believe the individual stuff can wait. i think the urgency for growth and so forth is the business tax cuts. if they don't get it done this year -- and when they say august, that's very optimistic if you use health care first. if they don't get it done this year, economic activity will be postponed. and the stock market rise will be postponed. the longer they wait, they're going to give up a 2017 economy.

and there may be downside for the stock market. that's richard's feel. all i'm saying is don't wait. get it done now. he needs a "w" on business tax cuts for small businesses as well as large. >> we need to get realistic here. look, we need to accomplish pro growth tax reform. we need to be able to do something with regard to the affordable care act, but we also have to focus on what are we going to do about debt to gdp. the only way you're going to get this done is through budget reconciliation. look, i believe in dynamic scoring as a supplement to the static. the trump administration doesn't set the rules for congress. the jct and the cbo will set the rules for scoring. so the bottom line is you need to use reconciliation in order to be able to do this in a way that will pass muster and you can kill several birds with one stone. >> but david, here's my point.

reconciliation can be whatever you want it to be. all right. we don't have time to go through all those details, but that's a point. i know a lot about this. >> i know, we need to use it. >> but the other point, my friend -- and you and i agree about limiting spending and government. we agree. but i'll just tell you this. debt to gdp, growth, growth. 3% growth instead of 2% growth, according to the cbo. >> that's the denominator, larry. >> a $3 trillion reduction in deficits and debt. so let's grow. >> i'm all for that, but the bottom line is there's a new four-letter word in fiscal policy. it's called math. and you need to do dynamic, but the fact is with 70% of the budget on auto pilot, growing faster than the economy, you have to do something about that.

>> let me just jump in. i completely agree with larry. the worst tax we've got in the system right now is the corporate tax. the best tax to address would be to bring down the corporate rate. but i don't agree they can peel it off right from the beginning and put aside the individual things when president trump campaigned on a middle class tax cut. >> i want to make a point here. >> you're right, andrew. >> i want to make a point -- >> i'm sorry, it was rick. andrew, you're right. he's a middle class guy. i don't see how you can unbundle that. i don't mean to interrupt. >> we have to let robert in. >> i want to talk about math coming into play. it's very important. the mnuchin rule. when he was on our air last time, he was very clear there would be in reduction in the taxes of the upper income taxpayers. when becky asked him that this morning, he kind of walked it back and said, well, it's our objective, we haven't finalized anything. what i don't understand is what's wrong with giving tax breaks to the upper income

earners if that's what you're doing. larry, you said this is primarily a middle income tax break. it's not. >> yes, it is. >> everyone who's scored this -- >> can i give you some numbers? >> i'll give you numbers. everyone said the upper income, 1%, gets a double digit reduction. >> i don't care. i see those estimates and those score cards, and they say -- >> everyone else is wrong? >> yes, they are. >> everyone else is wrong, including grover norquist. >> grover hates the b.a.t. tax. let's not go there. >> he wasn't talking about b.a.t. tax. >> the tax foundation is the only dynamic score here. look -- >> and they said double digit for the top and less than 1% for the middle. >> 80% of this bill revolves around large and small business tax cuts. and the biggest winner is middle income wage earners. >> on a percentage basis? >> yes, they are the biggest winners from these business tax cuts. all mnuchin's trying to say is if you lower tax rates and

broaden the base -- >> he walked it back because everyone else was showing him the numbers, which is all the deductions in the world could never offset going from 39 to 33. >> we got to go to break, guys. thank you. >> he should be open about it if that's what it is. >> thank you, everybody. thanks, guys. >> i've just been told we have the option to use a 16 box in this next segment. >> we're going to do that. when we return, the 16 box and what you missed from becky quick's first on cnbc interview with treasury secretary steven mnuchin, including what he had to say about china. let's take a look at u.s. equity futures. looking to add to our gains at the open. stay tuned. ...not the smooch me! come on... what's going on here? you know how ge technology allows us to fix problems before they... they slow production, yeah. well, no more catchy business acronyms. wait, we don't need to smooch? i'm sure we can smooch a solution! we just need to "hover" over the candice, problem until... just let it go...

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♪ welcome back to "squawk box." treasury secretary steven mnuchin speaking to becky earlier this hour. this is what he had to say about china. >> we have a process within treasury where we go through and

look at currency manipulation across the board. we'll go through that process. so we'll do that as we have in the past. we're not making any judgments until we continue that process. >> let's talk china, trade, and currency management with john rutledge. great to see you. what did you think? >> good, good. you know, everybody talks about trade. it's the capital flows that really country. currency manipulator brings to mind somebody who's trying to make their currency cheap so they can sell exports. actually for the last two years, china has been doing the reverse, selling dollars, buying its currency to try and keep it from falling, driven by the capital flows that are happening to chinese people taking their money out. so they'll do their process. it's politically charged, but china is actually propping their currency up, not pushing it down.

>> tell me -- so if you're a chinese official listening to this today, do you feel better or worse? >> i think you feel better. as he said, the process -- they've done this process many times and typically come up with the answer that, no, they're not a currency manipulator, with quotes around it. but of course they're going to be very aggressive with china with trade. being a wall street guy, i think mnuchin understands that the capital account is really what's been driving the currency markets lately. it's not the trade that's doing it. optical fiber is like trade happening on speed of light, infinite number of ships with money coming in out of the country. right now chinese national is worried about their government. the government is worried about political instability. chinese national is moving its money to either australia or the u.s. or canada, which is why you've had these enormous real estate booms in these places.

chinese government has been trying to stop it with capital flows. so i think in this environment, if mnuchin can say something that slows down those capital flows from china, he'll help the trade account more than you would by doing some sort of aggressive trade act. >> and joining us now, we should say, is leland miller. where are you on the border adjustment tax and how the chinese might feel about it, one way or the other? >> the chinese are scared to death of it. the commentary that this is dead because mnuchin didn't mention this and go hard, i don't think that's true at all. there's an enormous process going on right now. any of the timelines that we're talking about for getting tax reform done, forget august, talk about 2017, means they're going to have to coalesce around stuff that's already being done by the house, the senate. border adjustment tax is not just not dead, i still think it's the most likely possibility there. >> so your read is completely on the other end of where larry kudlow landed. >> look, i agree with larry

intellectually on a lot of this stuff. i don't agree with what he's seeing in the message. the trump administration doesn't have a team to put this stuff together. they have to have broad brush strokes. they also have to generate revenue. there are some nonrevenue neutral plans they have, but border adjustment tax comes ready made from house leadership. people are underestimating -- >> what does it do to china growth? slap the border tax on, what does it do? >> nobody knows because a lot of it is about dollar appreciation. the big debate is it going to go 5%, 25%? we've been working on this a lot. i think the more immediate issue is how do the chinese look at this in terms of the currency. so they've got all these economic things they have to figure out, but on the currency, if you have an appreciation of, say, 10% of the dollar, do you go all the way up, halfway up? is it considered a devaluation if you don't match dollar strength? how do markets interpret that? the chinese are just walking around in circles right now trying to figure out how in the world to game theory this out. there's no answer yet. >> john? >> that plays into the chinese

leaders' stability worries. what they're really worried about right now is stability in hong kong and with the migrant workers. so a stable currency and stable prices is a way they try and keep the political system together. without knowing the impact of this, they're very worried. i agree with leland about that totally. and let's face it. the border tax works with the idea that you're going to somehow impose taxes on imports and subsidize exports and the currency market is going to magically appreciate by just the right amount to offset that. i think that's baloney. these guys don't have a clue what's going to happen to the dollar. the dollar going up means the rmb going down, rmb going down would stimulate more of those capital outflows, which is the worst thing the chinese leaders would like to see. >> okay. gentlemen, we're going to leave it there. thank you, guys. >> pleasure. >> sure. coming up, the trump

administration's strong dollar talk. we're going to talk to a currency expert next. right now, though, as we head to break, here's what the treasury secretary said about the border tax, which we were just talking about, earlier this hour. >> i think there's a consensus on the majority of where we are on tax reform. we're looking closely at the issues on the border adjusted tax. i spoke extensively with paul ryan and with chairman brady on this. we're looking at it. we think there's some very interesting aspects of it. we think there's some concerns about it. but i think one of the things we're all committed to do is make sure there is a combined plan that is a plan that is the administration's plan with the support of the house and the senate that we're all working together on one plan that gets passed. that ride share? you actually rode here on the cloud. did not feel like a cloud... that driverless car? i have seen it all.

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regardless of when they go in place, this won't really impact the economy until next year when you begin to see changes in behavior, and it will take a couple years to get growth. but we're committed in this administration, and you can see this in the markets. >> that was treasury secretary steven mnuchin earlier on "squawk box." let's talk more about currencies. joining us now, cnbc contributor, managing director of fx strategy at bk asset management. boris, do you think that he really wants a strong dollar? >> i think he wants a stable dollar. i think what's fascinating about all of this is that while the administration is talking about

the dollar, while the fed is very clearly signaling they're probably going to go to three rate hikes this year, and while the data is actually quite good, the markets are just not buying any of it. if you look at the dollar, the dollar is actually down. as a matter of fact, after he stopped speaking, dollar-yen went down and broke the 113 level. to me, the interesting thing from a trading point of view, if you think fundamentally something is supposed to happen but the price action is telling you something different, you trust the price action. the market is seeing something here that is worrying to me. until dollar-yen breaks back above 115, i'm not a dollar bull. >> worry meaning that it's an alarm bell for the equity markets? >> everywhere. >> they don't think anything is actually going to happen. >> ten year hasn't rallied above 2.5. the dollar is lower. the market is very skeptical about all of these growth projections, very skeptical about -- >> so you believe the bond market and currency market over what the equity market is telling us. >> yes. i also find it interesting that they're acting this way despite

the fact the fed officials are telling them every day we're going to raise rates. >> so is the risk that the dollar moves so quickly in the back half of the year because if there's no rate hike in march, it's going to be a very back end loaded year in terms of hikes. >> it would have to be. the fed is pretty serious about raising rates. >> so the risk comes in march. >> i'm going to be looking at march very carefully. absolutely. >> so what happens, you think? >> i'm very torn. i actually believe janet yellen actually turned into a hawk and wants to raise rates. she's seen that reflation is happening across the economy. she wants to get ahead of this curve. but the market is not believing her. that's the fascinating trade right now. until we start to see the dollar break back up above 115 on dollar-yen, you have to be cautious believing this whole thing. >> you can't turn into a hawk. she's never going to be a hawk, ever. >> on a relative scale. >> you know what you are. you're never going to change. >> you've seen her testify where

she's always said we got to wait, we got to wait. >> and what did the market say? they said 22%. so they don't even believe it. she's a faux hawk. >> we're in a different regime. inflation expectations are going up, right. for the majority where janet yellen was in her position, inflation expectations were going down. it was kind of the right thing to be a dove. >> no, no, no. that's -- no. >> i know you hate to hear that, joe. she's the best forecaster. that's why you should probably listen to her in saying that, you know, growth is going to go up. but the market right now is just very skeptical. maybe the market is seeing all this confusion about congress. maybe it's congress that's the weak link. >> they've seen what the fed has done in the past. >> th >> maybe they're going to stymy trump's attempts to grow the economy. it's much more political trade than economic trade. >> which way are you betting though? >> i always bet against

congress. >> you always bet against congress? >> given the chance that you think congress is going to do anything or screw it up, i think the strong possibility is congress is going to screw it up. >> that means you think rates should remain relatively low, the dollar should remain weaker. >> they're going to get quagmired in this legislative process. that whole momentum could slow down. >> that means you think equities should be lower. >> i do. >> rick? >> if you look at where investors have been investing until the equity market, on the margin they've been going back to more defensive sectors. they're not loading up on cyclicals anymore, which was the story toward the end of last year. even though the indices themselves are still pretty high, i think there's a fair amount of skepticism. but look, i just think if we come back here in six months, what's the probability of inflation expectations being lower? what's the probability of nominal gdp being lower than it is today? i just don't think it's -- i think we're going to see more inflation. i think people should be positioned accordingly, whether

fixed income or equities. i think, to boris' point, i think janet yellen and the fed will play catch up as we see these numbers start going up as we go through the year. >> boris is sticking around. >> you disagree completely. everything, 100%. >> remember we had that famous person at one of our dinners. i agree with everything you just said. anyway, thank you, richard bernstein. >> okay. we still got a lot ahead on "squawk box." coming up at the top of the hour, mark costa is going to join us. later, hedge fund manager david gerstenhaber is here with our reaction to our interview with treasury secretary steven mnuchin. stay tuned. you're watching "squawk box" on cnbc.

a "squawk box" news maker and news breaker, treasury secretary steven mnuchin. >> we're looking at significant economic changes. we have an unbelievable economic team. >> economic growth, tax reform, trade. >> our economic agenda, the

number one issue is growth, and the firts, most important, thing that will impact growth is a tax plan. >> you heard from him first on cnbc. >> we need to cut back regulations that had prevented small and medium size businesses from being the engine of growth in this country. >> now wall street and washington react as the final hour of "squawk box" begins right now. ♪ 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 the nasdaq market site in times square. i'm joe kernen along with andrew ross sorkin and melissa lee. becky quick, as you know, is in washington this morning for a first on cnbc interview with treasury secretary mnuchin. the futures have been up for most of the morning, and they have actually increased even a little bit more even though the dow has hit nine straight record

highs. it's indicated up another 26 points today. as you probably heard, treasury secretary mnuchin said what do you expect the stock market to do. he didn't say it exactly like that, but the market move is a reflection of the policies that the trump administration is trying to put into place. interesting, i think, now we're below 2.40 on the ten year. janet yellen can talk about raising rates, and we can talk about inflation and talk about your worries about dynamic scoring and is it not going to be pay for. the bond market at this point is not freaking out at all. i'm not sure. we need growth. can we worry about paying for everything once we get some growth? maybe we should do it that way. can i just get you to give us a year? >> that's a new approach from your side of the aisle. >> it's really not. let's work on that first. >> in the meantime, we want to get to becky, who's in d.c. and follow up with her on her conversation with treasury

secretary mnuchin. becky? >> hey, andrew. hey, joe. hey, melissa. what you were just talking about, joe, i think that's one of the key points, one of the key takeaways from that conversation. as you mentioned, the dow has been up and hit record levels for nine days in a row. i believe the s&p and the nasdaq has been up something like eight or nine days out of the last ten trading sessions. it's something that the administration officials are watching pretty closely as well. you could tie this back all the way to the election and then again once the inauguration came through. when we spoke with the treasury secretary today, secretary mnuchin said it is something he's paying attention to. he's been watching the markets for all of his professional life. he says he sees it as a report card. listen in. regardless of when they go in place, this won't really impact the economy until next year when you begin to see changes in behavior. and it will take a couple years to get growth. but we're committed in this administration, and you can see this in the markets.

>> again, he talked about how you can see this in the markets. the flip side of that comes with what happens if the markets turn down. he said, yes, that would be a reflection as well. he's willing to live by the sword, die by the sword. as he sees it right now, this is all positive and all coming from these changes. the ones that have been realized and the ones that are still in the works for down the road. obviously what the marks are watching and caring about so closely is what happens with tax reform. that's issue number one. let's listen to more of what he had to say on that subject. >> our economic agenda, the number one issue is growth. the first, most important thing that will impact growth is a tax plan. we are committed to pass tax reform. it will be very significant. it's going to be focused on middle incomes tax cuts, simplification, and making the business tax competitive with the rest of the world, which has been a big problem and a lot of reason why companies are leaving and cash is sitting offshore. leaving and cash is sitting offshore. so that's really our focus.

we want to get this done by the august recess. we've been working closely with the leadership in the house and the senate, and we're working on a combined plan. >> you believe we can get back to 3% growth. how? >> i think we need to get back to regulations that have prevented small and medium sized businesses from being the engine of growth. we're looking at dodd-frank and making sure banks can lend. >> we've seen regulatory reform start. do you think we would see 3% plus gdp by next year? >> i think it's going to take time to get there. i think it would be, you know, more towards the -- seeing the growth towards the end of next year. i think by the time we pass tax reform, you see the impact on the economy, you see the impact of regulation, it's definitely going to take into next year to see an engine of growth. >> obviously a lot of people are looking at this, the fed and the cbo, and their growth projections are closer to 1.8%. what are they missing? they don't see any of this? >> i don't think they're missing

anything. i think they're making those projections based on the status quo. that's why the economy has been. it's been actually lower than that urn the obama administration. and i think we're looking at significant economic change. >> do you agree with the border adjustment tax as something that you think needs to be involved in tax reform? >> well, let me just say i think that there's a consensus on the majority of where we are on tax reform. we're looking closely at the issues on the border adjusted tax. i've spoken extensively with paul ryan and chairman brady on this. we're looking at it. we think there's some very interesting aspects of it. we think there's some concerns about it. but i think one of the things, you know, we're all committed to do is make sure there is a combined plan that is a plan that is the administration's plan with the support of the house and the senate that we're all working together on one plan that gets passed. i think everybody is on the same page in doing that.

>> when you sat down with us on "squawk box" back in november, you said that b even if wealthier people get a tax break, it's not going to be that they necessarily are paying less in taxes because the deductions, the loopholes would be closed as a result. do you stand by that now that you're actually in the administration and in your position as treasury secretary? >> there's been a lot of comments on that. i actually think there's a rule. i think during my confirmation it got named the mnuchin rule. look, as i've said before, we're primarily focused on a middle income tax cut and simplification for business. what we are focused on is that on the high end if there are tax cuts, that they are offset with reduction of deductions and other things. it's something we're going to carefully look at. >> you have said you expect interest rates to remain relatively low for some period of time. but when we get to this growth that you're expecting of 3% or better, how quickly do you think interest rates will have to adjust to catch up with that? >> we're in an environment where

we're at historically low interest rates. i think if you look at this on a historical basis, we'll probably have low interest rates for a long period of time. that doesn't mean that within that there's not the context that interest rates can go up, and you've seen the fed signal that. i'm not going to speculate on what they're going to do, but my comments are really about where we are not relative to just today but where we are relative to where interest rates have been over a long period of time. >> fannie and freddie. it's been a huge issue that people have kind of been swirling around. it's hard to say exactly where the administration stands on it. you have been committed to housing finance reform. can you tell us how you come down on that and what sort of time frame we should expect. >> sure. so i mean, i'd say -- again, something i've already started working on. i met with mel watt this week. we had a very good conversation. again, i think as i've said

before, i'm committed that under this administration we're going to have housing reform so we don't just leave these entities the way they are. they've been sitting there for too long of a period of time. we need a solution. we're going to look at this. i think this will be one of the areas where hopefully we'll have a bipartisan solution. i think there's a lot of people that share the view we need to do something with them. there are different views. as i said, i've already reached out to people. we have a team internally that we've already assigned. so this is something we're going to study carefully. i don't think you're going to see something right away from us, whereas tax reform is a near-term issue, but this is definitely on the agenda. we have a lot of things to do here. there's housing reform. there's cybersecurity. i spent a lot of time on technology. it's a big priority for me to make sure whether it's the irs, that we protect people's records. we got to update the systems at

the irs. we need to make sure the banking infrastructure is safe. so there's a lot of things on my to-do list. >> a lot of things on his to-do list, a lot of things that came out that he's obviously focusing on. some of the highlights that the market seems to be take away is this is a very aggressive timeline he has for tax reform being passed, where he's talking about it hopefully being done before the end of the august recess for congress. also, just the idea that this is something he's been committed to tax reform. that's a headline that's getting picked up all over the place. really, that seems to be what the markets are keying off of, guys, when you look at where the futures are this morning. joe, andrew, and melissa, clearly the market still looking at the upside for this and the idea that something might get done. that would be a significant upside as far as the market is concerned. >> you know how i feel becky. you touched on regulation right there. we're going to have a conversation now about the business round table with the ceo that sent a letter about regulation. you know, i'm looking at all this as half full.

i'm not convinced the 13% dow gain since the election is in anticipation that everything goes right with tax reform. i think purely unregulatory issues, on executive order issues, we can do 13% gains in our sleep and anything above and beyond that with tax reform is going to be a bonus. >> i guess the question becomes what kind of gdp do you anticipate if you get the regulatory reforms completed -- >> but nothing else. think about that though. i can give you a decent boost in gdp. we're going to talk to this gentleman. 20,000 new regulations since 2009. we've removed 179 of those previous regulations prior to that. what hurts innovation of our great companies and our small businesses? what drags it down and doesn't allow us to innovate? it's regulation. tax reform will be great, but i don't think we're factoring in enough positive things. we're all waiting for this thing

to turn around. we're worried mnuchin is going to live by the sword, die by the sword. i don't know. i think the market is trying to tell us something. >> look, mnuchin, the treasury secretary says the same thing. as far as he's concerned, the market is on board with this and is very much anticipating what's happening. but you're right. a lot of it is just the new administration, animal spirits that get picked up as a result of that. >> we've heard anecdotal evidence about what small businesses are dealing with. we know that's the engine of job growth and everything else. we hear the markets tripled since the lows of 2008, but let's go back to doubling since 1999. that's only -- you know, that's not way out over jyour skis necessarily. some people are hoping for it because it would mean it was

republican. >> you got to root for america, no matter what you think. >> say it loud and say it proud, beck. anyway, thank you. >> thanks, guys. >> the business round table sending a letter to the white house, addressing ceo's top regulatory concerns. it includes a list of recommendations that might help ease the burden. our next guest signed a letter to the nec chairman gary cohn. mark costa chairs the business round table smart regulation committee. i hope maybe your ears were burning. you heard some of my comments. don't you think -- you can just work on regulations and accomplish something, couldn't you, mark? >> absolutely, joe. what i'd tell you is -- i'm going to up you to the glass is three-quarters full. i think there's tremendous opportunity as brt when you think about improving more effective efficient regulation, tax reform, and infrastructure spending, three priorities for the brt. i think you can create tremendous growth for the country. there's regulation strangling this country.

as you mentioned, tremendous number of rules being laid on us. very little being removed and incredible complexity. we've developed a list of recommendations to the administration and to congress. they're extremely receptive about how we can start improving the environment and creating opportunities for growth. our country has been built on strength of innovation that creates great jobs and opportunities for everyone in this country from big corporations to small business, as well as creating demand for the world. we need to get back to that. we need to get more drive in driving innovation where we're the world leader and how do we have a regulatory system that embraces that, enables it. we have so many rules in the last eight years that are trying to oppress it and slow it down, especially in manufacturing. we see a lot of people, a lot of rules like the ozone rule that makes it hard to start up a new manufacturing plant, especially for a small business that doesn't have the resources eastman would have to navigate those hurdles. >> that's what i was going to

ask you. does the business round table have enough input from small businesses to know which regulations are really hurting all the smaller operations? i know that the brt members -- i think of big s&p 500 companies. are these recommendations, do they include things that are affecting smaller businesses? >> i think we have a great insight about what's great for the economy, not just for the large corporations, but small businesses. we operate in a community -- and there's a huge effect we have. every time we have manufacturing plants or operations in a community like we do in appalachia, tennessee, in the mountains, there's a tremendous number of small businesses that get employed. we have 3,000 contractors on top of 7,000 employees that are small businesses in our community. so we know them well. we understand what their needs are. if we grow, they grow, and we understand that, you know, the types of reforms we're recommending are going to help them even more than they might help us. i think there's tremendous

alignment there. >> so mark, do you worry that we're going to spend too much without paying for it with the tax bill if we don't do the border adjustment? do you think it would be all right to maybe focus on growth first and maybe spend a little more than you take in and then maybe worry about that when you get above 3%? i don't know if that would be the end of the world. what is the brt thing? >> first of all, we're strong supporters for corporate tax reform. we're not competitive in the world. we've lost our ability to, you know, have an advantaged position. really, all we're asking for in the corporate tax reform is try and get back to being competitive. we're so disadvantaged right now. we're very aligned on that. i believe in dynamic scoring. if you're going to do tax reform, the whole point is to stimulate economic growth, joe, and drive, you know, more jobs, higher quality jobs in this

country, which i think everyone's aligned on doing. i think -- i applaud speaker ryan and chairman brady for coming up with a plan. it's a bold plan. i think we have a lot of alignment with the architecture and the structure of moving to a territorial system, creating incentives for accelerated investment in the u.s., both in r&d and manufacturing. i think the overall plan is great. you know, obviously there's a lot of controversy and debate about the border adjustment tax, but the core principle of it, which is leveling the competitive playing field so we can compete on an export basis and trying to make sure that we have a way to sort of, you know, compete on a more fair basis, i think we support. obviously there's a lot that has to be understood about border tax and we're waiting for the details to sort of understand that and work with congress and the administration to make it as successful as possible. >> sounds like it's a very polite way, mark, of saying it's a big rift in the brt, where you stand on border adjustment. your company is a big exporter.

55% of revenues are outside the united states. 75% of your work force is inside the united states. you're probably okay with it. is this a divisive factor within the business round table? >> i think that, as you noted, we're the 27th largest exporter by volume. certainly at a concept chul level, we see border tax as a benefit for us and for industrial manufacturers. if you extend it beyond that, i think we have a huge second order effect in creating growth in the service sector as well when we grow in manufacturing. so i don't think there's anything wrong with an incentive and a structure that improves the ability for the u.s. to export and level the playing field when so many of our trading partners already have done something similar. obviously there's debate. the retailers have a different point of view. we're trying to work collaboratively within the brt to get everyone's view incorporated and make sure that whatever ultimately is proposed

it's effective. >> mark, thank you. next time you get back to new york, please come into the set and update us on all these things. a lot going on. good time to be in the media. not the mainstream media, the business media. anyway, thanks. coming up, hedge fund manager david gers getenhaber i going to join us. first, here's steven mnuchin on "squawk box" earlier this morning. >> our economic agenda, the number one issue is growth. the first, most important, thing that will impact growth is a tax plan. we are committed to pass tax reform. it will be very significant. it's going to be focused on middle income tax cuts, simplification, and making the business tax competitive with the rest of the world, which has been a big problem and a lot of reason why companies are leaving and cash is sitting offshore. so that's really our focus. we want to get this done by the august recess. we've been working closely with

the leadership in the house and the senate, and we're working on a combined plan. ughout) ♪ the first stock index was created over 100 years ago as a benchmark for average. yet many people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? it's time to bench the benchmarks.

i think there's a rule. i think during my confirmation it got named the mnuchin rule.

i was very keen on that. there's a volcker rule, a mnuchin rule, and a buffer rule. i feel like i have good company. look, as i've said before, we're primarily focused on a middle income tax cut and simplification for business. we're focused that on the high end if there are tax cuts, that they are offset with reduction of deductions and other things. it's something we're going to carefully look at. when we come out with the plan, we'll come out with the distribution and how it impacts people and that's something we're very focused on. >> treasury secretary steven mnuchin on "squawk box" earlier this morning. joining us now with some reaction, david gerstenhaber, the capital management president, one of julia robertson's first tiger cubs and created the famed macro investment group. good morning. >> good morning. >> you heard what the new treasury secretary had to say. to the extent you could divine where it all goes from here and what it means to the mark, you thought what? >> i thought this was going to be a great experiment.

we're going to see what happens with you take a fully employed economy and throw a bunch of fiscal stimulus into it. i think the fed is probably in the going to be all that amused by that experiment. >> when you heard that today, you're going to get off this set, is there anything you would do in terms of changing your own positions in the stock market based on what you heard there? >> no, i think he was very careful not to be too concise, too clear in terms of what he's going to do. he wants to keep that a secret at this point. >> why is the bond market so kw -- number one, you said full employment like it's known it's totally full. people argue about whether we can bring some people back in from the participation rate or whatever. so what i think i just heard you say, the bond market is wrong. it should be much more concerned than it is. we're at 2.39 today on the ten year. >> the bond market has been particularly stable at a low

interest rate. >> a big market with a lot of players that are smart. >> no question. but the fed is signaling that they want the market to take them more seriously, and the market isn't taking it seriously. >> 22% for march. >> listening to that, would you bet that tax reform of some sort gets done by august? >> yes, i would anticipate that some sort of tax reform gets done. but i don't think this is going to be deficit neutral tax reform by any stretch of the imagination. i think this is going to be something that leads to an expansion in the deficit, and the market is going to have to come to terms with that. >> the ek wiquity market, thoug might still go up based on this, yes? >> equity market is not cheap, right. we're in the ninth of tenth valuation a the this point. you're making a bet that everything is going to go swimmingly well if you want to be an aggressive long in this environment. >> so how are you positioning yourself?

>> well, we're what i would call lightly long in this environment. we're short the front end of the fixed income market. we have some currency exposure where we're betting in essence that interest rates going up more rapidly here than in the rest of the world will be supportive of the dollar. >> so can we sort of break that down? you're long equities but only lightly, as you say. you're short the front end of the curve. so what, twos, fives? you think yields will go much higher. and you think the dollar will be stronger. >> i think you have a lot of problems in europe at this point. you have a relatively slower growth environment in japan at this point. the biggest risk and position in the dollar is that mnuchin comes out and says something counter to your interests. but the fed is really trying to suggest they want to get three interest rate hikes this year. >> how'd you do in the last 12 months? did you see the article in the

journal on the tiger cubs? >> yeah, that was not a nice article. we weren't in there, fortunately. we were flat. >> you were flat, okay. i don't know whether to start worrying about the bond market now or whether i shouldn't listen to you. so flat for the last 12-month period. >> yeah. >> that's bad though, right. fla t pl flat is not down. >> in terms of being lightly long in terms of the equity market, your view is there's going to be a pullback. what would be the trigger for that if that's the case? >> i'm not suggesting there's going to be a pullback. i'm just suggesting that you're taking a lot for granted if you want to be aggressively long in this environment. the market's gone up really pretty substantially in a short period of time. and it's done it on animal spirits. so what are we going to get next to propel the market from here i think is what the issue is. >> if you don't get the tax reform by august, what happens? >> i think you'll have a setback

in the market. i think that's unavoidable. >> what premium do you think is built into the market now on the assumption of august, if that's the case? >> i think probably -- >> meaning, what would be fair value if there was no tax reform? >> i think we're not -- look, i think you'd probably get a 5% setback. >> that's it? i mean, if you think that we are up, what, 10% -- 13% since the election and now we're trending near record highs and we're going to see a 5% pullback, that doesn't seem like a terrible risk to the downside. >> 5%, 8%. you could have a nontrivial pullback in this market. >> are you waiting for that pullback to get more long instead of just lightly long? >> i would rather it be more long at lower levels, yes. >> so you're waiting. >> yes. >> okay. thank you. great to see you. >> all right. thank you. >> appreciate it. you bet. coming up, breaking economic news. weekly jobless claims. stay tuned. you're watching "squawk box" on cnbc. like?

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we are just seconds a way from weekly jobless claims. let's take a check on where equity futures stand. we're looking at a higher open. on the dow, looking to add about 33 points. s&p, about four, three points. the nasdaq looking at two. taking a check on the ten year treasury yield, we had seen it

below 2.4%. still hangs below 2.4% right now. 2.395 is the exact level in terms of percentage change here. we want to go to rick santelli standing by at the cme in chicago with the numbers. rick? >> and here we go. our last week look was 239. that moves to 238. you add six. you're up to 244,000, which is the current claims number for this week. if we look at the continuing claims, it moved from 2.077, we'll call it just shy of 2.08 million, down to 2.06 million right on the nose. of course, when we look at the headline number, we've been in the 2.30s. i'm not sure up 6,000 makes a world of difference. boy, what a great interview this morning by becky and the entire team. i'm sure we're all going to have plenty to talk about, whether it's the dollar or interest rates or b.a.t. tax. one thing is for sure,

investors, they seem to be pretty comfortable, at least thus far. back to you. >> okay. thank you for that, rick. back to this morning's news making interview with treasury secretary steven mnuchin. dom chu taking a look at wall street's reaction this morning. >> so andrew, we did see a little bit of movement after the 7:00 hour and what happened with the dollar and with gold prices, two of the more noticeable moves in the market on the heels of that interview. as we take a look at overall, the picture that we did show earlier this morning, tax reform, bank regulations, value of the dollar. like rick santelli said, becky's interview touched on a number of these topics. one stood out in terms of tax reform. he talked about this idea that tax reform is close and that they're looking to get it done pretty quickly. take a listen. >> we are committed to pass tax reform. it will be very significant. it's going to be focused on middle incomes tax cuts, simplification, and making the business tax competitive with the rest of the world, which has

been a big problem and a lot of reason why companies are leaving and cash is sitting offshore. so that's really our focus. we want to get this done by the august recess. >> and of course border adjustability, that tax also came up in the interview as well, talking this idea that perhaps they're still looking at it, no definitive plans made, through they're still working with congressional republicans on getting some concept or variation of a border adjustability tax. they're noncommittal to it right now. they didn't make a lot of news in terms of what's going to happen. perhaps that could be one of the reasons why the market is moving, especially the dollar, guys. and of course gold prices as well. taxes certainly a big part of that story. >> all right, dominic. thank you. real bonus day. we got to see you twice today. coming up, much more of this morning's first on cnbc interview with treasury secretary mnuchin, including plans for treasury bonds. >> we're not ready to make any formal announcement on whether we are going to have a 50-year or 100-year, but i have said

this before. i think it's something that we should seriously look at. i've already begun to talk to the staff about looking at that. again, we'll reach out to the market, investors, different people, but i think it's something that is a very serious issue of whether we should explore, whether we can raise 50 or 100-year money at a very slight premium. no matter how the markets change... at t. rowe price... our disciplined approach remains. global markets may be uncertain... but you can feel confident in our investment experience around the world. call us or your advisor... t. rowe price. invest with confidence.

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welcome back to "squawk box." in case you missed it, treasury secretary steven mnuchin joined us earlier in a first on cnbc earlier. here's what he said when becky asked if he'd use the market rally as a report card. >> this is a market to market business. you see what the market thinks. we're in an environment where there's very attractive investment opportunities in the u.s. i think that's reflective of the administration's goals and what the market thinks of it. >> joining us now, ian katz. what did you make of what the treasury secretary said about tax reform or actually maybe what he didn't say about where the administration actually stands on some of the major points of tax reform? >> i think he actually pretty deftly walked this balance beam

between being optimistic and being sort of a cheerleader for it and at the same time not overpromising. he was saying as far as the timing that he thinks they can -- he wants to get it done by august, but he didn't promise that. he does have an out if it doesn't happen. i think a lot of people agreed that's going to be a pretty ambitious timetable. i think he sort of did the same thing on growth, right. he said, well, he was optimistic about growth but said it's going to take a while, be late into probably next year when we really see that. so i think -- frankly, i think he sounded a lot like a treasury secretary, somebody who sort of knew his role is being an economic cheerleader of sorts while at the same time not overpromising. >> how much longer do you think this sort of balancing act can be sustained without somebody saying, hey, show us the goods here, whether it be the markets or people within congress or people on capitol hill. there's only a certain point at which, you know, you can accept the fact they're working things out but you need to see some

progress as to where the administration stands on certain key points about a tax reform bill. >> right. well, i think what they're doing on the b.a.t. tax right now, for example, is they're waiting a little bit. there's not a huge benefit for them to put out their hand right now. it's probably better to wait a little bit, see what happens in the conversations in congress, and then they could weigh in, sort of finish the deal sort of thing that i think president trump likes doing better than coming in early. they do have to manage expectations, though, but i think they're in a position where they could lay out an optimistic forecast. but at the same time, they're in a position where if things don't work out exactly the way they want, they could always say, hey, it's congress, things move slowly in washington, things take time. and i think he was actually laying the groundwork a little bit for that. he's being optimistic while at the same time laying out the possibility that, you know, it's not totally in the administration's hands. and it's not. >> what did you want to hear

that you didn't hear from the treasury secretary? >> well, you always want to hear more specificity as far as the tax plan. on currency, for instance, maybe you want to hear a little more specificity on what he thinks. i didn't expect that. i think that would have been unlike a treasury secretary. you could see now he's more in the mode where he is very aware of the things that he says can and will move markets. most treasury secretaries don't want to move markets. so he could have been more specific on a couple issues, but frankly, i wasn't expecting it because now he's in a different role where he has to be more careful about what he says. >> all right. ian, thank you. ian katz at capital alpha partners. coming up when we return, google taking a big step in the war on cyber bullying with artificial intelligence. we've got the details next. first, as we head to a break, from washington to omaha, becky quick is going to be sitting down with warren buffett on monday. that starts at 6:00 a.m. eastern time.

send us your questions using #askwarren. "squawk" returns in just a moment.

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welcome back to "squawk box" this morning. google and jigsaw announcing new technology today that combats online harassment through artificial intelligence. joining us now with more on the project is the founder and president of jigsaw, foremaneme google ideas. tell us about this.

we get all sorts of messages on twitter throughout the day. all sorts of people making terrible comments one way or the other. and there's hate out there, let's just say. you have a new technology which you're announcing today which is going to hopefully help with some of this. >> look, the decline in civility on the internet is pretty known to all of us. you guys, i'm sure, are getting trolled as we speak right now. we've used the best machine learning we have to make it easier for publishers and platforms to detect toxicity on their sites. the product is called perspective. >> how does it work? >> the way it works is any publisher or platform can feed the comments to the technology and receive a score zero to 100 of how toxic those comments are. >> what represents toxicity? is it foul language? or is it, you know, even more than that? >> in this case, toxicity is defined by what would cause somebody to leave the conversation. so the score that is returned means this comment resembles

things that other people have said are toxic. >> so joe often just blocks people on twitter. >> the ai must be pretty good because i might get something on twitter that says, wow, you are really a superb journalist. so fair, so balanced. i love the way you present -- now, they aren't serious. that's really mean, and they're being sarcastic. how will you know that's toxic? because that was toxic and i don't appreciate it. >> all technology does is return a score. the publisher and platform determines what they want to do with that score. >> i blocked them. >> if you want to block them, you can. >> we talk about twitter, facebook. are there certain platforms that you think have more toxicity on them currently than others, and how do you sort of think about that? >> i mean, i think you see it everywhere. trolls seem to sort of not discriminate between one platform or another. >> it's the anonymity. >> that's what i was going to say. twitter has more anonymous people on it than -- for

example, facebook, it's impossible to be really anonymous. >> why? sure it is. i have a fake account on facebook. >> you do? >> absolutely. >> okay, keep going. >> people like to say it's anonymity. i think it's more complex than that. you have 72% of american internet users who say they've witnessed some kind of cyber bullying. more often than not that bullying takes the form of a real person. >> i've never met anyone in public -- and a lot of people come up to us. i've never met anyone like the trolls on twitter. everybody loves us. they love me. they love you. they all love us when we meet them in public. where are the people that -- >> here's what's interesting about perspective. so what perspective does, you can imagine a situation or you could imagine a use for it where you, the viewer, can use that score to determine what level of toxicity you want to see on a particular day. so let's say andrew, you know, came to work today and he's just -- >> he doesn't block people. he likes it. >> let's say he's feeling sensitive. you're sort of feeling robust and comfortable, enduring it all. you can literally see different levels of toxicity in the

comments. >> isn't there a balance though? i don't know. i like to see everything. even if it's bad. you have to take the very best along with the very worst. >> no. >> for me h, i like to see everything. aren't we sort of creating a culture where people are developing very thin skins? >> you know, it's -- there's no rule that says it needs to be one way in perpetuity. what's nice about this is you can make a determination about what you want to see rather dynamically. >> in the short term, it's the publishers that will make the decision. individually, i can't use this technology myself, can -- or can i? >> it's up to publishers and platforms. maybe you'll decide you want to put all the power in the hands of the users. all perspective does is put the power in the hands of these platforms. >> and this doesn't touch on fake news yet. >> fake news is a whoa differle different problem. >> you're not scoring the accuracy of what people are saying.

>> i would say you have more people impacted by trolling an online harassment. 47% of american internet users say they've been bullied online. >> let's say there's a comment section for an article maybe that you wrote, andrew. does that mean "the new york times" or whoever publishes that article can decide, oh, we're only going to allow, i don't know, a nice score, nice comments to be posted. doesn't that sort of change the dynamic because you're editing the responses. >> well, the aspiration is already there. those long terms of service that people may or may not read, publishers have already articulated some sort of threshold for what they constitute productive conversations. we're providing a tool for them to implement that. >> i've almost got a perfect following now. >> how many people -- >> now people are all being sarcastic and sending things in. no, really, you're great, we love you. >> will perspective be able to catch that? >> to your point about people becoming too thin skinned, maybe you're experiencing a desire to

see something a little edgier, in which case you turn the dial up. >> has twitter signed on to this? who's signed on so far? >> we've started just with publishers in part because the initial data came from research partners in the publishing community. we'll talk to anybody, any time. >> the service is called perspective. jared cohn, thank you. >> i have two teenagers at home. i get plenty of it there. i don't need -- here i need peace. when we return, jim cramer. i don't think -- he does block people too, but he loves his followers. jim cramer joins us live from the new york stock exchange when we return. there's a process within treasury where we go through and look at currency manipulation across the board. we'll go through that process. so we'll do that as we have in the past. we're not making any judgments until we continue that process. ♪(music plays)

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we're in an environment where we are at historically low interest rates. >> uh-huh. >> i think if you look at this on a historical basis, we will probably have low interest rates for a long period of time. that doesn't mean that there

within that there's not the context that interest rates can go up. and you've seen the fed signal that. so, again, i'm not going to speculate on what they're going to do. my comments are really about where we are not relative to just today but where we are relative to where interest rates have been over a long period of time. >> treasury secretary steve mnuchin on "squawk box" earlier this morning. let's get down to the new york stock exchange. i've been looking at other twitter stuff, jim, i don't know whether you've tweeted about what you thought about the interview. so i'd like to hear your take on what secretary mnuchin had to say. >> look, i think that a bull loves what he has to say because he still says everything's pretty much on track. and that's a very fast plan given the fact that we are looking for affordable care, repeal. we've got a lot of nominees that haven't been vetted yet. we still have a lot of people in congress i think that are trying to slow things down for mr. trump. so if you actually get augn augt

timeframe, i think that would be a spur to the market. i found them to be reassuring. said, look, things are on track. if things are on track, then you don't want to sell the market. >> jim, you know the thing that keeps coming up for me now is the number of guests that tells me the bond market has it wrong. i wonder if we're going to blow out all this fiscal stuff, inflation's back, we're going to have pro growth policies and stuck below 2.40 again. they say, no, no, the bond market doesn't know. a lot of times, i mean, there's other factors maybe, but the bond market's usually smart. a lot of players with a lot of money dictates where that goes, aren't they? don't they -- >> i spoke with a lot of executives say the same thing based in paris, germany, london, china, based in india, look, this is the only place things are going right. i know a lot of people might say politically that doesn't seem to be the case, but this is the only place things go right.

it's where we want to put our money. it's where we want to put our investments. where we want to put our brains. i think there's a great demand for u.s. treasuries even as rates should go higher because i think the economy's pretty strong. >> if the thinking politicians in europe think what we're doing is wrong, doesn't that by definition mean what we're doing is right? >> well, i think there's a big split coming in europe. i think they're people -- >> we don't want to do what they do. of course they think it's wrong. we're not an entitlement state. we've got a private sector economy. they look over here and go whoa. they're not going to like it. i don't know, maybe you're right about the flow of funds, jim. maybe the bond market is not saying there's not going to be growth. maybe it's not saying that there aren't going to be positive things. maybe it's stuck down there because money's coming here and supporting the dollar. >> i think there's just such turmoil around the world, at least it looks like we've got some growth. better place to put money than anywhere else in the world.

i really believe that, by the way. i defy to find a better place to put money than our country. >> so there's nothing you wish you'd heard or nothing you thought he was, you know, less than bullish, his comments? there's nothing there? you can't nitpick with anything? >> no. look, i thought it was a great interview by becky. what i came back with is maybe they're going to be creative, things are on track. i don't know if things can be as on track as he said, but i certainly feel i'd love to see there's a sense -- i didn't see any disarray in this interview. and i think there's a lot of people who just say, listen, this thing's in total disarray. i did not feel there was disarray after listening to mnuchin. >> well, i will tell you i thought the same thing. the last week or the week before where every front page article was chaos, chaos, chaos. i was like let me see, i just saw the nfib and the consumer confidence and the philly fed and i just saw the eighth straight high in the dow and i'm like what are they talking about

flynn or something? or they're talking about the withdrawal of the -- >> i don't know. mattis -- the other side of what i care about, but probably the two greatest intellectuals of our time in the military. tillerson seems to be doing a pretty good job. >> with the chaos -- that's where you get the idea maybe you're not getting the straight story every day with mainstream media, necessarily. anyway -- >> i just think there's two different narratives. >> yeah. >> and i thought mnuchin blended them both and you felt like, well, listen, there's really only one narrative and this kind of bouncing along things are going to be okay. >> jimbo, thanks. see you at the top of the hour. coming up later on "squawk alley," former u.s. deputy treasury secretary robert kimmitt will join the game at 11:20 a.m. to the interview becky's with secretary mnuchin. "squawk box" will be right back. i have access to the oil markets and gold markets.

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get a final check on the markets. they were mixed before the big interview. now they're up even more than last time we checked up almost 40 -- that would be another new high. >> the mnuchin effect. >> the mnuchin effect. >> the mnuchin rally.

>> quick mnuchin rally. >> they keep mentioning tax reform and we keep going higher. >> the squawk quick-mnuchin-lee, sorken rally. positive sentiment again today. that would be ten straight. melissa, thanks for being here. >> pleasure to be here. >> we'll see where the day ends up. see you later today at 5:00. make sure you join us tomorrow. "squawk on the street" begins right now. it will take a couple years to get growth, but we're committed in this administration and you can see this in the markets. you can see the stock market's up, you can see the dollar's up. there's a lot of confidence in the trump administration and in the desire to invest in the u.s. this is a very competitive place to do business. we got great companies. and you see that reflected in the markets. treasury secretary steven mnuchin this morning on