it's friday, february 24, 2017, "squawk box" starts right now. >> live from new york where business never sleeps, this is "squawk box." good morning, everybody. welcome to "squawk box" here on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. we'll start things out this morning with this news. ten straight record closes for the dow. that is the longest winning streak the index has seen since 1987. look at the u.s. equity futures. things are not looking as rosy this morning, dow futures are down by 31 points. s&p down by 4 points. nasdaq down by 19 point. if we actually see an 11th close today, that would push us all the way to 1983 since we have seen a record like that. overnight in asia, you did see some weakness in stocks. the nikkei down by a half percentage point. the hang seng down by 0.6%.

the shanghai closed flat. early trading in europe, markets under pressure. the dax down by 1%, as is the cac in france. ftse down 0.6%. look at crude oil prices. right now it looks like crude oil is down by 29 cents. natural gas has been under some extreme pressure over the last week or two. couple of big stories we're watching. president trump is calling china the grand champions of currency manipulati manipulation. in a reuters interview, trump said he has not held back in his assessment that china manipulates the yuan. the china foreign minister saying china has no intention of using currency devaluation to its advantage. just yesterday in your interview with mnuchin, he wouldn't go that far. he didn't call it a ma

manipulator -- >> no, it seems like he stepped back from the trump promises to label china a currency ma anybo manipulator from day one. china has been propping up the currency recently. we'll see what happens, but it will be a much more settled -- >> but trump will go out there, say it publicly, his cabinet members, same thing with mexico, rex tillerson sort of walking back some comments that the president makes. >> this was an election issue that has fallen by the wayside. i was curious to hear if they would go out on a limb with this. >> it's happening across the board. pence goes over to europe and talks about how we love the eu and nato. >> right. trump says one thing and then the surrogates say the other thing. >> trump is not a politician,

pence is a politician. >> trump is a politician. >> not really. >> he did call himself one the other day. he said i can't believe i'm saying this. >> one thing his supporters like, he's impolitic. you know that you pointed it out as much as anyone. he is impolitic. >> the important thing to becky's point is that the chinese are actually propping up the currency right now. >> it's hard to label them a currency manipulator when they are pushing things up. >> how are they doing that? actively selling foreign reserves aggressively. as long as that continues i don't flow you can label them a currency manipulator. >> physician heal thyself. if you believe half the world is behind the curve, what would the dollar be right now if the fed had not come along and raised rates? if you look at how many times corporations and ceos have complained about dollar strength

and how long we stayed at zero, we never -- is there anyone in the world that doesn't manipulate currency to some extent? including us. >> what's the definition of labeling someone a currency manipulator? i would argue trump labeled them a currency manipulator yesterday, mnuchin didn't. >> because the last time an administration officially labeled china a currency manipulator is in '94 under the clinton administration. >> germany doesn't manipulate? >> what constitutes the label? when the president says it, isn't that the label? >> there's an official -- you take an administrative position -- >> and think about how beneficial a lower euro has been for the economic recovery of europe. i would argue at some point this year you will hear that the ecb is behind the curve. and they need to reassess and lift rates. >> couple other quick headlines. a bit of tech news.

google's self-driving car company waymo suing uber alleging they stole property. they say a former google engineer stole design information before leaving the company and went on to find the uber self-driving truck company. they believe the actions were part of a concerted plan to steal google's property. january, new home sales and a time report of february consumer sentiment at 10:00 a.m. time. new home sales are forecast to rebound by 6% following a more than 10% decline in september. a few notable names reporting before the open, foot locker, triva dpshgs o a trivago and jcpenney. some stocks to watch. gap posting earnings in line with expectations.

revenues slightly beat guidance. shares pretty much flat this morning. nordstrom beating the street, earnings in line helped by sales of the nordstrom rack stores. on the call, nordstrom's co-president was asked about the impact of president trump's tweet and all the things with ivanka, the brand pulling ivanka trump's line from the stores, the executive called that impact negligible. and hp enterprise -- i think they should have called it enterprises. maybe they're so focused now, it is only one enterprise. >> focusing on one enterprise. we're an enterprise company. >> so they -- there's not enterprises businesses? >> it's like the cloud, you're not part of the clouds. >> i get con ffused at deer and-

>> and moose, moos? so, hp enterprises reporting lower than expected sales and is slashing earnings projections for the year after intense competition in its clouds business -- it didn't really say that just cloud. programming note. don't miss hp ceo meg whitman in a cnbc exclusive interview today with squawk on the street. politicians making headlines at the cpac meeting. eamon javers has more on that story. >> reporter: good morning. you don't often get to see steve bannon out in public these days, especially now that we've got the conservative political action conference in washington. the first of the annual gatherings since president trump has been inaugurated. the conservative movement

adjusting itself now to trumpism and figuring out what part of the conservative movement is trump and what part of trump is the conservative movement. bannon said that the president is going to continue to fight for conservative causes. here's what he said yesterday. >> he's going to continue to press his agenda. as economic conditions get better, they'll continue to fight. if you think they're going to give you your country back without a fight, you're sadly mistaken. every day -- every day it is going to be a fight. >> presidential counselor kellyanne conway was also at the conference. she made a joke that had some serious undertones in terms of whether or not this is the conservative political action conference taking place or the president trump political action conference. >> so, let me ask you, how do you believe president trump has impacted the conservative movement? >> well, i think by tomorrow this will be tpac when he's

here. no doubt. >> so, conservatives figuring out where trump stands on issues that they necessarily vent always been comfortable with, including things like foreign policy, a whole post of issues in which donald trump doesn't necessarily align with the conservative movement, but now he's the president of the united states, he is the leader of that movement, we'll watch and see what the president says today when he goes before the conservative political action conference later on this afternoon. he will clearly lay out his agenda and try to make sure he keeps that wing of the republican party firmly on his side. >> here's a question. bannon said whether you're a populist, limited government conservative, libertarian, economic nationalist, we want to have you back. in terms of how they're trying to -- >> i think he said we want you to have our back. >> yes. right. how big is the tent, when you think about that room there?

>> well, it's pretty big. you have seen a whole different range of people coming to the conference over the years. every year there's a headline fight over who should be invited and who should not be invited who gets include and who is not included. for conservatives, some issues they're focusing on is protectionism. a lot of conservatives and republicans in this town for a generation have advocated free markets, globalization. this president doesn't necessarily feel that way. a lot of conservatives said we shouldn't have a robust executive at the top of the government who tells businesses what to do, we want the government to lay off of business. yet you have a president here now who feels comfortable lecturing individual companies on what he wants to see from them in terms of building plants and creating jobs. so some of those things don't square with what conservatives have been saying for a generation, that's what this conference is here to do this

week. >> eamon, the people like bill kristol, even mcmullen, the never trumpers, the ranks are thinning. he didn't even speak at cpac last year. these guys, maybe there's a couple of hold-outs still, but a lot of people in that room down there are smiling because everybody loves a winner at this point. you can't govern -- mitt romney, what a great candidate for the cpac. loved him. yeah? he couldn't beat barack obama when he was running for re-election. the ranks are thinning. i would argue the tent has gotten big and a lot of people there look at what's happened in the house, senate, state legislatures, governor ships, and how can you look a gift horse in the mouth when you're there? a lot of happy people in that room. >> i think you're exactly right about conservatives. i think you have to look right at the supreme court. the neil gorsich nomination goes

a long way. that's one thing they were concerned about on the campaign trail. now they checked that box. as you see this administration unveil certain things, they'll go and check boxes for their constituency. you have to dance with the girl that brung you, and president trump is doing that. >> ted cruz says he has no inside information on ginsburg or kennedy or anything like that but he says could be by the summer. i don't know. i think that's just pure conjecture. >> they have great healthcare at the supreme court. those guys seem to be able to live forever. >> but nobody does live forever. >> right. right. not yet, any way. >> right. we're working on that. the dow hitting its tenth straight record high for the first time in 30 years, joining us is james liu and joe

joe terranova. a lot of things change but a lot of things stay the same. we were talking on the way in. i know you have read stock operator, confessions of the stock operator, jesse livermore. was that written in the '20s? i think. the diabolical motivation for the market is to advance itself as far as possible without anyone believing it, with as few people on board as possible. and the wall of worry, every time there's something like this, there are individual bricks put in by the majority of people that don't believe the rally until it's almost ready to stop. they don't get on board, they don't get their clients on board, they moved too far, they are unable to pull the trigger after it's already moved too far, they never get in. it's happening again. what is going on, the industry is recreating itself and how we

transact. fees are compressing, the ability to be that star manager is so uniquely important to attracting assets under management. when you think about performance, who expected emerging markets would lead global assets right now, 10%? nobody. who expected the european recovery? there's not euphoria in the marketplace right now. i keep hearing sell. come into the market and sell. take profits. the question becomes, number one, what are you selling? are you selling high yield? investment grade? they're all up. the only thing down year to date is crude oil. are you going to sell? when you do sell, what's your expectation on that sell? are we going down 5% and getting back in again? >> i talked to daniel before we came on. his thesis, and someone says it every day, don't chase the rally. i said how long have you been saying don't chase the rally. you said since the election, and

you don't believe it at this point, and eventually you'll be right, but missing 13% that doesn't help. i don't know if the people who took your advise cadvice, if th happy they took your advice. the problem with the current dynamic is the fundamentals have shifted. >> we've been bullish on the market cycle. >> bearish since november 8th. >> exactly. the things that have driven the rally, a lot of people are focusing on the wrong factor. oil prices rising, interest rates backing up. also earnings recovering. we're seeing at this point a lot of enthusiasm in the short-term sur surges are due to promises. so what could cause this rally to be sustained is an actual

concrete tax reform package that may come out. that doesn't look like it will come out until august. so we need something like that to help drive the fundamentals which have already become stretched. >> do you ever try to gauge consensus and realize if it's too crowded t will probably be wrong? i can tell you the most common theme we hear is that the markets move too far without knowing what the tax reform package will look like. every person says that. and the market has hit ten straight new highs. >> just look at market fundamentals. >> fundamentals -- what if the fundamenta fundamentals -- many times fundamentals are not what you should be looking at, but momentum. >> i'm okay being wrong a few months. >> alan ableson was wrong 25 years. >> there's only one factor that predicts returns, and that's long-term fundamentals, like the

forward pe ratio. we're at the highest levels of that pe ratio since early 2000s. we shouldn't be chasing returns here. >> back in november f you're investing for 5, 10 years, you should have buying, you would have gotten 13% and you wouldn't be worrying about short-term pullbacks. >> it's great if you can catch every 1%, 5% -- >> you should stay fully invested. >> james, listen, there's a movement towards indexing. we're not supposed to pay attention to corrections. sounds like you think a correction is coming. what is actionable in that? what is someone supposed to do liquidate equities and get back in again? >> i'm not a trader, i'm talking about long-term positioning. i'm talking about whether you should be overweight or neutral weight equities here. we think that because of where

we've come in terms of the market rally, we're at record highs, the highest level since 2004, we should pare this back. >> you are making an assumption that most people are overweight equities now. >> i'm not giving customized advice here. if you are overweight equities, we say pare that back. we thought coming into the year we would see a solid single digit return number. at this point the market is up 5.5%. only about 1% of that is an acceleration is in earnings potential. the rest of that is entirely valuations and sentiment. i see a scenario where you can get a double digit return, but things would have to be incredibly rosy. >> i disagree that sentiment and fundamentals that are present now, profit margins, 8.1% a year ago, guidance given in this quarter, 35%, raised above consensus expectations, 5% is normally what the average is for

that. oil prices at a two-year high. these are fundamentals in a moment. we're seeing a european recovery that nobody expected. >> i think those are lagging indicators. we came into the cayear expecti 11% 12% earnings full year. the market already priced that in. in order to see further upside from here, you need to see further acceleration. we think that 11% 12% earnings growth has to come down. the average has been 6.5%. we think should much is built into the market. yeah, we could see a continuation of the rally, but if you're a long-term investor, now is a great time to start paring back to a neutral weighted portfolio. >> 13%, your correction won't get you back to where you weren't in in the first place. >> that's because the cycle has been long. we're at the later stages of the cycle. >> i'm trying to get people out there listening to us, we've had

a lot of people since november every new high telling them to not chase the rally. if they listen to the people saying that, they're out. now can you get in? now it's even more -- now you might get in. >> let's remind ourselves of where we were a year ago. everyone was convinced there would be a global recession within six months. everyone. then we had the bottom and everyone became bullish again. let's not look at sentiment or what the market is doing, that's always a lagging indicator. look at how expensive the market is if you're a trading expert. what i'm looking at are things over the course of years. >> i hope you're smart enough when we get a pullback, if we do, know when to buy. a lot to of times it doesn't pull back enough and you're still not in. thank you, james. you'll stick around? >> yeah. >> thanks. when we return, jeff

sessions sent a memo about the use of private prisons and shares of correctional contractors are on the move. and this coming monday warren buffett will join us for the annual "ask warren show." three hours. send your questions you have using #askwarren. 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. is happening before our eyes. shift in human history sixty to seventy million people are moving to cities every year. at pgim we help investors see the implications of long term megatrends like the prime time of urban expansion, pinpointing opportunities to capture alpha in real estate, infrastructure and emerging markets. partner with pgim the global investment management businesses of prudential.

welcome back. u.s. attorney general jeff sessions sent a memo yesterday rescinding an order by the obama administration that would have ended the use of private prisons. the move would have had little impact as most federal inmates are housed in state prisons. the original order also didn't apply to people being detained by immigration and customs authorities or the marshal service. shares of two private prison operators rose on that news.

>> these shares got hurt badly when the obama administration first sent that executive order out. it looked like the end of the days. i guess this changes that scenario. >> many of us live in our own private -- >> private prison? >> gilded gauge? >> where do you land on private prisons? >> i like private sector things. >> what about the lobbying that private prisons do, which has issues then around how we -- >> everybody has a lobby. >> but that's the point. the point is you have lobbyists who actually want more people to go into prison to profit from that. >> i think the bigger concerns are, the reports -- i don't know enough about this to weigh in on it. there's been reports written up about care in some of these prisons. >> which is another issue. >> i don't know enough about it.

>> overcrowded as our entire prison system is, you think there's a shortage of prisoners? that they need to drum up some business for themselves? >> but -- but this goes to the whole issue of whether you think people arrested for marijuana -- >> it's a bigger issue. >> prison reform is a huge social issue that's being impacted by private corporations that are lobbying -- that's a big issue. >> i don't know. >> here's something both of you will want to weigh in. you have an alexa at home. >> we have both. >> you have neither. >> i have one, i haven't hooked it up. >> i've been leery. here's an update on a murder case we told you about in december in that situation, law enforcement officials wanted amazon to provide audio from an echo device that may have been listening when the murder was

committed. as part of a motion, amazon argues that the responses of alexa, the artificially intelligent speaker are protected under first amendment rights. >> you just kicked her off here. >> hi, alexa. >> it gets tricky when you say this little thing has first amendment rights. they've saying it's really amazon's first amendment rights backed up by this thing written in side of here. >> alexa, how is the weather? >> in new york, 59 degrees, mostly cloudy skies. >> never gets old. >> prior to alexa, there were parents also listening. >> oh. >> and that plays into this story. there were parents in the past that have said, you know, the guy is married. the parent goes, oh, tony -- it's like my name is jim. there was a parrot they were

going to interview about whether they had -- now, should parrots have first amendment rights? >> yes, because they're living and breathing? >> parrots? >> i could argue that before alexa. >> i guess instagram -- we had "squawk box" first. we love connecting with viewers on social media. that's the royal we, not me, because i do not. on our facebook page, if you're looking for us on instagram, you won't find us but you'll find this "squawk box" account, a subscription order for things for your bird. it's called squawk.box. i think we should sue. instagram -- we had "squawk box"

a long time ago. >> maybe we could team up. >> a friendly arrangement since we have given them advertisement. >> who had it first? instagram is how hold? >> let's not go hostile immediately. squawk box folks, if you are watching -- >> do we know where the squawk box folks are based? >> our name. our name. our lawyers -- >> we'll work on it. we'll come up with a friendly arrangement. joe will come up with a different arrangement. >> or else. >> he's the heavy. >> he's the heavy if you don't act nice. coming up, when we return, tax reform may be the most eagerly anticipated item on president trump's agenda but it's not without controversy. t we'll talk about taxes next. first, a look at the s&p 500 winners and losers.

the first stock index ♪ (musicwas createdughout) 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. 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. ♪ to err is human.

to anticipate is lexus. experience the lexus rx with advanced safety standard. experience amazing. companies across the state are york sgrowing the economy,otion. with the help of the lowest taxes in decades, a talented workforce, and world-class innovations. like in plattsburgh, where the most advanced transportation is already en route. and in corning, where the future is materializing. let us help grow your company's tomorrow - today at esd.ny.gov

♪ welcome back, you're watching "squawk box," live from the nasdaq market site in times squar square. >> good morning. joe's here. >> it says joe, it's on you. >> go, you better run. i want to know what happened. >> is it the director? technical director in. >> i think they got caught up in

the conversation we were having during the commercial break and with playing along with us. >> oh. okay. good morning. u.s. equity futures at this hour, when something like that happens, you're supposed to pretend nothing is going wrong. >> exactly. you're like mr. suave rico. >> from now on, nobody will knows there an issue. any way, european equities are down. that's sort of spreading over here. we've had -- every day can't go up. but it looks like a lot of red there. down 46 on the dow. 25 on the nasdaq. there's what's happening in germany, france, italy. all down. this will be a day that will be written about. the day before yesterday, the he futures were flat, and the rally

was taking a pause. >> it was flat. >> the s&p broke above 2300 on february 9th, everybody said that won't matter it has mattered. >> from a technical spperspecti? >> 22 trading days since the dow settled above 20,000. 17 of those days we spent above 20,000. it does matter to those technically oriented. and there will be a correction. >> and they'll tie it to a coincident news event. they could tie it to anything. it's not going well in mex coic for tillerson. >> the question becomes when the market is down 5%, 6%, will those who have been calling for five years or six years for a massive selloff saying, okay, now you have to buy it. >> no, they want 10 or 15. they are always out. >> but his point is if you're

saying buy it, you missed how much getting to that point? >> but they never do buy, because they're always looking for that 10% that's listen elusi elusive. >> let's talk about some issues that have been propping up the market and pushing it higher. one of the most anticipated items on president trump's agenda is tax reform. here's what steve mnuchin told us yesterday in a first on cnbc interview. >> we are committed to passing tax reform. it will be significant. it will be focused on middle income tax cuts, simplification, and making the business tax competitive with the rest of the world. which has been a problem, and a lot of reason why companies are leaving and cash is sitting off shore. that's our focus. >> joining us to talk about the tax proposal is harry stein from the center for american progress, and chris icy studies

at the kate to institutcato ins. this is something that won't be unveiled until next month at the earliest what do you think from what you've heard about the details that have been slowly filling in. >> it's important to understand how little daylight there actually is between trump and republicans in congress when it comes to taxes. they both are proposal huge tax cuts that mostly go to those at the top based on what they already said in white papers and campaign plans. in 2017, according to the tax policy center, both of these tax cuts would give -- these plans would give a tax cut of over $200,000 to the top 1%. >> are you talking about the obamacare taxes being repealed? >> no. the obamacare tax being repealed would give a tax cut of $50,000 to millionaires. this is the better way fax plan rolled out, and then the tax

plan rolled out by donald trump's campaign. for all the talk about trump being different from republicans, and he may be in some respects, but when it comes to tax cuts for the wealthy, this is the same trickle down economics that we've been hearing. >> and we heard something about child care tax credits, something that ivanka trump has been trying to rally support about for in congress. >> let's be clear how that deduction works. she talked about a child care deduction, because tax rates are progressive, you are in a higher bracket when you make more money, that would benefit the wealthy, more than the middle class and lower income people. it works well as talking point for the trump administration to show, to claim they stand with the middle class, but in reality it's -- >> you think it's insincere? in talking to him, hearing about it, it sounds like they sincerely want to help. it sounds like you're

questioning about whether they're sincere about trying to help. >> i'm not sure if they're sincere about it or not, but when they rolled out the deduction, people pointed this out. it seems regressive. they made a couple changes around the edges on this, but the basic thrust of the plan is something that will mostly help the wealthy more than the middle class and poor. it's a bad tool they're using. >> chris, your thoughts? >> i agree with harry on that one. i think ivanka's child credit is a bad idea. that's all a side show any way. the most important thing here is a large cut in the corporate tax rate. i give trump credit arguing for a 15% corporate rate. all of our trading partners have done this. canada has a 15% corporate tax rate. amazingly canada raises as much money from their corporate tax at a 15% rate as we do at a 35% rate. why? you cut the rate, get more investment, get less corporate

tax cheating, corporate tax avoid dance. so the corporate tax is hugely important. you cut the corporate tax, american corporations and foreign corporations build more factories in america, hire more workers, wages go up. it's a win-win. it's of central importance. all our trading partners have done this. the global corporate tax is 24%. it's really long overdue that we do this. the last two administrations have been negligent. they didn't deal with the corporate tax issue. >> you can map out a tax plan at 15% that's revenue neutral dynamically scored? >> if you cut the corporate tax rate at 20%, it is revenue neutral over the long run. you cut the rate, you get more investment, which means more income taxes, more payroll taxes, more sales taxes, and you get a lot less tax avoidance.

the left and right, economists on every end of the spectrum agree there's large corporate tax avoidance going on now. the central driver is the high corporate tax rate. that's the reality. i've been looking at this for two decades. the corporate tax rate is a hugely important thing. we got to deal with it. >> harry, our corporate tax rate is far out of whack with what you see from trading partners from other developed nations, how do you think we should address that? >> i certainly agree that the corporate tax reform would be helpful, so we can lower the rate some, but let's broaden the tax rates and make sure we're closing the channels for tax avoidance. unless you lower it to zero percent, there will always be tryi people trying to game the system. >> i think there's corporate

spending that is corporate welfare, so you give less handouts to corporations but make them more efficient by cutting corporate tax rates that would be a win-win. >> coming up, boosting america's economy. congressman david schweikert weighs in on mnuchin's target for growth. and wisconsin governor scott walker will join us to talk taxes and jobs in america, and our guest host at 8:00 a.m., known as hollywood's brand father, a matchmaker for celebrity endorsements and consumer brands. you're watching "squawk box" on cnbc. runs on intel? that ride share? you actually rode here on the cloud. did not feel like a cloud...

that driverless car? i have seen it all. intel's driving...the future! traffic lights, street lamps. business runs on the cloud... and the cloud runs on intel. ♪ i wonder what the other 2% runs on...(car horn) with e*trade you see things your way. ♪ ♪ you have access to the right information

at the right moment. ♪ ♪ and when you filter out the noise, it's easy to turn your vision into action. ♪ ♪ it's your trade. e*trade. ♪ ♪

welcome back. time for the executive edge. in his "squawk box" interview yesterday, steve mnuchin took a diplomatic approach towards china's currency process.

>> we have a process in treasury where we look at currency manipulation across the board and we'll go through that process. we'll do that as we have in the past. we are not making judgments until we continue that process. >> that is a softer tone from president trump in an interview yesterday he called china the grand champion of currency manipulation. we have joined by eunice yoon. >> the chinese have picked up on the softer tone of mnuchin, the foreign minister earlier today said they welcome mnuchin's softer response. >> >> translator: mnuchin is just new into office. we look forward to cooperation with him to push forward u.s./china cooperation and trade. >> the foreign ministry had stronger words for president trump. the spokesperson dismissed the

description that president trump had laid out of the chinese as the grand champions of currency manipulation. >> translator: if you want to label china as a grand champion, indeed china is a grand champion, but a grand champion in economic development, since reforming and opening up policy was introduced, we have made remarkable achievements, in this regard we are a grand champion. >> the ministry also reiterated that it wasn't china's intention to try to get a trade advantage by devaluing the currency, he said china's focus is to stabilize the currency and press ahead with reforms. guys? >> thank you, eunice. great to see you. fascinating stuff. when we come back, retail earnings in focus. shares of nordstrom rising after

a 22 cent beat. and we'll get jcpenney's numbers coming up in the next hour. right now, as we head to break a quick check of what's happening in the european markets. they've been under pressure. in fact, it's increased with the dax and the cac both down by better than a quarter of a percent. this car is traveling over 200 miles per hour. to win, every millisecond matters. both on the track and thousands of miles away. with the help of at&t, red bull racing can share critical information about every inch of the car from virtually anywhere. brakes are getting warm. confirmed, daniel you need to cool your brakes. understood, brake bias back 2 clicks. giving them the agility to have speed & precision. because no one knows & like at&t. we're drowning in information.

where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. morgan stanley.

it's been over 100 years since the first stock index was created,

as a benchmark for average. yet a lot of people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? why invest in average?

nordstrom shares are rising this morning. the company reported earnings of $1.37 a share. that was well above expectations, 22 cents, in fact. revenue was short of estimates. we'll get results from jcpenney later this morning. here to talk retail earnings, senior managing director and retail analyst. i think of the cross currents, bob, going through retail right now. obviously there's the border adjustment tax. i'm not sure that's the main problem. we all think of amazon. we think of, i guess, just online shopping and the end of the mall, the death of the mall. unless you're a great mall, that whole business model is sort of suspect now, or is it? >> talking about nordstroms specifically, they're one of the best brands in department stores from a consumer franchise. the consumer loves and really admires what nordstroms stands

for. >> and they're in the better malls too. >> that's right. not as many stores. there's a lot of positives to what nordstrom is doing. >> do they need to be multichannel? >> yes. >> they do? >> absolutely. >> you have to be everything to all people. >> and they've really invested aggressively over the last five years in terms of this omni channel approach. one of the things happening right now for nordstrom is you're seeing an inflection point in the online business profitability against the bricks and mortar. when you're getting better growth and on the channel, it's helping. >> that's not pretty right there, that three-month chart. >> but bob, isn't this all about amazon? >> that's what i just said. >> beyond nordstrom. >> yes, absolutely. amazon and the ecommerce push forward. when you think about nordstrom's positioning specifically, nordstrom is higher end, amazon has made a big push into fashion. i think fashion is its second largest category today. but on the nordstrom side, you know, the higher end fashion

products, amazon doesn't sell as much of that. they've aggressively pursued it. nordstrom has a really strong franchise with the nafashionist, the footwear business specifically. >> but just the trend. don't you think some of the truly high-end stuff will end up on amazon? >> but i think there's a loyalty factor as well within this environment. i think nordstrom has that. i do think amazon has made tremendous inroads in fashion. the invests they've made, the brands they're getting, they continue to get better and better brands. nordstrom, their leadership, they've really done a fabulous job looking forward in this five-year investment they've made. now in the environment that we're in with like amazon plus, just the spending environment, we talk about the tax piece of

it. nordstrom is trying to move themselves forward. we've had a few quarters now finally stable operating margin. they're doing all the right things fundamentally in this environment. >> to joe's point, is there no way of avoiding a decline of the stock price? >> our call on nordstrom is essentially if they continue to -- like operating margins have gone from 11% to low sixes. if we start to come back with the profitability on the nordstrom side and the sales do stabilize a little bit more, i think the stock can work higher. >> you think they got lumped in with the broader retail picture here. >> well, i think one of the biggest concerns on nordstrom has been, you know, mall traffic specifically. they're trying to really incorporate the buy online, pick

up in store. they're not seeing as much pressure. >> 7% is pretty significant. >> jcpenney later. if i knew jcpenney was going back to 12, i would buy it. it's at six. everybody keeps saying buy jcpenney. so many people have been on here making the case to buy it, and it hasn't moved. i wish i knew. you say buy too? >> we're neutral on jcpenney. >> thanks. all right, bob. thank you. >> big thank you to joe. >> thank, guys. >> come on back. >> absolutely. >> oh, that joe. you never thank me. i thought you were finally -- for the wisdom, for the support. >> i'm excited for your interview on monday. >> oh, thanks. >> and most importantly the fees and what he's going to say about the structure of the market. that's what's going on right now. >> thanks. >> we'll have to hand that will ourselves, beck. >> oh, yeah. i'm not here. >> wonder where you are, mr. hollywood. coming up, the gop plan to spur economic growth.

congressman david schweikert. s, i have access to the oil markets and gold markets. okay. i'm plugged into equities- trade confirmed- and i ha global access 24/7. meaning i can do what i need to do, then i can focus on what i want to do. visit learnfuturestoday.com to see what adding futures can do for you.

holy dow. the index pulling off a stunt it hasn't done in 30 years. we talk the dow's record run and market strategy next. the president takes center stage at cpac today. a live report from the conservative convention and the key issues investors will be watching. that's straight ahead. plus, amazon hits the red carpet. we're going to tell you how the streaming giant could steal the show at the oskacars this year. the second hour of "squawk box" begins right now.

♪ good morning. welcome back to "squawk box" here on cnbc. we're live at the nasdaq market site in times square. another record day for the dow. it marked its longest streak of record closes since 1987. check it out. you're looking at -- what a chart that is. the futures right now this morning, as we tell you what's going on, you're looking at -- well, could be a down morning. at least for now. it started that way before and ended in the green. dow looks off about 72 points. nasdaq would open down about 32 points. the sa&p 500 off close to ten points. among today's top stories according to us, two reports will wrap up the week's economic day. the government will report new home sales for the month of january. that's expected to be a 5.8% jump. the university of michigan's consumer sentiment index will be out. i have a feeling that's not going to be that positive.

>> i take it you already started picking your brackets. >> i'm so confused. i may not do it this year. villanova lost. you know who's number one? gonzaga. >> you've liked them for forever. >> i saw where that actually came from. >> becky, are you just going to do -- >> no, this year i'm going to try and pick. >> what about you snrvelg? >> i may do the one click. >> might be better. it's impossible this year. everybody's lost to everybody. you know who looked good last night? cincinnati looked really good. i think they've only got three losses. >> you know what happens when you start liking a hometown team. you're like the curse. >> xavier unfortunately lost their best young guy to an acl thing. anyway, a name change is in the works for hotel operator

hilton worldwide. okay. keep the hilton, lose the worldwide. the company will simply be known as hilton, inc. this cost millions with a branding expert. they thought about all the possible -- that's the business to get into, branding. get paid a million dollars to come up with drop the worldwide. as of march 6th, it also unveiled a $1 billion share buyback program. president trump says china is the grand champion of currency manipulation. he told reuters he still thinks china manipulates the yuan to its own advantage. yesterday, secretary of treasury steven mnuchin told us he wasn't yet ready to pass judgment on china's currency practices. when you're the president, you got all these other guys. you say stuff you feel like having people talk about, then

you let everybody else do the damage control. >> that's kind of a new phenomenon. we used to do it the other way around. you remember when bush sr. said he didn't like broccoli and the broccoli farmers got mad. >> if you go up to a cat and go like that, it's going to jump. then do it again, do it again, sooner or later -- >> you sound like you've practiced this. >> yeah, but sooner or later, it doesn't move at all. i think the most cogent thing said about trump, if you take him literally and not seriously, you got a problem. >> no, now you have to take him literally. before you weren't supposed to, now you do. >> okay. so then what are we going to do to china? don't take it literally. we're not going to do anything. >> you told me he wasn't going to build a wall, now he says he's building a wall. >> it's going to be a series of -- you're going to start in

el paso, start in some of the places where you get the most influx and put maybe the fences. i don't know if there's going to be a brick by brick, concrete wall. i don't know. although, it's been done before. no, i don't think that. you watch bannon yesterday? >> we talked about it. i saw parts of it, some of the clips. >> what was your radar doing? were you petrified? did he seem like, you know, maybe from the bowels of hell? >> what did you think? >> i find myself -- thought he looked actually very reasonable. i found myself nodding my head about economic nationalism. i think everybody -- if everybody looks out for themselves, in terms of nationalism, everybody does better. there's competition. i don't think this globalist idea works where everybody -- you know, we're never going to bring everyone up to the standard of living in the united states. i'm not opposed for us taking care of our own people first at all. sweden, you do it. >> my concern comes in when you are talking about american

manufacturing jobs where we want to manufacture things and send them around the globe. something like a boeing. i think 85% of their stuff is manufactured in the united states. >> i know. you had to love the way those ceos act around trump now. could you imagine if five years ago donald trump told those guys anything to do, they'd say, you're trump. now they're like, yes, sir, mr. president. did you see how -- >> did you see jeffrey immelt tell the story? >> i did. >> all right. we have to talk taxes, serious stuff. >> this is serious. that was unbelievable yesterday. >> yes. let's talk tax reform. it is one of the hottest issues on capitol hill and wall street. just yesterday on cnbc, in a first on cnbc interview, secretary steven mnuchin sitting down with becky quick, says the goal is to have a plan later this summer. >> 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. >> the house ways and means committee hopes to get a tax plan on the table by early summer. let's find out how lawmakers are going to work with the treasury secretary. joining us now, arizona congressman david schweikert. good morning to you. you heard what the treasury secretary had to say in terms of trying to get something done by august. is that realistic in your mind? >> yeah, it's realistic. becky did an amazingly great job because it was neat to just hear that wide breadth of the discussion of everything from economic growth to hopefully the president's tax plan that we hope to see in the next few weeks. >> thank you, congressman. i appreciate it.

>> congressman, the other thing i just wanted to try to understand, which we're all trying to understand, is what kind of tax rate do we think is realistic and how revenue neutral does it ultimately have to be. >> well, a couple mechanics here. we do have dynamic scoring in our rules now, which is something that had not happened in previous years. and let's face it, there's a reason it takes 30-year gaps before you do big-time tax reform because it's hard. i've had more people march through my office, tell me they love it, hate it, and often they'll stand in my hallway and argue with each other. let's face it, it's always about the money. but the treasury secretary even yesterday with becky reiterated this is about economic growth. this is about expansion of our job base, and it's also about simplification and fairness. i think if we can stay on that

focus, we're going to produce a plan out of the house ways and means committee. we'll see the president's hopefully also in the next couple weeks. then it will be up to also seeing what the senate produces. >> congressman, the president yesterday said everybody seems to want this border adjustment. maybe it's something we should do. i think i want to, which is different. people before were saying it wasn't part of the president's notion. there's a lot of senators that are basically not on board with this. it would only take a couple to kill it, but then you have paul ryan and others in the house that really want to do it. i don't know how this is going to finally work itself out. i hope congress, you know, the republicans in the senate and house aren't going to somehow -- what is it, to get it perfect, you kill the overall -- whatever that expression is. it should be simple. >> it's still liearly in the morning. >> it should be big and simple. is the border adjustment tax

simple? >> actually, in the way it ultimately is cleared, it actually is fairly simple. can we get our brothers and sisters in the senate, though, to at least step up and admit that the rest of the world does have a tax arbitrage on our system with their v.a.t. system and our income tax system and with the refundability of the v.a.t. on products heading our direction. we get arbitraged. if some of our friends in the senate have a great, brilliant suggestion, we'd love to hear it. so far we have not heard their version of how to fix this problem. >> the other big problem is tactically in terms of the timing, what comes first. the view is that obamacare, to the extent there is going to be an effort to make this revenue neutral, youfd ha'd have to do obamacare first. do you believe that's the case? >> actually, in some ways, the timing partially driven by the need to do much of this through the reconciliation process. if a number of our friends on the democrat side in the senate

will not be playing nice and we have to do this in a process where we have to do it in the senate with 51 votes, the mechanics end up sort of driving the calendar. >> and what's your expectation in that regard? >> i actually believe you'll do a number of the taxes and the financing side on the aca and then the next opportunity we have in reconciliation that we build for this calendar year will be used for the income tax reform. >> the last piece, and it goes back to the dynamic scoring issue, clearly the cbo will come out with some kind of number that i imagine will show debt at a much higher level tan whatever comes out of the white house. what do you think is a politically palatable number where people say, that's okay, even if it differs from what the administration is saying? >> for us, it's actually the joint tax committee. they have almost like 50 ph.d.

economists over there. >> oh, good. that's great. >> but it's as much also the revenues that receive -- think of it as the two layers. top line revenue but also what happens in job expansion, in our fica tax base. do we see an expansion of job opportunities with higher salaries. because that's also critical for what's happening right now in the big trust funds. they're in real trouble. so you're looking at a whole series of different economic expansions. it's not just enough to be growing at the top line. we also need our fica tax base to also be expanded. >> that makes it sound so complicated. i don't know how you score any of this stuff when you think about the moving pieces. >> look, there's a reason why

every night i go home with these binders and sit and read and read. on occasion, you go to sleep realizing there's so much more to learn. >> congressman, thank you for joining us this morning. always appreciate it. >> i appreciate the chance. >> we hope to keep up with you as this process moves along. >> going to be fascinating. coming up, the dow logging its tenth straight record close. we'll talk market zwrstrategy n. what's the value of capital? 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

welcome back to "squawk box" this morning. quarterly results just in for retailer jcpenney. the company reported a quarterly profit of 64 cents per share, 3 cents above estimates. revenue was below forecast. the same store sales dropped 0.7%, bigger than the consensus estimate of 0.1%. treasury secretary steven mnuchin joined us yesterday on a first on cnbc interview. here's what he had to say about the market rally as a report card on the trump administration. >> 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 is josh deeds, portfolio manager at alpine funds, and rebecca patterson. welcome to both of you. rebecca, what do you think about that, that this is a mark to market situation? the administration is watching it closely. >> i understand what he was trying to get at, i think, that when the market is rallying and a lot of it appears to be on the back of hopes for certain policies that are going to support growth, great. market is reflecting something. i think he might regret saying those words. whether it's a year from now, five years from now, the treasury secretary's words carry so much importance. think about bob rueben with the strong dollar policy. that stuck for decades after he said that. now if the market goes down, is it because of white house policies, administration policies, or something else? so you live by the sword, you die by the sword. so i get what he's saying. i get it.

but i think the press may use it against him in the future. we'll have to see how that plays out. >> right. josh, just looking at it, this administration's policies, what they're trying to get done, you think that's what's being reflected in the market. >> i do, absolutely. they're looking to cut taxes, which is positive for the markets. less regulation, positive for the markets. a big infrastructure spend, which is also positive for the markets. i think the market is pricing all that in, but now the administration has to deliver. >> how much are they pricing it into the markets? what's the premium based on all those things? >> if you look at the p.e. ratio on the s&p, it's high right now, but what happens when you have a corporate tax rate go from 30% to 20%. i've seen certain stocks in certain sectors and look at the rails for instance. i would say about 50% of that is being priced in for lower taxes. so now they'll also have stronger earnings growth as well. so some of it's priced in, but if we get -- if it's delivered, i think the market could go higher. >> that's where we get into the rub. we just had the conversation

about taxes. it's really complicated. even the republicans aren't on board with some of these issues. there are the unintended consequences. when moving something here, you don't now how it's going to affect four or five other places. what are the odds? the administration is pretty hopeful they can get something done before the august recess. w what are the odds by the end of the year? >> i think it's good to get something done by the end of the year in terms of corporate tax rates. i don't know about the border tax. i think we get something done because they have to get it done before the midterm elections. if they don't get it den this year, it's going to be trouble for the republicans. >> i want to ask rebecca about the ten year. that's all i can think about. >> the ten year? >> yes. >> okay. >> how's inflation? what do we see? suddenly inflation is back. what's trump going to do fiscally? we're building up the military. we're going to blow out the deficit according to andrew because we're using dynamic scoring on the tax reform. we're going to have 3% or 4% growth according to these people.

we've got yellen finally talking like she might not be a dove anymore. now she's going to be -- the rate's going down. the interest rate is going down. why? how? with all this stimulus, all this economic activity, all priming the pump. why isn't the bond market seeing that all these things -- >> well, it did after the election between november and early december. >> so on a relative basis it went up a little. we're at 2.37. we're not at 3. >> inflation, while it's rising, is still quite low. i think there's a chance we get something done this year because if they don't from an incentive point of view from the midterms, it's going to be tough next year. right now it's just expectations. it's not there. >> the stock market seems to be believing these things are going to happen. why doesn't the bond market believe it's going to happen? >> the bond market is priced in a bit. i'd also say the stock market is rising on other stuff. the earnings trends are definitely improving over the last two quarters.

the economic data is definitely improving in the u.s. and globally. >> that should send rates higher too. all that should mean higher rates. i think it's the rest of the world holding us down. >> i think the ten year is likely to go up this year. i think yields generally are going to go up this year. hopefully that comes alongside growth and we have reflation and that would be a great story for a lot of companies, for the financial sector in particular. >> i hope it's not saying we're just still stuck in the muck. >> i don't think so. i don't think so. not at all. >> if we're going to have 3% growth, 3% above, it's weird to be at 2.3 on the ten year. >> except comparatively speaking -- >> i could understand it if you say it's global. >> that is part of the story. becky, i think that's a great point. part of the reason yields might not be higher is because if you compare us to japan or germany, et cetera, there's still a lot of foreign capital coming in, buying our bonds. >> that should make for a great

perfect storm. >> insurance companies alone, where they have to be putting in buying of government bonds. >> we're priming the pump. we're going to have all this theoretical economic growth and have low interest rates at the same time. should be great. >> rebecca, thung veank you ver. josh, thank you. coming up, drama in silicon valley. google's self-driving car, the company wants to take uber to court. "squawk box" will be right back. "squawk box," that's us. in what year did leonardo dicaprio bring home an oscar for best actor? the answer when cnbc's "squawk box" continues. yeah looks like a real nasty moving back in with his parents. what? no. i just broke my leg. no, this is a full blown move in to the basement,

you're gonna be out of work without that money from... aflac! you might miss your rent. aww i just moved out. bummer man. hey i used to have my own place. yeah? no, no i live with my mom, but it's cool. health can change but the life you love doesn't have to, keep your lifestyle healthy with... aflac!

now the answer to today's aflac trivia question. in what year did leonardo dicaprio bring home an oscar for best actor? the answer, 2016. welcome back to "squawk box." google's self-driving car

company suing uber, alleging the ride sharing giant stole secrets. a former google engineer took design information before leaving the company, then went on to found uber's self-driving truck start-up. in a posting, waymo says they believe the actions were part of a concerted plan to steal their trade secrets and intellectual property. we've heard stories like this before. >> this sounds like -- if you read deeply into some of this stuff, they went to find -- i forget if it was the police department or somewhere. they were getting information back from some public government office, trying to confirm some of these things. they did some deep digging that sounds like there is a problem there. uber says it's taking this seriously. this is not like a one-off, hey, i think you're doing this. i think they have some stuff to back them up. >> waymo. i like that. tom brady could be coming to the big screen. a new movie and book are in the works about deflategate. then the patriot quarterback's big super bowl win.

the two authors behind the book "boston strong," which inspired this year's patriots day film, are teaming up on the project under the working title "let's go." which is brady's rally cry. he'd have to play himself. why wouldn't he? he's still playing. i have heard people urging him to run for senate against the head of the -- the new head of the democratic party. >> senator warren? >> elizabeth warren. she is the de facto head. >> folks, when we come back, a live report from cpac as president trump gets ready to take the stage. plus, governor scott walker spoke there yesterday. he'll join us next. you know, 90% of the world's largest supercomputers run on intel? that means you can take a universe of data - in your case literally - and turn it into medical discoveries, diagnostic breakthroughs... ...proof that black holes collapse into one singularity. i don't know what that is. but yes. innovation runs on supercomputers... ...and supercomputers run on intel. you are super smart. and super busy.

♪ ooh! ufo! false alarm, eyelash!

♪ good morning. welcome back to "squawk box" here on cnbc. we're live at the nasdaq market site in times square. among the stories front and center at this hour, footlocker out with its quarterly numbers. revenue matched analyst estimates, but a same store

sales increase was 5% better than expected. also, hp enterprise, joseph, not enterprises. >> just to really focus on one specific thing. >> lower than expected sales, slashing earnings projections for the full year. this comes as the company is facing intense competition in its cloud business. of course, a programming note, because you don't want to miss this, our own david faber will be hanging out with hp ceo meg whitman in an exclusive cnbc interview today at 9:10 a.m. president trump is going to deliver a speech at cpac today right at 10:00 a.m. eastern time. hoo he's just one of several speakers taking center stage today. probably one of the significant ones, kayla, right? president. joins us now from the site of the conference at the national harbor in maryland. yeah, he's just one of the speakers today, kayla. >> reporter: well, joe, to be fair, he has spoken at this conference multiple times in the

past. it was actually here at cpac where president trump sewed his political seeds back in 2011. i'll apologize early on. we're doing an early morning sound check here at the gallery on the national harbor. interestingly, this has become a trade show or a pep rally, a rite of passage for both gop leaders and hopefuls. yesterday in a rare joint appearance, chief strategist steve bannon and chief of staff reince priebus talked on stage about the ajgenda, about how th administration was going one month in. i want to play for you what steve bannon said about the economic nationalism at play. >> i think one of the most pivotal moments in modern american history was his immediate withdraw from tpp. that got us out of a trade deal, our sovereignty come back to ourselves. >> reporter: interesting to get so many cheers from an audience that normally favors free trade, that normally doesn't favor protectionism. but of course, times are

changing. bannon said be prepared for innovative bilateral trade deals to come down the pike. another speaker last night, vice president mike pence. he got cheers when he invoked ronald reagan, the appointment of judge neil gorsuch to the supreme court, and a plan to rein in government spending, but he talked about this plan to repeal and replace obamacare. listen. >> we're designing a better law that lowers the cost of health insurance without growing the size of government. we're going to let americans purchase health insurance across state lines the way you buy your life insurance. >> reporter: interesting to hear the vice president say you'll be able to buy your insurance across state lines because we've heard on cnbc from aetna's ceo and others that's a somewhat outdated idea, that they've actually advised congress not to pursue. earlier in the show, the phrase was used dance with the one that brung you. it will be interesting to see what the audience here feels about cpac. last year he didn't speak but

got third in a straw poll when he was running for president. certainly they seem to have embraced the president, the party that he's with. we'll be talking to some of those young attendees later this morning. >> yep, everybody loves a winner. supposed to be a head wind for all the other people running for office. it was a tail wind for most except for kelly ayotte. maybe those cheers for getting out of tpp, maybe those were paid protesters, democrats that were there. hillary didn't want tpp either. could they have infiltrated the cpac? >> they can't get in there. >> reporter: china didn't want tpp either, interestingly, joe. they were left out of tpp. we'll see what trade deals emerge. interestingly, yesterday on throwback thursday, people were going back to trump's appearance here at cpac back in 2015, before he even announced he was running, where he said i think i'm the only person who can beat hillary clinton. he said he had been on the oh

si -- other side of the ledger, knew how it works. people didn't take that seriously. >> these guys, you would think, kayla, now they might get too confident. you look at state legislatures, 31 governors, the house, the senate, and plans for 2018. these guys might be -- i mean, they're not going to just be cheering sort of drunk with the knew reality of this resurgent republican party. >> reporter: i don't know about that, joe. i don't know if the governors necessarily feel that way. now they're going to have to be competing against each other to win these factories and jobs. >> well, i just think at cpac that trump used to be sort of an outsider. i think at this point that it's going to air on the side of embracing him. you have to. everybody loves a winner at this point. but we'll see. we got scott walker coming up, kayla. he's joining us now. governor scott walker is

chairman of the republican governor's association. who's right, governor? the governors are worried about some things they don't like about trump, or there's going to be sort of -- i mean, i think they'll overshoot on embracing donald trump at this point. >> well, for us, it's really about the possibility. we have 33 republican governors. >> 33? >> we think we can add another one here in virginia. the most we've had since 1922. it's because we're getting things done. in fact, part of the reason why donald trump is the president, because in states like florida, ohio, michigan, and wisconsin, we got elected back in 2010, re-elected in 2014. we laid the groundwork so those states are republican. not just donald trump, but a republican could win the election in 2016. i hope our friends here in washington will take a page from our states and do the things we said we were going to do. go big, go bold, get things done, and people rewarded us, which i think they'll do for the house, the senate, and eventually the president. >> i like that angle, governor.

it wasn't that it was trump providing the tail wind. you guys did the heavy lifting in 2010. what happened in 2012 then? you had the perfect candidate in mitt romney, and he couldn't beat barack obama. you didn't help him. >> well, in '12, part of it was one of the biggest issues, obamacare. mitt romney is a great man, good person, would have been an excellent president, but was not the great contrast because obviously in massachusetts had something very similar to that. but you look across the nation in the eight years that barack obama was president of the united states, there are more than a thousand new republican lawmakers since then. democrats at that point, when he was sworn in, had 28 governors. today we have 33 republican governors. it's not only because people were upset in 2010 but in states all across america, we delivered it. in our case in wisconsin, not only did i win three elections, including that historic recall, but our state legislative

majorities have grown three times in a row. similar to what you see in states all across this country. voters, many of whom in the midwest in particular are kind of independent, can vote either party, have seen that republicans actually deliver on their promises. >> governor, you were sort of trump before trump in terms of beating the unions, beating the establishment, beating the media, beating everybody else, overcoming the recount. you did obviously deserve a lot of credit for that. if you had to say murphy's law and if there's going to be some way to screw this up, even with all this stuff moving -- because there's plenty of ways. could be obamacare. now you have boehner saying it's not going to be repealed. you have all these people at the town hall meetings and everything. you've got how are you going to do tax reform. there's a lot of pitfalls -- potential pitfalls in the path here. we know congress is useless most of the time.

>> the biggest thing i would say is what i said six years ago after we went from all democrat to all republican control in our state. put up or shut up. meaning the voters wanted a change, they spoke loud and clear. if we just nibbled around the edges, i told the new republican majorities that time in our state legislature they'd be right to throw us out two years later. obviously we didn't nibble. we went big, we went bold. not just on collective bargaining and budgeting reform, but on a whole bunch of other things. welfare, education, you name it. voters responded not just in the recall but again two years after that in the re-election. i think the message is -- and it's real easy, particularly in a town like washington, d.c., to get caught up in the noise and images of protesters, to get caught up in the pundit ri out there. the reality is that people outside of this city, and i call it washington, d.c., 68 square miles surrounded by reality. there are real people across america who want republicans to do the things they've said during the campaign, who aren't

at protests, who aren't at town hall meetings. i saw that when i had 150,000 people occupy my state capitol. remember, the occupy movement didn't start in wall street. it started on my street in madison, wisconsin. not only what republicans want, but independents and some democrats, are people to do the things they said they were going to do. they have to repeal obamacare. instead of focusing on repeal, they need to focus on replace and reform. how do you reform the system. and they have to pass comprehensive tax reform. the best thing of which they can do is lower the corporate tax rate so this we can compete with the rest of the world and bring more jobs back to america. they do those two big things, rein in regulations on top of that, we're going to have a thriving economy, which will more important than helping us in the 2018 midterm elections, it'll help this country. >> jim demint said why don't you send president trump the same bill repealing obamacare that

you sent barack obama like six times. it's a different world. you caught the bus, the dog chasing the bus. now republicans caught it. oh, crap, what do we do with this thing. that's frightening. there's so many ways to screw this up, governor. i don't know. we'll see. >> well, governors this week are stepping up here to try and help the congress, particularly when it comes to not only the replace but the reform, to reform medicaid. not just so people have access to affordable coverage but so we can actually help transform more people into the workplace. that's what we really want, people working and not depending on the government. >> governor walker, thanks. been a while. good to see you. >> good to see you too. >> all right. thanks. see you again soon hopefully. when we return, treasury secretary steven mnuchin weighing in on housing reform in a first on cnbc interview yesterday. we will get reaction from the ceo of the mortgage bankers association next.

opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

if only the signs were as obvious when you trade. fidelity's active trader pro can help you find smarter entry and exit points and can help protect your potential profits. fidelity -- where smarter investors will always be. when you have $7.95 online u.s. equity trades, you realize the smartest investing idea isn't just what you invest in, but who you invest with. ♪

welcome back to "squawk box." treasury secretary steven mnuchin addressing the speed of housing finance reform and the

future of fannie freddie in a cnbc interview yesterday with becky quick. >> 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 and 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. >> let's bring in david stevens, mortgage bankers association president and ceo. good morning to you. we heard a little bit more there yesterday about his intention to try to deal with this. not too many specifics yet in terms of where he's going to go with it. where do you think he can go with it, assuming by the way, and we've seen what's happened to the stock, the idea -- i mean

in terms of the price of all this, the idea that we're going to -- are we going to be willing to reward effectively the speculators who have bought into all this? >> yeah, so look, the gses are the last kind of unfinished piece of business of size from the obama administration. they were put into conservatorship under the previous president before obama. for eight years we talked about it but nothing's been done preside. it was very refreshing to hear the secretary say that openly and talk about congressional reform, bipartisan reform. but as it relates to the speculators, as you say, which is accurate, i think that's sort of a question that's going to be handled by the courts more than it will probably through the legislative process. >> you don't think that ultimately there's going -- we're going to have to figure

out a way to dispose of this stuff though. isn't that something steven mnuchin is going to have to figure out how to do? >> you need a pathway for trillions of dollars of mortgage backed securities. there's absolutely no doubt that what freddie mac and fannie mae do today is bring a lot of liquidity globally into the united states housing finance system. that's a critical function, but the housing finance reform, which is as the secretary referred to it, and i think that's the right way to refer to it, says the word reform. these two models can never be repeated to the point where we go back in time and forget they drew $180 billion when they went into default from the american taxpayer. what ultimately happens to shareholders, you know, these companies sit in conservatorship and that'll be resolved through either a court process, which is currently in action right now, or a legislative process. whether they're rewarded or not

will come out of that process. i think we need to all be collectively concerned about the housing finance system. >> what happens to housing prices, the 30-year fixed mortgage if fannie and freddie are not under government control? >> well, remember, fannie and freddie were private companies. they distributed a mortgage-backed security with a government guarantee on it. that created a 30-year fixed rate mortgage for americans for decades. what they did wrong are things that you can actually resolve through a legislative process and permanently box out their ability to use their portfolios as essentially hedge funds, buying risky assets. so a redefined purpose and a redefined operating ability through a legislative reform process can eliminate the risk the taxpayers ultimately

inherited and this model of shareholder gains and taxpayer losses can be permanently walled off through a legislative process. you can still protect a government guarantee behind a mortgage-backed security as long as you have enough private capital in front of that. there's pathways forward. we've written a paper on it recently, published, as have others, that creates a sustainable system for housing finance, which is really important right now. but at the same time, doesn't keep this model where you have these two huge duopoly models sitting on the government's risk balance sheet today in conservatorship. really, i think secretary mnuchin is hitting the rallying cry that any housing stake holder should support. need to get them off balance sheet, need to reform them, but we need to protect some of the core functions they provide. he clearly said all of that in that interview. >> david, we appreciate it. thank you. >> likewise. coming up, amazon ea's head

to the oscars. why they're giving traditional studios a run for their money. apparently 60% of the public can't name one of the best picture nominees. little bit of the glitz is gone. that story next. "squawk box" will be right back. you totanobody's hurt, new car. but there will still be pain. it comes when your insurance company says they'll only pay three-quarters of what it takes to replace it. what are you supposed to do? drive three-quarters of a car? now if you had liberty mutual new car replacement™,

you'd get your whole car back. i guess they don't want you driving around on three wheels. smart. with liberty mutual new car replacement™, we'll replace the full value of your car. liberty stands with you™. liberty mutual insurance.

the academy awards are just two days away, and it's a landmark night for amazon. julia boorstin joinis us now frm the red carpet with more.

>> reporter: good morning, becky. that's right. there is a red carpet underneath here. it's just that right now it's covered with white plastic as they get everything set up. everyone here, becky, is talking about amazon. it's the first ever streaming video company to be nominated for hollywood's highest honor, best picture. amazon bought "manchester by the sea" at last year's sundance film festival. it has six oscar nominations, including best actor, director, and screen play. this catapults amazon past netflix, which has only drawn five nominations ever, all of which were for documentaries. amazon seeming overnight hollywood rise speaks to its threat not just to netflix but to the hollywood system, raising the bar of how much both netflix and traditional studios have to pay for film as well as tv series. last month amazon outbid major studios on a number of films at

sundance, writing one of the biggest checks in the festival's history for $12 million. now, amazon spent an estimated $3 billion plus on content last year. it has the advantage of not having to focus on box office success but rather how many prime subscribers the content they buy drives. for oscars, you get a little oscar attention, it definitely helps draw viewers. guys, back over to you. >> it's a completely different model. are the studios in disarray over this? >> reporter: well, look, i think amazon is a frenemy to the studio. it licenses a lot of hollywood content. a lot of the studios, especially when it comes to television, are producing tv shows to sell to them. the studios are not just distributors but also purchasing the content themselves. so i think it's a little bit of a frenemy, and everyone is trying to figure it out. it's more like the walmart model. wa walmart used to sell dvds as a

big discount to get people through the doors. now it seems like amazon is using content as a loss leader to get people through the door of that prime subscription. >> it's working in our house, that's for sure. julia, thank you very much. all right. couple stocks to watch this morning. hudson bay reporting lower fourth quarter sales gains at its department store. actually, the gains were offset by weaker results in europe and its discount and online operations. this is the owner of sachs fifth avenue, lord & taylor. last month the retailer cut its full year revenue forecast citing a challenging environment in the u.s. and europe. still a lot more ahead. coming up, the ceo of rxr realty is going to be here. we're going to talk manufacturing in the trump era. and remember this super bowl commercial? we'll talk to the duo behind the blockbuster deal with dr. pepper/snapple. stay tuned. you're watching "squawk box" on cnbc.

the future of business in new york state is already in motion. companies across the state are growing the economy, with the help of the lowest taxes in decades, a talented workforce, and world-class innovations. like in plattsburgh, where the most advanced transportation is already en route. and in corning, where the future is materializing. let us help grow your company's tomorrow - today at esd.ny.gov know you have a dedicated advisor and team who understand where you come from

know you can craft an investment plan as strong as your values ♪ know that together, you can establish a meaningful legacy with the guidance and support of your dedicated pnc wealth management® team.

the president meeting with

ceos again this week. we're going to talk infrastructure spending plans and the economic impact coming up. washington watch. president trump calls china grand champions of currency manipulation. reaction from beijing straight ahead. plus, it's a bird, it's a plane. no, it's a ufo. why one expert says sightings have reached an all-time high. 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 becky quick and andrew ross sorkin. futures are indicate the to pull back today. of course, this is after ten straight record highs in the

dow. treasury yields continue to trade well below 2.5%. they were under 2.40 earlier. 2.36 now on the ten year. okay. some headlines to bring you this morning. president donald trump says that china is a grand champion of currency manipulation. trump told reuters that he still thinks china manipulates the yuan to its own advantage. yesterday treasury secretary steven mnuchin told us that he wasn't yet ready to pass judgment though on china's currency practices. two economic reports top today's agenda. the government are report new home sales for january, expected to post a 5.8% jump. also, at 10:00 eastern time, the university of michigan's consumer sentiment index. we got to watch for that. then in corporate news, hp enterprise reporting lower than expected sales and is slashing its earnings projection for the full year. it coming as the company is facing intense competition in its cloud business. also, programming note, you don't want to miss this. hp's ceo meg whitman will have a cnbc exclusive interview today with mr. david faber at 9:10

a.m. eastern time. other stocks to watch this morning, a mixed quarter for jcpenney. earnings beating the street but revenue falling short. comparable store sales dropped 0.7%, wider than expected. they also announced plans to close up to 140 stores over the next few months as well as two distribution centers. you can see e that stock is off by 2.3%. footlocker topping estimates, but the retail environment for 2017 will be challenging. still, you can see that stock is up by 2.8%. and nordstrom profit beating the street. however, the retailer gave a weaker than expected full-year earnings outlook and predicts it will be seeing flat comparable store sales. gap posting earnings in line with expectations. revenue slightly beating. the full-year guidance is a bit light of the current consensus. and wendy's upgraded to overweight from neutral at jpmorgan securities. the analyst says that management

appears to have complete command over its tactical strategy to achieve long-term goals. herbalife posted better than expected earnings. republicans making headlines at the conservative political action conference down in maryland, including a rare public appearance by trump adviser steve bannon. president trump is already hard at work on twitter this morning. eamon javers joins us now with more. today it was back to the fbi, back to leaks at the fbi is what i saw so far. >> yeah, that's right. the president's been pretty restrained, joe, this week on twitter. this morning we have two new tweets to bring you up to speed on. this is an apparent reaction to some cnn reporting last night, which i can't independently verify. cnn reported that the fbi rejected a white house request to publicly knock down media reports about communications

between trump's associates and russians who were known to u.s. intelligence. apparently, according to cnn and their reports, the white house wanted the fbi to go public denying those accounts. the fbi rejected that because it's an ongoing investigation. that all according to cnn. so here is the tweet this morning from the president, if we can bring that up. he says, the fbi is totally unable to stop the national security leakers that have permeated our government for a long time. he said, they can't even find the leakers within the fbi itself. classified information is being given to media that could have a devastating effect on u.s. find now, in all caps. that from the president of the yats th united states this morning. notice he's not denying the substance of the leak themselves or the accuracy of the leaks. in a news conference last week on a different set of leak, the president said that the leaks were accurate but the news based on the leaks was false news.

in this case, the president not denying that the underlying leak was accurate from the fbi apparently. somebody at the white house had made that request. ironic, joe, given this is a president who campaigned on leaks last year in many respects and said publicly many times how much he liked the organization wikileaks. so that's what's going on this morning. also, we've got cpac, the conservative political action conference, taking place here in washington, d.c. the president will be there today. we'll wait and see if we hear more from him on this. also yesterday, as you mentioned, we got this rare appearance by steve bannon, who's sort of a behind-the-scenes figure in this white house. he promised conservatives a continuing fight for their and -- agenda. here's what he said. >> he's going to continue to press his agenda. as economic conditions get better, as more jobs get better, they're going to continue to fight. if you think they're going to give you your country back without a fight, you are sadly

mistaken. every day -- every day it is going to be a fight. >> it is absolutely going to be a fight if there's anything we've learned about 2017 so far, joe. so that's where we stand as of this morning. >> they make the distinction that the wikileaks were e-mails between reporters and john podesta. that's not classified information, eamon. that's not when you're talking to the president of russia or the president of mexico and immediately -- or other classified information. you could be for the one leaks and against the others without it being contradictory if one is classified information. >> well, look, if you live by leaks, if you campaign on leaks, it makes it difficult for you to suggest that the leaks are a bad thing. >> one is when you're a president and it's classified snfg information. the other one is when you're -- >> look, this is a president who on the campaign trail called for russian intelligence to hack

hillary clinton's e-mails. >> you heard exactly how he said that. i wonder where those -- that's another -- that's going to go down in history with your revised narrative that he was urging them to do it when, in fact, what he did was, geez, there's 50,000 missing. maybe the russians can find those. that's a far cry from asking -- you know, there are some in your camp that wanted him to be convicted of treason for that. >> in fairness, he was not condemning the hacking, which is what you want somebody to do. >> ai'm confused. with the reince priebus stuff, if he supposedly called the fbi, is that classify the information? >> the stuff he's complaining about, you know, with the leaks coming out of the intelligence agencies, the mike flynn stuff and all that, a lot of that is classified. >> some of that stuff is. i think this is a different situation though. i think the reince priebus call was -- >> if the chief of staff at the white house were to have called the fbi, that would raise some questions about the relationship

and the appropriateness of that call between the white house and the fbi. there's supposed to be a bit of a separation there historically between the house and the fbi. so that's one issue. yeah, if the chief of staff makes a request like that, it's not necessarily the request itself would not necessarily be classified information, to becky's point. >> we go back, the stuff that went on previously with the justice department and everything else, i don't know -- there's no walls left anywhere between government agencies, it seems like. >> you want to promote that. we'd like to see that. >> it's been on the decline. anyway, thanks, eamon. infrastructure was on the agenda at president trump's meeting with manufacturing ceos at the white house yesterday. joining us right now, rxr realty ceo, formerly vase chair of the port authority of new york and new jersey. how do we do it? i heard there's going to be a shift maybe from just paying for

it to finding a way to do it and have receipts come in. there's maybe other ways. is there a way to do it without busting the budget? >> when you think about infrastructure, i think you got to think about it more of an investment than a cost. if you're investing? infrastructure, roads, airports, bridges, tunnels, ports, you're investing in the growth of the economy. so to the extent you need to actually increase your deficit and not be deficit neutral, if you get a return on that investment, i think it makes sense. you got to make sure it's the right type of infrastructure. one of the biggest challenges of infrastructure has been that we've been woefully underfunding our infrastructure and we're living on past times investments. >> what's another way to do it? what's a way that could be, you know, less negative on the federal budget? >> i think, you know, the most ideal way that we've seen globally are public/private partnerships. >> how does the private side of things, how do they recoup? >> so the port authority, we just did the laguardia airport, which is the largest

public/private partnership in the country. generally, agencies don't want to do it because they say our cost of capital is low. why do i need private second to be money. it's not about the capital. it's about the private sector discipline, the private sector innovation, the transparency, and the transfer of risk. that's the big thing, the transfer of risk. if you are asking a private sector organization to come in and take the risk for cost overruns and delays, they're not going to let you go forward on a project without understanding every element of it. when you see the public do it, the politics drive projects before they're thought out. i'll give you one example. at the port authority, we started two bridges at the same time. we did it as a public/private partnership. we went through it, designed it, the scope came out, the budget was high. we sat down with our private sector partengineered engineered it, brought it down. they said, we're ready to transfer the risk. that's on time and on budget. the bayonne bridge, they went out before the designs were

done. it's now years delayed and over $100 million over budget at this point. >> the point being is if you've got skin in the game, you're going to be making sure that you are double and triple checking every aspect along the way. >> exactly. it's going to insulate you from the politics, forcing you to do something or even pretending you know what the number is. >> that makes sense tactically in terms of how to approach some of these things. one of the big criticisms or questions about some of these public/private partnerships are whether certain projects that may not be profitable on their own or at least up front are going to actually get funded the way they should be if you're thinking about this from a sort of political social structure. >> again, you got to look at public/private partnerships in two parts. if it's just transferring, for example, government public assets to the private sector, i'm not sure that really is something that is accretive to the process. it's just sort of playing a show game of moving numbers. if it's in talking about actually building new, it's less about the capital than the

execution and transparency. listen to this stat, which is amazing to me. in paris and tokyo, it costs $500 million per mile to build a subway. in new york, our last two subways cost $2 billion per mile. $500 million versus $2 billion. we're talking about paris, right. we're not talking about china or some place you wouldn't think -- paris' regulations have labor rules. it shows you that we have so much red tape. we have so many layers of regulation. we have so much bureaucracy. we have, i think, a lack of discipline and accountability. >> that's a remarkable number. >> it's an unbelievable number. >> who's paying for the tappan zee. >> the users will ultimately pay for it. >> they'll get that back through the tolls. >> to some level, whether it's specific to the bridge or the whole network. >> like $80 to cross it? >> it won't be that. there's a good example. we all need to recognize we have

to pay to have infrastructure. i think the reason that the public doesn't like to pay for infrastructure is because every time they pay, they get delays, they never see the end product. i think the right way to actually fund infrastructure is you don't pay snl the product is delivered. if you would have to pay more to get through the tunnel from new jersey to new york, you knew you were going to be on time v a good experience, you wouldn't mind paying a little more money to do it, if the product was delivered. don't charge them now. have the user fees directed to knew product when the product is actually delivered for the customer. >> i'm worried. 80,000 bridges, right? >> we're talking -- the worst part about infrastructure -- we're talking about the sexy projects. so much of our infrastructure has been underfunded for so long. it's the pipes underground that are a hundred years old. it's the hundred-year-old tunnels, the dams that are breaking that aren't sexy where you won't have ribbon cuttings, that doesn't have the momentum to get things done. those are the things you're really going to need government

funding to get done. there's not going to be private sector funding to get them done. >> but separating those differences is probably a good first start, where you can get some private help. >> absolutely. there's repairs and there's improvement. we need to repair what we haven't repaired for the last number of decades. then we need to invest in improvement. >> you're looking for shovel-ready projects. those are all going to be repairs. you don't have shovel-ready projects that are new projects or new things out there. >> there are some. again, in new york, we're fortunate governor cuomo has put out $100 billion of infrastructure projects. some of them are repairs and improvements. you can take a penn station. we're not just repairing it. we're improving it. we're going to have greater capacity, a greater experience through it. same thing with laguardia airport. we're expanding the airport, expanding the number of gates. that means more planes can fly in. more passengers can come in. more retail, more revenue. there is ways that when you say repair, not everything falls

that way. >> uh-oh. storm warning. >> oh, no, no. an amber alert. on the phone. oh, this is not good. hyundai sonata. >> it's amazing that, you know, you're talking about public infrastructure. i know you said public/private. once again, regulations are making it much tougher. deration will help in the public sector as well. funny you said it's nice to have the private sector, not because of the money, but someone is watching. >> there's layers and layers of the red tape. that's true. the politics gets in the way and hurts it. >> even in public works, it would be in this case to have private sector. >> it's going to be the future. >> all right. scott, thanks for being with us this morning. >> thank you. coming up, the investing duo behind the blockbuster deal with dr. pepper and snapple. on monday, warren buffett will

send us for the annual ask warren show. send us your questions. use #askwarren. stay tuned. you're watching "squawk box" on cnbc.

with e*trade you see things your way. you have access to the right information at the right moment. and when you filter out the noise, it's easy to turn your vision into action. it's your trade. e*trade.

welcome back to "squawk box" this morning. our guest host this hour, ran one of the hottest venture firms in the consumer product space today. since launching last year, they've already closed their second fund at $200 million, which they just raised in six weeks. the founders have been behind such blockbuster deals as bai, which just sold to dr. pepper/snapple. joining us right now is roj rojan oza. a lot of stuff going on in the food space. i don't know if you think of this as too big a food space, but i'm curious where you come down on this kraft heinz effort, the takeover recently.

>> it's interesting. i think everyone is kind of fearful now of 3g and warren buffett coming up and cleaning up the mess out there, so to speak. so they have two choices. grow earnings, drive sales, or cut costs. so i feel like all these big strategics now at cpg companies are taking that page out of the playbook. starting to trim costs. look at general mills, kellogg. all of them are starting to reduce cost. it's forcing this action on these strategics. they got to drive earnings. the only you can drive earnings is increase sales, which these portfolios are having a hard time doing, giving their legacy stale brands. >> center of the shopping store. >> you have to cut costs. >> why have they failed to come up with new products? you guys have come up with some pretty interesting products and backed some interesting products. you've sold into them almost to the extent they're outsourcing their r&d.

why have they struggled to come up with some of the stuff themselves? >> it's difficult to come up with authentic, original ideas sitting in a major corporation. i used to work at coke. amazing company. i worked at coke. i loved working there. until i left and became a partner in vitamin water, or the founder of bai who the inspiration to create something unique and different that just come out of corporate america. >> but why? what's wrong with corporate america? >> the thinking and the wiring is different. >> you can't take a risk? >> can't take a risk. same reason microsoft didn't come up with facebook or google wasn't coming out of ibm. they don't have the ability internally to push the innovation thinking, the risk taking, the culture, the equity model, the desire to work, you know, 19 hours a day to build something cool because you own a piece of the action.

it's a very different philosophy. what's happened now is corporate america has basically subcontracted innovation. it makes america a great place to be an entrepreneur because entrepreneurs are now the incubation innovators. >> is the better model not to try to even build your own stuff? by the way, this is almost like the valiant model. >> for me, that's our philosophy. we feel entrepreneurs incubating brands for corporate america. we back these entrepreneurs. we have a couple on today. i think that instead of -- i was at coke. we spent i think 200 million on a brand called surge back then. where is surge today? doesn't exist. coke decided to buy vitamin water or smart water and invest. that's a much better model. those things are here to stay. they grow those brands, guaranteed winners. >> is there a big cpg company out there right now you think is

well managed and you say to yourself, it's actually pretty good? >> i think -- >> i love them all. >> yeah, we love them all. we're equal opportunity employers. they all are awake now to what the issue is. they've all started vc arms, most of them. >> does that make sense? >> absolutely. >> it makes sense for them to be in the vc business as opposed to officially outsource it? >> i think so. one, they're buying these companies outright, a lot earlier than they used to in the life cycle. i think the come bination of buying these assets plus the vc arm, i think it's great for the industry. >> we're going to meet some of these guys. real quick before we go, the hottest sort of foot trend right this minute. besides the sort of all sugar is terrible. >> there's a few things.

>> one, protein is still king. 60% of american men want protein in snacks. >> do women not want protein? >> women want protein as well. not just men. that's why the chicken jerkey that you like, women love the chef's cut chicken jerkey. >> you just said it's stuff you like. >> i do like it. we all had it last time they were here, and it was great. >> protein is still king. probiotics is the new big one that's coming through. fiber you'll see next. >> fiber? >> sugar is public enemy number one. carbs are bad hombres. >> okay. we're going to continue this conversation with these guys throughout the hour. thanks so much. >> thank you. when we return, a new report suggests that ufo sightings have reached an all-time high. we have the details when we come right back.

hey gary, what are you doing? oh hey john, i'm connecting our brains so we can share our amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswim's chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders? i know. your brain told my brain before you told my face. mmm, blueberry? tap into the knowledge of other traders on thinkorswim. only at td ameritrade.

hero peopmore people are se suspicious objects in the sky. ufo sightings have hit an all-time high. according to one statistician who reviewed data from the national ufo reporting center, since the beginning of the 20th century, there's been an uptick in other worldly sightings. not just by dennis kucinich. in the last seven years, more than 45,000 spaceships were spotted.

the statistician also noted that the u.s. is the most prone country to seeing ufos. americans report 300 times as many sightings than the global average. >> there's a lot more stuff flying around in the air these days. drones. >> i'll tell you, 40 light years, that's a long time, obviously. but that solar system. >> it's hope. if you need a new planet. >> that significantly makes it more likely dr. >> we're going to find other life. right. when with e come back, which ceos have made the most money off those gains. ♪ ♪ only at&t offers you all your live channels and dvr on your devices. data-free. entertainment. your way.

only from at&t. won't replace the full value of your totaled new car. the guy says you picked the wrong insurance plan. no, i picked the wrong insurance company. with liberty mutual new car replacement™, you won't have to worry about replacing your car because you'll get the full value back including depreciation. and if you have more than one liberty mutual policy, you qualify for a multi-policy discount, saving you money on your car and home coverage. call for a free quote today. liberty stands with you™. liberty mutual insurance.

♪ good morning. welcome back to "squawk box" right here on cnbc. we're live at the nasdaq market site in times square, talk about the business of weed, sort of. sharing of prison companies are in favor on wall street this morning. it comes after a move to rescind the obama administration order to fund privately operated

prisons. and warren buffett is listing his california beach house for sale. i thought he had already done this. laguna beach home is listed at $11 million. i saw this in the papers a couple days ago. buffett bought it in 1971, paid $150,000. but he's used it sparingly in recent years. monday warren buffett is going to join becky for three hours. he wants to answer your questions, so send them on facebook and twitter using #askwarren. maybe somebody will buy the house. it's a beautiful house. you can google it. >> there's not a pool. you can see it within sight of the ocean. >> a pond and a pool. pond would be good for you. i'm going to be asking some questions. >> i'm sorry, yes. i'm not going to be here on monday. >> bigger fish to fry. >> you'll be here asking

questions. >> you can get the commission, becky. if someone asks a question, puts in a bid for the house. >> i don't think so. i think they do have their own listing agent. >> all right. i got to read this now. then we'll introduce our new guest in a moment. the trump rally has delivered billions of dollars for investors, but what about company executives. wilfred frost joins us from cnbc headquarters with that story. he's up early and stays late. but you're young. >> this isn't late yet, joe. >> it's late for me. >> indeed, i am young. you're very right. let's get to this. the answer is yes, execs have made a lot of money too. but let's have a look at which ceos have made the most money themselves since the election. according to data compiled, dow 30 ceos have gained nearly half a billion dollars in the three months since the election just based on the stock they hold in their own companies. here are the top five ceos.

unsurprising to see bank ceos at the top. extraordinary to see the extent of their leadership. lloyd blank nifein's holding in goldman sachs soaring a massive $146 million. jamie dimon close behind with $114 million. apple ceo tim cook a distant third, gaining just $23 million. now, why such a lead for these two? clearly the big rise in bank share prices relative to the rest of the market plays a part, but that's not all. if we broaden out to the other big banks outside of the dow, blankfein and dimon are still way ahead. tim sloane, james gorman, brian moynahan coming in with around $7 million of gains. why is that? it comes down to the length of the blankfein and dimon's tenure, around a decade, at the top of their respective banks and their performance whilst they've been there and thus how

much they've managed to build up such large stakes in absolute size within their banks. moynihan would be top in terms of relative performance, his share ownership up 36%. former wells fargo ceo john stumpf would have been third in this ranking. he's gained nearly 28 million since the election, just sitting there relaxing at home. becky, in terms of ask warren questions, perhaps you can ask him if he's offered his laguna beach house to his old friend john stumpf. he could buy it almost three times over. just with his gains since the election. >> you've got to send that question in by twitter. that's where we're taking them. >> i know. i've put some other ones on twitter. >> did you? all right. i'll take a look. thank you very much. treasury secretary steven mnuchin telling us yesterday he wants tax reform done by august. >> 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. we're working on a combined plan. >> joining us right now is daniel lipman, co-author of politico's playbook. daniel, this whole idea of getting tax reform done, there's a lot riding on that for the administration for their other plans, but it's not going to be easy. there's a lot of complications. i know politico has kind of chronicled some of these issues, particularly when it comes to the border adjustment tax. the plan that's in the house that does not have a whole lot of support in the senate, even among republicans. >> i remember just like eight years ago when they were saying let's get health care done by august. so that took like more than a

year. >> but they did get it done. >> they did. but there wasn't as much divide between the senate and the house. so they're basically going to have to force it down the throats of senate republicans to get that border provision in. >> we had david schweikert on earlier. he said, if they have a better idea, let's hear it. american companies have been at a disadvantage. how do you do it? if the senate doesn't want to do it this way, do they have an alternative plan? >> no one has really put out huge plans. i think we're waiting for the trump white house to release what their ideas are. president trump is addressing the nation next week. so i think a lot of house republicans want to hear support for their proposal. yesterday he met with ceos and less than an hour later was telling reuters, well, i agree the border adjustment tax is going to create a lot of jobs.

that's and ka indication of how sometimes the last person in his ear might influence. >> we have ceos who say he does in these situations sound like he's listening to them. a lot of retailers have been in there as well. do you think there's a way to bridge the gap? >> i think there's a huge -- this huge lobbying battle going on between these two new coalitions in washington. the people who support the border tax and then a lot of retailers, which are saying, you know, to trump's voters, do we really want to raise all these consumer prices given that most mainstream economists, they think that the border tax is not a good idea, we shent ouldn't b making it more expensive for regular day americans who voted for donald trump in the heartland to buy products at walmart, for example. >> who's got ear of trump inside the administration when it comes to the economic issues? is it gary cohn? is it mnuchin? is it peter? how do you see the cross

currents rating now? >> i see all of those people have access to trump. we had a story about the number of people who have walking-in pr privileges. trump loves hearing from deficient people. at the end of the day, he often goes back to his cell phone, listens to voicemails of his friends who called him, and goes to the secure phone at the white house and calls them back. like the roger stone types. so i think navarro doesn't have a ton of allies in the mainstream part of the presidency of the administration, but i think gary cohn is meeting with trump every day and kushner is a big influence on him too. >> i was going to ask you about kushner in terms of what's going on inside. there was a story today in the journal about kushner and ivanka pushing to keep the climate change accord out of one of the executive orders. two weeks ago on some of the lgbt issues, i think they were

pushing. you kaeep hearing there are thee social issues they're somehow excludeing. how is that working within the sort of construct of everybody else who must be pushing in another direction, since some of that stuff must have originally appeared at least in drafts? >> jared and ivanka are like the liberal flank of the trump white house. they, you know, keep pushing for their ideas. i think if you're a presidential adviser not related to trump, you're less likely to criticize jared and ivanka's ideas in meetings. you have to find a different way of getting your point across because i don't think president trump appreciates when people make negative remarks about jared and ivanka. i think they're kind of seen as untouchable. but trump is not going to listen to them always. he has his own ideas, especially

with bannon influencing him. i think bannon has more face time with trump than jared because he's just in every meeting it seems. >> daniel, thanks a lot for coming in today. >> thanks for having me. okay. coming up when we return, the founder of a company looking to disrupt a nearly $3 billion meat snacks category. chef's cut real jerkey. plus, make it a small business success story. we'll introduce you to the founder of a company started in an l.a. apartment on a credit card, now valued at nearly a billion dollars. the ceo of health-aide will join us next.

♪ we're drowning in information. where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't.

you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. morgan stanley.

our guest hosts this morning are now joined by founders of their top portfolio companies in the better for you category. joining us now is dyna trout, ceo and co-founder of health-aide. >> is there alcohol in here, by the way? >> no, less than half a percent. >> you have to drink a lot. i have not tried that. i love the jerkey stuff. >> thank you. >> tell us about -- i don't know anything about this. let's start with that. >> so how about we start with what kombucha is. it's fermented tea. naturally risk in probiotics.

it's been around for thousands of years, it's thought. it's been used in a lot of cultures to promote health, but it's only recently become popular. >> just in the last couple years. >> yeah, there's been a decline in carbonated soft drinks and sugary drinks. in its place, there's been a growth of foods that make you feel good. so foods that have function and drinks that have functions. probiotics are at the top of that list. >> kombucha i had issues with the first time i tasted. i thought it was going to be like a sweet tea. it's not. i think you have to prepare yourself for that taste. when i smelled this, it reminds me of what i color easter eggs in. but it tastes a lot sweeter than that. >> yeah, we flavor it only with cold-pressed juice. i think i might be biased. >> it helps a lot. >> ultimately, kombucha is a bubbly, slightly effervescent, delicious beverage, but it's nothing like a tea. >> what about the caffeine?

>> naturally as much as decaf coffee. >> it's a $1 billion market. where do you sell this stuff? basically new york and l.a. at this point? >> it's not really a niche market anymore. it's expected to double by 2020. it's on track to be the largest emerging category, actually, in beverage. it surpassed all expectations. right now we're at 6,000 accounts nationwide. but other competitors -- >> where do you sell? like a whole foods type of store? >> yeah, the natural market. the biggest opportunity is in conventional. so we're expecting a lot of growth there. >> and in terms of how you get into these stores, is that the key, getting shelf space on some of these items? >> yeah, you have to have a lot of grit to get in, especially when you started where we did, which was in the farmer's market, in our closet, with a credit card. really tiny. >> it's good. >> thanks. it's been about four years of a crazy journey. it's been awesome.

>> your favorite is -- >> what is your hair color strategy? >> you just drink a lot of pomegranate. >> that is cool. >> yeah, i guess i change my color often. it was blue a couple weeks ago. >> perfect. i like it. >> playing around with the blueberry kombucha. >> i love the jerkey. >> i love it. >> so how do you make this stuff? >> well, you know, it's chef crafted using real ingredients, but then there's the magic behind the process. kind of like special formula coca-cola or the secret recipe of kfc. it's what makes it special. >> just healthier. >> it's just healthier, and it makes us quite honestly the best taking jerkey on the market. >> there's the jerkey down there. pick up a pack so people understand what we're talking about. that's what you're looking at on the screen. then you've started doing these sticks. >> correct. >> what goes on in the stick? that doesn't seem as natural. >> it is. it's all natural. it's premium ingredients. it's basically a sausage

process. we use no nitrates, no msg, gluten free. definitely the best tasting stick on the market. >> when you don't use nitrates or anything, that's been a huge concern for other people. if you don't have those nitrates or anything, how does it stay preserved? >> it's the magic formula. it's the cooking process and the magic behind what we do. >> so what's the goal? is the goal to get -- we keep talking about big cpg companies. i was mentioning i knew crave, a competitor of yours. they were sold to hershey recently. what do you want to do? >> at the end of the day, we build a business for longevity. we build business looking at the next 20 years. you can't build a business looking for an exit strategy because you make poor decisions and make some mistakes along the way. >> how did you even decide you wanted to do this? >> you know, i've been in the cpg business my whole life. i saw this product, tasted it, i'm a foodie. obviously you can tell. i got inspired by the founder.

to see a golf caddie turned chef and create an amazing product got me interested in the brand. then obviously having rohan behind it made it an easy decision for me to join. >> he may not be running the r business with an exit vat ji, b -- strategy, but what are you thinking? >> i actually fully agree. if you build to flip, those brands are not around five, ten years later. if a coke or pepsi or kellogg's or whoever buys it, someone at some point probably ends up buying chef's cut. how big are you this year at retail? >> we'll do definitely over $100 million in retail sales. >> the problem is he's blocked at retail by people like jack links, who actually pay money so we can't get on shelf. >> is that what's going on? i keep seeing jack links everywhere. why is that? >> they're the biggest in the category. they control half of the category. it's a $3 billion category. they're at least half of that volume. they flex their muscle. it's easy when you're that big to spend a lot of money to block

all the new entrants. when whethe come to the table, hear we have an exclusive or they own the rack and we can't get you in. we have to be creative and nimble. >> how big would you be? >> listen, we're doing $100 million in retail sales this year. it could easily be doubled with the right distribution. >> how do you do the end run? do you go online with sales? >> we're online. we have a national presence. we're not in every retailer but a lot of them. >> we have to get you in hudson news. all the airports. i looked for your stuff recently. those guys are trying to block you there. >> exactly. >> you mean the cnbc stores. >> actually, we're in the cnbc stores. >> could you sell it on the way into the oscars? >> i'll mention it to the folks there. >> if you pull that out at the oscars -- don't do that. >> thank you, guys. >> real meat. >> thank you. when we come back, jim

cramer will join us live from the new york stock exchange. stick around. you're watching "squawk box" on cnbc. across new york state, from long island to buffalo, from rochester to the hudson valley, from albany to utica, creative business incentives, infrastructure investment, university partnerships, and the lowest taxes in decades are creating a stronger economy and the right environment in new york state for business to thrive. let us help grow your company's tomorrow - today at esd.ny.gov

natural gas falling over 9% on tuesday, a week after a move magnitude lower, the slide in nat gas tends to

let's get down to the new york stock exchange.

jim cramer joins us now. we have some numbers, nordstrom, stuff like that, jim, but were you watching that ceo thing yesterday with those guys they went around and introduced themselves? did you get a kick out of that? i don't know. i got a kick out of that. >> i liked it. >> currying favor with a guy probably years ago they would have looked at and rolled their eyes and now they're trying so hard to please him. it was surreal. it was weird to see. i liked it, but ceos aren't used to that, are they? >> no, they're not. >> they boss people around every day. >> i think a lot of the people there are actually -- i know this seems strange but they seem like they're actually having a good time. maybe they're all fabulous actors and actresses, but when i see -- i think like you did, i remember people saying as "the apprentice" each year would have the contestants, gene simmons, who's going to watch, oh, no, these guys are contestants like, wow, i like being a contestant. good to be a contestant. >> i wonder, you know, i just

wonder what comes out of it because we've been told forever, jim, that you do things for shareholder value. and some of these things couldn't -- maybe are not aligned with shareholder value, but it could be aligned with economic nationalism. and i wonder how we bring those two -- i mean economic nationalism, i think, is a great term for what i think we should do. i want us to win in everything we do. i want everyone else to try to win. >> is it the same as protectionism? >> i don't know. it isn't the same as protectionism, is it? economic nationalism? >> the idea of creating more jobs here is not necessarily nationalism. i think creating more jobs here is just a great idea. i think the give to get, which is create more jobs here and then we'll get you tax reform is unbelievably good for shareholders. so if a guy is going to generate a lot of jobs, if a corporation is going to generate a lot of jobs, the president is going to go to congress and say, listen, we promised this, now you have to give them tax relief. that's great for shareholders. i don't know. i think it's a deal if trump can

deliver on, then these executives are playing it right. >> yeah. all right, great, jim. it's just surreal though. >> fascinating. >> we know a lot of those guys and -- >> these are our guys. >> it's like watching them -- anyway, he's holding court. thank you. thanks, jim. see you in a couple minutes. also coming up on "squawk on the street" cnbc exclusive with hpe ceo meg whitman right at 10:00. stay tuned. you're watching "squawk box" on cnbc. we've done well in life,

with help from our advisor, we made it through many market swings. sure we could travel, take it easy... but we've never been the type to just sit back... not when we've got so much more to give when you have the right financial advisor, life can be brilliant. ameriprise today i am helping people everywhere do what they do... better. i work with startups like alpha modus to predict markets five times more accurately. i am helping tv networks use social data to predict what people want to watch. and i worked with marchesa to turn fan feeds into a dress that thinks. hello, my name is watson. working together, we can outthink anything. hello, my name is watson.

oh...ncome on...och method! 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... hey, sorry i'm late for team building. smoooooooch! that felt right. what's wrong with you!? he's so trusting...

on monday morning on "squawk box," warren buffett will be joining us for the annual ask warren show. you can go ahead and send us your questions you have for the oracle of omaha, do it on twitter or facebook using #warren. tune in for answers coming up monday at 6:00 a.m. >> guest host this morning, rohan oza, we've been talking about various brands and things, we were showing at the beginning a new commercial that you guys did. >> yeah. that was developed by our founder, ben, justin timberlake and the guy they call the grandfather of buy, all creative

in-house. so those three guys sitting at actually my house in l.a. ended up creating what was -- >> justin timberlake is doing stuff though? >> he's brilliant creative and him and ben really connect. the three of them came up with a spot literally overnight. they call christopher walken, they got him and they shot i think one of the best parts in the super bowl. >> goes back to your point about being able to create these things and promote them and do the marketing around it when you have somebody who has a stake in it as well. >> correct. i mean, i don't see any other ceos at big companies sitting with someone like a justin and grabbing the head of creative and saying, guys, let's put a spot together. takes nine months to go through agency briefs and creatives and bai does it all in house. it's different. >> we're going to have to go. give us one crazy food we don't know we like but we will like soon? >> cottage cheese. >> i already like cottage cheese. but that's the new thing? >> it's the new yogurt. >> it's the protein way to start

your day. americans love cottage cheese, but it's so boring and there's no flavor. >> how do you make it less? put flavors in with it? fruit flavors? >> a bunch of flavors and cool packaging. >> good culture. >> yeah, the brand. thank you. >> thanks, guys, appreciate it. >> wow, man, all right. that went fast. happy friday to you guys and to you as well. make sure you join us on monday. "squawk on the street" is coming up right now. ♪ good friday morning. welcome to "squawk on the street." i'm carl quintanilla with david faber and jim cramer at the new york stock exchange. dow flirting with at least breaking that streak. futures lower on disappointing retail earnings, dollar at a one-week low, europe mostly red, dax down about 1.5%. ten-year 2.33 now. and watch gold at a three-month