with the speech last night, but i would attribute at least some of this to that. and i saw some -- >> why do you say that? >> -- savvy market pros on our air yesterday saying the probability of him saying anything that causes the market to go up is very, very low. and i made a note of it and sent it around and said let's see if this guy's right. >> we're out of time. >> we got to go. make sure you join us tomorrow. "squawk on the street" begins right now. >> yeah, art cashin. ♪ good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. call it the trump rally 2.0, futures way up on the president's address to congress last night. the dow looks to open within earshot of 21k, europe nearly 2% gains, german inflation cracks 2 for the first time in years and back home the two-year yield an eight-year high as expectations soaring for a fed hike this month. a roadmap begins with a

different tone from the president on taxes and trade to immigration and obamacare, his message to the markets. >> plus, the market rally returns as investors digest white house economic policy and that possibility of a march rate hike for the fed. >> and prepping for the biggest u.s. tech ipo since facebook, snap is set to price tonight but will the ipo prove a boost to the tech market? first up in his first speech before a joint session of congress the president highlighted his plans for boosting jobs and the economy including tax cuts, trade deals and a major infrastructure program. >> i will be asking congress to approve legislation that produces a $1 trillion investment in infrastructure of the united states financed through both public and private capital creating millions of new jobs. this effort will be guided by two core principles. buy american and hire american. >> i guess we can start on infrastructure right there, jim. people paying attention to the

language, legislation that produces a $1 trillion investment in infrastructure. not necessarily that price tag from congress itself. >> no, but i have been saying, i've been trying to boil it down one of the metaphor stocks, it's martin marietta, why? they make the cement for the wall and infrastructure for the roads. this is a remarkable moment because i'm speaking to democrats and republicans today and both have said, look, hey, who was this guy? who was this guy? and what that's being translated to is a wild rally. i mean almost as if, okay, this is what we've been waiting for, let's sit down. i mean, remember, yesterday was the end of the streak. and how many articles did you read the end of the bull? i saw on our own network so many times the sense it was over, as

long as you push out the good stuff, like you said, when is congress going to agree to the infrastructure? i don't care, as long as it's out there somewhere. he didn't take it away. he didn't come in with a negative thing. he came in with a positive thing. so suddenly i look at david and said, david, we're going to get maybe the border tax but maybe not, we're going to get the corporate tax reform this year but maybe not. all things that make sure the ball stays in the air and doesn't hurt you come in and the international markets are strong, britain -- >> i know, but you're raising the right point, jim, which is that we didn't necessarily get any specifics. >> thank heavens. >> or details. >> thank heavens. >> but the market is taking it very positively. >> right. >> certainly the speech was well received. people liked the more positive tone. >> yes. >> but why is the market up so much? >> i think the market is up in part because there's a sense that we are not going to be in some sort of great civil war. it just was not polarizing. >> so you're saying the market is coming off of the tone? because policy wise we have very

little -- >> no, i have less than what i came in with. >> yeah. >> wilbur ross was coming out, i saw the crawl, the thing underneath, president says border tax policy, wilbur ross says no. it's even more confused but confused in a gentler and kinder way. lincoln was mentioned, that old republican. >> yes, he was. >> not even with something i ever would have associated -- >> no. >> malice toward none charity toward all thing -- >> yeah. it was interesting. >> but it was the tone that allowed people to say, well, wait a second, maybe things can happen. at the main time saying we're going to have this rate hike, of course i've had omelets all over my face, turns out to be good taste and i'm going to put some western on it. >> williams and dudley people now focused on march, why is that a positive for the stock market? >> because you have jamie dimon talking about how we need rates

up badly. >> and we saw i think it was the end of squawk rates up pretty sharply. >> jamie dimon said the same thing yesterday and we didn't like it, today we have a rate hike and we love it. you also have lowe's saying, hey, they're spending, they're just not spending at target. and people are just kind of they want that speech gave people a feeling of whatever was not so great yesterday, i kind of like it today. >> so to carl's point you really think the tone matters? >> yes, i do. do you think that's -- i mean, i know that's artifice and there's lots of people i went over with before saying this tonight, i said if i say this will people say that's total triumph of form over substance, but i'm going with it. >> if you're going to put all this reaction on that, right, can it be easily toppled by another attack on the media, another mention of the border wall in mexico, another thing about voter fraud? how much of this is tenuous? >> boy, that's a great point.

you mean if he could just stay away from twitter for like 48 hours we could take the stock market to 4 trillion from 3 trillion? yes. yes. >> at some point they're going to have to put a lot more meat on the bone though. >> why? [ laughter ] >> you just want the promise out there. >> david, you don't have to cross the jordan river, you just got to look at it. >> it's true. moses never made it. never made it to the promise land. >> but maybe still a couple thousand years after they figured that out. >> all right. well, you know, couple thousand years would be good for this bull market. >> i'm saying -- i mean, i watch all the commentary after and i got these people i thought like hated the guy saying, well, that was the first speech he's ever given. someone honestly said that. what were the other things? but it does make me feel there are a lot of people maybe shorts who were betting it's over. the shorts have been so wrong about everything. they short lowe's off of target,

and they short the dollar general off -- and they short the banks because at the end there's no rate hike and suddenly there's this era of good feeling breaks outd in congress and everyone's covering everything. >> funny you mention that because b of a ups target from 2300 to 2450 as investors, quote, capitulate into equities. >> i like that. did you notice the bull/bear ratio which i know no longer has the grav tas it used to but 63.1, highest since '87. the streak, the dow, highest since '87. i happened to live through '87. that did not end nicely. '87 did not end nicely. >> though we came back quick in '88, really fast. >> look at you with the positive spin. >> like that? but this b of a piece someone e-mailed it to me thought it was worthwhile. over the last 80 years minimum market equity returned in a bull market was 30%. they're saying don't underestimate an old bull. >> that's right. i like that. >> so maybe your question as to

why and the old bull, maybe just, you know -- >> i put on my virtual reality glasses -- >> ours is not to reason. >> just to do or die. i like that. >> yeah. >> yeah. >> who was that? >> fred astaire. >> on taxes of course we didn't get an explicit mention of border adjustment. we heard about a level playing field. here's the president last night talking about a tax cut. >> my economic team is developing historic tax reform that will reduce the tax rate on our companies so they can compete and thrive anywhere and with anyone. it will be a big, big cut, at the same time we will provide massive tax relief for the middle class. we must create a level playing field for american companies and our workers. >> well. >> all right. >> nothing new there. >> i have to read this in code. >> nothing new. same things. >> there was a bulletin went out to all the media, i didn't get it.

i don't know. i'm off that list. sometimes they send it to the wrong address. there's the tired trump bull market. that was the thesis going into this speech. it was the tired trump bull market. so people had abandoned it, they take profits and then we get the kind of, well, you know what, maybe the bull market's not so tired and you just -- everybody reverses. i mean honestly look at salesforce. salesforce the number comes out thrks is about the psychology of the market. >> okay. >> can we stipulate among the three of us salesforce comes out and they issue earnings, right? >> yes. >> and issue guidance and it's right there. and initially stock goes to 83, goes up $3. when you go through the guidance send it down $4 even though the conference call is quite good. >> yes. >> and now the stock up a $1. only thing that happened is the president gave a speech. nothing else happened. he gave a speech. >> well, your point about the speech is good. but you also have dudley. >> right. >> and williams yesterday basically saying the case for a

march hike more compelling. >> they watch the show and realized they were off message -- >> china pmi. >> beat. we mentioned german inflation getting to two. so all of these things are working in concert, right? >> yes. again, i come back to have you looked overseas? i mean, you wake up this morning and the overseas markets remember when the overseas markets were always down and had panic? the overseas markets are strong because the numbers are very strong. it is something -- let's say we were like three british guys, get wilf down here use that accent. he always sounds so good with the dinner jacket. >> those are very significant gains for those three major european markets. >> my point is if you're in france right now, with le pen and stuff, are you talking about a better trump? no, business is better. and we had the tired trump bull market that is coinciding with the fact that the one thing that the banks really need and they have been the leaders was rate hikes. and the international stocks that were trump stocks are getting the strong overseas market and all the bears have is palo alto networks.

great. >> dollar's getting stronger again too. >> yeah, but people looking through that. have you noticed in best buy they look right through the guidance from the first quarter being negative? and that's what they're doing right now with dollar tree. and they're doing the guidance negative -- looking through the negative guidance with salesforce right now. why? international? no, domestic companies. >> so goldman's point a few weeks ago that march would be the point of maximum optimism, i don't hear you disagreeing with that. >> i can't disagree with that. i can't. i mean, i just -- i'm looking at this. i want that fed rate hike so badly. and they're giving it to us. >> is it too early to start talking about as mike santoli asked on twitter today, 25 or 50? >> oh, geez, i don't know. i'm trying to get past this idea that the bull market ended yesterday. because it clearly didn't. and i'm just going over -- i'm parsing every word of that salesforce conference call trying to figure out why the stock is down big. by the time i come in it's not down. the recuriel nature, everyone is

being whiplash all seeing the international markets being better, they're all seeing who the heck thought we'd have a conciliatory man speaking in front of congress? i mean it was conciliatory. now look, the real cynical people are saying, well, he was phony conciliatory. but the fact is that he's kept the bulls in the air. mr. border tax, no border tax, we live to play again. >> right. >> and moses by the way i think he had a virtual reality tour. >> you're getting deferred comp at j.p. morgan, you're dancing around those offices today. >> but wells fargo eliminating some bonuses for some of those fellas. >> yeah. >> we got a lot more to get to. more discussion on the rally tomorrow, of course a big debut for snap, gearing up to what is anticipated to be the biggest technology ipo since alibaba. we got calls on intel, we got goldman on micron. a lot more "squawk on the street" from post nine in a minute. hey gary, what'd you got here? this bad boy is a mobile trading desk so that i can take my trading platform wherever i go.

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morning getting busier now with auto sales. let's get more with phil lebeau in chicago. >> carl, last month ford sales dropped 4% here in the united states, little lower than the edmunds.com, when you look at ford it's sales and inventory what a lot of people are keying in on. ford's inventory in terms of its days supply dropped to 79 days supply at the end of february. compare that with january where

it was at 95%. so that's the improvement that people have been looking for. and, guys, it's the same thing we've seen for months and months and months. trucks and suvs are where the sales are at. ford car sales down 24% last month. overall ford cars in terms of total sales are now just one out of every four vehicles sold. think about that. used to be about a 50/50 split back in the day. no longer. it's all trucks and suvs. we get gm in 15 minutes. guys, back to you. >> phil, we'll come back to you on that. phil lebeau thanks. getting breaking news out of wells today as well. we'll go to wilfred frost at hq. >> wells fargo is taking further executive compensation matters this is affecting eight members of the 11 strong operating committee, the eight that existed before the 2016 sales scandal that includes ceo tim sloan, cfo and they will not receive cash bonuses for 2016,

in addition some previously given equity rewards that vested during 2016 will also be taken back. the result is a total of $32 million of compensation being withdrawn for those eight people in total. that compares of course to the $41 million that john stumpf gave up himself. chairman says these actions are not related to any findings of improper behavior. they're part of the board's ongoing efforts to promote accountability and put customer interests first. so of course that lack of improper behavior contrasts to the four senior managers albeit less senior managers that lost their jobs a couple of weeks ago. so these actions less severe in that regard. tim sloan the ceo says i fully support the board's action and believe they are critical to wells fargo's commitment to the customers. just a closing line this press release does suggest there won't be further announcements until

the full findings of this board review is released, which of course is april 2017, guys. >> wilf, thank you very much for that. no bonus, couple of people have lost their jobs. they handling this right? >> i think so. my travel trust owns it. it's been a huge disappointment. it's obviously a company that lost its way, maybe it's getting its way back. stock has done nothing during the whole rally in part because of what did occur, but anything that makes it so it's in the past rearview mirror waiting for not unlike what you see with the chipotle to use the financial analogy where you've got to see those checking accounts stop going down, the new ones open every month. but wells is going to, you know, you get a fed rate hike and people will be saying what was that cross thing? what was that check thing? because fed rate hike is everything for these guys. everything. >> i'm with you. everything. you say everything. i nod. >> even with the curve flattening here since the election people watching that

today. >> well, you know, it's really interesting when you go back over the home depot call, which i mention that because lowe's is in the news, you talk about $40 per month for rate hike is not going to stop anybody from buying stuff. i do think that wells, we forget how much -- they are the housing stock. now, they don't have -- they have a huge deposit base and people say deposit base obviously bank of america's got the biggest, but when you think about housing being on fire and it's still not on fire, if you get housing on fire and get a little bit of vig here from the corporate -- from the deposits, wells goes to 65. >> where does j.p. morgan go? >> $100. >> j.p. morgan now got $325 billion market value. >> it should. what it's got a 14 multiple even though a great growth stock. >> i hear it's got a fortress balan balance sheet. >> what kind like ft. knox? >> i've read it. >> all right. my gold finger could not knock off ft. knox. >> no matter what nerve agent he was using. >> that's why jamie dimon and

lake are a powerful one-two combination. >> very powerful. >> which of those two is james bond? >> so did jamie dimon. >> when we come back we'll get cramer's mad dash and count down to the opening bell. tomorrow at 9:00 a.m. eastern an exclusive with mcdonald's ceo steve easterbrook. we cannot wait for that. take another look at the premarket see if we get 21k or anywhere near it at the open. back in a moment. is happening before our eyes. xty to seventy million people are moving to cities every year. at pgim we help investors see e implications of long termegatrend li the pme time of urban e, ointing opportunitie to capture alpha in real estate, infrastructure and emerging markets. partner with pgi the global investment management businesses of prudential.

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let's get to a mad dash on hump day few minutes before the

bell. we didn't talk specifically about lowe's earnings, made a few references, but let's get to it. >> comparable stores 5.1, people were looking for 2.2, more than double. a lot of people felt maybe lowe's wasn't going to be as good as home depot, i would argue they did better than home depot even though home depot is terrific. david, if you spend on your home, maybe you don't go out. >> you brought it up yesterday, we discussed it a lot, people staying home, they're on their devices or playing video games, ordering pizza and fixing stuff up. >> there you go. >> they're not going to the mall. >> no, mall no go. by the way lowe's isn't in a mall. they're stand alone. so this is happy house is happy family. what's incredible, david, is it's every aisle. and wait until we get to the spring, which will be even bigger because that's their christmas. so people are anticipating that now. a monster good call. the spend on the home is the opposite of target. and what's amazing is the irrelevance of target.

brian cornell talking about a three-year plan. lowe's does not have a three-year plan. it has a tomorrow plan. so, yeah, spending on home is it. >> lowe's and home depot can't get amazoned? >> it's just too murky. i can't find that stuff on amazon and the prices are really right and i usually need a little help. and they're always very helpful. so i just find that these are -- they've come up with good models, david. >> okay. >> there's a nice lowe's in brooklyn i go to and go by really nice home depot there, and i've got to tell you, david, they make me very happy. i do all my plant stuff at home depot and fred blank sends me seeds, says don't do it all from flats. >> those who are long the stock market will be happy. >> david, they were shot this. >> mistake. >> ill advised. >> we got a lot more coming. stay with us right here "squawk on the street."

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something like this because yesterday's close was so muted, jim. >> yeah, i mean, i think there were so many people who really did quietly say i got to get out. big institutions. that this thing had run its course, that there will be another angry-like inauguration speech and it will make it so people feel nothing's going to get done and i got to get out ahead of and it that was misplaced sentiment clearly. and now we're in the mode where we're going to talk about snap. and snap's going to be successful. so you're going to have a lot of new money coming in of the variety which says i got low cost commissions that just started. i've got a fed rate hike that suddenly everybody likes and i got snap. and you know what, maybe i haven't like warren buffett, remember said on monday, that was a long time ago, but said you may not have missed that much. >> we should point out on snap it will price this evening. already starting to get some indications as it's underwriters put together the book that they are fairly high quality. >> yes. >> a lot of long onlies in

there. that's what you want. long to be focusing on a growth stock. remember 55 million of the shares is going to those having a one-year lockup. so you're talking about 150 million shares freely traded. and we'll see where they end up pricing this. >> it will double. >> looking over subscribed with what i'm told is a high quality book of orders. >> i'm told $40 billion opening for the market cap opening. >> $40 billion? >> yeah. >> so assume price at $25. >> no, i think at 20 and goes to 40. >> oh, come on. you're calling for a double? >> you'll do a squir face snap and i'll do a flower head snap in it doesn't do 40. get ready with a squirrel face snap. >> i don't know how to do that. >> i'll show you how. >> your point will be it's not of their own making necessarily. >> right. because if they priced that so well, they'll come in and buy at

the open no matter what and get a great base on the average. the revenue growth there is extraordinary. the engagement is incredible. people will love it. the advertisers, it's a must buy is what i'm told. a must buy. >> whoa. you are really bullish on snap. >> i did a little work. >> at the opening bell and the s&p at the bottom of your screen. at the big board it is going to be exxonmobil, ceo darren woods here for company analyst day. just out a few moments ago cap x up 16%. >> i tweeted your comments, carl, because they'd been much more muted about cap x when they spoke last. this could drive some of these permian oil stocks higher. that was a very big change, i felt, at the margin if oil goes up we have inventories. i thought that was very positive. >> talking about permian and bakken inventory with a rate of return better than 10% at 40. >> and remember there are some oil companies that are in the permian that could just make fortunes on that call.

so be aware that's a major, major positive. >> by the way, at the nasdaq today it's first trust advisors and tcw group celebrating recent launch of the first launch tcw opportunistic fixed income etf. so there's so many areas you can go, lowe's, best buy, what are you going to watch, banks? >> you know, i think banks. obviously they need that rate hike and that's very important. let's go fast growing tech and i'm -- i know i'm itching to get david's view on this, but this alphabet channel has got people talking to me about how there's additional revenue stream for google for alphabet the way when people got excited about apple at 93 started talking about the revenue stream, david, is the revenue stream ki mchimerical o could that be big if apple tv takes off? >> it could be significant. it's going to be a while and

there's plenty of competitors. i think frankly the impact from another offering priced aggressively, remember directv now kind of took things by storm briefly. >> yes. >> then it sort of waned quickly. but the idea of there being, again, more and more choices for people who are cutting the chord -- cord or cord nevers who are using internet connection to get as much television as they want is only going to increase the pressure on some of the broader ecosystem. >> okay. >> but whether it really becomes a meaningful revenue source or really increases usage of youtube, which already has incredible usage numbers. >> oh, my god. billion hours watched every day. >> right? >> well, i thought, remember they have got great machine learning capabilities so maybe they can do content recommendations. david, their cloud -- their data centers are bar none other than amazon the best. how about you put all your stuff in the cloud, you can pull it down when you want to, incredibly strong as we know they're great at search, i came

back and said, you know what, they get the nfl china contract they're going to have a game in china every week. you know they're going to do that. the nfl. >> how often are they going to have a game in china? >> they'll do whatever's necessary. they're about making more money than they should. remember they do tired night football and nobody cares. >> they really do. >> sunday, sunday, sunday, we start in china and move it to england. it will be like a full trading outfit, but google will get the china bid. they'll get the china nfl and suddenly you have to take the package. >> as you're talking, guys, we have hit 21,000. >> unbelievable. >> now for the first time ever. 20,000 was just january 25th. and here we are 1,000 points higher. led by -- it's a classic setup, j.p. morgan and goldman leading the dow followed by cat and utx. >> all the things -- i'm watching alcoa, remember when that min trerals trade was suppd to be over and international trade over and rotates of drugs and you know what the money

never left. the money hates bonds. they hate bonds. they like stocks. >> largest market cap company in the world is already up 19% this year, that being apple. that's helped. >> their greatest days are behind them. i saw tony -- guy, you just missed 40 points. >> there has already been a very significant rally in tech names with apple and facebook up 19%. alphabet has lagged, as you say, google up only about 7%. amazon also, those are huge moves. those are moves that investors would be happy with on a yearly return for many of these names, 14, 15, 18%. >> remember when coca-cola doubled in value in the '80s and people said, oh, my, that's ridiculous, gm is so much bigger. no, they're having one of those moments. it's a revaluation moment. >> and when people say narrowing

leadership two-thirds of stocks under their ten-day moving average, no, nothing? >> it just all ended this morning. >> yeah, it's going to change. >> they better come up with a darn new theory within the next 90 seconds because i don't have any segments other than -- maybe they're going so say, listen, palo alto crosses all lines and therefore you should ignore everything else. this kind of breaks the spell. i don't know, i think people are really positioned wrongly. they were really positioned wrongly for this speech. >> yes, i think people felt he was going to give the same speech from national harbor -- >> cpac. >> yeah. i think he certainly did not give that speech. it was a different kind of speech. >> there was no mention of the administrative state or the fake news media. >> no. i think we have to recognize that. no fake news media stuff. kept waiting for it last night. >> let's get to gm. we've got ford under our belts. phil's in chicago. >> general motors in february

increased sales 4.2% below the edmunds.com increase, but remember february is the second or third slowest month in terms of total volume of auto sales. two important notes. one, day supply in terms of inventory came down dramatically down to 91 days from 108 days the previous month. also general motors is estimating total industry sales rate for the month will come in at about 17.5 million vehicles. again, that's gm's estimate for the industry. we'll get actual number later on today. back to you. >> all right, phil, thank you very much. we'll watch for that. we had some credit comments yesterday from dimon. >> i saw that. look, you have to worry about everything. i had a guy last night this is a private bank -- well, started out refinancing student loan

debt, which i think is the worst. student loan debt you're stuck with the rest of your life. i'm concerned about all sorts of debt. i would love to see the auto sales stronger. i would love to see housing sales stronger. but i think what's happened tax receipts something h & r block has said and i think companies are looking through calendar shift in the first quarter. no one seems to mind that a best buy gave you kind of down beat first quarter. and i think that's because people are saying, wait a second, maybe january is -- we're looking for excuses. we're a lot of alibiing today. where were they yesterday? >> yesterday was the first day we were down in weeks at least on the dow. >> go back to j.p. morgan. why was it unchanged yesterday and now it's up $2.35 on the same comments? fed rate. >> you could argue there at least it is the fed and williams and dudley's comments from

yesterday and the idea rate hikes are coming sooner than some had expected. there i can at least find something. >> cowen today says we didn't get explicit mentions of dodd/frank last night. >> right. >> we remain dubious the gop will repeal dodd/frank or provide level of regulatory relief banks or investors expect. >> i'm exhausted by wall street research that doesn't like this market. >> let's go back to the bigger picture here in terms of expectations of investors and corporations right now when it comes to the major legislative accomplishments they're hoping to see. >> we'll do that. >> first repealing and replacing affordable care act. >> which we know is going to be hard to do. >> going to be really hard. we have no sense as to where things really lie on tax reform when it comes to border adjustment tax, which is as i've said many of course people believe is dead. but certainly key revenue raising vehicle to make that appear to be deficit neutral, if you were to do that under reconciliation that becomes important or use dynamic scoring and assume we're going to get more than 3% gdp growth which may help your numbers, but we've

got a ways to go there. the president apparently introducing an idea of an immigration bill much to the surprise of the anchor who is i guess were at this briefing, which was not included in the speech. >> i know. >> there's a lot there. and it's still very hard to get a real sense in terms of timing on any of it, jim, starting with obamacare. >> again, at this moment i think that's okay. i know it sounds i'm being way too glib by saying as long as it's out there, but i do believe that there was a shift last night which i think a lot of people felt it would be republicans who would break ranks and i think last night kind of conciliatory spirit republicans maybe thinking about breaking ranks don't, that could happen. there's a lot of people research backtrack classic technology, goldman put a sell on it about a month and a half ago saying, listen, get out. now they upgraded today. all that's happened is the stock gone up. i'm seeing second thoughts and regrets by analysts who have downgraded, downgraded,

downgraded and now trying to get onboard. trying. because they sense it's just -- >> all right. but are they overlooking their valuation parameters simply because they see a momentum market? >> i think that's it. i think i'm going to say yes to that. >> that's not necessarily a good thing to do. >> no. but i just feel like in the end, you know, a lot of these guys have always felt the train leaves the station. leon cooperman always told me there will be another train. another train comes. but there's a lot of people feel union pacific's leaving the station along with csx and norfolk southern i better get onboard. >> speaking of getting onboard, goldman takes micron to a buy today. >> how do you like that? they waited, waited, waited, but dram prices up makes sense. numbers way too low symbol mu, again, that's exactly the kind of call i'm talking about. where you been, partner, but they're onboard. >> same time intel which is the

worst dow component at the moment bernstein takes it to a sell, structural headwinds, competition from nvidia, namd, weakness in the data center. >> i felt that that call was gratuitous. you probably want to buy that stock. intel is coming on strong in those areas. i do like amd, i like nvidia. that was a nitpick call. i didn't think it was a necessary call. they should have just let that one go. you don't need to slam it like that. in the meantime the kinds of stocks i'm looking at you take a 3m, 3m, stock is now up 12 straight points, there's just a lot of guys saying it's not as bad. things are a little better. and that's causing people to pay higher multiple, which i know you don't want. you don't want to do greater fool theory, but some estimates are too low and that means you can buy a micron. >> yep. >> estimates might be too low honeywell. >> higher multiple with rates

going up. >> right. well, something should give. look, there are moments where you just say, warren buffett says apple is a consumer goods product story, i like that. there are individual stocks, individual companies doing better than we thought and you add them up and you can't reconcile bonds with the fact so many company themselves, thank you warren buffett, for teaching us this, are doing better than we thought. >> yeah, some people were struck by buffett and that in prior rallies he had started warning investors. didn't happen this time. >> no. and becky kept trying to get him to do that, the bubble, bubble, bubble, and he wouldn't go there because he felt the bubble was in bonds. that was powerful logic i think people should go back and listen to that tape. he was not taking the bubble bait. he wasn't. he didn't take the -- when the water tide comes out who's

naked -- >> exactly. >> every one of the typical ones, it gave them every single one -- >> his old line, a great line. >> i know. i mean, look -- >> he would not say people were swimming naked. >> he would not say people were swimming naked, would not say it's a bubble. come back and say buffett doesn't think it's so bad. people are desperate to get in this thing. >> so we have at least ten dow components that are up a percent or better. let's get to bob pisani on the floor. bob. >> good morning, carl. the trump hope trade as i like to call it very much alive. 2-to-1 advancing to declining stocks, major sectors, new highs all over the place. all the major banks are hitting 52-week highs right now. we're also seeing new highs in the tech names, apple new high, materials advancing nicely as well. industrials are doing well, boeing's at a new high, honeywell at a new high. this is really across the board rally, but particular strength in the financials and the industrials. as for trump and the markets, no, they did not get the specifics they wanted. and in that sense it was a disappointment, but it didn't matter. we didn't get anything on banks

or dodd/frank or housing reform or russia or china and almost nothing on energy. it didn't matter. the speech gave a strong impression that the president could accomplish his goals. that's a win. the market has been giving trump the benefit of the doubt all along, and the rally has been holding on the belief that he can get his agenda passed. on that score card the speech was a resounding success. and you can see the reaction from the overall markets. speaking of the trump trade, february fund flows were in late last night and they're good again. now, in january we got about $40 billion in flows into etfs, we got almost $50 billion in february right across the board spread out. u.s. equities, international equities, fixed income, nothing stands out dramatically here. just nice strong inflows right across the board, large cap, mid cap, small cap had inflows. trump trades, well, looks like it's still very much alive. people putting a lot of money into financial stocks for example. they had $1.8 billion in inflows. health care also getting inflows. and canada and mexico are

getting outflows. there is your trump trade. next up, the federal reserve. janet yellen at the -- speaking on the economy in chicago on friday. now, i don't normally bring up the reuters icon probability of a rate hike, but look at it for march. up rather dramatically near 70% right now. i don't normally bring this up but stock traders all this morning saying, hey, bob, the fed may be getting more aggressive look at it starting to show up here and it's clearly impacting the stock market here. look at banks here 52-week highs, in some cases historic highs. not many of them, but goldman sachs 30 points on the dow. that's the reason the dow is outperforming the s&p 500, j.p. morgan regions financial, wells fargo, dozens of new highs right across the board. elsewhere we're all excited about the snap ipo that will be here tomorrow right behind me, but we are getting some other ipos. hamilton lane is pricing on the nasdaq, should be trading in about an hour. they priced at $16 right in the middle of the price talk range. they help wealthy investors invest in private markets.

interesting company. we're going to get a very well known womens apparel maker tonight as well. not getting a lot of attention, but j. jill is very well known to a lot of women, been around for a while trying to price 11 million shares. you know the state of womens apparel and apparel, they're being watched as a retail bellwether on top of that. and snap getting all of the oxygen right now 200 million shares 14 to 16. there's been all sorts of talk they're going to price at $17, $18, maybe. we don't know anything yet. they have not changed official indications of $14 to $16. i will be here right behind it. it's going to be all the action in the booth. we'll be giving you the whole play by play both before the stock starts trading as well as after explaining how this ipo process works. and carl, of course this is always an excellent opportunity to show the real interplay between technology and humans on the floor and how ipos get priced here. this is going to be of course one of the bigger ones that you're ever going to witness and we'll give you the whole play by play right here on cnbc.

carl, guys, back to you. >> no one better than you, bob, to walk us through it tomorrow. we can't wait. thanks, bob pisani. let's get to the bond pits as well. rick santelli at the cme in chicago. good morning, rick. >> good morning, carl. what an exciting day in the marketplace for a variety of reasons. you know what, it was just 24 hours ago when we were bringing out numbers on consumer confidence. well, i made a comment, seems like everybody's e namerred. seems like that may have changed. carl was talking this morning about the two-year note, there it is in all its splendor, august 200 last time yields were at this level. but let's dig a little deeper. ten minus twos yield curve spread, well, it had been flattening. that makes sense especially if the fed and fed should be in play for march, should be in play for several meetings in 2017, but today it shot back the

other way. the tens are playing catchup. as a matter of fact right now you have a light bit of steepening going on. you see on the right side of that chart. one-week of the tens shows you why. we've traded and priced all the way down in yields all the way up to unchanged on the year. now, benchmark that against the net change on what's going on in the equity markets, benchmark that against what hedge funds investors call sharp ratios. look equity against the backdrop of volatility, decent trade going on there. now look at the schatz, two-year in europe, german two-year, one-week chart we're about 16 basis points off those intraday low yields. and i think part of that's the fed. you know what, i give them an a-plus. pull this thing around, negative dead man's curve where all of a sudden it's guns hot for the treasury. one-week of bunds turned back up and guns hot, here's what i'm talking about tens minus bunds. when rates go down or get more negative, they drag us. when rates are going up, policy

divergence, seems like were having the opposite effect. that's a good thing. one-week of the dollar index, yes, the euro should go down, the dollar should go up with what's going on in equities, but specifically in treasuries and potentially the fed, but the dollar index still down on the year 102.21 where it closed, 101.82 is where it is last. carl, jim, david, back to you. >> thank you very much, rick santelli. as we know another record setting day for stocks, dow's up 2.14. let's look at the s&p heat map. obviously relatively small percentage of components in the red. best day for banks since november 14th. as we go to break here's david rubenstein. >> it's clear he's serious about the promises he made. we know those of us in washington know getting things through congress is not that

easy, but i think he'll push and very serious about getting many of these things through.

dow 30 heat map, only a few components in the red. intel downgraded today at bernstein. we're looking at how long it's taking to move 1,000 points in the dow. if we're at close here above 21k would tie for the shortest duration 24 days, which it took to get from 10k to 11k. we'll get stop trading with jim in a moment.

there's an outlier i've mentioned twice palo alto's down very badly, that's cyber security company. all execution problems. i have spent a lot of time with cisco, and i believe that cisco is directly gunning in its cyber security large ecosystem it's building for palo alto and it's beginning to have success. chuck robbins wants palo alto's business. i think that mark says point-blank listen it's not competitive. he mentioned they won a couple pieces from cisco, but this is, i think, chuck robbins saying we're coming for everyone and particularly palo alto. and i think he's succeeding. chuck robbins is not someone you

mess with other than the fact he was a falcons fan and had turned it off, i think, in the third quarter. go do some other stuff. >> what's tonight? >> viva system. this is another -- viva las vegas stock down very big and now going up. software for service company for life sciences. are you giving me a time-out? >> no. >> people didn't like it initially and then people like it. go figure. this was the hardest show we've ever done. >> really? >> yes, because you hate to have it hinge on an atherial speech. we need it on numbers. thank you, lowe's, for at least giving us something there. >> jim, we'll see you tonight. "mad money" 6:00 p.m. a lot more on the rally when we return. when you have $4.95 online u.s. equity trades...

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♪ good wednesday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen, david faber at post nine of the new york stock exchange. dow 21k best day of the year for the dow and the s&p as the rally comes on the heels of that

presidential speech last night. best day for banks since november as expectations for a rate hike in march are soaring. >> and we've got a busy day for economic data. more now on manufacturing. let's get out to rick santelli for that breaking news. rick. >> all right, let's start out with the older data. january read on construction spending a big miss down 1%. and last month's down 0.2 saved the day a little with a 0.3 revision but that is weakest month over month construction seen since april of last year. now, the number february read on ism, we're looking at 57.7, so that jumped above our last read at 56. that makes it the best read since, wow, goes back a ways here, since the 57.9 in august of 2014. let's go through the internals, shall we? on prices paid 68, that is down one from 69 exactly as expected. new orders 65.1, a nice jump

from 60.4. and especially employment even though we're not going to get it until the end of next week, it actually was retrograded, downgraded a bit from 56.1. last look at january to where it stands now at 54.2, we're still hovering two basis points into the sell territory pushing rates higher. we settle at 2.44 for 16, currently 2.46. carl, back to you. >> thank you, rick. markets showing optimism after the president's address to congress last night. let's bring in art cashin here at post nine. art, good to see you again. happy ash wednesday of course. >> thank you. >> you said three-to-two odds last night that reaction would be negative because the president had to say all the right things. did he? >> well, i was assuming he'd have to come across with some details for the market. and he didn't do that. he gave a rather sweeping this is the way i want to take the nation kind of speech.

initially futures look like they're going to sell off and then they shot around and spiked higher. that left a feeling in some of the guys who were trading that some of the initial buying may have come out of europe. and that they were perfectly willing since the speech was much more presidential and somewhat conciliatory to buy into that. and there's still a feel that some of this celebratory rally that we're seeing part of that can be out of europe too. >> is that a function of this new reflation data out of germany? we got a china pmi number that was good, but we obviously just got ism at a multi-year high. >> yeah. the data beneath is coming in. now, the real question is can the president move this package through congress, that's still open to doubt. and, you know, it was like waiting to see him pitch a perfect game. and he surprised us and did it anyway underhanded or whatever.

>> so is that the view that the conciliatory tone actually increases the likelihood that he's going to get a lot of the pro growth agenda passed or at least seriously considered through congress and that's what's given investors hope? >> yeah, the idea that he's going to get at least a decent hearing, while nobody thinks the democrats are going to march over and chime in, he's making it easier for anybody who wants to go along on something like infrastructure and stimulus and whatnot. but i think wall street was clearly off base going into this. certainly i was. and that's why you're getting i think such a sharp reaction on the upside. >> any other reasons you can cite today? we're up over 1% in the s&p, the banks contributing to that in part of an expectation of march rate hike. >> right. the rate hike got above 70% likelihood, so that really put

things together. as you say you can see it, the banks are moving. i want to see how long this lasts. i mean we're going to get into discussions. we're going to hear from people like the tea party and whomever what's going to happen here. so so far so good. >> i mean, i wonder if it's the lack of details which is just -- we heard an argument this morning of morgan stanley it's the fact he kept it on broad strokes is actually very positive for this market because it keeps hope alive. everything's on the table. all of these pro growth measures. we don't have to dissect the little details. >> plus the absence of things that worry the market, protectionism not getting much play. >> he stayed away from that. but that's an interesting way to look at it that if he didn't give you detail, then nobody can stand up and rail against it. and so the absence of opposition may encourage some people. it's a bit of a stretch, but i can understand it. >> one last thing on levels. we've already seen one b of a

taking their year end target up to 24.50. where is firm resistance here? >> well, right below 2400, i would say. 23 95 to 2400, somewhere in that range. so we've got a ways to go there, but the vehicle they're riding right now is the dow. and, again, we'll see what happens after europe closes. we'll find out whether that theory that some of this is buying from there if it begins to wane after european close. >> art, we'll see you soon. thank you, art cashin. >> pleasure. >> of course we have been discussing it. for more on takeaways on the president's address last evening and that clear market reaction we're getting this morning, let's get to our eamon javers. he joins us from the white house. eamon. >> yeah, good morning, david. i think art cashin's got a future as a political pundit because he nailed it. you know, that was a speech that was very different in tone but not a whole lot of specifics. i can tell you though that they are glowing here at the white house. there's very much a feeling that yesterday may have been the best

day of the trump presidency so far. and he has a little bit more political wiggle room today than he did yesterday in terms of getting his agenda passed up on capitol hill. with dow 21,000 this morning, this is a white house that very much feels that the stock market is a barometer of how they are doing. and they are not shy in talking about that. that's different than what we've seen in the past. that's going to be another item on the check box here that makes this white house feel very good today. but talk about some of those spec specific points and you dive into this speech and you see the president's raising some agenda items but not telling us exactly how he's going to get there. like this moment last night on infrastructure. >> i will be asking congress to approve legislation that produces a $1 trillion investment in infrastructure of the united states financed through both public and private capital creating millions of new jobs. this effort will be guided by

two core principles, buy american and hire american. >> a similar picture on taxes. the president simply saying that his team is developing a tax plan but no specifics here as to where he's going on border adjustability and all the other issues in the big tax debate that's happening here in washington. here's what he said. >> my economic team is developing historic tax reform that will reduce the tax rate on our companies so they can compete and thrive anywhere and with anyone. it will be a big, big cut, at the same time we will provide massive tax relief for the middle class. we must create a level playing field for american companies and our workers. >> but, david, overall a real afterglow here at the white house. i just talked to a white house official who said they are still in debate and deliberation mode here on a lot of these specifics, but they expect to roll back a lot or announce a

lot of this in mid march. we're expecting obamacare specifics in the middle of this month. and then after that some more details, sara, on the tax cut plan and where the president's actually going to go with that. >> we'll await the details, but as long as they are framing the stock market as a score card for the administration's policies, eamon, it's days like today that they certainly would be proud of and point to. dow's up now 240. >> absolutely. that's dangerous for white houses though. traditionally presidents don't do that because they know there's always a correction looming. they typically just say from here markets go up, markets go down, we're focused on the fundamentals of the economy long term. this white house is very much embracing the stock market, a very different tone from here at 1600 pennsylvania avenue. >> working so far. we'll see what happens, eamon, thank you. eamon javers at the white house. for more on this speech and some of the economic points here including these strong wall street reaction that we are seeing right now, let's bring in president of the committee for responsible federal budget, and tom delay, former majority

leader of the u.s. house of representatives and house speaker. great to see you both. thank you for joining us. maya, going to start with you on the budget and the spending impact of all these kind of policies, but instead, are you surprised to see these sharp market reaction? dow up 240, s&p up 1% after this speech. >> yeah. i'm not a good market predictor, that's for sure. so i guess the reason, i think you made a point that i agreed with in the last segment, i guess the reason that makes sense to me is i thought it was a very good speech in terms of message and tone. but when you get down to the details of which there weren't very many, that's when it gets a lot more difficult. and the one thing i took away from the speech with a long list of priorities is it sounded very expensive. and so what i think is probably a possibility is that the market responds very positively when you hear some priorities that make a lot of sense and are pro growth, but when you get into the details and see how hard it is and how challenging the legislating is going to be and in particular paying for this so

it doesn't blow up the debt, i worry that the market will pull back a little bit because it's harder to enact than it is to talk about at the top level. >> well, tom, you've had a lot of experience in politics. do you agree that those challenging tasks of getting some of these ambitious policies, health care, tax reform, infrastructure spending through congress just became a little bit easier for the president this morning? >> yes, i do. i agree with maya a little bit in that it was a great speech. it was very well written and very well delivered. i think what the market's reacting to is the speech was all about his leadership. and he's the strongest aggressive dynamic leader that we've had in my lifetime. and it showed last night. the problem is as maya said is that when you look at the substance of the speech, i have a little angst because it's all spending. the economic plan is weak. the tax reform is weak.

it doesn't talk about the debt. doesn't talk about doing something about entitlements. so i'm looking at this speech as stopping the carnage caused by obama, and hopefully he will turn to what really needs to be happening and that is a revolution for the constitution start cutting down the size of this government. >> but, leader, i wonder, let's take the aca for instance to start, that appears to be the top priority given the time he spent with it last night. whether it's state money on medicaid, you got some gop senators who want full repeal, nothing less. did last night do anything to ease that path? because we got to get that out of the way before we can move onto some other things, apparently. >> well, exactly right. and it needs to be repealed of aca. this whole notion of repeal and replacement, i just don't get it. the federal government has no business. it's unconstitutional for the

federal government to be involved in health insurance. in the first place. that's why it needs to be repealed. and whatever's replaced should be constitutional. and they're talking about funding and subsidizing people's health insurance. they're talking about funding medicaid expansion in the states. i don't think that will go anywhere because there's some strong conservatives in the house especially that just won't go that way. >> well, all right, maya, let's get your read on where things are going to actually sit in the house when it comes to what may be deficit busting policies here. is this thing going to have a chance? is it going to need democratic votes to get it through? you know, are the concerns you are going to raise and we just heard mr. delay raise going to carry the day? >> so i think that the aca's a perfect example of how much easier something is when it's a top line message and much more challenging when you get into the details.

and just as an example on aca repeal, when it was in the budget, the republican budget in the past years, it was put there to save $2 trillion over ten years. that's when they knew those budgets weren't actually going to pass. now that this is going to become a real plan, one of the big disappointments is that the aca now is only put in the budget as something to save $2 billion, a change from $2 trillion to $2 billion is a massive scaling back of how this would improve the fiscal situation. and likewise a kind of concern i have is for many years republicans talked about the importance of getting the budget to balance over a ten-year period. given how deep our fiscal hole is, i would say that might be aggressive, but it's very important to have a fiscal goal. now that we have a republican president, senate and house, what's troubling to me is i haven't heard any talk of getting to balance in ten years and last night we didn't even hear talk of where we actually want to get the debt to. the president talked about how

much president obama ran up the debt, but didn't talk about his plan to bring it down. and so, again, we are at record levels of debt. we need real political leadership to focus on that issue and how we're going to both grow the economy. and an important part of that is controlling our debt. that's going to take some real policy choices we still haven't heard about. >> i was just going to ask you about that quote, maya. he did say, president trump last night, in the last eight years the past administration has put on more new debt than nearly all other presidents combined. first of all, is that true? and second of all, does that set him up for having to focus on the debt as he starts to lay out all these massive spending policies? >> yeah, exactly. that's the exact question i think needs to be asked of the white house. because it is true that president obama ran up the debt significantly in many ways as a result of inheriting a very bad economic situation. but he also didn't do enough to get that debt back under control. now president trump is inheriting a much better economic position, but a much

worse fiscal position. and if you look back to the weekend when he actually tweeted about how the debt had gone down in the first month of his being in office, technically that has nothing to do with his presidency. but he did, again, put himself on the line for the debt being an indicator of how well his presidency is doing. and i will tell you that the course he is on right now, and we have to wait until we see their full budget and we need to give director mulvaney some time to get in there and really make choices, but the course they are on right now is they would add as much to the debt over their tenure as you just criticized president obama for having added both because of their new policies they haven't put forth ideas of how to pay for and the fact that they're inheriting a big automatic spending increase in entitlements. and one of the biggest troubling pieces i see in all of the president's promises is him saying he won't reform entitlements. >> right. >> if we don't address social security and medicare they'll bust the budget and programs will run out of funding.

>> maya, i want to end with mr. delay. put on your majority leader hat for me if you can, and just tell me how you'd be strategizing if you were in the house leadership right now in terms of trying to get this stuff done, whether it's aca, repeal/replace, followed by tax reform, mr. delay, how would you strategically be thinking about getting that legislation out of that body used to be a part of? >> first of all, i would make sure the house puts pressure on the senate. and the house needs to pass a complete repeal of aca and put the pressure on the senate. they tend to be weak and they don't like those kinds of votes. and if the house has the support of the president, then that pressure will buckle the senate and they'll get the full repeal. the point is is that they're trying to build a consensus bill, and they need to lead. like trump they need to lay out what the plan is and then go

from there using the economy tees and so forth. but this notion of working behind closed doors with different members, it just keeps it confusing and muddled up. they need to lead. if they expect it to be done. >> but they're watching. we'll leave it there. thank you very much for joining us, both of you. congressman tom delay, former majority leader, correcting myself there for saying house speaker earlier, and maya, always nice to see you as well. >> thank you. >> as we go to break, a quick programming note, be sure to join us tomorrow for an exclusive ber view with the ceo of mcdonald's, steve easterbrook will join us at 9:00 a.m. eastern time. dow's up 242, close to sengsssi highs. hey gary. oh what's with the dog-sized horse? i'm crazy stressed trying to figure out this complex trade so i brought in my cfort pony, warren, to help me deal. isn't that right warren? well, you could get pport from thinkorswim's in-app chat. it lets you chat and share your screen directly

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some news on u.s. steel following the president's speech last night. jackie deangelis has more on that. >> good morning to you, sara. i want you to take a look at the pipeline companies and steel stocks today. they are moving helping lift this market because of one word in president trump's speech last night. take a listen. >> i've issued a new directive that new american pipelines be made with american steel. >> okay. so more clarity there from the president about new pipelines being made with u.s. steel. remember when the executive order was issued there was a lot of confusion about the pipelines that had already been created say for the dakota access or the keystone. those pipelines are going to be

okay. why the market likes this news is, a, because it's bullish for projects going into the future, but also it gives the u.s. steel companies little time to be able to ramp up the correct grade of steel to move forward with these projects. so you could see some of the names today like ak steel, nucor, u.s. steel, pipeline companies, energy partners, transcanada big movers too. back to you. >> jackie, thank you very much. when we come back, markets are headed higher and higher. dow now up 251 after the president's address to congress last night. we'll bring you the latest. later on former medtronics ceo bill george will join us on how ceos will react to the trump speech. stay with us.

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that felt right. what wrong with you!? he's so trusting... of course last night the president giving a speech that has been well received, certainly by investors this morning. let's see what they think over in the manufacturing part of the world. joining us right now is jay t timmons, national association of manufacturers president on recently, nice to have you back. any specifics or details you heard last night that are different than what you heard previously? >> look, i have to tell you this

was a speech that the american people expect from their president. and it was a home run in the minds of manufacturers. we had an opportunity to meet with the president, david farr, our chairman at the national association of manufacturers met with the president with other manufacturers last week and message clearly was received loudly and clearly, tax reform, regulatory reform, health care reform, infrastructure investment. it was a great agenda for manufacturers. >> right. all of which have been -- excuse me, on the agenda for some time. you say it was a great speech -- >> they have, but -- >> yeah, go ahead. >> i was going to say, to hear the president articulate it so well, i think really sent a strong message to manufacturers. and with all due respect to my friends maya and tom, you know, i think that the reaction has really been from a lot of folks kind of what we normally hear in washington. i was really heartened to hear the president say that the time for small thinking is over.

our agenda is bold. and we've got to embrace it now so we can make sure that america gets to work again. >> let's zoom in and talk about harley davidson for a moment, because the president seems to be really impacted by his meeting with harley davidson executives. he talked about the fact that they face tariffs in overseas markets, in one country even as high as 100%, which could be india looking at some of the import tariffs for u.s. motorcycles. do you think this makes sense to do some sort of reciprocal tax on overseas tariffs in this country, or was he implicitly sort of supporting the border adjustment tax? what do you make of that? >> so, sara, here's what i heard. by the way, i'm in madison, wisconsin, right now at the last day of our state of manufacturing tour. we've been all over the country, texas and pittsburgh and new york and detroit and columbus and now madison. and what i'm hearing everywhere is manufacturers want free trade, but exactly what the president said last night, they

want fair trade as well. so what i heard last night is if trade is not fair, if we're being taken advantage of, then this administration is going to focus on enforcement. i think we have to see what the details are going to be, but i think that makes a lot of sense. we should be playing on a level playing field. and manufacturers want that. we do want to sell our products to the 95% of customers who live outside of the united states. there's no doubt about that. but we want to make sure it's a balanced and level playing field. >> hey, jay, we've talked to a lot of companies in the past few weeks about repatriating supply chains. everyone from small companies, housewares, manufacturers to hewlett-packard. a lot of them say i can't even cost it out because the things i need, the sourcing i need is not made here. is the association doing anything to help entrepreneurs who say i can learn how to make that quickly and grow that business in a hurry? >> well, i think you're talking about -- i think you're talking

about the fact there are 350,000 jobs in manufacturing that are going unfilled today. and that is a problem for the sector. and when we fix or tax system and fix our regulatory burden and we invest in infrastructure and we reduce the cost of doing business here in the united states, that problem is going to get even bigger. we estimate 2 million jobs unfilled by the year 2025 if we don't do something. manufacturers have a responsibility to do something to work with community colleges and high schools to try to inspire young people to want to have a job and a career in manufacturing. manufacturing today is sleek, it's technology driven and i really think that the more we talk about the modern manufacturing story, the more folks are going to be attracted to our sector. >> all right, mr. timmons, we're going to leave it there. appreciate you're joining us. thank you. >> thanks for the time. >> you're welcome. jay timmons. did want to share some news we're just getting here of

course involving the world's largest hedge fund, bridgewater, run by that man right there ray dalio, who's been its founder, it's co-ceo. in april he reports that he will transition out of management as of april 15th in a memo, he writes any organization run by a 60 plus-year-old that says it isn't in transition is either naive or dissin jeingenuous. bridgewater started equity management transition with the goal of having others replace me, as explained at the time we allowed for this transition to take up to ten years because we knew getting things right would take some time. trial and error, he says we have done what we have said we would do, kept you informed and the purpose of this note is to continue doing that. and he reports that he will step down as of april 15th as the co-ceo. he did remind people that ten months ago he temporarily

stepped back into management as interim co-ceo for one year. he says he's excited about this change and expect to remain a professional investor at bridgewater until i die or until those running bridgewater don't want me anymore. but of course he is a voice as a very strong one heard loud and clear with investing circles and his management approach is a very interesting one, radical transparency. they have cameras. everybody is supposed to share fully what they think of the other person. >> radical truth. >> yes, radical truth. and returns have been strong in certain years. i haven't really kept up exactly with how they're doing recently, but assets have been quite strong at bridgewater. >> we knew he was sort of laying the groundwork for this but still it's sort of a wow headline, the world's biggest hedge fund, more than $100

billion. >> and david mccormack and aleen curry will take over as management of the firm he founded. >> all right. we'll watch that. it is about 31 minutes past ts hour. let's get to sue herera with a news update. hey, sue. >> good morning, carl. good morning everyone. here's the cnbc news update for you at this hour. a nasty night of bad weather across the midwest spawned tornadoes, hail and high winds in several states. the line of storms stretching across four states is now being blamed for at least three deaths. the system is now moving east. facebook is updating its suicide prevention tools after a string of disturbing incidents on its live video streaming service. the company says it's streamlining the way users report suspected suicides and is now also offering users the ability to have a realtime chat with crisis counselors. and a star player on the nba's top team may be out for months. the golden state warriors say kevin durant hyperextended his

knee early in the first quarter during last night's loss to the wizards. he's undergoing an mri today. that was hard to watch. so painful. meantime, take a look at this pickup truck going airborne. the crash happened while authorities in webster parrish louisiana tried to chase down an escaped prison inmate. all right, that's the news update this hour. sara, i'll send it back down to you. >> oh, my god, that was like out of a special effects out of a movie. >> it looked like it was out of a movie, didn't it? >> sue, thank you. >> sure. as we head to break here dow's up 260 points. we'll be all over that. and be sure to tune in tomorrow. we've got special coverage of snap's ipo, big day tomorrow here at the nyse starting at 9:00 a.m. "closing bell" will have more on the pricing tonight. it should come after the bell. much more "squawk on the street" straight after this.

markets are surging this

morning following the president's address to congress last night. joining us to talk about former medtronics ceo bill george and former omb director now at credit union national association. guys, good to see you both. good morning. >> good morning, carl. >> bill, talk about the speech through the prism of ceos. we've seen these executives go to the white house for meeting after meeting. there's been conflict there. there's been no conflict in other cases. does last night's speech and the market reaction cure all of that conflict? >> absolutely not. he's put down some markers. and i think most of them are good things. i have some questions about defense, but infrastructure, health care, entitlements. you can't pay for all these things, so something's got to give, carl, without massive deficits and i don't think the republicans, particularly paul ryan and tea parry are going to capitulate to massive deficits. ceos have to be conscious about where it's coming, particularly health care and infrastructure. i'm for these thiengs, but i think we're going to have tough tradeouts and i think the president is going to throw a lot over the wall and give it to

congress. and i wouldn't be surprised health care going to get so mired in the muck he's going to through that over the wall to the states. >> right. jim, does that mean that today is as goldman would argue the point of maximum optimism? >> well, i can -- could be. i just came from my conference. i've got 5,000 credit union members in town talking about some of the regulatory relief having to do with financial services regulations. and they're certainly excited about the fact that's on the agenda. we wish we would have heard more last night, but they're also very positive about the economic changes and those issues. i think there is kind of an undergurding or a concern about how we're going to pay for it all. these are also -- credit unions are the folk who is sit across from people every day and help them balance their checkbooks and pay for getting out of debt and things like that. and they have the same question for the president, how are you going to pay for this? how are you going to balance the federal checkbook and make it all fit together? >> well, the president has answered that question, jim. he said we're going to get

better economic growth, we're going to get up to 3%, even more and that's going to cure a lot of the problems and pay for a lot of the debt. and it looks like the market is buying that argument. there's a lot of optimism about the economic outlook from these policies. do you buy it? >> well, that gets you part of the way there. and i can remember using those same arguments myself. there's no question that economic growth -- economic growth can cure some of it. but when you're talking about basically taking about 70% or 75% of the entitlements off the table, when you're increasing the other 15%, which is national defense, now your down to about, i don't know, less than 10% of wiggle room that you have to actually go in and make for the puts and takes to balance the rest. and when you're talking about $3.6 trillion worth of spending, that's just not enough wiggle room. >> yeah, sara, let me just say, we're not going to get the growth by trying to build back jobs -- bring back jobs of the past. that's not going to happen. you can talk about it all you

want. you've got to build our global strength. and that's where the real battle is going to come between economic nationalism, steve bannon style, and the global leaders. and i think most of the business people i know are very much in favor of global growth. that's where the jobs come. it's created 27 million jobs in the united states in global growth. that's where the opportunities come from. and we can't shut that down. so a lot of these ideas being talked about could really hurt them. so we have to ensure that the u.s. is going to dominate world markets as it has and not let trade deals and other things get in the way. >> there's a white house official quoted this morning saying last night's speech was nationalism with an indoor voice. did you sense up any change in the tone from what bannon would have said? >> oh, yeah, it was not a bannon speech. it was much more positive and much more open to people. and i thought it was a very good speech. but that doesn't solve the details. we got to get down to the details. jim's done that more than anyone having to make those trade-offs. i'm saying you won't get the growth. easiest thing is to factor high

growth into the numbers. you're not going to get that unless you create jobs of the future. there's still 5.5 million jobs going unfilled and your previous speaker was talking about how are we going to get workers, american workers ready for those jobs? it's automation that's killing jobs, not trade. so we can have a false narrative here. 85% of all the jobs killed are all from automation. that's going to continue. that's going to accelerate. and so we need to get people prepared for running robots and running computer controlled machines and being computer experts and programmers. that's where the jobs are. not going back to the coal mines. >> but we're not hearing that. >> we're not, no. >> the focus right now is on the border adjustment tax, the idea behind that frankly is to bring your supply chains back to the united states whether or not it can actually happen. but that's not about globalization. that's anti-globalization. >> exactly. and, david, there are 15 million people employed at retail, that's going to kill retail jobs. if you have a 20% price increase at walmart because you have a 20% border adjustment tax, and the chinese by the way are going to do the same thing and make it

harder for companies like ge and medtronic and all the others to trade in china. so have to be very careful about starting a trade war because what's good for the goose is good for the gander, i would say that's going to be a huge mistake. it's also going to kill the farmers exporting. 30% of all u.s. goods are shipped outside the u.s. mostly to mexico and canada. >> hey, jim, as it pertains to mulvaney, he walks into this office known as a strict hawk, to sara's point, does last night's speech mean everyone within the cabinet has bought into this 3% ideal? >> i doubt it. i would bet that there's still some consternation behind the scenes. they'd all like to plus-up their own budgets and talk about their own priorities. that's going to be the tough part. i mean, the president's agenda requires tax reform to move through congress and infrastructure bill to move through congress, a whole host of regulatory relief such as dodd/frank and others to go through congress.

and i have to say based on the congress that i see, that's going to be very difficult to even get one of those through in a session. so i've told my people. i've got them in town right now, please be aggressive in letting your members of congress know that now's the time they have to act and not just talk about. that's going to be the difference, i think. >> bringing it back to ceos and businesses, one company that continues to get heat and credit is lockheed martin that f-35 program the president negotiating on the cost. we're talking about how to pay for everything, bill. who's next? >> sara, i just think that this is political rhetoric. and i think -- this is my first job as defense department trying to get defense costs down at lockheed and boeing and people like this. i know how tough this is. so this is mostly rhetoric. and i'm not sure about the $50 billion additional defense spending i'm not sure that's going to survive the cuts. i don't think it will. but i think we need to concentrate on jobs of the future and building our global companies. and until we do that we're not going to have a vibrant growth economy.

the opportunity is there, and trump's said a lot of good things, but we got to focus on that and not get into a lot of these id logical things like border taxes and all that. going to cause a lot of problems for a lot of industries and we don't want that. we want to build jobs of the future. >> i wish we had more time to talk exxon, crazy day. >> yes. >> bill, jim, thanks, guys, see you soon. >> great to be with you. coming up, former wyoming senator alan simpson is going to join "the santelli exchange." talk about deficit hawks. very exciting when we return.

it is the hot stock up more than 360% over the past year, what it is and whether that rally can continue at tradingnation.cnbc.com. more "squawk on the street" coming up.

♪ we're drowning in information. where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. morgan stanley. stocks are still surging, dow's up 240. let's send it to rick santelli in chicago with a very special guest today.

good morning, rick. >> absolutely, sara. and david's right, when you think deficits you always think senator alan k. simpson, former republican senator for wyoming, an attorney, senator, thank you so much for taking the time and we're going to play a sound bite here from the president's speech last night. so let's roll it. >> great. >> in the last eight years, the past administration has put on more new debt than nearly all of the other presidents combined. >> now, let's harken back to an earlier time when aforementioned senator bowles, on entitlements and lack of will to go after them, here's what he said, that type of deficit reduction proposal are a sparrow belt in the midst of the typhoon, senator, you heard the president, you know how you feel

about debt entitlements, is president trump on the right track? and can this be done without raising the ire of all of us so concerned about the deficits we pass onto future generations? >> well, i'll tell you, the only way to do it is to raise the ire of every american. i tell you, when we worked on this project, we worked for ten months or so, we got five democrats, five republicans, one independent and they said who was on there, well, dick durbin, oh, that commy, oh, tom -- oh, that republican, the deal is you're going to have to piss off everybody in the united states or you're not going to get it done. and we have had no shared sacrifice in this country since world war ii. and we're going broke. the systems are going broke. they're called social security. where is the aarp? they don't give a wit about their grandchildren. where are these senior groups? what about a guy who can get a heart operation for $200,000 and never get a bill and he can buy

the whole county? gi give me a break. you got to start hitting everybody. and the real joy is to watch people come say love what you did except for that one part, al. and that's their part. and they'll scratch your eyeballs out with a salad fork to keep that part. >> well, senator, is it possible -- let's be a devil's advocate here. is it possible that the entitlements may come at a future date and that the growth, in other words the cbo looks at things one way, not the way that trump looks at them, he's looking at the dynamic scoring growth wild card reversal of a landscape in the past that was business unfriendly, is there enough horsepower there to make a difference, senator? >> well, there's stuff of gimmickry, dynamic scoring, we ought to get back to the worship the great god of math, m-a-t-h. this can't work. you can't do this unless you

drill down deep in the entitlements programs. you've got to do something with affluence testing. you have to increase the retirement age to 68 by the year 2050, everybody knows what we have to do. and the rest of this stuff is s is fantasy. cutting npr and humanities and the arts. give me a break. that's almost disgustingly funny. it just makes no sense. what the hell are you going to do about the interest on the national debt? it's about $260 billion. wait until interest rates go back where they usually go, 4%, 5%, 6%. you've got $700 billion going down the rat hole helping another country do something with their infrastructure, their education. this is nuts. >> all right, now, you've broached another topic that i brought up at the top. the fed seems to be recognizing some of the animal spirits in the economy. i know that legislation isn't written, but i guess what i'm really asking is, rates have to go up, senator. negative rates in europe is going to kill the financial

system. servicing the debt, maybe that's the reason the federal reserve has been dragging their feet. in this final minute, how can we square the notion that rates indeed are too low, negative rates are corrosive for capitalism around the globe, yet embedded in that is going to be a servicing the debt cost that could go significantly higher? finish it up, senator. >> well, there's no way to finish it, except we're headed to a gdp which is not -- you're not going to get economic growth of 4%. that's disney world. you're not -- nobody's had a -- you haven't had a stretch of that kind of thing forever. 1.9%, 2%, that's the growth rate. it isn't going to work. you can't grow your way out of it. you can't tax your way out of it. and you can't spend your way out of it. you've got to go into the guts of the stuff. where is the money and how do you get it out? and you go through the entitlements programs and you restore solvency to social security, and you be careful as

hell, because when this interest rates -- and they're going to go -- that should be called print money one and print money two, what they did over these past years, and now we're going to pay for it, because it's going to go where nobody wants it to go, which is back where it always did go. >> well, senator, i think you've just accomplished something that was once thought impossible, especially today -- you found something democrats and republicans agree on -- nobody wants to touch the entitlement third rail. thanks again for taking the time. i hope you're enjoying wyoming. carl quintanilla, back to you. >> well, keep it up. you do a good job. >> senator lighting up the phone lines there, rick. thank you very much. meanwhile, snap is set to ipo tomorrow at the nyse, but between its enormous valuation and limited shares and the experimental business model, the largest tech ipo in nearly two years still a tough sell for some investors. leslie picard joins us at post 9, i think for the first time on

this show. >> first time. . >> welcome. >> thank you. >> it's going to be crazy tomorrow. >> oh, yeah. we're in for a ride. both the snap bulls and snap bears can admit one thing -- this deal is certainly a controversial one. in the few research notes published so far, analysts used phrases like "total junk" and "ephemeral value" to describe the company. and take a look at this chart put out yesterday by aegis capital research. some investors are spooked by the line showing a big drop-off in user growth in 2017 and beyond, but that's the key thing to know about ipos, their prices are not always determined by models and estimates and pen-and-pencil fundamental research. much of it is based on momentum, and snap seems to have enough of that to drive demand. sources i spoke with yesterday said that snap and its advisers have communicated to the market that they'll likely price a buck or two above the range. that could yield a market value of $25 billion, which was the target they had been initially seeking before their ipo even

launched. they also could benefit from scarcity. there have been few tech ipos in the last few years, and they're only selling 14% of the company. and in a filing this week, snap disclosed that 50 million shares, or 25% of the offering, would be sold to investors who agreed not to sell for a year. even if institutional investors seem skittish, though, deals like this one can benefit from retail investors or individuals who know snapchat, who have seen their kids use snapchat and believe it will pop on the first day of trading. my sources say advisers are expecting individuals to fill in gaps if institutional investors, which can sometimes be a little hard to read, aren't willing to buy in. guys. >> all right, it's going to be a long day, a long night, and we'll talk to you tomorrow. >> absolutely. >> we're going to talk a lot more about it on "squawk alley." leslie picker, thank you. >> thanks, guys. still up, the president promising to save billions on contracts and boost defense spending. we'll tell you which companies could stand to gain. and later, be sure to tune

in at 10:00 tonight. we've got a series premiere here on cnbc, a new prime time show. it's called "the deed." much more "squawk on the street" when we come right back. the dow is still up 240 points. what are you doing? getting your quarter back. fountains don't earn interest, david. you know i work at ally.

i was being romantic. you know what i find romantic? a robust annual percentage yield that's what i find romantic. this is literally throwing your money away. i think it's over there. that way? yeah, a little further up. what year was that quarter? what year is that one? '98 that's the one. you got it! nothing stops us from doing right by our customers. ally. do it right. let's get out of that water.

welcome back to "squawk on

the street." i'm morgan brennan. aerospace and defense stocks soaring again today. the ita aerospace etf is up after defense was big in trump's speech last night. >> i am sending congress a budget that rebuilds the military, eliminates the defense sequester, and calls for one of the largest increases in national defense spending in american history. >> the administration is asking for $54 billion hike for next year, above and beyond the spending caps, also another $30 billion for this year. now, companies that could benefit -- boeing, whose f/a-18 superhornet has been in consideration for a big order, according to trump, just recently. also, warship builders huntington ingalls and general dynamics with an expected build-out of the fleet and more armored vehicles as well as antidefense and armor systems from raytheon and lockheed

martin. speaking of lockheed, the president praising the "fantastic fa-35" last night, touting the savings he helped bring about for those fighter jets. expect that pattern, top-line spending growth but a focus on costs. with that, carl quintanilla and "squawk alley." >> morgan, thanks so much. we are getting a halt on shares of mcdonald's for news pending. it's the company's analyst day today. as soon as we get news on that or a resumption of trade, we'll get that to you. meantime, it is 8:00 a.m. at snap headquarters in venice, california. it's 11:00 a.m. on wall street, and "squawk alley" is live. ♪ ♪

good morning. welcome to "squawk alley." joining me at post 9, sara eisen, mike santoli, jon fortt once again live at the mobile world congress in barcelona. we'll get to jon in a bit. the dow crossing 21k for the first time ever, the nasdaq and s&p trading in record territory on the heels of the president's speech last night in which he struck a new tone in that address to a joint session of congress, laying out his administration's vision for immigration, trade, infrastructure, and taxes. >> my economic team is developing historic tax reform that will reduce the tax rate on our companies so they can compete and thrive anywhere and with anyone. it will be a big, big cut. at the same time, we will provide massive tax relief for the middle class. we must create a level playing field for american companies and our workers.