thanks everybody. big show. big jobs number. make sure you join us on monday. "squawk on the street" begins right now. ♪ good friday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. 235,000 is the jobs number for february, solid data across the board for the first full month of the trump white house. dow futures up over 100. we're going to cover this from top to bottom including a live interview with gary cohn. europe is higher, rates here initially slid on the jobs number but now firmly back to 2.6. roadmap begins with the first jobs number of the trump presidency, strong, futures

higher. >> plus, we're going to have more opposition it appears to the border tax. the ceo of jc penney says it makes profitability virtually impossible. >> the corporate tax myth, a new report showing many of the american -- largest american companies pay no taxes at all. within that headline number of course the better than expected jobs report shows private sector payrolls up by 227, construction up 58,000, that's the most in nearly a decade. average hourly earnings up, numbers coming ahead of next week's fed meeting in which policymakers are expected to raise rates. that construction number driven perhaps by trump rhetoric or policy. perhaps by a warm weather in february and very little snow across the country. >> well, i've got to tell you, i always like to look at where the jobs are created. and i've been waiting for construction. i love construction jobs because they're such a great ripple effect. construction punches way above its weight in the u.s. economy and increase by 58,000. i also like to see manufacturing up 28,000. and then mining has been such a

drag. now, that is not because the epa pruitt just got approved, but i do think the makeup of the jobs is such there will be more jobs coming. because these are jobs that get other jobs. that's not the same with health care. >> labor force back to 63. the highest since march of last year. basically matches a -- the highs of the crisis. meaning maybe there's a little more slack than we thought. >> yeah, i mean, i think people coming back to the labor force is really important because we've been absent. i think that is part of the animal spirits. now, look, watching this atlanta fed, they keep cutting what they think is the gdp. i'm not buying that. i think gdp's going to hold up well. when i look at these numbers it makes me think that there are people taking loans and getting things done. now, you think, wait a second, isn't that too soon since november? not really. in the process you get a loan, if you have the permits, maybe start getting something done, maybe start doing some hiring, but the weather does matter. and i say that because southwest air one of my absolute favorites

just came out with some revenue numbers that were weak and they blamed the rainstorms in california. so let's just say, let's just pause it the idea perhaps this is an even better number given the fact that southern half of one-fifth of the country, california, was kind of shut down by rain. >> some numbers to go over here thanks to peter boockvar who's helpful when he puts all this together. 199,000 private sector job additions averaged over the last three months, versus 189,000 over the past six months and 180,000 over the past 12. so we had picked up over the last three months. but to put it in perspective, in 2015 private sector job adds 213,000 and in 2014 239,000. this may be one reason why we're not seeing bond yields skyrocket this morning. >> because it's not that it's additive but not so much you should be freaking out. >> right. >> the take was -- the bond market was perhaps fearing the worst of the best. >> and then look, i always feel

so -- i'm always feeling a little bit sociologically mixed by saw only up six cents for the hourly rate, then think the american worker, six cents and then we got this about how rich people pay taxes, it's just two countries. >> yeah. >> you did have an increase in 25 to 54-year-old employment which people have been looking for, fairly significant one. >> nice. >> which is important in terms of the makeup of the labor force. >> u-6 matches post crisis low. people are tossing around three-month charts of aggregate hours worked coming back to levels that would take you back to 13, 12, that would be good. >> look, the economy is better. and we're seeing actual -- i interview a lot of ceos for "mad money." always like to talk about the other shows that i'm on. i mean, there isn't one that doesn't feel like things are better. there isn't a single one. now, i have united technologies today. i really want to hear what they think about what greg hayes has

to say. i've seen greg hayes be kind of a straight shooter over time as a ceo. i don't know if you feel like that. >> yes, i do. >> but i would like to know what he thinks because i'm seeing on a smaller level lots of people who are involved in distribution. lots of people involved in well built important companies ring the bell, food machinery, whatever, they're seeing good numbers. they're seeing some good numbers. now, retail is horrendous. i mean, i can't believe that retail can't pull down a country there's so many jobs being lost in retail. it's frightening. it's frightening. it's 10% decline in mall traffic. >> when you say that, what are you thinking about? some days we go on and i'm then left saying, wait a second, jim, the mall's dead but children's place is doing all right. the mall's dead but e.l.f. is doing all right, it doesn't appear to be bleak across the board. >> let's take that. what is children's place doing

to increase profits, close 200 stores. foot locker, close 90 stores plan for profitability. when you see macy's trying to improve profitability closing 68 stores, penny, there they go, they got improve profitability, 140 stores. cigna yesterday actually good number caused a big short squeeze, 165 mall based stores, limited 250 stores, wet seal 171 stores. i had columbia sportswear on last night they're doing well despite rei. i'm sorry -- you look at these and say good guys are closing stores, bad guys are closing stores, look at those malls, the mall reached yesterday they were in a minicrash. >> those were really interesting numbers. i'm glad you put those together. now, the omnichannel of course is making up for that, right? >> oh, thank you. you're playing my game here, man. >> recode today, amazon registered more apparel sales than any retailer in the u.s.

for millennials. >> well, it's funny because i was going to go back to the comments by richard hain at urban outfitters. remember we're six times the number of square footage in europe and japan. david, here's where the rubber hits the road. last night ulta reported gross margin number that was down ten ticks. okay. why? because their online is doing so well. richard from urban out fitters gave an incredible treatise about how online is killing offline. their own online, not just amazon. he is saying, look out, it's not additive, it's negative. so people are realizing, omni channel, the great omni channel, is killing them. name three retailers that did really good this quarter. name me three. >> children's place. >> well, there were three that did excellent. >> okay. >> good relative to what? >> did very well. >> t.j. -- not a mall.

tjx according to "new york post" whole new leaf here -- >> home depot. >> well, okay, apparel. >> so happy birthday. anyway, listen to me, tjx, burlington and ross stores all did well. what do they not have? omni channel. they're not willing to cannibalize. omni channel, take this down, david. the omni channel is the donner party of retail. >> essentially eating your own foot. >> they left four weeks too late, got 23 feet of snow and you know what happened there? >> i do, you mention it so often i had to find out. >> brains and -- >> couldn't eat your own. >> no one ever ate their own family. >> thanks for sharing that again. i appreciate that. >> i went down to where donner party happened. >> meeting resistance from one

of the u.s. biggest trade partners, canadian prime minister trudeau expressing concern that such a tax would hurt both countries' economies. he delivered keynote at cera week last night in houston. >> i think one of the things recognizing of course how much the canadian economy depends on close collaboration and integration with the american economy, anything that creates impediments at the border, extra tariffs or new taxes is something we're concerned with. >> at the same time jc penney's ellison talked to courtney reagan about whether or not he's looked at financial models that would assess the damage to retailers from border adjustment. take a listen. >> it takes our tax structure as an example from roughly a 34% corporate tax to over 170%. so that gives you an idea of the financial impact to a company like jc penney. and that's very consistent with other companies, companies like

best buy, target, kroger, walmart, i mean, you name it, i mean, we're all in the same precarious position because we don't have manufacturing capacity that exists in the united states. >> does that mean there's no chance for profit? >> it will be very difficult. very difficult. in the short run virtually impossible. >> fabulous interview by courtney. fabulous interview. and i will just say unlike the other retailers that he mentioned their balance sheet is not going to be able to sustain this decline. >> you know, tepper made this point the other day on "squawk box" though, border adjustment tax gets phased in over a number of years, the dollar perhaps does react to a certain extent. it's not all completely clear, even though you get this enormous pushback from retailers that profitability is going to be something they can simply not get to. they're having a hard enough time as it is to your earlier point, jim. >> right. look, one of the guys i

absolutely -- i have a lot of ceos i just really love, but i had this guy, tim boyle from columbia sportswear, i happen to love their clothes, 49th largest taxpayer in this country by the way. and they were saying, listen, you know, if you're looking at this border tax from the u.s. point of view, you're really forgetting what happens after we put it through. because they do a huge amount of business in europe. and he said you think they're just going to say, hey, that's okay, u.s., fine. no. they're going to do another retaliation. retaliation. he's talking about tariffs. he's talking about 1930-like tariff wars. we've got to be careful. >> we do. though i'm still of the belief we're not going to end up with a border adjustment tax as part of tax reform, though we will have retaliatory tariffs from the president to a certain extent. >> that's actually a little more logical, i think. >> you do? >> well, look, i think president obama put through a -- i know no

one even remembers that guy, but president obama put through very tough tariffs on china. >> yes. >> and south korea. on steel. and what saved the american steel industry? it was those tariffs because you could see where a.k. steel, you could see what happened at letter x. i'm not saying that president obama was trying to make america great again. that's a trademark. that's like greatest of all time. muhammad ali was like a trademark. but tariffs can work. tariffs can work. ak steel's higher -- you know, they're not going to lay off people en masse. >> especially if you're serious about shortening value chains, which i don't think there's any doubt the white house is quite serious about that. >> yeah. i want to hear from gary. i mean, you know, who -- what jim cramer w joe kernen was saying, one of the things i would ask, gary -- call, gary, is that good or bad? >> oh, we'll ask him, we certainly know that. whether or not we'll get a definitive answer i think is much more of a larger question.

because it's not clear that the administration -- the administration has yet to coalesce behind a point, a specific point of view on a border tax, right? >> but when you listen to target -- look, ellison is a terrific guy. he's trying to save jc penney. they help employ a huge number, huge, tens of thousands of people. you do not -- you may have a border tax and that may actually raise some revenue, and then you lose tens of thousands of jobs at jc penney, are you kidding? where are those people going to get re-hired? coal mines? checkers? we're getting rid of checkers. have you seen what this does to the checkers? 3 million people are going to become, what, sales consultants? >> you're talking tens of millions of people in retail. >> that's right. let's not forget those are jobs. they're not just money coming in. you can't find jobs for those jc penney people very easily. we went to work at jc penney after fulfilling lives. >> i hear you. well, february payrolls up 235,000, jim. >> they can switch to manufacturing, those people,

yeah, fine. >> when we come back we're going to talk about that new study jim mentions that claims that 35% corporate tax rate is a myth. plus white house reaction to the jobs number. we will talk to gary cohn, director of the president's economic council, take another look at the premarket. we are halfway through the president's first hundred days in office. more "squawk on the street" in a minute. hey nicole. hey! i just wanted to thank your support team for walking me through my first options trade. we only do it for everyone gary. well, i feel pretty smart. well, we're all about educating people on options strategies. well, don't worry, i won't let this accomplishment go to my head. i'm still the same old gary. wait, you forgot your french dictionary. oh, mucho gracias. get help on options trading with thinkorswim, only at td ameritrade. duexperience our mostand perforelevated suvs ever. including the lx, gx, rx and nx.

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the 35% corporate tax rate is a myth for many profitable fortunate 500 companies according to a new study. it shows 258 fortune 500 companies were consistently profitable over an eight-year period and paid a 21.2% effective tax rate. study also found 100 companies enjoyed at least one year in which their federal income tax was zero or less. 18 companies including ge, priceline paid no income tax over the eight-year period and collectively the 258 companies enjoyed almost half a trillion dollars in tax breaks over the last eight years. not sure this is entirely breaking new ground. >> no, and remember there's lots of companies that weren't just took some losses, didn't necessarily make that much money. to me a much more valuable study is what happened say last year when the economy started getting better. >> right. although they did make the point that those were profitable

companies. >> right. >> and i think the debate we're going to be having on corporate tax reform, these are salient points that are worth paying attention to. >> no doubt. >> not to mention and this has already been done by many people trying to figure out the potential breaks that are going to come from tax reform, they're already looking at the effective tax rate for many of these corporations and seeing whether in fact they would benefit from let's call it the overall package of tax reform where you get rate down to 20%. and many of them won't. that's what's interesting. >> right. >> and yet you can imagine why we need corporate tax reform because the territorial system and elimination of so many of the potential games that need to be played by these corporations and i say games, they're legal, moving ip, moving so many other things in terms of what they do to avoid u.s. taxes would be potentially done away with. >> general electric in a statement said the report -- in comment said the report is deeply flawed and misleading but brings us back to the caterpillar news this week in

the times. >> then again priceline, what, 75% of their business is from overseas. duke energy, well you know what, a lot of the utility companies have very complicated cost structures that make it so they would not necessarily be large taxpayers. and no one ever expected them to be as regulated utilities. so let's take it with a bit of a grain of salt. caterpillar i am all over. i'm spending so much time on that. it's very difficult to figure out whether it's criminal, whether it's civil, how much of it was at stake, how much was it to get around the repatriation. very difficult. in the meantime of course business finally got good. just great that this happens right at this moment. >> typically you've had little patience for accounting questions. in this case it seems like you're willing to give them more benefit of the doubt. >> i would like to know whether the change in the ceo was related to the idea that they wanted to get ahead of what was obviously a long-term discussion over taxes to say here's some

good faith. i would hate that to be the case because i like doug a lot. but they made a change and it was never really explained, particularly because business was starting to get better. but a lot of times the government is a quid pro quo, like hey, maybe you make that change, maybe we go lighter. i don't know. impossible to find out. i am saying vault on that issue. >> right. of course under the tax reform plan there would be repatriation holiday, unclear what the grade would be there, but it would be lower than the 20% that has been discussed overall as the corporate tax rate. >> right. but cat was just starting to build a head of steam. >> yep. when we return we'll get cramer's mad dash, count down to the opening bell. don't forget white house economic advisor gary cohn with us in a few moments on the jobs number and the white house game plan for boosting jobs further. take another look at the premarket. a nice friday setup. more "squawk on the street" in a minute. with e*trade's powerful g tools, right at your fingertips, you have access to in-depth analysis, level 2 data,

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we got a mad dash. i always like to say on this friday. yes, we've come to the end of the week, important trading session ahead after we digest that jobs number. where are we headed? >> you know, here's a contrary, and i just love this call, this is a morgan stanley call right in the teeth of the mini crash of oil saying wait a second, we expect oil inventories to burn off. inventories worse since 1982, they think that's important. and they think oil will go to $62.50 by year end 2017. and they're making a very strong case to own the big oils. i've got to tell you, often, david, we find research is trend following. so we kind of feel like, well, thank you for that, what does that do? this kind of reasoning i think is terrific because what it says is don't give up the ship. just when everyone -- a lot of this is because the speculators,

this was the largest number of speculators that we have seen in the commodity futures trading commission, and that precipitated this because they were all betting that opec was going to shut down. a lot of the people felt that because the aramco deal, people feel like the saudis are going to keep oil up. >> we heard from the saudi finance minister earlier this week, didn't we? >> yeah, it was all kind of bullish down there. >> or -- >> yes, at the cera festival, no, that's our person, sara. >> you tend to think this is a decent call? >> i think oil goes to $47, i think it can't get through 55. our companies sell so much oil in the futures market it stalls and then gets to 45 and we shut the spigot. i don't think you can get -- i just like the call. 45, 55. >> porpt important to keep an e

oil. let's see what we do today, by the way in addition to watching the market of course we're going to have white house economic advisor gary cohn joining us to talk about the jobs report. keep it here.

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you're watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell in just over two minutes on this jobs friday. if you've missed it 235,000 is the number above the expectation of about 200. a lot of interesting bond market reaction here, jim. >> geez. >> they're being very patient about whether or not we're in the throes of some incredible wage inflation. >> what does it take to move the ten-year? i mean, the ten-year i think should be at 3. again, rick just talking earlier about, you know, we haven't seen three in a long time. why isn't that at three? i mean, maybe because if you're anyone in europe 770 million people in the euro you don't want to be in their bonds. which make no sense whatsoever. >> right. building on a lot of maturities. >> you want to be in italian bonds where there's like a cash economy? >> no, i don't. >> the third largest bond market

in the world. >> no. >> sell, sell, sell, buy, buy, buy. >> bill gross said 2.6 is a more important number than dow 20k, dollar/euro parody, oil at 60. do you think it's a true battleground or not? >> that's a nice showman view. i think that those are we're given hyperbole, i think that's a little hyperbolic. i think three is where i would say, okay, now something's going to happen. provided that the 30-year is at 3.10 at the time, where i see it now. see it now. what a great show that was. >> 3.16 on the 30-year, almost 3.17. >> i wonder what gary cohn would think of that. >> we're going to find out in a few moments. a lot to talk about. hopefully we can pin him down on some of the views attributed to him via anonymous sources. >> right. we know the president has tweeted that forget all those stories it's all dynamite down

there. >> meanwhile watching crude as well as you guys covered a few moments ago still below 50. the energy sector the only s&p sector negative since election day. >> i was working on my show and you tweeted that and i retweeted that, i have to tell you that was electric. people were like furious, don't you know it wasn't the president's fault. i mean oil got -- whatever. but it was really incredible how much people were just glued to that statistic that you tweeted. glued. >> there's the bell and the s&p. at the big board today it's welbilt, supplier of commercial food service equipment celebrating rebranding. >> yes, did you know at one point they were the largest employer in new york city? >> wow. >> yes. largest employer. because -- yes, i'm not kidding. i just met with mr. hirsch who was the founder of the original. >> how so? >> they just had a lot of jobs that built a lot of equipment. they make a lot of food

equipment. they make, for a restaurant they make garland, they make fryers, refrigerators, you have a good restaurant, you have a franchise restaurant, you are using welbilt, all of the great restaurants use welbilt. i know because we're like trying to save a little money. >> good breadth at the open there. at the nasdaq it's presidio, an i.t. solutions provider. the leaders, floor, vol can. >> wow. that's a nice comeback. it's good to see a couple of the technology stocks that have been doggie of late, nvidia and apple doing a bit better. by the way, facebook message, another thing they're doing against snap. i mean, boy, facebook is just decided we're going to eviscerate snap. they're not buying them at $14. they're eviscerating snap. eviscerating. i think they sit around, i think zuckerberg sits around said, all right, i've had enough of that

snap. get rid of that snap. >> that's funny, jay yaro runs our digital business tweeted yesterday zuckerberg he thinks takes a screenshot of snap and hands to his engineers and says make this. >> absolutely. oh, i think it's worse than that, take a screen shot, destroy this. i mean, i think he is a very competitive fella, you know. >> they typically are. >> yeah. >> yeah, they're competitive. >> yes. >> i want this put out of business. by the way, i was looking at some snap ads. i'm not clicking. no. sometimes they fool you. i mean there's like an espn, there's like a kong ad for the movie. >> part of it is they pressure the advertisers to be creative in the content so that it's part of the experience. >> true. and espn, which by the way is the greatest and is on snap, is the greatest. >> does iger have a shock button on you now? >> their coverage of free agency before the free agents are even free agents, shefter has it.

>> later this morning we'll talk to jim stewart. his times story today looking at the probabilities of howard schultz, iger -- >> was that something? benioff. he floated benioff. benioff was floating in that piece. holy cow. >> what about him? >> he was floated in the -- what'd he say the business -- that was a fun piece by jim -- by james b. >> it was. we talked a lot about schultz in the past. we asked him many times. >> i'd like to ask about same store sales. >> you would. you were not particularly pleased with the same store sales. >> no, this current quarter i'm concerned about the same store because of the mosh pit problem, the guys cutting in front of you because of the mobile pay. >> jim harley's having a nice morning. baird is out saying q1 sales are tracking above. >> that's very good because they were tracking below expectations not that long ago. so that's positive. we have a nice market here. i think people feel it's one of those goldilocks numbers. >> right. we were talking about snap just a moment ago.

did want to share some research from aegis, cited this data from app tracker earlier in the week and now following up saying they sliced through the data by developed country to see where the strengths and weaknesses are for snap and the takeaway daily average user growth weak in most major developed countries including u.s., australia, south korea, russian, germany, russia and germany the only two where it appears strong. >> interesting. >> but those are shares with us now a little over a week. >> yep. >> actually showing some strength. >> can i tell you i'm a little relieved about something? ulta was down 15 points earlier. and ulta's now back up, as it should be with that 16% comp store sales and the addition of mack. they now have mack cosmetics at ulta. >> they do? >> yeah, that's estee lauder. >> let's bring in gary cohn in on the news of the day from the white house. labor department says 235,000 jobs is the number for february. gary, good to have you back on the show.

good morning. >> good morning, carl. thanks for having me. >> jim just used the goldilocks term. first time i've heard that today. you going to go along with that? >> sure, why not? i think it was a perfect number. right exactly where it needed to be. our jobs plan and our jobs creation and bringing jobs back to america is going exactly the way we'd like it to go. when i was on a month ago we talked about bringing jobs back. i think this number reaffirms everything that we're trying to do. >> how much of it is potus and white house? how much of it would you legitimately say is minimal snowfall, warm weather, a good february? >> look, there's clearly a good february as part of the number. i'm not going to deny that, but on the other hand when you look at what we've been doing here at the white house and all of the ceos that we've brought in whether it be exxon or sprint or intel, they've promised enormous amount of jobs and job creation in the united states. those hirings have not been done yet. those are future hirings. so we're still living on the

hirings from the normalized economic growth that's built into the system here. so when you look at what's ahead of us and what's built in the system we have a huge backlog of hiring that we already know about in the normal run rate of the economy. so we're very excited about what's ahead of us. >> all right, gary, jim. we've got this debt ceiling i know we have got always concerns about debt. always worried about the border tax. how about this? i'll let you take credit if you go with it. we need a make america great again 50-year savings bond, $1 trillion to fix our infrastructure. gary, why shouldn't we do that? you know bonds, come on, 3.16 with the ten, the world is starved for 50-year u.s. government paper backed by the full faith and credit. could you please give us that savings bond? >> jim, we'll work together on that one, how's that? i don't need credit. we can work together on it. i'm happy to be your partner in this one, but we agree with you. we had a large group in here two days ago into the white house talking about infrastructure, talking about the enormous needs. we have underinvested in our

infrastructure for the last 50 or 60 years in the united states. we have enormous opportunity right now, and jim, as you point out, we can issue enormous amount of debt in the 50-year and 100-year segment to finance debt. i'm not sure how much debt we need to finance. there's an enormous amount of capital in the system looking for long duration assets in the united states. we have enormous amount of long duration assets with real revenue attached to them in the infrastructure world. we are going to go rebuild those assets, we're going to do it in public-private partnerships, we're going to do as much as we can in a variety of different financing mechanisms. it's not all going on the government's balance sheet. in fact, we're going to do it as efficiently as we possibly can without using the government's balance sheet. >> gary, another important initiative of course undertaken by the administration is tax reform. last time you were on i asked you about it, you didn't really give an answer in terms of where the administration stands on a border adjustment tax, which is such a key part of it.

but i'll ask again. >> okay. >> is the administration in favor of or against a border adjustment tax? >> well, i'm going to give you the same answer i gave you a month ago. so if you want me to do that, we'll go ahead and do that. we're exploring all opportunities in taxes. we want to protect american jobs. we really do. as we started out we're talking about jobs today, it's jobs friday. we want to bring jobs back to america. we want to bring manufacturing jobs back to america. so anything we can do to incentivize manufacturers to come back to america, that's important to us. that said, taxes is just one of the tools we have at our disposal. right now i think you all know we're actively involved in health care and health care reform. when we get done with health care reform we are going to get to taxes. we are actively working on a variety of different tax alternatives. and we will present a tax plan when we're done with health care. >> so we're going to get an answer from you guys at some point, i would assume, in terms of the specifics on that border

adjustment tax and/or what you're going to do to replace it if you don't like it to keep the rate low but not bust the deficit? or do you not care? i mean, is that a view of the administration though, gary, that maybe forget about the deficit, let's just get tax reform through regardless of the revenue raisers that need to be a part of it? >> no, no, we do care. we do care. we care about the deficit. we care about revenue, we care about what's going on. we're going to most likely absolutely do taxes under reconciliation. we're going to have to be deficit neutral over a ten-year period. yes, we will be able to use dynamic scoring. and we think we've got some opportunities to do that and do it in a very constructive way for u.s. consumers, for u.s. industry, for everyone as a whole. we are working on a bunch of really interesting ideas to reform the tax system in the united states. >> gary, put your old goldman sachs on. >> jim, i'm not -- jim, i'm not allowed to do that. >> forget goldman. forget goldman.

whatever. that was a great place to work for a couple of weeks. this trillion -- this stock market $2 trillion in wealth, how important is the stock market to this white house? >> look, the stock market is important to us, but it's just one of the barometers that we're looking at. we look at the stock market every day, but we look at the employment data, we're looking at gdp data, we're looking and talking to ceos every day about what they're seeing in their business, about what they're hiring needs are, what their opportunities are, where they see opportunities for us in america. so, look, the stock market is a barometer. the nice thing about the stock market it's a fairly realtime barometer for us, so we do look at it. >> gary, speaking of the data, we've had the president during the campaign and before cast dispersions on the veracity, the legitimacy of some data, including bls. does he believe it now? >> look, we look at all data. we are very data driven.

in the nec where i work and where i'm the director my team looks at enormous amount of data. we're evaluating what's going on in the economy all the time. we're trying to drive the administration to the right place and make the right decisions. >> gary, real quickly, it's a jobs day, you mentioned right at the top the president's policies helping to create jobs in the future. but some would say, you know what, the promises that have been made by corporations, many of them were in the planning stages already. and really when you add the numbers up, they don't even add up to what we saw this month in terms of job growth, or last month, how do you respond to those who say it's still really not something we can necessarily see as a long term answer in terms of job growth? >> well, i would completely disagree with that. we've had many ceos and i've been involved in these meetings, i've been intimately involved in these meetings, many ceos have walked in and specifically said to us and said to the president that without you being in the white house and without your policies and without your reform agenda, without your tax agenda,

we would not be building these facilities here in the united states. so i'd start with that. number two, it's not just the jobs they're committing to. remember, for every job you bring in one of these specific facilities there's all type of ancillary jobs. there's suppliers for these facilities. there's services for these facilities. there's an enormous trickle down effect in job creation when you bring back these big manufacturing facilities to the united states. so we're very excited not just about the facilities but all of the ancillary jobs that are created. >> gary, we know you've got to run. we look forward to next month. good to see you again. >> thank you very much. and, jim, i can't wait to share credit with you on the infrastructure. >> fair enough. cramer-cohn -- no, cohn-cramer. >> whatever you want, jim. >> gary cohn, national economic council at the white house. what did we make of some of his answers specifically regarding debt and border adjustment? >> look, i think this is really just still up for grabs.

i mean, i think they just keep speaking to ceos and keep speaking to ceos. and i don't think they have the answer yet because i think they're trying to be really considerate about it. >> i do think an important point he made in terms of using dynamic scoring perhaps but making sure it's deficit neutral using reconciliation in terms of tax reform, that's an important point because there are some who believe maybe the administration will simply be willing to say no to a border adjustment tax and the revenue that would be raised by it and simply willing to accept a higher deficit with lower rates that you'd be getting under corporate tax reform. he seemed to say, no, we're focused in part on making sure it's deficit neutral. >> i do like the fact he said, listen, we can do some off balance 100 and 50-year bonds, the world's starved for them. don't look at me like that. come on -- >> the 30-year is a pretty decent maturity. >> the world wants 50 to 100. the world wants it. >> will take away from the 30, won't it? >> the world wants it. he could do it. he could sell it right now.

>> 100-year bond? >> well, 50 easy. 50-year treasury, a savings bond for your kids, you would buy them right now if they had a savings bond, and gary knows that. gary knows that better than anybody in this country. >> good to have him. on all that we'd love to get rick santelli's take as we get back to the bond pits at the cme. good morning, rick. >> good morning, carl. you know, deficits are a weird thing. we can talk about them, we can static score, dynamic score, come up with different answers, cbo can give us numbers, they're nonpartisan, but garbage in, garbage out is also nonpartisan. i think what icahn's trade on is even before trump considered running before president the out years 2025, 2026 we have a real deficit problem. that doesn't include anything we may add to it. you know, i don't know, 50, 100 year bounds, they sound like a good idea. talk to friends with credit cards, you know, if your credit card company says i have a deal for you, real big deal, hey, i'll extend your payments out another 50 years and i'll cut

your monthly bill by 30%, is it really a great deal? i'm not sure. one thing i can tell you, it was a great deal for everybody who bought those auctions. you know, we've talked about it, no market's linear, so on the week, on the week ten-year as the crow fly up 11 on the date or down five, now it's 10.4, down four on the day, up ten on the week. why is that significant? because as important some of these levels are, jim, you get once again the award of the day, you were talking about anybody want to buy italian bonds? listen, i like italian pastries and pasta, but i'm not sure i'd buy italian bonds. that's part of it along with the auction. there's a whole other side to the short trade that's a mitigateling factor. quickly, intraday two down, gives you an idea of how things have reversed, same thing is true for tens, but tens are fascinating. there's your intraday.

let's go to september of '14, and also basically mid december of 2016. the one close over 3% basically since the first half of 2011 occurred on new year's eve of 2013. you see that one blip right there. open the chart back all the way to when we really actually spent some time over 3% and you'll see it first half of 2011. dollar index, does technical analysis get any cleaner than this? this thing keeps bouncing away from it's 102.20 close for 2016. did it again. does that mean it can't pop through it? of course not, but it also means that there are a lot of mitigating factors here that even though the obvious rates going higher, you know, as traders down here know if you really want to make a wallet fat, it's the timing that gets you rich. david, jim, carl, back to you. >> all right, rick, thank you very much. rick santelli, what a block. when we come back our pulitzer prize winner jim stewart looking ahead to 2020 and which ceos

might run for president. dow up 43 points to start the morning. back in a minute.

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markets off the initial high but still pretty good breadth today. a lot of tech leading, but you just mentioned energy. >> yeah, energy just can't hold the bid because there is -- the inventories have to be worked off which is why i thought the morgan stanley comment about they will be coming down was so important. it is amazing that tech is strong even though fin sar is so weak which is a key part of the optical chain. it shows you people are containing the negative tiity t that. have you been watching j&j go up endlessly? celgene? >> yes. mary is one of the finest executives in the country, doesn't get enough credit, they have figured out how to have a

brick and mortar store that works and they deserve more talk. >> just talked to gary cohn national economic council, if you missed it a moment ago, take a listen. >> we have underinvested in our infrastructure for the last 50 or 60 years in the united states. we have enormous opportunity right now and, jim, as you point out, we can issue enormous amount of debt in the 50-year and 100-year segment to finance debt. i'm not even sure how much debt we need to finance. there's enormous amount of capital in the system looking for long duration assets in the united states. we have enormous amount of long duration assets with real revenue attached to them in the infrastructure world. we are going to go rebuild those assets, we're going to do it in public-private partnerships. we're going to do as much as we can in a variety of different financing mechanisms. it's not all going on the government's balance sheet. in fact, we're going to do it as efficiently as we possibly can without using the government's balance sheet. >> wow. >> right. >> i just thought that was real big news.

i know what people have to recognize is these guys were not born yesterday. they are very clever. >> he's talking about capital being out there that might be willing to invest in a bridge, for example, you put the toll up, know it's going to last for 40 or 50 years, obviously there's maintenance or longer so it becomes sort of its own long dated sort of bond in a way. >> remember we used to -- >> yet it is owned by a private/public partnership. >> i'm fine with that. i just want some bridges that don't fall. >> some democrats are not fine with the piece with which financiers would like to get their -- >> i would like to get to point a from point b without breaking my axle. >> lefrak said it's a lot more than roads, it's water supply. >> yes, it is. we're pathetic in this country. we all know it. >> $4 trillion? >> yep. >> pathetic. >> stop trading with jim in a moment. don't go away.

time for cramer and stop trading. >> i was worried about how estee lauder would react to putting mack into ulta. huh-uh, people love it. the stock is screaming. the ceo of estee lauder, i know they've had some problems in

hong kong, but i bet you he believes in the selfie generation. i bet he believes when you walk out you have to have makeup. that's why mack going into ulta is fabulous for them. and i think that that stock is now going to have a considered move in not going to stop here. get to know his name, he's a brilliant executive. >> i have met him. >> you met fabrisio? >> i have met him. >> he's my guy. >> is he? you're constantly doing that. >> it's not a zero sum. >> greg hayes is my guy. greg hayes -- >> no he's not. >> yes, he is, he's on my show tonight, united technologies. >> so what? >> he's my guy. >> there's greg hayes right there tonight, right? >> yes, my guy. >> along with lending tree. >> sorry, david. >> all right. we'll see. we'll see. not backing off. >> thank you, and happy birthday to david who knows him only in passing.

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good friday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen, david faber at the new york stock exchange. markets on this jobs friday looking okay. pretty broad buying in place as we got close to an all-time high on the nasdaq. oil trying to recover getting closer to 50. >> our roadmap for the hour begins with stocks getting a boost after the u.s. added 235,000 jobs in february. was it a trump bump? and has the stage now been set for a rate hike next week? >> and the ceo president, why pulitzer prize winning columnist jim stewart says trump paved the way for a 2020 presidential race between executives. >> plus, a new study showing some of the largest u.s. companies are actually paying no taxes. we'll talk to the lead author behind that report. but first, let's get straight to our senior economics reporter steve liesman with more on what looked like a very healthy jobs report for the month of february, steve. >> yeah, give me 235 all day

long here, sara. it's a positive jobs report helped by some temporary factors like weather but still showing really solid underlying strength in payrolls and in the economy. here are the numbers everyone's talking about up 235, not a big revision in january up 9,000. the unemployment rate ticking down to 4.7 bank accou%. a big entrants into the work force helping the labor participation rate. average hourly wages kind of muted, 2.8 year over year. labor markets continue to point to improved economic momentum in 2017. we view risks surrounding the recovery as broadly balanced and see now substantive recession concerns. now let's look at where the jobs are or were in the february. construction and leisure hospitality, those two numbers will be helped by the better weather up 58,000 on construction. but manufacturing coming roaring back up 28,000, big number right there. health care a perennial winner 27,000. retail taking a dive after a good january number, but a lot of that was in the bricks and

mortar stores. you have to wonder what's going on there given some of the store closures that we've had. now take a look at what all this means for the fed. what we're looking at here, folks, is the january fed funds futures. what we're trying to gauge is whether or not a third hike is baked in. that would bring up to 137. so you can see the market is now more and more sure about a third rate hike for this year. and john from rbq writing about a second hike saying if this momentum is maintained we expect the fed to hike at the june meeting. with march just around the corner and baked in never too soon to start talking about june. >> steve, i'm wondering about the market reaction and bonds and the dollar. the dollar a bit weaker, some buying of bonds. was this just buy the rumor, sell the fat because both were coming from pretty strong places in that report. >> well, sara, i know you followed mario draghi's comments yesterday. that created a bump already in yields. we have this 2.61, 2.60 level as well as a rise in the two-year

as well which seemed to hit around 1.38 i think was the number that was there. look, i'm interested in this rise in -- 1.37. okay. i'm interested in this rise in bond markets, but what's happening in stocks look at the dow there up 71. the fact the stock markets are taking this really in stride and keening in on the higher growth prospects rather than the downside of higher rates is very interesting to me. it tells me that rates -- growth trumps rates every time. >> we will see. we'll see if there's a breaking point level on that. >> that's right. >> steve liesman, thank you. >> thanks. >> the director of the national economic council, gary cohn, joining us earlier with his reaction to the february jobs report. take a listen to cohn on whether the administration will ignore the deficit impact of tax reform. >> we care about the deficit. we care about revenue. we care about what's going on. we're going to most likely -- we're going to absolutely do taxes under reconciliation. we're going to have to be

deficit neutral over a ten-year period. yes, we will be able to use dynamic scoring. and we think we've got some opportunities to do that and do it in a very constructive way for u.s. consumers, for u.s. industry, for everyone as a whole. we are working on a bunch of really interesting ideas to reform the tax system in the united states. >> let's talk about all of this. for more we're joined by j.p. morgan chief global strategist david kelly and ds economics founder and ceo diane swonk. our jobs day regulars. welcome to you both. >> good to be here. >> so, david, let's just key off of what gary cohn said about the deficit. doesn't dynamic scoring mean that there's actually going to be a deficit? what's the significance of that? >> well, no, it doesn't. if you do dynamic scoring, honestly you can say if you make certain changes in the economy, even in the structure of taxes and that causes economic growth to accelerate, then you get some more revenue. but you have to be honest about it. i think if we look at cbo

numbers. if they do the dynamic scoring properly it's hard to get a big bump in economic growth from a revenue neutral approach. so we just have to see how it works. but i really like this commitment to deficit neutrality over ten years because this economy's at full employment. it's doing very well. but it doesn't need a lot of stimulus right now. frankly we can't afford a lot of stimulus right now given the debt. so i like the commitment to keeping deficit neutral over the next decade. >> diane, economists keep saying we're at full employment and then we get numbers like 235,000 jobs added during the month. so what does that tell us about how sustainable it is to get this kind of job creation? >> well, i think the more interesting issue is that we saw a lot of people join the labor force. we saw that other up tick in labor force participation which came almost entirely by people without a high school degree. these are some of the people that are the most marginalized and the fact the labor market hit this tipping point last year where we saw it move from easy

to tight and wages began to accelerate, now employers are having to sort of dig deeper into the barrel and look at workers if they have to invest more in as well to bring their skills up and in fact one of the gains we saw in employment was in private education which includes training by employers, which was very interesting to see that. that's something that's been absent much of the recovery even normal training programs were cut in the wake of the crisis not only are we seeing training programs come back, but we're now seeing employers willing to invest in employees that may not have all the hard and soft skills that they would like. that is the exact symptom of actually a tight instead of a loose labor market. >> speaking of which, david, i wonder the ten-year's action today is that a reflection of the fact that this number didn't come up at 300 plus? or is it more about labor force and the idea that maybe there are some more workers at the bottom of this bucket? >> well, i think there's still a lot of demand for fixed income securities worldwide. and i think that's keeping the treasury rates from backing up

more. but i do think the treasury rates will rise further. i mean, this i think means we're a go for liftoff on a fed rate hike next week. but honestly if we get these kinds of reports, this kind of economy, i believe the federal reserve will raise at every press conference meeting this year, unless we have some crisis. that would be four rate hikes, not the two the market is pricing in. if you did get four federal funds rate hikes this year, i think obviously treasuries ought to be somewhat higher yields than they are right now. >> are we seeing wage growth for that to happen, diane? >> yes, we are actually. we're at 2.8% on a year over year basis, that's within spitting distance of the fed's goal of 3% sustained wage growth. that will deliver some more inflation out there. this is what the fed cares about. this is despite the fact that growth in the first quarter looks like it's coming in less than 2%, which means weak productivity growth. but i think what we're seeing now is finally the fed has its goal is employment and stable prize e prices. we're getting both those goals and i think the risk of four rate hikes just went up quite

dramatically this year and it will be interesting to see that dot plot as they raise rates in march next week at their march meeting. i think you're going to see a couple people on the fomc or at least participants in the meeting that raise their outlook on rate hikes in 2017 as well. >> diane, you mentioned productivity growth still not really there. i mean, do you expect that we're going to see that given it's a key component of overall gdp growth? >> this is the huge uncertainty out there. i'm really worried about productivity growth. we do need so see some more investment. i think we'll see more this year. we've seen a lot of productivity growth on the shale oil fields. we need more broad based gains in investment and productivity growth. i think we'll see some rebound from what we've seen but to see the kinds of numbers to getted to administering's growth numbers you need to see the best productivity growth we've seen in the post world war ii period and that doesn't seem likely. >> it does bring up this idea, david, that yes we're seeing a spurt in hiring and big boost in confidence, but it's not really translating into that much of a boost for business spending or

consumer spending. why is that? >> well, yes, because i think on the consumer side we've had very good consumer spending numbers for a while here, so some pause is reasonable. but we don't have any pent up demand. we're at 17.5 million units in vehicle sales, that's above trend. it's an old expansion hard to get consumers really excited here. and on business spending businesses need to know that they have a market which we encourage them to invest in the united states. so if we had a lower dollar and greater emphasis on increasing exports in this country, that might lead to more investment spending but you need a huge amount of extra investment spending in order to bump the productivity number. >> absolutely. >> i share diane's worries about this. it will be very hard to get productivity high enough to m n meaningfully change this rate. >> thank you both for joining us on this jobs day. david kelly and diane swonk. when we come back, reaction on today's strong jobs number and the fed's next move with

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as the nation's first ceo president has donald trump paved the way for more korcorporate executives to seek higher

office. schultz of starbucks, iger disney, benioff at salesforce to name a few, while they've all denied it our next guest says that's common ahead of any campaign or primary season. joining us at post nine to talk about it is pulitzer prize winning "new york times" columnist jim stewart to have you. it's great to have you. what a great read. >> thank you. it was a lot of fun working on this. >> of the people that you talk about, which one interests you the most in terms of a probability? >> well, i think of the ones that i mentioned howard schultz is probably the farthest along. he's the ceo of starbucks. he's going to be easing out of that job in april but still staying involved in the company. and he came, people told me, quite close a year ago to throwing his hat in the ring. bob iger at disney has definitely had talks, but he's been willing to extend his contract. i don't think that's so likely. the others are a little more out there. but i do know from multiple conversations that a lot of ceos are beginning to talk about it and beginning to talk to some

key fundraisers to see would this be feasible. obviously they all have a lot of money themselves, which makes that easier. but you still need to attract financial support. >> you go into a pretty good discussion of the differences between operational prowess and campaign prowess, right? and media prowess. >> yes. >> and very few can replicate what trump has done across those. >> yeah, i think people underestimate trump to some extent that he spent decades cultivating the trump brand, the trump name. david gergen told me, we had a great conversation this week saying he is a performer first and foremost. and very few chief executives are performers. and you've got to get out there on the campaign trail, you have to, a, perform, you have to interact. i mean, you can quarrel with how trump deals with the press, but he deals with the press. he is not surrounded by layers of handlers which most ceos have been. >> so these are all obviously democratic potential candidates. >> obviously. >> i wonder if it's being driven by opposition to president trump

and his policies, or just the fact that looks like you don't need any experience in that corporate experience is as good as any. >> well, i think a lot of people started thinking about it when they realized that, oh, my gosh, we've got a president now with none of the traditional resume. there was a very funny interview with oprah on bloomberg tv where they say have you thought about running for president. because obviously you don't really need any political experience to know, wow, i hadn't really thought about that but it seems to be true. so, a, people are thinking along those lines that it's possible. and b, many of them are saying look, this guy isn't that great a manager. i'm a better administra adminis a better successful business person, why couldn't i do it? i could do a better job. i think that's kind of what's driving it. >> but few of them have to your point the long term recognition that trump has had as a result of of course being on "the apprentice" for example for all those years. >> yeah, i think they're underestimating that. i mean, the only one in this group that has that kind of recognition is oprah.

by the way, if oprah threw her hat in the ring, i mean wow. she has all the qualifications, i think, to win. does she want to do it? stu who had been advisor to mayor bloomberg kind of the prototype for the successful business intern but he was saying they typically underestimate the scrutiny and opposition research that gets done on him. he pointed out somebody will pore through every second of every television show oprah has ever done if she decides to run and dig up something controversial. >> didn't seem to stop trump. >> well, no. i mean, again, he had such a teflon brand that, you know, all this stuff kind of bounced off of him. maybe the same thing would happen with oprah, but i don't think you could say that about any of the others. >> did you see the weight watchers stock? >> well, presumably although again who knows, under the new standard, but presumably she would have to give up her job as a pitch woman for weight watchers if she went to the white house. >> we'll see.

precedents are being broken all the time. >> true. >> iger specifically having written a book on disney, would it surprise you? >> not really. although honestly i think iger would be more likely to run for -- >> mayor of new york city, how about that? >> mayor of new york city or governor of california. i think realistically the presidency is out of reach there. he's probably the least known there. and he didn't build the company, so he can't kind of run saying, oh, i'm the creator of disney the way howard schultz can say i created starbucks. i think his goals are maybe a little more modest. if he does stay at disney for several more years, he doesn't have to be in any rush. >> outliers, zuckerberg, who else? benioff actually spoke to you and said business is the place to effect change. >> yes, very cleverly didn't deny that he'd ever do it but he was saying, look, i'm making a big impact here. and he is. you know, that pledge 1% thing he has really gotten some traction. he has been outspoken on some political issues. so he's been quite effective from his platform as a ceo. it's like you don't have to be

the president to change the world. you know, some people say elon musk probably has had more impact. now, he's another occasionally you hear wishful thinking, you know, can we get him to, you know, step in. but he's not -- he wasn't born in america, so we have that. we'd have to revisit all of that. zuckerberg absolutely not. that all came from a thing about would he still have voting control if he did serve in government. that's not happening. and i think sheryl sandberg is mostly wishful thinking at this point although somewhere down the line i expect it's quite likely she might decide to run for office. >> what do you think it says culturally that we're in a mode where ceos are looked to as a well for candidates whereas in past generations it was really about military service for instance? >> yeah, and political service. i mean, this is the new world we're living in. i think people some day look back and say there was pretrump and there was post trump. and in the post trump world i can't imagine -- i mean i know four years ago i was not having this discussion with ceos. it was not, you know, open season and thinking anything is

possible politically. this has really opened up the world of possibility to other people, which by the way maybe that's not such a bad thing. and not just ceos, there are other successful people who may not have the traditional resume who could be president. i mean, the founding fathers most of them were farmers, i think, and you know they came in, they did it and went back to their work. maybe this whole idea of the career politician is something people are getting a little tired of. >> i would take it a step further, jim. ceos used to get bashed in washington. obviously the last administration came in during the financial crisis. and now they're parading into the white house nearly every single day. and you have vice president pence and president trump saying it's an honor to be, you know, on tape with these great ceos. it feels like business is sexy again. >> yeah, well, that is a sea change. and i think that's actually very healthy. i think it's great that business people and other people too are being consulted and brought into the national conversation. it is, you know, still not without controversy, you know, iger got lots of questions at the shareholder meeting why are you on this council.

you know, travis kalanick had to quit, you know, protest tim cook wouldn't even go on. so are these photo opportunities? but i think in generally speaking it's healthy and has created a different climate and attitude toward top business executives. >> it's sara's must-read of the day, you know it? >> yes, i hope you were watching at 5:35, our morning must-reads. david was. >> always. every morning at 5:30. >> it starts at 5:00. >> oh, that's right. >> coming up, a major retail ceo speaking out on the possible border adjustment tax. some specifics here, why he says it makes short-term profitability virtually impossible. and take a look at stocks at this hour. we've got a broad market rally here. the s&p 500's up half a percent, still we are looking at the first down week for stocks in the last seven. much more "squawk on the street." stay with us.

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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 we've got some headlines crossing right now from a meeting between commerce secretary wilbur ross and mexico's economic minister on trade. ylam mui has more for us on

commerce. >> hi, sara. secretary ross provided some new details on the timeframe for renegotiating nafta this morning. take a listen to what he said. >> there's a very specific set of proscesses required to get through the trade promotion act, the so-called fast track for negotiations. we are now in the very early stages of that. the next stage will be hopefully some time in the next couple of weeks. we'll be issuing the 90-day letter. and that's what triggers the beginnings of the formal process itself. >> mexico's economic minister said his country would be ready to start negotiations by the end of may. so it looks like these talks could start some time this year. i asked secretary ross how long it might take to get through those negotiations. he told me that this is a very complicated deal, it needs to be updated and it could likely be

expanded to include sectors of the economy that didn't exist back when nafta was drafted in the 1990s. i of course also had to ask him about the border adjustment tax and what it would take for him to make up his mind on which way to go, whether to support it or not. and he said that the proposal currently lacks a lot of details and suggested he might need to see actual legislative text from the house before he makes up his mind. but more broadly speaking the appearance with mexico's economic minister was really a show of cooperation on an issue over sugar imports from mexico that has been a long running dispute between the two countries. they wanted to show that they could work together as they began to look forward to these major trade negotiations over nafta going forward. back to you, sara. >> all right, thank you, ylan, i'll take it. ylan mui in washington, d.c. a prominent retail ceo voicing his concern over a possibility of a border tax to our courtney reagan. courtney joins us now with more

from that interview. >> good morning, david. marvin ellison was among the ceos that metd with president trump and lawmakers last week in washington to discuss tax reform, specifically of the impact of the house proposed border adjustment tax. the retail has run financial models and ellison says the tax rate for jc penney swells exponentially. take a listen. >> it takes our tax structure for example from roughly a 34% corporate tax to over 170%. so that gives you an idea of the financial impact to a company like jc penney. and that's very consistent with other companies, companies like best buy, target, kroger, walmart. i mean, you name it, we're all in the same precarious position because we don't have manufacturing capacity that exists in the united states. >> does that mean there's no chance for profit? >> it would be very difficult. very difficult. in the short run virtually impossible. >> that's a blow for a company that posted its first positive

net income in six years. ellison says while jc penney has a higher percentage of private label clothing brands than competitors do, which means it's more in control of those costs, it will still cause it to rise -- to raise those prices. he says he can't take out 20% of cost from production without cheapening the quality. and he won't sell goods with a lowered quality to his shoppers. ellison reiterated to me it would take him about a decade to get the level of manufacturing capacity in the u.s. to serve the needs of his shoppers. and if that's even feasible, it's nearly impossible to know what that would cost, carl. >> really important interview. good work, courtney. courtney reagan on jc penney. when we come back, goldman's chief economist jan hatzius will join us, his take on the jobs number and a lot more. "squawk on the street" in a minute. online u.s. equity trades...

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good morning everyone. i'm sue herera and here is your cnbc news update at this hour. russian president vladimir putin hosting turkish president erdogan in moscow for talks on syria. putin hailing the close interaction between the two nations' military forces in that war torn country. south korean police say two people died in protests against a court's decision to remove that country's president from office. thousands of residents and president's supporters reacting angerly shouting and hitting police with flag poles and also demonstrations in favor of her removal. amateur video capturing the immediate aftermath of an axe attack inside a german train station which injured nine people late thursday. the 36-year-old suspect was arrested after jumping off an overpass as he tried to flee. police say it appeared the suspect had mental health problems. bmw is adding nearly 134,000

suvs to a 2016 recall to fix drive shaft joints that can fail and cause the vehicles to stop moving. it covers certain x5 and x6 suvs from the 2011 to 2014 model years in the u.s. and also in canada. and that's the news update this hour. carl, i'll send it down to you. >> all right, sue, thank you very much. as you know by now the economy added 235,000 jobs in the month of february. we're joined this morning by goldman's chief economist jan hatzius, here at post nine with david and sara and me. good morning, jan, good to see you. >> good to see you. >> not too far off on the headline number and made changes to your fed forecast in terms of hi timing of hikes. >> yeah, we've made some small hawkish revisions basically pulling forward hikes in 2017 into june, to march next week,

then june, then september. >> still three for the year? >> we still have three for the year. so that's not a change from before, but the timing's a little different now. and we also pulled forward the start to balance sheet adjustment from 2018 into late 2017. i'd say it's a fairly close call between three hikes plus balance sheet adjustment and four hikes. i think four hikes is definitely possible, but that's our best guess. >> so directionally why are you doing that? >> basically because the economy shows very solid momentum. and i think today's number is testament to that. i think the ism numbers, surveys more broadly have been consistent with that. and i think the fed showing going every three months is something that they are in principle comfortable with. of course it always depends on how the numbers come in and what happens to financial conditions. so the fact that financial conditions have actually eased since the december meeting i think has been a very important development. you get a sharp tightening we might regret this change but our

best guess is that won't happen. >> how much credit does president trump get for today's blowout number? >> i think it's a little too early to really see, you know, big effects one way or the other. what is clear i think in terms of what's happened to business confidence, if you look at some of the sentiment numbers, those have increased very sharply after the election. so i think there's still a question in terms of hard economic indicators, how much of that is going to show up in the hard data, jobs data, gdp data. gdp isn't tracking so well in the first quarter, but i think it's just a little too early to tell. >> but if you break apart the components of this report, we saw this big jump in construction jobs, but we had a warm february. you saw a loss of retail jobs. i'm just wondering how sustainable it is to get these above average plus 200,000 level jobs. >> i think that's a good point. i don't think you should take this 235,000 at face value. i do think there was some weather in it. we've seen almost 100,000 jobs added in the construction sector

in the last two months. and the warm winter i think had something to do with that. so we should expect some payback over the next month or two months or maybe three months. >> jan, tax reform certainly also part of the overall economic landscape in terms of the benefits that may accrue if we get it. earlier we had gary cohn join us of course who runs the national economic council, and i asked him about the administration's plan. of course he wouldn't offer anything on a border adjustment tax. but he did offer at least the idea that they are going to be thinking about deficits. i'd love you to take a listen to what he had to say and get your reaction. >> we care about the deficit. we care about revenue. we care about what's going on. we're going to most likely -- we're going to absolutely do taxes under reconciliation. we're going to have to be deficit neutral over a ten-year period. yes, we will be able to use dynamic scoring. and we think we've got some opportunities to do that and do it in a very constructive way for u.s. consumers, for u.s. industry, for everyone as a

whole. we are working on a bunch of really interesting ideas to reform the tax system in the united states. >> jan, is that kind of new, or is that something that's encouraging when you think about deficits overall and deficit spending? >> i mean, i think the deficit will play a role of course. that for us is one reason why we think that ultimately the size of the tax cuts is not going to be as large as what was proposed during the campaign. if you take the numbers that were published during the campaign, you get to 2% of gdp or more in terms of the overall fiscal easing once everything's phased in. we're building in about 1% of gdp. you know, i think that's still a fiscal boost, not 2017, but 2018, 2019, but i do think it's going to be a little more modest than some of the numbers that are out there. >> does the timing matter to you for corporate tax reform? the administration wants to get it done by the august recess. senate leader mitch mcconnell has said otherwise this week.

do you think that investors care about when exactly that happens as long as they have the hope still that it's going to get done? >> i think it matters to some degree. my expectation would be that it's going to take a little longer. and, you know, late 2017 has been our assumption. it could even go into early 2018. and i certainly think as far as the economic impact is concerned, this is not a 2017 issue but a 2018 issue. so, you know, i do think for this year the economy has good momentum, financial conditions are providing a boost, that is helping us but i don't think fiscal is really going to be a major factor. >> are you willing to call a serious turn in labor force participation? or no. >> i would be surprised if we saw a really big increase in labor force participation. i mean, i think some further increases are possible as we go, you know, maybe a little bit beyond full employment. but it looks to us that the current level of the labor force participation rate is not very far away from where we would say

it should be structurally. just looking at the demographics, looking at trends in things like years of schooling and so forth. >> so when we see data that looks at jobs hard to fill, is that only going to get worse? >> i would think so. i mean, under our forecast for the economy where we get increases in, you know, in employment to population ratio still above trend growth, yeah, i think we'll see some more skills shortages and there are already some out there. i don't think at this point we're meaningfully beyond full employment, but my expectation would be we do go beyond a little past full employment. >> i want to get your thoughts when it becomes something equity investors will start to pay attention to. >> i think that's hard to have confidence on at what point, you know, other markets, equity markets or other markets focus on higher rates. but i do think it's a headwind for the equity market. and it's one reason why our portfolio strategists don't really expect big gains from

here, at least post the next few weeks. and the fact that interest rates look more likely to go up than down, i think that's an important reason. >> channelling costin as you speak. >> channelling david costin. >> jan, good to see you as always. jan hatzius of goldman sachs. >> when we come back, a new study showing many companies paying no federal income tax. let's get a look at shares of southwest airlines, lower. a lot more ahead. stay with us. into promotions? ♪ nah. what else? what if we hire more sales reps? ♪ nah. what else? what if we digitize the whole supply chain? so people can customize their bike before they buy it. that worked better than expected. i'll dial it back.

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when you have the right financial advisor, life can be brilliant. ameriprise this year's best performing mega cap etf could have a lot more room to run. that's when you knat one techni analyst says. find out why on tradingnation.cnbc.com. more "squawk on the street" come upg.

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rick santelli and the santelli exchange. >> hi, carl. i'll tell you, what an exciting day. markets to me are so fascinating and today even more fascinating. so let's take a look at how the markets reacted here a bit. remember, when we look at rates, we just finished threes, tens, 30s, 56 billion in supply, let's look at an intraday of tens. notice the lows right around 2.57. okay. and that in and of itself is fascinating because, listen, this data it wasn't really cold. it wasn't even middle of the road. now, i was way higher, three handle, because i think one's coming, but it was a pretty decent number. and year over year wages pretty decent. and we'll get into labor force participation in a minute. but look at where the market moved. basically moved down towards the 57 level, where did we auction the tens at? 2.56. so right now watch 2.56 and watch that big resistance around 2.61, 2.62.

because breakouts especially close on either side give you some clues as to what we may be looking for next week. 30s give you a more granular picture. they went off at 3.17 on the auction. you can see the low 3.16. this is important because those areas will be defended. if you continue to be under water based on auction price and you participated, it's not a complicated trade, most likely you'll sell futures in tens or 30s and the cash and that's the move we're looking for. okay. now let's get back to what's going on. labor force participation rate look at the chart. okay. now this is a chart going back to early 2011. why is it interesting? because we're starting to see it move higher. 63. it's moving a bit higher. how important is that? if you open the chart up to a 20-year chart, you see how important it is. you see that flat top on the right side? you know, charts are basically giving you an idea of the underpinnings here and there could be more to the upside. why is that important? listen, underemployment -- the

level is what 9.2%. and the people that are out of work, tens of millions of people over 90 million people that can work, i think the fed and many experts have thought, you know, that that pool isn't going to change and if the jobs market gets hot, you know, we're going to have to find people. well, i think we know where the people are hiding. and i really do think where i'm different why i'm looking for a 300 number and maybe even some upside to unemployment rates, which isn't a bad thing, is because i really think we're starting to see we're going to use those people again. that's my feeling. and i think that's a huge, huge positive. the other thing that we need to talk about real quickly here is if the real unemployment rate, and i think it is, the real unemployment rate is the underemployment rate, we've made huge progress over the last five or six years but also may explain or go a long way to explain why the fed seems to be dragging its feet. okay. another way to look at the fed is we may have a four handle on the advertised rate, but if the reality in their mind especially if you can go back into this pool of people that nobody

thought could ever work again, what it really means is is that we aren't at full employment. and that might change the dynamics of what makes the fed move. carl, back to you. >> that's a good point of view after talking to hatzius a moment ago, rick. thank you. we look forward to seeing you on "meet the press" this sunday at 9:00 a.m. eastern time. don't miss it. separate news, tracking consumer trends here. it is official, americans now drink more bottled water than they do soda. that's according to a new report from research and consulting firm beverage marketing group. the study shows bottled water consumption in the u.s. has reached 39.3 gallons per capita last year. and that was enough to put it over the edge because carbonated soft drinks slipped to 38.5 gallons. the shift comes of course amid concerns about the health effects of sugary beverages. several cities voting for a soda tax and just a general trend that's been going on, guys, for a decade. both moving in opposite directions, soda consumption has been falling while bottled water consumption has been rising.

i took a look at the market share, which brands are the most popular for the u.s. number one is coca-cola's dasani water. >> right. >> number two is aquafina owned by pepsico, number three is pure life by nestle. actually nestle gets the number one spot globally. this is just u.s. market share. nestle owns all of these bottled water companies. >> by the way a lot are just purr fied water. >> true. >> i mean, the idea this has become the dominant beverage is incredible. for those of us who grew up drinking it out of the tap. not to mention all those plastic bottles. but incredible marketing opportunity. and i guess also goes to the fear people have about their local water supplies, i suppose. >> well, there's that. and it's also a big strategy -- it marks a big strategy shift for some of the big beverage makers because coca-cola still exposed to carbonated soft drinks. >> of course. >> and pepsi as well. and so they're going to have to shift their portfolios because bottled water is where it's at. this does include sparkling water, which is a much bigger deal overseas, as wilfred frost

would tell you. and a lot of those brands, peligrino and perrier owned by nestle. >> yeah, long term health policy implications as well if the trend continues. could be good news for diabetes rates, childhood, onset, you name it. >> right. that's why coca-cola's strategy of smaller packages selling them as a treat is what they're hoping takes them into the next generation where millennials do want to drink healthier. it's also something i've been covering with these soda taxes popping up all over cities. they want to raise their budget and decrease diabetes rates which has been a drag on health care. >> all right. well, let's send it over now to jon fortt with a look at what's coming up on "squawk alley." >> i love it, guys, bye-bye cola wars, hello water fight between coke and pepsi. coming up on "squawk alley," we're going to talk about where the jobs are. also walter isaacson is going to

join us to take a look at what's happening with the economy overall and employment. of course we also expect president trump to be meeting with house leaders over health care, all that and more coming up on "squawk alley." during the lexus command performance sales event, experience our most elevated suvs ever. including the lx, gx, rx and nx. experience amazing.

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another ipo opening for trade at the nasdaq. it's presidio, an i.t. solutions provider, relatively flat after pricing at 14. that was the at the low end of the range. of course, snap took a lot of oxygen out of the room last week, but we'll keep an eye on this as it opens for trade. >> tech is the best-performing sector right now on the s&p. new analysis on corporate taxes shows 18 profitable fortune 500 companies actually paid no u.s. federal taxes over the past eight years the institute on tax united nations and economic policy's new report summarizing the 35% corporate tax rate is actually a myth. matthew gardner, lead author of that report and senior fellow at the institute joins us now. so we constantly hear the refrain that the u.s. pays one of the highest corporate tax rates in the world. it makes us uncompetitive at 35%. you're saying that's not true? explain. >> well, what we did in our new report is to look at all of the

fortune 500 corporations that have been profitable over the last eight years and see what they actually paid. what we find as a group, they're paying a little bit more than half of 35%, and that more than 100 of them actually found ways to pay zero in at least one year during this period. so 35% simply isn't the reality for many of these companies. >> you actually named some names and we're showing some of the logos. big companies like general electric and exxonmobil. talk about some of the strategies these companies are employing to get these lower or nonexistent tax rates that you fou found? >> all of the tax structures are completely legal. they're strategies that have been expanded in recent years by congress. accelerated depreciation for utilities. executive stock options, resurgent development tax credits and a special tax break for manufacturers. you add up all of these tax breaks and what you see is that there are entire industries that are finding ways to almost zero

out their taxes, with astonishing regularity. >> and why do you think that these ceos and the investors we talk to are so excited and some of them are these names that you've listed about potentially lower corporate taxes under a trump administration, even down to 20% or a little more than that? >> well, i think right now, we have a situation in which there is a tax rate that looks high on paper, and will be sharply reduced. and if corporations are excited right now. it's probably because if you look at what the proposals are from leaders of congress, they're answering all the easy questions about how far they want to lower the corporate tax rate, but they're not at all addressing the hard questions that many of these companies would be fearful about. which is, will my loophole be taken away? will my tax break be taken away? bottom line is, the proposals we're looking at right now are going to be huge corporate tax reductions overall, and for most of these industries, on top of the low rates we're seeing

already. >> well, tax reform as we currently know it, at least, would include taking away some of those deductions that you're talking about. and others, as well, to try to raise revenue. i'm curious, though, matthew, to the extent that you could share it all, if you've looked at, given that we're taking in as much revenue as we might have thought, is there a way to understand what corporate tax rates currently being laid out would be a revenue gain? the first thing we know about corporate tax reform is it's a trade-off between closing loopholes and dropping the rate. and it's been estimated that if we aggressively close all the loopholes available, something congress has not said they would do, you could take the corporate tax rate down to somewhere in the mid- to high 20s. as you know, because leadership and president trump have proposed taking the corporate tax rate lower and not going to

close all the loopholes. so as it stands, the corporate tax rates we're looking at right now, would end up sharply reducing corporate tax payments overall. >> i think it's important to note that a lot of these companies that you point out are big multi-nationals that do a lot of overseas business. and we know companies like procter & gamble take advantage of the fact that they do operate in other places where they can get better deals on taxes. the case for tax reform would be, they won't have to do tactics like that, and that the revenue can come in from the u.s. government, if we become more competitive for global companies like a p&ge. >> well, one thing we see out of this report is that there are actually two different ways in this companies compete internationally. they compete against european country countries with legitimate economies and real tax systems. and we find they're paying tax rates that look an awful lot like what they're paying in the u.s. when you talk about companies like microsoft and apple and google shifting their profits

offshore, they're not shifting into countries with real tax subpoenas, they're shifting into the caymen islands. zero percent, which is what these countries are paying in the caymens, is always going to look good compared to 35, 15, 20%, whatever tax rate you need. as long as zero percent is available, these companies are always going to find a way to shift their products into tax havens. that's the real concern. and simply dropping the rate won't accomplish that. >> we've got to leave it there, matthew. thank you for joining us to talk about some of your findings. matthew gardner is the lead author of the report at the institute on taxation and economic policy. as we head to break here, take a look at stocks at this hour. the rally continues, though. we do have energy and real estate sectors in the red. technology in the lead. that explains why the nasdaq is doing the best of the bunch. much more ahead. stay with us. so what else is new? how's your mother?

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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. welcome back to "squawk on the street." i'm jackie deangelis. there was some optimism that more than an 8% slide in crude oil futures this week, that we would turn them see positive here. maybe a little buying the dip. not happening so far. a little boost in crude after that positive u.s. jobs report, but we turned negative again, seeing another nearly 1% decline here. breaking under 50 this week and holding, potentially closing

under $49 a barrel, really key when it comes to this trade. back to you and "squawk alley". >> jackie, thank you so much. it's 11:00 a.m. at the white house, 11:00 a.m. on wall street and "squawk alley" is live. ♪ good friday morning. welcome to "squawk alley." jon fortt, sarah isen and myself at post nine. what a day. the u.s. economy adding 235,000 jobs in february. that was past estimates called for 197. construction recording its biggest monthly gain in nearly ten years.