happy birthday, scotty. "squawk box" begins right now. ♪ >> live from new york where business never sleeps, this is "squawk box." good morning, everybody. welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. u.s. equity futures this morning, after a pull back yesterday, you can see u.s. equity futures are indicated higher. dow futures up by 47 points. s&p futures up by 6.5 points. the nasdaq up by 11. this is all coming on fed day today. today is the day we get the decision from janet yellen. news conference follows after that. in asia overnight, markets were relatively tame. nikkei and hang seng down

slightly. shanghai composite was up slightly. this morning in europe, some early trading there, things are relatively flat. the ftse is up by 0.2%. oil prices are moving higher this morning. api data late yesterday showing a surprise draw down in u.s. crude supplies. 531,000. later this morning we'll get official inventory data from the energy department. it has been a rough ride forever cru for crude oil prices. 48.59 a barrel. let talk about today's agenda the fomc policy decision comes at 2:00 p.m., chair janet yellen will hold a news conference 30 minutes later. you can watch all of this we'll have complete coverage on cnbc. in addition to all of that, there's a fair amount of economic data today. february retail sales and consumer price index at 8:30

a.m. eastern time. followed by january business inventories and the march home build rers survey at 10:00 a.m. the justice department expected to unveil charges related to the attacks which exposed millions of yahoo users. reports say the authorities will accuse four people, one in canada, three in russia, who allegedly have ties to the russian government. last september yahoo disclosed hackers infiltrated that network in 2014 and stole data from more than 500 million users. in december, the company disclosed a similar incident happening in 2013 affecting more than 1 billion accounts. >> took a long time for anybody to discover this. that's what happens in cyberwarfare, there will be people attacking us, we won't find out about it until years later. >> it's a question of the economy not releasing the information even after they

realized what happened. >> and they're looking into that. there's a lot to going on there. >> yep. i heard rachel maddow last night has president trump's tax returns. white house responding to -- you know why? i didn't get up. i was tired. >> i watched. >> i didn't get up. i said whatever they are, i'll see them tomorrow. 38 million. white house responding to president trump's leaked 2005 tax return. eamon javers joins us now from washington. watching you. watching you, eamon. see how you characterize this. 38 million pace foys for a lot stuff. seems like a productive member of society. not a terrible, horrible person. seems like you would want a lot of people, if you could, if would be nice if everybody could make 150 million and pay 38 million in taxes.

society would be a good place. we would be rolling to dough. >> would it, though? would society be a good place if everybody had that such money? that would drive inflation. >> okay. i knew you would figure out -- you're right. >> cars would cost $150,000. >> whatever you think, eamon. go ahead. i think it would be a good place. take it as it is now without inflation, assuming something like that, it would be a good thing if everyone made more money and paid more in taxes. that's simple. you can give me a yes on that. it won't kill you. >> yes. >> thanks. >> 2005 was a good year for donald trump. rachel maddow obtaining two pages of his tax return from 2005 and revealing them on her show on msnbc last night. here's the moment where she unvalid tu unveiled the tax returns. >> what we have are these two pages, front and back from the same 1040 form that you might have filled out when you file your taxes. in terms of what's on here. aside from the numbers being

large, these pages are straight forward. he paid $38 million -- looks like $38 million in taxes. took a big writedown of 1$103 million. more on that later. if you add up the lines for income, he made more than 1$150 million in that year, mazel tov. >> what we don't know here is all the supporting detail behind these years, behind these disclosures. we have a statement from the white house, they put this statement out before rachel maddow went to air last night. they obviously knew this was coming. they had received a request for comment from rachel. they said before being elected president, mr. trump was one of the most successful businessmen in the world with a responsibility to his company, his family and his employees to pay no more tax than legally required. they're also saying it is totally illegal to steal and publish tax returns and say the dishonest media can continued to make this part of their agenda

while the president will focus on his. obviously there's a journalistic interest in publishing the tax return information. 1$150 million in income, 3$38 million in tax. a tax rate of 25% this does put to rest the idea that the president took such large losses in the 1990s that he actually didn't pay taxes for decades. we know now that he paid taxes in the year 2005. the rest of his returns still outstanding. >> yeah. kudos to jay yero, who wrote a good piece for cnbc.com. made it on to some of the aggregators. >> what did he say? >> you need to check it out yourself. >> i'll read it. i always read cnbc.com. >> i do, too. it's great. >> i write for it. >> you do i've seen your stuff. >> i do. yeah. >> at the beginning i told you,

remember, i read your stuff. >> right. >> read it closely. very closely, javers. remember that. >> i'm feeling highly scrutinized. the fed -- i think we'll talk about this again. i don't know if you'll be around, we'll probably kick this around again at some point. the fed is kicking off a two-day meet -- day two of its meetings today. >> when did it start? >> 2:00 p.m. >> rate increase expected 100%. can't go over 100 k it? >> 100% chance. >> 110 point chance -- >> you need that with this fed, i still don't think they would do it. it would be the third hike -- crazy. nuts, liable to do anything at any time. the third hike in 11 years. joining us now is john writing and alison deans, from aa deans

adviser. that has nothing to do with friends of bill? >> no. >> friends of bill? >> no. it has to do with my initials. >> do you have 12 steps of investing? >> no but that's a great idea. she's also a cnbc cribber. contributor? >> 200% chance? >> 200% chance would equate a 50 basis point move. no, we won ev't ever see a 50 bs point move again from the fed. but there will be a move, and will it be more than others? no, i say it would require four fomc participants to change their views, that's too much.

and does it say anything about the balance sheet? the fed has a $4 trillion bans sheet, they only need a 1$1.5 trillion balance sheet to operate effectively. i think today's meeting has been well signaled and will, for the third move in 11 years, it will be a non-event. >> we're saving the world, too? aren't other places starting to pull back, starting to taper? if we're the engine of growth that we should be, we can actually make a positive impact on the rest of the world. this is not good for anybody, this new normal of central bank controlling economies. >> no, it isn't. the real problem is, going back to what you're talking about, if we have more people making more money -- >> that would be good. >> that would be good. the problem with this economy, i said it before on she show, productivity. we're not a productive enough society. our productivity gains are too

slow. easy money doesn't create productivity. in some ways it may be productivity destroying because it makes some tough choices that make productivity gains. >> do you think that's why we have seen such low productivity? >> it might be a factor, but the real fact seror is the tax syst being a drag on economic froth. 35% corporate tax rate in the u.s., you have got an average tax rate in the developed world of more like 25%. that puts the u.s. at a competitive disadvantage. >> alison both today, this week, the month, this is good for the markets, is it not? is it negative if she raises rates? overall it's for good reason. >> they're responding to good nu

news. >> do we need to say yes, but with this? >> no, it's good. the economy is improving. they've been looking at wage growth, employment, trends. the fact they're improving and will most likely continue to increase rates at a gradual pace is a sign they're feeling more comfortable. >> it's kind of scary. someone yesterday said if we double the rate we pay that we'll be at all discretionary spending? >> jim grant. >> if it goes up -- if rates were to double on what the government pays and what we already borrowed, it doesn't take long for us just to be paying in debt service all of the discretionary spending. >> i never heard that before. that's kind of scary. >> he said if we don't get back to regular rates of 5% or something. i guess that goes back to the idea of why haven't they shrunk the balance sheet before making some of these moves, john? >> that's the original plan. they thought that shrinking the balance sheet after the taper tantrum, that would be like tipping off possibly what is coming. i think they want to be comfortable that the economy has

absorbed the rate increases, so they want to wait. >> they don't have to sell anything. they can let things run off. >> they can. but next year is the biggest year of run-off of treasury debt. the fed runs something like 4$45 billion of treasury debt out of the portfolio if they don't reinvest it. if they do reinvest it, that locks in that debt for an average of another seven years. if you're going to do run-off, the sooner you start you can do it more gradually. so my suspicion is come september fomc meeting that's when we'll start to see the fed slowly wind down the balance sheet. that may reduce the number of rate hikes the fed thinks about doing because if adding to the balance sheet was a tool of easing monetary policy, then taking away from the balance sheet is a way of renormalizing policy without pushing rates up

so highment. >> i think gradual is the key word. it has not been a strong, rob r the increases are very small and gradual. >> alison, i was worried earlier this week that the cbo scoring would get people worried about the eventual passage of the repeal, which would get people worrying that tax cuts would be pushed back. you had both opinions, that the market might have gone too far because these things are not a done deal, but then the whole back drop of the argument was that the economy was already strong and the market was doing this based on the prior administration. things were already going well. economy was improving. does it matter if nothing trump tries to do gets done because it wasn't from him any way? >> the economy is improving. the market has improved. his policies would probably improve the improvement.

>> so if it doesn't happen we need to worry about the market. >> when i look at foreka casts this year an next year, a couple dollars were thrown in for trump policy. >> are you worried now? this is like wrangling cats. >> that's my concern. people thought it's all republican, they'll get everything through congress. the reality is the party irt is d itself is disagreeing over issues. >> and the democratic party is not monolithic. >> maybe we need eight parties like other places. >> no the other places with that -- >> a third party, yes. but eight parties -- >> bernie sanders and trump -- >> they could be the third party. >> the election cycle is just so painful. >> that's one great thing about the uk, they don't spend this

money. >> if bernie sanders and trump put their tax rate together, you put trump's high tax rate together with bernie paying hardly anything -- >> what about the lake house? >> that's new. >> that might be a write-off. all right. thank you. >> you're welcome. >> should have seen us, the economists and the -- trying to work the coffee machine in there. who knew, there was an on button right there. why is it there? >> you two were trying to -- >> you press espresso or latte, but it was blank. >> so you sat there pushing it?. >> maybe the problem is the quality of the labor force. that's real. >> i said there's no power. >> what you think about millennials and snapchat. >> you guys are quick.

>> do you think -- i think people are spending way too much time. >> thanks, you didn't help. >> people don't focus anymore. people need to focus when g getting a job done. whofrnlgt saved you? >> an exist, he's in the real world. my god. >> when we come back, are corporations worried about a trade war with china? we have the results of a new cnbc survey next. and oil prices jumping today on new inventory data, but will this last? that's coming up when "squawk box" returns. first, this day in history. kevin, meet your father. kevin kevin kevin

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not appropriate. now i'm mashing these potatoes with my stick of butter... why don't you sit over here. something for everyone is awesome. find your awesome with the xfinity stream app. more to stream to every screen. ♪ >> welcome back to "squawk box." china's premiere says beijing does not want to see a trade war with the united states. speaking at the closing ceremony, he encouraged better ties between the two nations. this comes as u.s. secretary of state rex tillerson begins a week-long tour of asia. he's visiting japan today. business leaders think

president trump's trade policies could drag us into trade war. jackie deangeles has the details. >> a very tall jackie deangeles. >> this was interesting, the cfos we spoke to represent some of the largest companies in the world, they manage $4 trillion in market capitalization, so we asked them to weigh in on a number of trump proposals from tax reform to infrastructure spending. and the president's trade policies are weighing heavily on their minds with 95% saying they are somewhat concerned that trump's hawkish stance will trigger a trade war with china. when asked where u.s. trade policy uncertainty ranks up among their company's biggest external risks, 18% said that was the biggest one they faced. coming in second to consumer demand. a majority of cfos told us they oppose the president's push for

this border adjustment tax that would tax goods coming into the usa. there's more on our results, they also weighed in on what they think the fed will do, rate hikes, and trump's tax plan as well. >> the border adjustment tax is an interesting point. 52% say they're opposed to it. a huge chunk of them don't know or are not sure what they think about it. >> we've been doing this survey, and the last couple of times they're confused on a lot of the policies is the general theme i'm seeing. when it comes to the border adjustment tax people are trying to figure out what the details would be. i don't know that the administration knows either. >> that's the scary part, the unknown, waiting to see what happens with some of this stuff. thank you very much.

>> great to be here. commodity traders will be watching the weekly oil supply data very closely this morning after a surprise inventory draw in the api yesterday. it's fallen ten times in the last 11 sessions. wti is now down 8% over the last week. right now you can see crude oil prices up to 48.54. joining us is matt smith from clifford data. anybody who thought we were heading back to higher prices is probably surprised by the last ten sessions or so. >> right. we're seeing two factors, u.s. production returning, we're seeing u.s. inventories at a record high. we're seeing product inventories in the u.s. kicking around record highs. and rig count coming up quickly. exactly. doubling, almost tripling in the permian basin. that's in combination with the

monthly report out today, we had the opec monthly report out yesterday. both of those have indicated that oecd inzonventories are no dropping. opec wants to get inventories back to a normalized level, and that's not happening. so prices have thrown in the towel. >> it's not like opec is cheating. we normally expect them to set these rates and cheat. it seems they've been more disciplined than in the past about actually sticking with some of these production cuts. >> a certain, tn extent. we track exports, so we're not seeing these nations really cutting back, and if they are, that's not showing up in the data. that's not balancing the market. saudi is getting fairly concerned about whether it's russia or even other members of opec not being in line here. so, even though they were saying

they're not likely to continue this production cut into the second half of the year, it seems like they'll have to to balance the market. >> is there a point where saudi arabia throws in the towel and says forget it, we can't control the non-opec members? we can't control the united states companies drilling to such a large extent? we'll do what we can to get what we can in terms of market share? >> we don't think so just because they need the higher prices. so, we think because they're such a large player they will continue to try to lead the charge in terms of opec as a cartel. >> where does this leave us in terms of where you think oil prices are headed? >> i think we'll get a bounce here in the short-term today. last week, we saw in the gulf of mexico there was an issue relating to weather. we're seeing lower imports and a draw coming through. we're bouncing from key support now, it will depend over the next couple months whether opec implements those cuts. if they don't, we'll see prices

likely move lower from here. >> we're talking about relatively range-bound, right? something like 40, $58 or something? very much so. maybe low 40s to high 50s. simply because once you get up to the mid high 50s you will see so much production coming to market. this is the new normal, we can forget about the new normal when it comes to interest rates. this is the new normal when it comes to oil prices? >> until we get into 2018, 2019, 2020 when all these projects that were supposed to come online are not going to do so, we could see a lack of supply because of that. until that point we're range bound it would seem. >> matt, thanks for coming in. >> thank you. coming up, president trump is traveling to michigan today. on capitol hill, lawmakers are dealing with the gop healthcare plan, the national debt and the budget. former governors ed rendell and judd gregg will tackle the big

issues next. before the break, a look at yesterday's winners and losers.

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welcome back. you're watching "squawk box" live from the nasdaq market site in times square. good morning. u.s. equity futures scheduled to open on the plus side and sort of mixed for the last week or so. this is maybe the sort of lull that people thought we were in after the first eight weeks of november. have not made much headway. went over 21,000, now treading a bit above, a bit below. strong today. i guess it's more fed than anything else. i don't think suddenly the healthcare situation, the obamacare replacement and repeal, i don't know where that stands right now. president trump is nominating james donovan as deputy tresh rir secretary. he is expected to work on the administration's domestic policy

agenda. a relatively young looking man there. the white house also naming david malpass as treasury undersecretary for international affairs. very tall man. >> that is true. >> he will be the main conduit between the treasury and imf, fund wonder his stance, think larry kudlow. think commonsense. president trump is tapping christopher giancarlo to head the commodity futures trading commission. they have been facing industry criticism over extensive rules they have. his appointment requires senate approval. president trump will visit michigan and revisit fuel economy rules put in place by the obama administration.

this is one of several items on the white house agenda including a new healthcare deal and a new budget that we will be getting later this week. joining us is judd gregg, former senator of new hampshire, and former pennsylvania governor, ed rendell. gentlemen, welcome to both of you. >> thank you. >> good morning, guys. >> good morning. >> let's start out talking about the budget. that will be a huge issue. governor gregg, what are you expecting to see in the budget? what would you like to see? >> i think the first thinged about the budget is what will happen today with the fed. if they raise interest rates by 25 basis points, that adds 4$40 billion to the deficit. if they raise it by 75 basis points throughout the rest of the year, a trillion dollars to the deficit. no matter what the budget does, it will be impacted by outside forces considerably because of the size of our debt. i would like to see a budget that tightens down on spending and gets our fiscal house in order, very hard to do if you don't address medicare an social

security, which are the driver's of our deficit now. the president has already made it clear he won't get into those accounts. i think the budget will be sort of a nonevent to be honest. they will freeze discretionary spending which is arbitrary, won't have a big effect on the debt or deficit. won't address entitlements. >> governor rendell, that's an excellent point looking at the jump-off point. we have had these incredibly low interest rates, allowing to us do things and get away with spending that we would not have been able to do under normal circumstances. what do you think about this? do you share governor gregg's concerns about where we're going with some of these entitlements as well? >> sure, because even with very low interest rates, we've still seen the debt increase as a percentage of gdp. judd is right. we have to do something about the debt. we're facing a potential train wreck in 15, 20 years. we have to do something.

there's no question about that. and discretionary spending is such a small part of the federal budget, forget freezing it. even if you cut it radically, there are going to be cuts, you won't be able to generate enough money to do something. we need the approach that simpson and bowles had. increases in revenue as a result of tax reform, some of that mob used money used to reduce the debt, some used for other purposes. we need a balanced approach. some reductions in some of the entitlements that make sense. and some increased revenue. >> it makes sense, but that approach went nowhere unprder president obama. when you look at close to the votes needed under simpson bowles, there was a moment that i thought something like that could be passed in washington. that moment seems to have passed. >> if president trump is going

to raise military spending by 2 $52 billion a year, if he's going to have an infrastructure program that will cost 100 billion a year, a trillion over ten years f he's going to give a massive tax cut, the debt will explode. we're absolutely looking at a disaster down the road. >> wait a second, you've been in favor of infrastructure for a long time, right? >> absolutely. but i think it should be paid for. paid for by raising the federal gas tax in part. >> sure. >> and by using private money. >> and by using -- borrowing now while interest rates are still low, maybe coming up with -- >> we should done that -- we should have done that three years ago. >> all fair concerns. governor gregg, just back to this point. it seemed like this was a movement that really had both sides coming together for a while. that moment seems to have passed. it does not seem like the two sides in washington are near working more closely together.

republicans have generally been the ones concerned about deficits. donald trump, this republican president, does not have the same sort of budgetary concerns. as you mentioned, he won't be touching social security and medicare, at least that's not his plan at the moment. >> you're right. washington does not have an atmosphere now to address deficits or the debt. probably because it's been put on the back burner by the low interest rates, and by the fact that it has not affected us yet. the world still puts their money in the united states because we're deemed to be the best horse in the glue factory. the fact is we're in the glue factory and within a certain period of time our debt will reach a point where people will question our ability to pay it back. and that's going to come. it's inevitably going to come. we will cross the $20 trillion debt point here of public debt held, we're already well over

1$100 trillion of debt which we owe, which we know is coming at us. we have 80 trillion of unfunned liability in medicare and social security and medicaid. this is a problem not going away. it's getting worse. i would love it if they would come together and address it. >> can we talk about obamacare for a second. republicans talked about it being in a death spiral, imploding, collapsing. all of the words you know. one of the interesting stories that has come out of the cbo's report yesterday is perhaps it is not imploding. i will read you something. the non-group market -- this is for health care -- would probably be stable in most areas under either current law or the legislation. what do you make of that? >> i think it's unrealistic to make that statement when you have over a third of the exchanges today across the country only having one insurer in them, which means they're a

single payer system. the fact is the obamacare is not working. it's structured not to work. what the republicans have to come up with is a plan that will do better. certainly in the area of controlling costs, but also in the area of delivering quality. i congratulate the house for going forward with a plan. i don't think it's the plan we'll end up with. >> because? >> it's not acceptable to the senate. >> why won't it be acceptable? >> because of the fact that too many people will be forced off of healthcare under the medicaid proposals and states which have opted into medicaid will find themselves left hanging out there with people were covered and won't have the ability to continue to be covered. that will be expensive and senators won't accept that. >> do you think that's the right decision? >> yes, i actually do think it's the right decision to freeze medicaid at its present size. the biggest mistake that obamacare made was expanding

medicaid by 50%. there's a better way to get those -- >> so you would pass the plan as is, despite the people being left off the rolls? >> no, i have serious reservations about the tax credit. we have the earned income tax credit today, there's a tremendous amount of waste and fraud in that program. we'll get the same waste and fraud in this program proposed in this bill. it's a new entitlement. we don't need more entitlements. we have too many as it is. >> there's a take in the "journal" today, this may be the one chance to rein things in. the best chance in a generation to control runaway government is to do something with healthcare. people who tell me obamacare is working who are you, baghdad bob? we have the americans on the run, at the gates of our city, things are going swimmingly. judd, have you heard from rendell? has he called you up and made

treaties about switching parties? ed, is this your democratic party, rendell? seriously. when you watch what's happening. done you ever -- i'm surprised you agreed to come on. are you still associated with this group we got right now? >> yeah, i am. i don't always agree with what some of our leaders do, but i still believe in the basic principles of the party. >> well, that's a -- so you have not called judd gregg, i don't know if he has connections in the party. >> no, but judd would be the first person i would call if i was going to switch. >> you're so smooth. >> let me say one thing -- >> it would be a small gathering, ed. >> that's right. one thing about cutting costs, the administration is trumpeting the fact this plan scored by the cbo as saving 3$337 billion ove ten years, if they didn't have the tax cuts in it for wealthy

people and wealthy businesses, that savings over the course of ten-years would be almost a trillion dollars. if we're really serious about getting the debt and the deficit under control, we can't have massive tax cuts for people doing just fine. >> you would be okay with -- >> i find myself disagreeing -- >> sorry. governor rendell you would be okay with this plan if it did have people falling off the rolls as long as it tackled the deficit? >> not at all. the big thrust point in this plan is they want more competition. i will tell you how to get more competition, public option. that gives you all the competition in the world. >> three things. one, a lot of people are falling off the plan because they don't want to be in the plan. you're talking about young folks who opt out of healthcare

because they have discretionary dollars, they don't want to spend it on healthcare because they don't feel sick. >> judd, you have heard -- there's -- i will give thank you statistic. a 64-year-old earning 26 do$26, would pay $14,000 under the plan trump is proposal, compared to $1700 that obama passed. >> for that demographic profile, that will probably be changed. but the idea all these people are being off the healthcare system is not accurate. most of these folks didn't want to be in the healthcare system. the that the point. >> i did see one committee sent out something yesterday, this is a win for american families who don't want to be on the healthcare rolls. that cracked me up. i can understand a young individual. there's no family that doesn't want their kids to not have health care. >> you're correct, but a lot of

individuals between 25 and 35 don't want to be on it. maybe 10 million. >> becky, how about jason chaffetz statement, all we have to do is not buy iphones, we can cover health care. >> obama said the same thing, rendell! you know that. you are so slick! >> to pay for the plan -- >> he said the same thing. he even used the phone analogy, you have to make choices. your hero. come on now! >> to pay for this plan -- >> he said the same -- >> would have to buy 33 iphones a year. >> i have judd's e-mail. you get through to me, i'll get to you judd.

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right now it's time for today's executive edge. the snowstorm that blasted the northeast may be picture perfect in terms of a back drop for canada goose. the company is set to go public. this is the maker of trendy winter coats that is expected to price its ipo this afternoon and trade on the new york and toronto exchanges tomorrow under the symbol goos. the company is majority owned by bane capital. >> quick comment because i own one of these things.

i proudab ablly bought them bef they were fashionable. now you walk around new york city, everybody in new york city has one. they're so unfashionable you can't wear them anymore. how is this going to work? >> it has a distinttive loctive that could go out of style. >> the parka. >> yeah. >> do you remember cb sports? everybody had to wear a cb sports coat? the hottest thing in the world, then you couldn't wear one because everyone else had one. >> my favorite is members only. >> members only. >> people see that, they think, wow, he's -- >> he's a member of a club. >> he's a member of a club. >> it's so popular that nobody goes there anymore. too crowded. when we return, it may not look like it right now, but spring it around the corner, so the real estate market could heat up. we have a real estate expert to tell us about the art of flipping that property this

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and the fortune 500, and, can deliver insight person to person, on what matters to you. morgan stanley.

welcome back to "squawk box." this morning, hgtv getting ready to air the second season of "flipping virgins." joining us now on what it takes to flip a house, hgtv's

"flipping virgins" host. we're flipping virgins this morning. >> emphasis on flipping, not virgins. >> i've never flipped a house. so help us. first of all, what's going on in the real estate market? >> oh, my goodness. we're preparing for a vigorous seller's market. that's all the talk across the nation. it's all about supply and demand. right now there's just more qualified buyers out looking than there are good houses on the market. it means if you're a seller, now is the time. >> can i make it political? is there a trump confidence going on? >> if you want to make it political, go right ahead. i mean, historically, usually when we have a new president, there's some jitters about what's going to happen, but right now so far, so good. >> the other thing people are worried about, the fed is meeting today. potentially everybody expects they're going to raise rates this afternoon. that gets people starting to worry. am i going to lock in the right rates for my mortgage. >> i think you hit the nail on the head. they've been talking about that for a while.

now their ny're not just saying, they're saying a few hikes throughout the year. so buyers are trying to get in while the getting is good. >> it's definitely heating up the market. >> it is, and i appreciate it. >> let's talk about flipping. flipping was always sort of a sign something bad was happening in the market. >> there are still deals to be had. i will tell you not as many because prices are going up. my show "flipping virgins," that's exactly what i'm trying to do, teach first-time investors how to properly flip a house for a great profit without losing their shirts, which you can't just go find the ugliest house on the block and do it. there really is a science, rhyme, and reason to flipping. >> is there a way to do it in new york city? >> you do notice i'm flipping in atlanta, right? >> you used to be here though. >> i used to be here. >> i know that, but that's why i ask. i live here. i'd like to flip some plaices here if i could. >> but it was never in manhattan. >> i started flipping houses in

newark, new jersey, when they were essentially giving away properties if you would pay the taxes. so i got in while the getting was good. we had some of those circumstances up in harlem at one time. that was of course before the clintons moved in and everything went sky high. there are still deals to be had. you just have to know where to find them. they're a little more difficult in new york. you may have to travel across the bridge. >> well, i get a rash. that's very difficult for me. >> we don't want you. >> in jersey? >> no. >> i'm a new jerseian. >> i'm happy to buy stuff in queens. that's the new hot market around here. >> as long as the formula makes sense. your acquisition, your renovation, and the arv. arv stands for after rental value. that's a big step that a lot of first-time investors are missing because they're watching all of these -- come on, all of these flipping shows on television right now. mine is different because i'm teaching the formula to flipping.

as long as those numbers make sense, meaning if you're going to buy a property for $150,000, $200,000 -- not in new york -- and you're going to put another 100,000 into it, i want to make sure you can at least get $100,000 worth of property. it makes no sense if you're going to walk away with 20,000 and take that much risk. >> just from the blood, sweat, and tears. >> everybody is trying to diy everything these days without really understanding there's a lot at risk. >> and that i think is one of the best lessons. it's not as easy has it looks. >> no. nothing ever is. what you do is not as easy as it looks. >> is it still kitchens and bathrooms that get you the most value? >> kitchens and bathrooms absolutely sell properties, but people are looking for smart homes now. that's a big trend. >> is that a good idea or bad idea? because technology changes so quickly. >> i think it's a great idea to invest in the technology. a lot of homes, new builders are making their homes smart home ready. if you want to in the future add in a smart home system, you can.

>> okay. thank you. let's go flip something. >> as long as you're not flipping me. >> great to see you. >> thank you. coming up, former house majority leader eric cantor will join us on set to talk about battles over health care policy and tax reform. plus, mike jackson will tell us how this could impact saelts when we return. this is where i trade andrs. manage my portfolio. since i added futures, i have access to the oil markets and gold markets. okay. i'm plugged into equities- trade confirmed- and i have global access 24/7.

meaning i can do what i need to do, then i can focus on what i want to do. visit learnfuturestoday.com to see what adding futures can do for you. at bp's cooper river plant, employees take safety personally - down to each piece of equipment, so they can protect their teammates and the surrounding wetlands, too. because safety is never being satisfied. and always working to be better. this just in. 50 million customers' data was not compromised this morning in a security breach that didn't happen. wall street, not rattled... at all! no. sir, sir. what went right? what went right? everything. we have a brief statement on this non-breach. we're happy to report there's nothing to report. my dad's company wasn't hacked today. cool.

it is decision day. the fed widely expected to raise interest rates for the second time since december. a full breakdown of what investors should expect from the decision this afternoon. breaking overnight, the white house confirming president trump paid $38 million in 2005.

guest host and former house majority leader eric cantor is here with reaction. you can see him right there. and the president is expected to reopen a review on fuel economy rules set in place by the obama administration. auto nation ceo mike jackson is here to talk about the effects that move could have on the industry. the second hour of "squawk box" begins right now. ♪ live from new york, where business never sleeps, this is "squawk box." good morning and welcome to romper room here on cnbc, also known as "squawk box." live at the nasdaq market site in times square. i'm andrew ross sorkin along with becky quick and joe kernen. in studio for the hour, eric cantor, former house majority leader. lots to talk to him about with

what's going on in politics. ever before we do all that, a quick check on the markets. looks like the dow would open about 46 points higher. s&p 500 up close to six points. also, some headlines for you. we have a slew of economic data coming up ahead of this fed policy decision later today at 2:00 p.m. we'll get february retail sales and consumer price index at 8:30 eastern time. later this morning, business inventories and the home builder sentiment. also, crude oil higher for the first time in eight sessions. this coming after the american petroleum institute reported a surprise drawdown in inventories. the energy department releasing official inventory numbers later this morning. you're looking at wti crude trading at 48.75. finally, get ready for qe-4. jpmorgan chase ceo jamie dimon thinks that's possible, but not from the federal reserve. this time he says it's a round of stimulus that he believes could come from bringing cash back from overseas, if laws change to make such moves more

favorable. fed meeting day two. the market expecting janet yellen and company to hike rates later on today. steve liesman joins us right now with a preview. he's been down in d.c. ready, waiting for two days. right, steve? >> yeah, becky. we're looking for ready, set, and hike. the federal reserve expected to hike by 25 basis points today. that could prompt a broad but light interest rate rise. the quarter point hike is going to raise the rate banks charge each other for overnight money to 0.87 basis points. that's the highest level since the fed furiously cut in 2008 amid the financial crisis. the move has been pretty well telegraphed. the probability of the hike is 94%. stocks have remained at high levels, even as the feds funds future market prices in the rate hike. 1.33 is the level of january fed funds market.

there it is. it's just below the 1.37 that would mark fully pricing in three rate hikes in 2017. so the fed is hiking because it says it's at or close to hitting its jobs and inflation targets and the economy is operating close to its potential. that creates a possible conflict with president trump, who wants to ratchet up growth. he's talked about military spending, tax cut, and infrastructure spending. so today we listen for hints. a possible fourth hike maybe or about how close the fed is to thinking about reducing the $4.1 trillion balance sheet and how fed chair janet yellen thinks policies should react if president trump gets his policies through congress. >> all right, steve. let's add a couple more voices to this conversation. gabriela santos is from jpmorgan funds. michelle meyer is at bank of america merrill lynch. are you with just about everybody else on wall street today figuring we're getting a hike today? >> the fed basically already

hiked through communications. to me, it's not really a question of whether they hike, it's what's the communication they deliver around that, which is what steve was talking about. so how do their dots evolve? do you actually have a real consensus within the fomc where they're assuming a faster hiking cycle. what does yellen say during the press conference? there's a lot for the market to digest, but it's not going to be the rate hike move. >> gabriela, we know the rate hike is coming. the market has shrugged that off at this point. if janet yellen sounds hawkish, is there a reaction in equities to that? >> i don't know about equities necessarily. in fixed income, yes. i think that will come either from the dot plot or the press conference, where we may see the conversation shift from two to three rate hikes more to three or four rate hikes. that will still need to be priced in on the short end and long end of the fixed income curve. when it comes to equities, one point we always make is, look, we're normalizing rates very,

very gradually. and we're doing this because the economy is doing much better. >> eric cantor is with us this morning as our guest host as well. eric, we had a couple conversations this morning just trying to figure out what it means for our budget deficit. is that a big concern? >> clearly, as you know, the heart and soul of the republican party, which is in the majority in congress, is about fiscal discipline. this notion that somehow there's not a lot of movement in trying to resolve the deficit and deal with the debt will be a lingering issue. if rates go up, it's a significant drag on the budget. there are many in congress who would like to see actually some movement on trying to deal with the deficit. right now they're trying not to aggravate the deficit in terms of the health care bill or in terms of the tax reform proposals. >> but really, tackling some of this stuff is going to mean tackling entitlements, if you listen to most. >> and this is, i think, the

increasing tension you see in washington. donald trump came forward and said we're going to get this economy growing. clearly, as we've seen in all the surveys, optimism is abounding because of the deregulation push and because of the pro-business posturing in the white house and congress. but he's also said he's not going to touch entitlements. we all know that you can't just leave those entitlements the way they are and expect growth to take care of everything. >> growth would help a lot. >> phenomenally. it's a huge plus to get growth going. i think if we can just get there, we can see some entitlement reform. >> gabriela, what do you think of the market these days in terms of stocks? where are you? because we're looking at midway through the month of march, and we're basically flat lining at this point. we hit a new plateau potentially. >> the way i think about it, the market really started this move

in the middle of last year. it's been driven by two main factors. the first one having to do with just the global economy accelerating, the fundamentals improving for earnings as well in the middle of last year. layer on top of that over the past few months some political optimism. we still think the former justifies a higher equity market here in the u.s. over time. >> the economy? >> the economy itself. the fundamental themselves. in terms of political expectation, i think we may be reaching a point where we get a little bit of disappointment in terms of timing, in terms of scope, and that could create a little bit of volatility in the market over the next few months. >> what kind of pullback -- what's the biggest pullback you could imagine and what's the upside? >> well, if we think about historically, what would make sense, going all the way back to 1980, an average pullback of 10% once a year is considered normal. 5% once a quarter. you could still finish the year up if the fundamental remain as

strong as they are. >> steve? >> yeah, just a couple things. becky, i want to ask you a question. did you ever tell your husband that you didn't care about your birthday and then when it came and he didn't give you a card, you were upset? >> no, because he never listens to me. >> well, he's a nice guy. i'm a little worried about that with the market. it's been sort of well telegraphed that we're getting a rate hike. then when it happens and they see this notion that the fed is firmly on board with these three rate hikes, i wonder if it thinks differently this afternoon than it's thought. if it doesn't, it's a huge victory for the fed. it's a sign of how if you do come forward with fiscal policy, then it can, in fact, bail the fed out of this zero interest rate lock that it was in and couldn't get out of. i just think there's some risk today. it's interesting going in that we're up 48 basis points. we've maintained these high levels. i've been interested to see how the market's reacted to comments from the fed. it's reacted very well.

i think the final test is today. we're going to get those comments and statements and the forecast from the federal reserve. if the market can hold here through this rate hike and the forecast of three, then i think there's solid ground underneath it. >> stooeve, it's, i don't want anything for my birthday, just get me a card. what kind of relationship do you have? don't even bother to get me a card? it's like, give me a card but nothing else. and try that. see if that works. >> none of that works. >> if you have the choice of a card or nothing -- i mean, seriously? >> i would take a present without the card. >> that's what i mean. >> i guess i've ruined the conversation. i'm sorry. >> i've tried just the card. try just the card sometime for a birthday. >> none of it works. >> you open the card, and you look and you're like, is there something in the card? >> yeah, yeah, yeah. there's got to be something small and shiny usually. >> it helps.

michelle -- >> i'm usually looking for a green piece of paper. >> over and over again, we keep saying, oh, the fed has prepared the market, so now they can go ahead and raise. why do they care so much what the market thinks? why aren't they a little more volcker like? this is the way it's happening and you can catch up and i'm not going to wait for you and worry about a temper tantrum? >> that's a really good point. that's one thing the fed has been criticized for. they're so careful about massaging the message to the markets. so they're telling market participants that it's the data that matters, watch the data. if the data improves, the financial conditions are supportive, we're going to go ahead with the hiking cycle. >> but part of the data seems to be what the dow is doing. >> exactly. that's the complication. there's so much interaction between the economy and through financial conditions and the perception the market has about the economy. i think there's that complication, which is hard to disentangle, what the markets are going versus the economy.

>> all right. thank you both for being here. steve, we'll check in with you in just a little bit. of course, eric cantor is our guest host for the rest of the hour. when we come back, parts of president trump's 2005 tax return revealed. we'll speak to our guest host, eric cantor, about that shower and t -- story and the trump agenda. then, president trump may be about to rollback some of the regulations for automakers. also, later congressman greg walden is center stage when it comes to the american health care act. he's one of the authors of the legislation that's under fire by democrats. he'll join us later this morning. stay tuned. you're watching "squawk box" right here on cnbc. ♪ say carl, we have a question about your brokerage fees. fees? what did you have in mind? i don't know. $4.95 per trade? uhhh. and i was wondering if your brokerage offers some sort of guarantee? guarantee?

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welcome back to "squawk box." want to turn to our guest host this morning, eric cantor, former house majority leader. we're going to talk taxes, tax returns, obamacare, and everything else. just on the tax returns, did you watch? any take? >> i saw this morning. >> and? >> listen, i think it just sort of speaks to all the critics. everyone was saying he's never paid any taxes.

everyone was saying that he didn't make the money that he reputed to make. i think it was a win for the white house, obviously. >> i happen to agree with you. do you think, though, that we still should see the tax returns? >> sure. >> the actual returns. >> sure, absolutely. i think that transparency has always been the best standard to live by. hopefully we'll be able to see that. i think it'll put to rest some of the other conspiracy theories that some of the president's detractors are continuing to pursue. >> okay. >> nice number. >> yeah, listen -- >> 150 is a nice number. >> absolutely. the guy made a lot of money. >> nice number. >> he did well. >> my point is 38 million, you can do a lot with 38 million, the government can. >> everybody said he didn't pay any taxes. >> probably more than -- maybe more than i paid my entire life. i don't know. >> come on, joe. >> you probably are thinking in big numbers.

>> that's a lot of money. >> it's a productive member of society. the left at this point is so deranged. they have deranged trump syndrome. to make this guy into some villain when you're contributing 38 million to the tax rules, it just doesn't make sense. >> i think there's a conflation going on here. >> i'm not surprised, andrew. this is simple. >> there's the transparency of wantedi wanting to know the funding sources. >> i'm talking about are you a positive member of society when you do well for yourself and generate big tax revenue. >> he took all these deductions. but that's a lot of taxes. he paid a lot of taxes, he made a lot of money.

>> i want to talk obamacare, the repeal of it and what you think is going to happen. if you look at the cbo report, there's a couple of interesting pieces, but one of the most interesting pieces, at least to me, was the suggestion that over time the current plan actually would stabilize and that wasn't in the death spiral we hear about all the time. you think that's right, that's wrong? if it's wrong, what's wrong with the report? >> first of all, i would say, yes, the republicans are going to get this done. they have to get this done. there's just no option. i will stipulate that. they will have to get this done. it is the gateway to getting tax reform done, the momentum and the rest. i would say this on the projections of cbo. listen, it is not a science. they were way off in terms of the projection on obamacare. they were way off if you go back to the bush administration on the projections on medicare part

d. they didn't go in and project nearly -- anywhere near the kinds of savings, cost savings, that that program has been able to affect. i think this. i think the difficult problem to sort of compare apples to apples is the obamacare replace doesn't have in it a force mechanism to make people buy insurance. that in and of itself is going to result in less people being covered. that's just the bottom line. i think the interesting part about what cbo said is that you will have stabilization of the market over the peert of the budget window and you'll see a reduction in the price of premiums over time. i think that's the port thing. lowering cost is going to afford more access. >> if you're in the house and thinking about 2018 and you're hearing some of these other numbers, by the way, which is that older people are going to be paying a lot more than they pay now, how do you reconcile all that? >> well, first of all, what you're seeing is they're trying

to make the pool of patients more healthy. that's what has been the big problem. >> it's hard to do without the mandate. the mandate didn't even do it. when you're young, you think you're going to live forever. you think you don't need these sorts of things. >> this is the difficulty any time you get the federal government in the business of even tiptoeing near some kind of mandate. they have a continuous coverage provision. >> although, people point out constantly, look, you have to -- before you can drive, you have to have auto insurance. >> right, but it's not -- it is not something the federal government says is required. it is -- >> by states. >> it's by states and it's freedom. you can choose not to drive, right. same thing here. whether it's a smart decision or not to buy coverage, we're about freedom in america. so you're going to have a choice. the premise of the replace,

which has been discussed now for six, eight years, is this notion we want more competition. you've got to go in and affect those kind of reforms to give people more options. >> but does that mean cost goes up or down? when you start to think about the people who voted both for donald trump and put the republicans both in the senate and house this time, if the price tag ultimately goes up for many of those people, how are they going to feel either in 2018 or 2020? >> this is a question about the cbo projections. will the cost go up? ultimately cbo says the cost of premiums will go down. >> by 2026. >> right. the first couple of years there's going to be an issue because there's going to be less people in the pool because there's no mandate. that's just a given. if you're going to go with the sense we've got in this country of freedom, no mandates, you're going to have less people buying. >> could states do that? could they say you have to have insurance? >> that's an interesting

question. again, you get to -- i'm sure there's federal issues there about your rights. probably -- >> i hadn't thought of that until just now. >> i mean, i don't know necessarily they could require you to do that. all the constitutional issues. >> that's an interesting point though. >> play it out so we understand. you think that the repeal of obamacare happens by when? then let's talk about the domino effect of when we get tax reform and what's next. >> as you know, paul ryan has said they're going to get this done by easter. i know that the leader in the senate also wants to see this get done. different sort of interest on the part of some of the senators. >> senate's going to be much tougher. >> it's a different set of issues they're going to have to address. it's what we did all the time. trying to go in and put your best bid on the table in the house, then realizing the senate is going to counter with

something. this is what's going on. what i think they've done in the house -- >> so is this the best bid? that's very interesting. do you go in with the bid you think is closest to what they want or go in over here knowing they're going to go over here and we have to come to the middle later? >> given the discussion now and the feedback from the senate, which is a lot of the more moderate state senators on the republican side saying, hey, you know, we're a little concerned with these coverage numbers, we're a little concerned with the medicaid piece, but as you've heard in the house, most of the opposition is saying, hey, we don't want the extension of medicaid to continue. we want to cut off now. so in a way, you can say that the bid that's on the table is not far enough for some of the folks in the house. again, l realization is you've got to get it through the senate as well. this is a kind of -- you know, the chess game that you're playing when you're trying to navigate through counting the votes and whipping the votes. as you know, i started as whip then became leader. that's the real grind that they're going to have to go through now to get this thing across the finish line. >> you're glad you're not the

one who has to whip those votes. >> i'm good where i am now. >> eric cantor is going to be sticking around. thanks for that. coming up, president trump expected to reopen a review on fuel economy rules set in place by the obama administration. auto nation ceo mike jackson will join us to discuss what it could mean for the auto industry. time now for today's aflac trivia question. what activity was banned in ireland on st. patrick's day from 1903 to 1970? the answer when cnbc "squawk box" continues. leg. yeah looks like a real nasty moving back in with his parents. what? no. i just broke my leg. no, this is a full blown move in to the basement, you're gonna be out of work without that money from... aflac! you might miss your rent. aww i just moved out. bummer man. hey i used to have my own place. yeah? no, no i live with my mom, but it's cool.

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good morning. welcome back to "squawk box" here on cnbc. we're live at the nasdaq market

site in times square. among the stories front and center, mortgage applications rising 3.1% last week. that's according to new figures from the mortgage bankers association. both new purchase applications and refinancing activity were higher. the average 30-year mortgage rate rose ten basis points to 4.46%. that's the highest since april of 2014. also, some new charges will be unveiled today in the yahoo! hacking case. according to multiple reports, the fbi and justice department officials have scheduled a news conference for later this morning, presumably to announce these charges. some of the alleged hackers have tied to russian government, according to those sources. two separate incidents compromised the personal data of hundreds of millions of yahoo! users. also, president trump will nominate goldman sachs managing director james donovan as deputy treasury secretary. he's expected to focus on the white house's domestic policy agenda. the white house also named nominee for treasury secretary for its international affairs. president trump is expected to reopen a review on fuel

economy rules that were set in place by the obama administration. he is traveling to michigan today, where he'll be meeting with several top auto executives. that's where we find our phil lebeau. he joins us with more on the story. phil, good morning. >> becky, it's not just an expectation. it will happen. president trump will announce that his administration is reversing what the obama administration locked in toward the end of the term in january, and those are the fuel economy standards from 2022 to 2025. let me give you some perspective about those standards. these were originally written back in 2011, and you can see there's a dramatic expectation in terms of what's expected for fuel economy going all the way up to 54.5 miles per gallon by 2025. here's what the trump administration is saying. look, they're saying they want to reverse the 2022 to 2025 expectation. there's supposed to be a review in 2018. that was written into the

original rules in 2011. the obama administration said, no, we're just going to lock it in, in late january. the trump administration is saying, look, with fuel prices where they are, we should go back to at least reviewing the standards in 2018 and making a decision then regarding what happens in 2022 to 2025. the automakers have said all along that 54.5 miles per gallon by 2025 is going to be costly to the industry and to america as a whole, costing as much as $200 billion. those mpg requirements, according to the automakers, also do not reflect the realities of what people want to buy and the cost of gasoline and the cost of fueling a vehicle. as you look at shares of gm, ford, and fiat chrysler, since the election, we should point out the ceos of those companies are expected to meet with president trump along with executives from really all of the major automakers. they're all going to be here at this facility. we will be here as well. the president will be speaking

shortly after 2:00. we'll be here for his remarks. again, they are going to reverse what the obama administration locked in, in late january, which are the fuel skmi standards from 2022 to 2025. the trump administration saying let's talk about it in 2018 as originally scheduled. guys, back to you. >> all right. phil, my friend. joining us now -- checking the hair out today. could use a little gel. but with gel, it gets frozen. >> with spray, it stays frozen and the whole thing moves at once. >> you can't use gel. you'd need a whole -- i don't used any product. how about you? >> nope. >> joining us now -- i don't know about mike jackson. always looks pretty good. >> what are you talking about? a little hair spray. >> gel. >> oh, gel. no, i don't use gel.

i'm into paste though. >> mike, you look like you're pretty quick in the morning. you don't spend a whole lot of time. you got stuff to do. you're the chairman and ceo of auto nation. good to see you, mike. where are you -- as far as these fuel standards go, i understand maybe a time when they were maybe more important when we were thinking peak oil, et cetera, but it seems like they're never really a bad idea in terms of conservation and everything else. how do you decide the perfect point at which you conserve but you don't make it too tough for the automakers to comply? are we there right now, or should it be eased up a little? >> so joe, you're exactly on point. the whole debate is about the rate of the improvement, the slope of the improvement, not whether there's an improvement. the entire auto industry around the world is fully committed to improving fuel efficiency every year across the entire spectrum

of their products and is investing hundreds of billions of dollars until the technology to make that happen. when you come to the united states back in 2011, the auto industry made an agreement with the obama administration for the aspirational, very ambitious target of 54 miles per gallon by 2025. the only way that deal got done was the agreement of a good-faith review to be completed by the spring of 2018 as to whether everything was developing as expected. and what was the expectation? the expectation was that by that point, gasoline would be $5, $6, $7 a gallon and people would be purchasing 70% cars and 30% trucks. that was the basis for the agreement on the target. so what is the reality? well, due to fracking in the united states, we all know that gasoline is below $3 a gallon. it's going to be below $3 a gallon for a long time.

and the mix is completely the opposite, as we've talked about for the last two years. people are moving towards purchasing 70% trucks and 30% cars. it's unbelievable. so the industry says there's a major disconnect between what the expectation was and what the reality is, and there needs to be a good-faith review. what happened is after the election in the waning days of the obama administration, they slammed the door on the fingers of the auto industry, saying ha-ha, we tricked you, this review is done. this is the same administration that took seven years to make up its mind about the keystone pipeline, all the sudden was able to make up its mind in 45 days. that's not a good-faith review and does not reflect the reality that's out there. and perversely, the implications of standards that are too

extreme or onerous are that you produce products that people won't buy both because of their configuration and there's no economic underpinning to pay for the technology that's in it, which will slow down the replacement of the vehicles that are on the road in the united states, leaving older, dirtier vehicles on the road longer. imagine the average age is already approaching 12 years for the vehicles on the road in the united states and costing millions of jobs. so you would end up with dirtier air and fewer jobs if you leave in place extreme, onerous regulation. by the way, joe, you're hearing this from business across the board about the last administration, whether it's health care, financial regulation, and other things. well, yeah, we need regulation. if they're extreme and onerous, you kill productivity in america and you hold the economy back.

this is a perfect example of that. i think the trump administration is absolutely doing the right thing, saying, hey, there's a big disconnect between the regulatory demand and what's actually happened in the marketplace. of course we need to have cleaner air. of course, we need to have improve fuel economy. but we need to do it on a rational basis that genuinely achieves the goal and does not hold back the economy or disrupt the economy. >> let's say, mike, that it was a perfect world and we didn't have other considerations, just for argument's sake. what would the market dictate for fuel standards? if you did a supply and demand, this is the perfect point where maximum demand, perfect supply, with people doing what they want to do. do you think there would be fuel standards? i think there would, but it would be much lower than what the government dictates, right? >> joe, i hate to break your

heart, but let me tell you about the american people. >> we're guzzlers? >> below $3 a gallon. they want size. they want comfort. they want utility. >> and safety, mike. >> number one on the list is they'll say they want fuel economy. that's like saying -- if you survey the american people and say everybody would like to weigh ten bounds less, but are they going to eat broccoli instead of their donuts? no. so at $3 a gallon, it's very tough on the fuel economy side. and look at the mix of what people are buying. we're well over 60% on trucks. >> talking about regulations, bmw lobbying the government -- i don't know if you saw this -- for what's called seat belt ignition interlocks, meaning if you're going at a certain speed, you'd have to put your seat belt on. the reason they want this is because they want to make lighter cars, and they also want

to -- the current standard, if you run it into a wall, is that people are not wearing seat belts. they actually want this. where would you land on that? >> the seat belt is the greatest safety innovation in the history of the automobile. it's the most important. we're well over 90% compliance now in the united states with the laws. i would point out to you, as someone who's been in this business 45 years, we had a standard let's say 30 years ago that said you couldn't start the car unless your seat belt was buckled, and you can't believe the machinations the american people went through to circumvent that, including getting devices to stick into it. the american people resent certain levels of regulation and just bypass them. but bmw in principle is correct. >> in principle, they're correct, but the problem is when you're testing these things against another car of the same size or against a wall, it's one thing. the reason i want to be in an

suv at this point is because so many other people have suvs and trucks that i don't feel safe. odds are i'm going to hit another suv and it's going to roll right over me. >> becky, let me tell you, the perverse consequences of regulation. if the manufacturers were allowed to design vehicles with the assumption that people had their seat belts on, the safety of the vehicle would be improved exponentially and the fuel economy of the vehicle could be improved exponentially. you're absolutely right. the regulation requires manufacturers to design the vehicles also with the assumption that people do not have their seat belt. so people who wear their seat belt in effect are subsidizing those who do not. >> i used to try to resist. you can't. the ding will never stop. it never, ever, ever stops. ding, ding, ding, ding.

>> 50% of the 35,000 deaths every year are a function of people not wearing seat belts. >> you're crazy. >> everybody should buckle up. don't text and drive. >> i like the way it feels. >> you're right. don't text and drive either. >> thanks, mike. when we come back, a new plan from lawmakers to get rid of corporate tax breaks. and it's a big worry for business. we have that story next. also, check out the futures a the this hour. we'll hear from the fed, widely expected to be a rate hike. the dow futures up by 54 points. s&p futures up by seven. the nasdaq up by 12 1/2. oil the big mover yesterday. today, prices bouncing back. this is the first time in eight or ten sessions we've seen a higher price for oil. it's up a dollar this morning to 48.72. more on the markets in just a moment. "squawk box" will be right back. ♪ why do so many businesses rely on the u.s. postal service? because when they ship with us, their business becomes our business.

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it actually helped to know that somebody else cared and wanted make sure that i was okay. that was really great. we're the rivera family, and we will be with usaa for life. usaa. we know what it means to serve. call today to talk about your insurance needs. welcome back to "squawk box." there's a new flash point emerging in the debate over the rewrite in the nation's tax code, the deduction for interest payments on corporate borrowing. more on the story from washington. >> good morning, andrew. well, companies have long relied on the ability to deduct interest as a way of lowering their total tax bill, but the

house blueprint for tax reform gets rid of that benefit, so executives from the real estate industry are in washington this week. they're braving the snow to make sure that it doesn't go away. bob dewitt is head of gid, a residential developer in boston. he said losing this tax break could make new buildings more expensive, and that could send rents through the roof. >> our view is that the elimination of interest deductibility is detrimental to our industry. the conclusion is that u ultimately it will end up reducing the amount of supply we can add. it will increase the costs of doing business. as a consequence, it's going to increase rents. >> but tax reform is all about trade-offs. republicans are arguing that companies are getting a lower headline tax rate and full expensing in exchange for losing that interest deductibility. also important, getting rid of that tax break, raise federal revenues by $1.2 trillion. that's according to the tax

foundation. that makes it a bigger pay for than the border adjustment tax that we've all been talking so much about. so this is definitely going to be a big fight. >> ylan, thank you. a lot of fighting. when do they not fight? when is there not fighting? >> this is washington, joe. >> you remember tip o'neill and reagan used to throw back a few and we got a lot done. i don't know. i think it's all about the alcohol. anyway, thank you. coming up, we're going to wrap up the hour with former house majority leader eric cantor. then at the top of the hour, richard turnill of blackrock joins us for an hour. we're going to talk markets and today's big rate decision. plus, one of the authors of the american health care act, congressman greg walden, is our guest host. and might be the ides of march, but it's been a great day in my house because it's my son scott's birthday today. >> happy birthday, scott. >> happy birthday, scotty. >> oh, look at him.

>> my favorite male in the whole -- like, you have two favorite males. >> i do. >> your two sons. this is my favorite male in the entire world. he's 15 today. 15 on the ides of march. it's a deep and abiding love we all have. anyway -- oh, look. who was that? that guy is a babe. anyway, "squawk box" will be right back.

let's get to our guest host, eric cantor, former house majority leader. i look at you now and think, wow, you seem like you're in a good place. then i look at what, you know, on a daily basis what's happening down there. i question why'd you do it in the first place. you'd probably like to be in the action. >> i'm really good where i am now. >> i know. could you get this done? could you and ryan and others working with the senate get this repeal and replace? >> they have to get it done. >> but will they, can they? >> yes, yes, they will. they will. they will get this done. listen, the process is not pretty. it's ugly. we know that. >> will you recognize what finally happens? will you leave more of the medicaid expansion there for the senators? will it be less for the tea party types? what will it look like?

>> there are a lot of republicans in the house pulling away. >> further left or further right. >> at the end of the day, it'll come down to the president. i'll never forget, when we were doing things with president bush -- at the time i was chief deputy whip. we were in there counting the votes on medicare part d. these were things where president bush, we would have him on the phone. i would be in the cloak room trying to compel members to support the bill. when they expressed doubt, i would put them on the phone with the president and tell them, you tell president bush why you can't support the bill. >> there are some people suggesting this morning that president trump was duped into a bill that is more conservative than his world view and more conservative than he would want to support. >> i've read all these articles. at the end of the day, it's about the president engaging to make sure those dissenters in the house are reduced to a point at which they can pass the bill, get it through the house, and then go and confer with the

senate, do what needs to be done, and reconcile the differences. this will happen. it has to happen. there's no excuse anymore because republicans are in control. that will replace and replace obamacare and get on to what i think most people in the business world want to see happen, which is tax reform. >> i mean, are there going to be kicking shins to convince -- >> absolutely, absolutely. this is not -- it's not an easy process. remember, when obamacare was passed, the democrats, at least initially, had 60 votes in the senate, which made it a lot different situation. there's almost a razor thin margin at this point in the senate. i think people will come to the realization that, you know, you can't have everyone have it the way they want. >> but that suggests you're going to have to give much more leeway to the senate than you would otherwise, that the people in the senate are going to be more important because you can't afford to lose any votes there. >> at this point, there are

enough who have at least withheld their position in the house that, that has to be dealt with initially. >> if you had to bet, would you say this is going to be a bill reflective of senate concerns because of that political reality? >> one of the interesting things being discussed now is to try and affect the sort of means testing of the medicaid benefit. i think there's probably a needle tip being threaded with that issue. i know john thune and some others are working on it, which says, hey, we're going to means test it to make sure those who can least afford it get the benefit, but at the same time, not create or continue this sort of middle class entitlement that has purported to be created with this medicaid piece as well as the tax credit. i think there are a lot of moving pieces on this. but at the end of the day, i think republicans want to make sure those people who don't have access to care can have access, those people who can't afford it and are sick are not denied the coverage. >> that's pretty tricky. >> it's definitely tricky.

>> can we -- we just need to have an american society that says you must have health insurance. we can't let people choose not to have it. is that where we are? we've never been that way. >> no, we're not. >> then you're going to see the way the media portrays things. either we have a mandate that forces people to get it or anyone who makes a personal decision not to get it, you're going to hear they're not carrying their weight. we need to know as a society whether we force people to do what they don't want to do. we have the same discussion with vaccines. >> do you think we should let you -- >> no, no, no. we'd never do that. >> why not? >> then it falls on the hospitals. >> i know that. i'm just telling you that's what we have to decide. >> where obama started -- remember, president obama initially said he wanted to do something to bring down costs. quickly that became 100% issue about coverage. what the republicans are trying to do is trying to go in and

make sure that cost reduction is the number one priority because more people can have insurance. >> you always tell me you don't like subsidies and redistribution. ultimately it is a form of redistribution if you're happy to pay for that person. >> i'm just telling you it's a gray area. someone that doesn't think there should be any type of medical treatment given to their children by their religion. what do you do? >> do you allow them? >> again, we're ultimately about freedom in this country. >> i know. that's where we're different. we've always been different. i just wonder, you know, how do we finally decide. we're a wealthy country. everybody should be covered. but then you come to these other issues. i don't know. our thanks to eric cantor, who kind of helped solve a few things. we're still in the soup. >> absolutely. >> that's all right. we've got lots more to discuss this morning. in fact, coming up, congressman greg walden will join us to talk

about the gop health care plan. and then the fed aechb the markets. john bellows of western asset and richard turnill of blackrock will both be here. plus, senator john thune will be joining us. and if that one enough, we'll be talking mortgages and rising interest rate environment with the vice chair of rock holdings, which owns quicken loans. "squawk box" will be right back.

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it's decision day for the fed. a rate hike is on the table. we're going to tell you what else you should be watching as we count down to janet yellen's news conference. health care overhaul. the battle for reform continues on the hill. we will talk to a chief architect of the republican plan straight ahead. plus, red pill or blue pill? a matrix reboot is in the works. we'll tell you which actor is heading down the rabbit hole as the final hour of "squawk box" begins right now. live from the most powerful city in the world, new york, this is "squawk box." good morning and welcome back to "squawk box" here on

cnbc, live from the nasdaq market site in times square. we made it through the storm of the century. >> wow. >> i'm joe kernen along with becky quick and andrew ross sorkin. our guest host this hour is richard turnill, global chief investment strategist for blackrock. the futures right now are indicated up across the board. 50 points on the dow. over ten on the nasdaq. six on the s&p. oil prices, which have been conspicuously weak lately, are stronger today. that probably is boosting the equity markets. i think we're fine. starti start getting under 50, and i think we start worrying about whether it's a slowdown. >> yesterday the futures were pulled down by the decline in oil prices. this morning futures are higher once again. let's get to some of today's other top stories. an fomc policy decision is due this afternoon at 2:00 eastern time. chairman janet yellen will be

holding a news conference 30 minutes later. don't miss complete coverage right here on cnbc. there are a few economic reports on the agenda before the interest rate decision. february retail sales and consumer prices are both out in just about 30 minutes. the justice department is expected to unveil charges related to the attacks that exposed millions of yahoo! user accounts. reports say that authorities will accuse four people, one in canada and three in russia, who allegedly have tied to the russian government. yahoo! disclosed that hackers infiltrated its network in 2014 and stole data from more than half a billion users. okay. today's top political story, two pages of president trump's 2005 tax returns were leaked. robert frank joins us right now with that story. >> good morning, andrew. you're right. two pages of trump's 200 a -- 2005 were released. as a candidate and as president trump has so far refused to

release his returns, pages leaked last night show had he reported income of $153 million and paid $38 million in taxes. that would be an effective tax rate between 24% and 25%. there are lots of details missing here. it was just two pages from his returns, but they suggest his income included about $42 million from business income, capital gains of around $32 million, and around $67 million from partnerships. he paid most of his taxes because of the so-called alternative minimum tax. that's a parallel tax to the regular income tax, which is designed to prevent wealthy taxpayers from using deductions and other losses to offset all their income taxes. he did claim a $103 million loss on his 2005 regular return. maybe that's a carryover from those losses we've heard about from the 1990s. yet, the amt prevented him from using that full loss and the lower taxable income.

now, he also may have had a charitable deduction in 2005 of around $14 million from donating a conservation easement at his golf club in new jersey. we should also note that trump and house republicans have proposed repealing the amt as part of their tax plan. >> excellent job, robert. >> thank you. >> you're very welcome. you delved into exactly how it happened. some details are still missing. >> a lot. so we don't know what else is in the return in terms of losses and income and carryovers, et cetera. the more important issue is what we know about the wealthy is that each year's tax return is highly variable. they can vary their income, and they can vary their losses. this is one selective year which shows that even among the wealthy, he paid a high tax rate. >> what's the average? >> average among the wealthy is somewhere around 20% to 23%. >> and he paid 24? >> 24, 25. so that's a high rate, even for

multimillion dollar earners. the middle class, even though the effective tax rate is high, the middle class pays around 10% to 12%. he's paying a high tax rate for the wealthy, but we don't know what happened the year before, the year after, the 20 years before. so i think just to pick out this one year and say, see, he does pay a high amount of taxes, would be misleading. >> we're not wealthy. we pay about 35%. why do i pay 35? that's not including new jersey, i don't think. >> your income is ordinary income as opposed to from capital gains. >> i'm one of the chumps. >> you are. >> yours has got to be overall like 50. >> between new york city, which is close to 11%, including state and city -- >> watch we find out sorkin's got cayman islands stuff going on and section eight housing. sorkin probably pays zero on 15

million in income. he's got "billions," he's got all these other irons in the fire. watch him pay zero, just like harry reid said about mitt romney. here we are arguing all day long, and you're the one at zero probably. look, he's not denying it. you're like trump. >> i think i paid like 50%. possible i pay over 50%. >> we all do. >> when you are somebody who's paid just on the w-4 form like that. >> right, right. even at $153 million, trump would not have been among the top 400 earners. when you look at the top earners in america, most of them it's from selling an asset that particular year or people who make their money like warren buffett from capital gains. so that's why his rate is so much lower than his secretary's, et cetera. >> are you willing to release your tax returns, sorkin?

finally, will you release those, so i can see those? >> are you going to? you want to do it together? >> no, maybe not. >> yours is simpler than his. >> mine is definitely simpler. >> i'll make you a deal. when the president does -- >> oh, god. all right, all right, all right. that you ask our sports guests whether it's time for trump to release his tax returns. >> sports guests? what sports guest have i asked? >> it's hyperbole. but you ask everyone market guest, sports guest, house flipping guest. i mean, you've wanted to see those things for six months. >> and you don't? >> i saw one today. >> that's not what we're interested in. >> was there evasion or avoidance? avoidance is everybody's duty. evasion is against the law. people writing in now saying it's not fair he only pays 25%. >> i'm not interested in that point.

>> what's more relevant is how much income and wealth he has and where it comes from. by the way, they're not going to know that from the tax return. they're not going to know, oh, a russian oligarch gave his money. that's not going to be in your tax return. it's going to be the trump ssr corporation that declares a certain dollar amount. you all know who that is. so all these ideas that the tax return is going to magically open up all the sources of his wealth and how much he's worth, that's not going to happen. but he should release them. >> if he makes too much money, he makes too much money. if he doesn't make as much as he says, then he's a fraud. either way they're going to have something to yell at him about either way. >> it's not about the actual amount of money. it's about what the rated is a more importantly the sources. >> we won't know the sources anyway. >> we'll know more, but we're not going to -- it's not going to be the magic bullet that

suddenly unlocks all of the people who have paid donald trump and his sources of debt and all that stuff. that's what people are looking for. i think they're expecting too much when they talk about that. but we will learn more about his net worth, how much he earns, and what types of income he earns it from. >> it's guest the law to do this, isn't it? >> what? >> for someone to get the release unless he releases? >> as the white house said, it's against the law for someone to -- there is speculation that he released it, leaked it himself. because it's positive for him. >> and it's the only year where he paid. that's what the other side is saying. oh, release the one time he did pay something. you can't win. anyway, joining us now, congressman greg walden, chairman of the house, energy, and commerce committee, which oversees the health care plan put forth by the republicans. chairman, good to see you this morning. thanks for joining us. >> good morning. >> we had former leader eric cantor on. he says it's going to get done. i know he's a former republican. i asked him for the honest

answer given he knows how the sausage is made, and i think he was honest. he says it has to be done. that's what everyone's saying. but that doesn't mean it's going to be easy. what's going to need to be changed here, do you think? >> if it were easy, it would have been done already. this is the legislative process we're going through. anybody that follows it knows that you put something out, you work on it, you go through a deliberative process. we spent 27 hours and 27 minutes allowing anybody on the energy and commerce committee that wanted to to offer amendments. we voted on them, voted the bill out of committee last week. now everybody gets a chance to dive deeper into it, evaluate it. it goes to the budget committee this week. there's more opportunity there. then up to the rules committee next week, where there's even more opportunity. so what we want to do is get it right. we want to fix this problem. we want to repeal and replace obamacare. it's hurting people across the country. you see insurers pulling out of

the market. 225 counties last year had one choice for people. this year it's 1,022. that was before humana pulled out. so we got to fix this market so it works for consumers so they have more choices, more opportunities. and remember, what we're working on here is just one piece of the overall reform. it's just the piece in reconciliation. so it's really not fair to look at it in isolation. dr. price can do a lot at hhs to change the market and improve it for consumers. and we're going to do a lot more in individual bipartisan legislation going forward. >> when it's all said and done, how similar will the final product be to what has been presented so far? that's part of the question. >> i think it would be pretty close. >> okay. will there be more concessions granted to the far right that want to do less, or will there be more granted to the left, like the senate, that want to

actually, you know, keep more of obamacare where it is? >> you've hit upon my challenge. half of the republicans in the house come from states that expanded, like my state did pretty dramatically, which means half come from states that didn't. that's where we're trying to thread this needle to be fair to each side and move forward, which probably means both sides have things they didn't get that they would like, and they're going to fight for it. that's part of the process. that's what we're working on. so we're in contact literally every day and night with the white house, with our friends from different perspectives. i was over in the senate, briefed the republicans, took their questions, heard their concerns and comments. there are some things that probably get worked on between here and when it comes to the house floor. there are things that will be worked on over in the senate. they're an equal legislative body. so this thing isn't done. but what we want to do is get it done and get it done right. that's what we're working toward. >> chairman, can you just expand on that so we understand exactly where the debate is.

you talked about states like yours that expanded on medicaid, states that didn't. so the states that didn't are going to feel like they're getting shortchanged because if you freeze the roles where they are, they're not going to be able to do what the other states that took advantage of this were? >> here's the other part of it. this is where you get into the weeds. obamacare cuts their payments to disproportionate share of hospitals that care for those most in need. lower income. we stopped those cuts on states that didn't expand. we allow those cuts to continue under obamacare for states that did because they're getting more money through the expansion. so the cuts continue. so we provide some help there. we provide additional funding called safety net funding for states that did not expand to help them get through this period. and we have a state patient and stability fund for all states going forward, where they can buy down the deductibles, buy down the premiums, they can enter into preventive health care efforts they want to do. our goal here is to return more authority to state and local governments to make the decisions because we believe

they know better than somebody sitting here in washington. >> just to dig deeper into the weeds, this is something the markets will be paying attention to with those states that did not expand that will get additional -- that will have the cuts gotten rid of. hospitals in those states would be in a better position? >> i would think so. every hospital is going to be a little different here and there. certainly they should benefit from that now in the nonexpansion states. in the expansion states, hey, they signed up for the deal. it included the expansion money and the cuts. when the expansion stops at the end of 2019, december 31st, 2019, which by the way is the date the president in the meetings i've had with him was very clear, he doesn't want to create a gap here. he firmly said that's the end date. we'll keep a floor there for people. we don't want people to fall through. when the expansion stops, so do

the cuts. now, by the way, those that are on expanded medicaid can stay on at the higher 90% rate until those individuals get a better paying job, go off of the expansion eligibility on their own. so the states aren't penalized. the people aren't penalized. they go off on their own volition. >> so you think it's possible to make concessions to both sides. that's so weird to understand that. >> it's called the legislative process. we do it all the time. >> but some people want to move the end result of the replacement piece. some people want to give more to mollify all the critics you're going to have for people that are losing coverage. some people don't even want to give as much as they're giving now. >> welcome to my world. >> the issue is who's not getting coverage and more about who's covered and how much

they're going to be paying. >> so let's talk about that for a minute. the congressional budget office, they're good people. they work hard. they have got a really tough job to predict markets into the future. they admit they were off by a two to one ratio with how many people they thought would be on the exchange. this is tough work. they predict 14 million people will go off because of what we're doing. but when you look at it, all we're doing next year is taking the individual mandate off. i'm not sure why 5 million people give up free medicaid insurance because we said there isn't a mandate or why it also then speaks to why people don't want to buy this product in the insurance market. there are problems here that both dr. price can address, we're addressing, and we'll address with other legislation going forward. but we have to because the market's collapsing. when you talk about markets, you all know them really well. you cover it every day very well. this is an insurance market in collapse. rates have gone up in my state 50% in the last two years.

they may level off and only go up, you know, single digits going forward, but that's after a 50% increase. is it any wonder 45% of those who decided not to buy obamacare insurance, even though the irs mandated them to, either paid the penalty, got the waiver, and they're under 35 years of age. so younger people aren't buying what the federal government is trying to force them to buy. >> all right, mr. chairman. did you ever hear don't try to please all the people all the time? >> hey, i'm living that. >> i don't think it can be done. >> haven't you been watching the news? >> that's what worries me. you know how all this is going to be portrayed. >> we're going to get this right. we have to get this right for the american people going forward. that's what we're working for. >> you might get it right, then everybody's out in 2018. that's the only problem. that's the world we're living in right now. thanks, mr. chairman. i appreciate it. >> you're welcome. thank you. up next, the fed expected to announce a rate hike this afternoon. we're going to be talking market strategy with our guest host richard turnill and western

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welcome back to "squawk box" this morning. markets likely to take their cue today from the fed. joining us now is john bellows from western asset management, and our guest host, blackrock's richard turnill. what happens? >> so the market is fully priced for a rate hike today. the fed has done a very effective job of managing expectations. it's going to deliver on those expectations. i think the real issue is what they say afterwards. it's about adjusting expectations further out. the market has now priced in effectively three hikes this year. when you look into 2018 and 2019 where the gap exists -- >> let me ask you this. recognizing that it's unlikely that janet yellen is sitting in the chair in those outer years that you're talking about, does it matter what she says? >> so i think --

>> how do you read it? >> i think it matters, the guidance you start to get from the fed. you start to see expectations shift. i think the fact you're going to get some big changes in the fd d over the next few quarters further skew the risk. you may get more tightening than the market's anticipating over time. you're starting to get that adjustment coming through. i think what's key is that adjustment comes through in an orderly way where the market continues to anticipate gradualism over time. one of the notable features is the fed managed to navigate this price expectation into the market without really creating any disturbance. >> john, is good news good news in or is good news bad news? >> i think the interesting question is why are they tightening. remember a few weeks ago, everybody thought they were going to tighten in june, not march. so what changed? i think the biggest thing that changes is financial conditions. if you think about the month of february, there's a pretty impressive month.

equities up 5%. corporate borrowing rates lower. bond yields lower. the dollar sideways. you saw loosening of financial conditions. the fed's responding to that. in some sense, the fed is already responding to that positive news of financial condition loosening. that's why they pulled their hike forward. in terms of what that means for the outlook, i'd say not much, actually. we haven't seen enough evidence of economic growth to change their growth or inflation outlook. i still think we're in a secularly sluggish growth environment. there's a lot of headwinds there. so they're not going to move their terminal rate. so i think, you know, you saw some good financial conditions in february. the fed's responding to that. i don't think that warrants a wholesale rethink of their outlook in terms of where they're going from here. >> john, we often talk about the train having left the station. joe jokes that i missed the train. >> got to get on it. >> got to get on the train. i went the wrong direction. then everybody says, well, you know, historically, the market at some point during the year

retreats. so i maybe have a chance to get back on the train. the question is, do you have any idea what that would be and why? if that's the case. >> well, i think there's no doubt there's some cyclical strength in the u.s. right now. the employment report last week was very good. you're seeing some of the sentiment surveys having follow through in terms of the hard data. so the data has been positive. again, i think it's too early to conclude that we've escaped this world of sluggish growth and all the headwinds there. until there's more convincing evidence that we've seen permanent or lasting improvements in productivity, overcome the demographic headwinds, and generate some sustainable inflation, you know, i think the fed's approach of being gradual is right. i think we're going to have to see a lot more evidence until they're going to conclude that the train has left the station in any meaningful sense. >> you're an asset management. all people that invest in the long-term really need to know --

there's two questions. when you get a little bit of a pullback, do you put more money in? or when you get some strength, do you start taking money out? if you're in for the long term, whenever you get a pull back, it was at 800 whenever it was. now it's at 21,000. are you saying when there's strength people should sell or when there's weakness people should buy? >> so in credit markets, we're optimists. we have those positions in portfolios. we think the recovery is ongoing. we still think there's value there. you're right, prices have gone up. it makes sense to adjust positions in response to that. but overall, we're still optimists and have those positions. i'd say one thing that i'd note is on the interest rates, there's this consensus view that interest rates have to move higher. you can see that in positions. there's a lot of short positions in rates. we're not willing to be in that consensus trade right now. again, we have the credit risk in our book. when we think about interest rates, you know, the problem with that consensus trade is things might not work out

exactly like everybody expects. you could see growth disappoint, china could have a wobble, trump could under deliver. if things don't work out exactly as they expected, those consensus trades are going to be under pressure. >> all right. one more comment from richard. >> the point you raise, which is a critical one, many investors are still sitting on the sidelines with large amounts of money in cash. they're waiting for this 10 percent drawdown, which hasn't come. it's inevitable at some point. my answer to your question is different. you shouldn't be waiting for the 10% drawdown to invest because you don't know when it's going to come. the longer you will on the sidelines, the more opportunity you're giving up. our view is you're absolutely being paid to take risk right now, particularly in international equities and in credit. you should be an investor today. you shouldn't be waiting on the sidelines for that drawdown. the fundamentals are improving. >> all right.

we're going to go to a break, which gives you time to catch the train. you just heard that. that was very clear. where's your cell phone? >> right here. >> call charles schwab or whomever. >> all in. >> just get long. when we come back, we have some breaking economic news. retail sales and cpi.

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retail sales and cpi. cpi numbers are -- some people think they're getting pretty interesting. futures right now indicated up 48, where they've been most of the morning, on the dow. up ten on the nasdaq. the ten year, i don't think we have time to look at it. rick santelli has the numbers at the cme. >> all right. here we go. we're going to get a march read from empire. that's the most contemporary. that's 16.4, better than expected for sure. sequentially, a bit lower than the runrevised 18.7. cpi ex food and energy, up 0.2. now to the fun stuff. ex food and energy year over year, and that is running at 2.2. 2.3 last look. 2.2 as expected. if we look at that number, we really want to probably focus on the notion that like ppi, we're

starting to see these year of year numbers go up. if we just look at the headline number year over year, that's up 2.7. as expected but 0.2 higher than the last look. let's look at retail sales. we have lots of data points here. i'm going to try to pick it off on this other screen. month over month up 0.1, but we did gain 0.2. if we strip out autos, we're up 0.2. strip out autos and gas, up 0.2. maybe the most important number of all, just because it's a little easy, the control group is up 0.1. last look it was up 0.4. then, boy, grab the handlebars and rev that throttle. it doubled to up 0.8. so the control group was up 0.8. lest sti let's stick with the control group number. that 0.8 is the best level since april of last year when it was up over one. if we look at just one-tenth on control now, that's fairly weak.

the last time we were a number close to that was november at zero. the last time we had a negative control number was july of last year. if we sum it all up, best way to look at that is the markets. guess what, 2.58 on tens. doesn't seem to be paying a lot of attention yet. maybe it's because janet yellen and company will be grabbing mikes not too long from now. back to you. >> yep, and we're so excited. i thought i was excited about the march madness, but steve liesman, pales in comparison to what's going to happen this afternoon, does it not? >> it is a dramatic, dramatic moment, joe, as far as i'm concerned. i know the way you're sitting there is literally on the edge of your seat. as you say often, joe, all eyes on the fed this afternoon. they're going to be looking at this data. what's interesting about this data is they kind of work together. you have the retail sales on the one hand and pricing data on the other. one is affected by the other. for example, you had a decline

here in motor vehicle sales, down 0.2%. but then when you look in the pricing data, new and used vehicles declined by 0.1%. the pricing did. so you don't have an inflation adjusted number here. you had a big decline, 3%, in gasoline prices. that obviously helped or flattered the headline number for the inflation data. also, you manyhad a decline in of the clothing. you had department store sales go down. the big number, rick flagged this, the control group being revised up to 0.8%. the reason is because that feeds directly into gdp. it's interesting. the two together show pretty decent over the first two months retail sales on the part of the consumer. we might see an upward revision to gdp later on today for the first quarter, which has been running weak. one other thing i want to leave you with, which is the

expectation has been that in february retail sales would be muted because the tax refunds have been late because of a law that was passed making sure they could verify some of that. the idea that we've done okay over the first two months is a good sign because people think it's coming in march or in the second quarter when it comes to better retail sales based on the confidence numbers we've seen, becky. >> all right, steve. thank you. i don't know about all eyes, but i know my two eyes will be watching both at 2:00 and 2:30, waiting for your questions. we'll see you then. mortgage rates ticking up as we wait for that fed announcement this afternoon. joining us now with the impact of fed rate policy on borrowers is bill emerson, rock holding's vice chair, the parent company of quicken loans, where he was the ceo for the last 15 years. bill, thanks for being here today. >> great to be here. how are you? >> doing great. we want to know how the housing market is doing, so i guess we'll ask you that. with rates sort of suddenly picking up a little bit, are you seeing more activity? are people trying to lock in these rates? what's happening when it comes down to it?

>> i think what you're seeing is people are waking up and realizing rates are moving a little bit. rates have ticked up a little bit in anticipation of the fed announcement this afternoon. you've seen mortgage applications ticking up, both on the purchase and refinance side, which i think is interesting because as rates tick up, i think on the refinance side, folks are realizing they have to lock in and take advantage of the opportunity. you don't really know what's going to happen once the fed does decide to raise rates this afternoon and what that means over the next couple weeks. >> do you think it will mean that rates go up automatically overnight? >> you know, i don't know. i would have told you pre-election, probably not, because things were very, very stable. all of this stuff was priced in. i believe that some of this has already been priced in. as you know, markets are irrational. i think volatility is a new norm here for the next few months until we get some more visibility into the economic data and what that ultimately means for the fed come june. >> yeah, i guess part of it is trying to figure out what janet yellen says at that news conference. if she sounds much more hawkish, is that the type of thing where

you could see mortgage rates respond in kind? >> i think so. i don't know what janet yel listen s -- yellen will say, but the fed doesn't want to be mind tbehind curve on making a move, but they want to respect the data. it will be interesting to hear what she says at 2:30. i think that will drive some of the interest rate moves we see in the next few days. >> you pointed out that refinancing activity has ticked up. that always surprises me. rates have been so low for so long. i'm shocked by anybody who hasn't locked in a rate if they had the opportunity to do it. >> you know, we've been shocked at that too, but there's still a lot of people that have not done anything out there. you know, when you have that one last chance, maybe that's when you wake up and say ir should d something. as you look at the numbers going forward, just because rates go up, doesn't mean people won't refinance. they just refinance for different reasons. there will be a little less of it, but people will still refinance. >> bill, you had a significant victory, a meaningful victory about a week and a half ago

related to this case with the fha. they dismissed a number of the claims that were brought against the company. what happens now? where's this whole thing play? >> well, so andrew, good question. number one, it was with the doddoj not the fha. we continue to chip away at this ridiculous case that's been filed. now it's a matter of continuing to move forward. we have to sit down with the judge and figure out what discovery looks like, continue to move forward in that process. we're going to continue to narrow this down. we're going to continue to refute this broad claim that the doj is making and ultimately we believe we'll be victorious. we're looking forward to that next step in the process. >> bill, we'd love to have you come back next time you're in new york. maybe come into the studio with us too. >> happy to do it. >> okay. let us know. thank you. >> all right. thanks, guys. coming up when we return, justin bieber among the celebrities whose twitter accounts were hacked. detai details about that and more when

we return.

coming up when we return, the health care battle reform continues. south dakota senator john thune is working on an amendment to the house bill. the senator is going to join us to discuss it all first on cnbc. we're back in just a moment with

that conversation.

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hundreds of twitter accounts have been hacked and branned with the turkish flag and anti-german and anti-dutch messages. this hack comes amid rising tensions it between turkey and the netherlands. the university of chicago and "forbes" are among the verified accounts compromised.

hackers posted a youtube video that featured clips of turkish president erdogan. a twitter spokesperson said the source of the hack was limited to a third-party app and that its permissions were removed immediately. that goes to show, don't believe everything you read on the internet. when we come back, south dakota senator john thune. he's one of the most powerful republicans on capitol hill. he'll join us next live. dear predictable, there's no other way to say this. it's over. i've found a permanent escape from monotony. together, we are perfectly balanced. our senses awake. our hearts racing as one. i know this is sudden, but they say...if you love something set it free. see you around, giulia

the probability of a fed

rate hike is now over 90%. in the week following a hike, the worst performing sector etfs were materials

welcome back to "squawk box." this morning, the third highest ranking member of the senate proposing an amendment to the gop's health care bill. senator john thune joins us with details about his plan. he serves as chairman of the senate republican conference. tell us about this plan, which i understand would means test tax credits. >> right. we think the house bill lays a great foundation, andrew, and what we're hoping to do is to improve upon that by helping deliver the benefit to the people that we think are going to need it the most and shifts the way that the -- redirects, i should say, the tax credit to the lower end of the income scale and also provides an age adjustment so that older people,

people of lower incomes actually are able -- better able to afford health insurance under this new plan. we think the house bill has laid a great foundation. it has a number of components in it. the medicaid reforms are significant. we look forward to having an opportunity to work on it in the senate. >> we were talking to eric cantor about this in terms of the way these things are negotiated, which is to say how the house approaches this and how far out they go on one end and how far the senate goes out. do you think the house has put their best bill forward to you, or is this part of a negotiating dance? >> i think it's both. i think the house has put their best foot forward. i think it includes a lot of the -- as i said, a lot of the thought, substance in terms of republican policy, conservative policy as it applies to health care over the past several years. i think they incorporated a lot of those ideas into the bill. i also think this is a negotiation. obviously the dynamics, the political dynamics in the house are different than they are in the senate. so they're doing what they need

to get 218 votes in the senate. we have to figure out what it takes to get -- or i should say 218 in the house. we have to figure out what it takes to get 51 in the senate. that's why i'm hoping this amendment, if we can get it incorporated in the house bill, enhances and helps the prospects of passage in the senate. >> just to put a fine point on it, if the plan came in as is without this provision, you would not vote for it? >> well, i'm not saying that. i'm saying this would be make the bill stronger. i think that it needs some -- i think we need to tweak a few things in it and dial some things differently, but like i said, i think the house is off to a great start. i just think there are ways we can improve and strengthen this bill that enhances its passage in the senate, and i have a number of colleagues who share my view about the tax credit and how the benefit is distributed and would like to make some impromts improi improvements in that. >> andrew had an anecdote earlier about an elderly person -- >> if you were making $26,500,

the way the subsidies would work, you'd be paying close to over $14,000. up from $1700. >> andrew would be on board with this. >> yes. >> so you're getting the other side there sort of coming along. >> but i would argue, but i wou i think this is a conservative amendment. this tax credit goes all the way up. if you're a married couple filing jointly, you can still benefit up to $32,000. this compresses that and actually takes some of the revenue that you would use to deliver the tax benefit on the higher end, the tax credit on the higher end and give it to people that actually need it. i think it's a smart thing to do because it lessens the amount of tax credit that you put out there and the income categories that would benefit from it. >> you're also doing something else, senator. you're having hearings on all of the droning that the senators do in the chamber? i don't see any way for you to -- that's like a bird has got

to swim, a fish has got to fly. there's no way -- is that what you're doing? >> i figured when we posted that hearing, that's what you guys would think it's about. but actually, we have a hearing today in the senate commerce committee to talk about drones. it's a really interesting subject. a lot of applications. you can think of many ways in which it enhances public safety. there are a tremendous amount of commercial applications. that's the focus of the hearing. and there will be a good amount of droning. >> droning about drones. and if you think about it, if anything, a lot of people don't like regulation. if you don't regulate these drones, i'm going to be afraid to walk outside or look out my window or be afraid that there's -- just the whole aspect of delivering some horrific agent. there's a lot that needs to be considered before these things are flying everywhere. >> i agree. that's the point that we've been making and we've been working

with the faa in the last two faa reauthorization bills in anticipation when these become more available out there, more people flying drones now. there has to be some rules of the air, so to speak, when it comes to flying drones and how they integrate into the overall air space system. and we need to get the full benefit of all of the wonderful benefits that are going to take place, i think, as a result of increasing the amount of drone usage when it comes to agricultural applications, when it comes to looking at wildfires, when it comes to inspecting utility poles out there a long ways away from civilization and those are things that we think are really going to be utilized extensively and that's why we want to make sure it's done in the right way. >> what about the quote/unquote hob hobbyist, the retailer buying

these drones these days? >> a lot of the hobbyists -- a lot of people are doing it, we have to have standards in place to make sure they are not getting in the way of commercial aircraft and the rules of the sky are designed in such a way so that everybody can participate but nobody is getting in anybody else's space. and so that's really the focus of the hearing. we think it can be done in a way that enhances safety, not impair safety and we're hoping to get more answers about that and to proceed in a way that is measured but also takes full advantage of the tremendous benefit that can from usage of drones. >> all right. thank you. senator, appreciate it very much. >> thank you. >> senator, you're like 6'8" or something. those drones are eye level for you. are you the tallest -- you're the tallest guy in the senate, aren't you? >> i used to be. i got passed up now. >> who did it? >> our new senator from alabama,

luther strange, he's 6'9". >> but senator, can you dunk? >> that's the key. probably not anymore. back in the day. >> senator, great to see you. it's great to have you on when you can. thank you. appreciate it. >> appreciate it, guys. thanks. let's get down to the new york stock exchange. our jim cramer joins us now. every week it's a lot of stuff, jim. i don't even know where to start. although, there will come a day where we won't say it's all about the fed. maybe that's coming. maybe that's coming some day. but today it's about the fed. >> largest steel company in america was on last night. 2017 is going to be a terrific year. the largest warehouse distribution company in the country, they are trying to put up as many warehouses as possible. they can't meet the demand. how many days do i have to have ceos who say business is great for people to realize it's okay

to have a rate hike, probably a couple rate hikes and it's not going to -- look, these guys are looking for workers. business is very strong and all i ever do is read that you should be worried about the environment, the fed shouldn't raise it. i'm really tired of it, joe. how many executives come on, are they all lying? does anybody talk to these guys? i talk to them. >> i just wonder, does that mean 4 4 this year? >> i think 3 is something that would not slow down these companies. sudden surge in orders since the election. this stuff is happening. it's just that the regular -- look, we're like -- i feel like on "mad money," we're presenting a story that's seen that's alternate from what i read in the press. >> i hope there's a new new

normal or an old new normal. it would be good. >> nobody knows how to deal with it. everybody just says it's a bad economy. they don't know how to deal with the good economy. they don't know what it's like. they should make some calls. >> young people don't know what it's like. >> they don't. >> i know. all right. thanks, jim. >> absolutely. >> see you at the top of the hour. jeff gundlack will be on at 12:30 p.m. "squawk box" will be right back.

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our guest host this morning is chief investment strategist. >> i think we're seeing a transition in the market. if you look at the second half of last year, it was all about surprises in the u.s., optimism about the u.s. politics and policy. if you look at this year, global growth surprises is much less about a u.s. story. the real surprises are actually coming in from europe and asia. that's because expectations are so low and you get positive growth. i think it's a huge amount of

skepticism about those markets. many international investors have bought into the u.s. story and are hugely skeptical about growth surprise coming in europe, coming in asia. >> it's been great having you, richard. thank you. >> thank you very much. that does it for us today. make sure you join us tomorrow. right now it's time for "squawk on the street." good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla along with jim cramer. janet yellen has a press conference at 2:30. dutch parliamentary elections are today. cpi is in line but the biggest year-on-year gain in five years. our road map begins with the fedex expected to raise rates today. is the market ready