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 for a hike and what comes next?

>> some trump tax returns are made public. we know what he paid in 2005 taxes. what does it all mean? and the prime minister of ireland joins us live. his country has hundreds of u.s. companies meeting with the president tomorrow. we'll find out what he's planning. first up, though, the fed is set to wrap up the two-day meeting. fellow policy makers are going to announce a rate hike at 2:00 p.m. yellen has a news conference half an hour later. trying to hang on to breakeven levels for the month, the story is going to be about the dots and the word gradual and business investment. >> i think you will hear a lot of people say, this could be the beginning of the 17 rate hi2017 that caused problems in the 2000s. we are at a low level. you're not fighting much of a fed. i believe very strongly we have

a much better tone of business in this country. there was an article today about lending and that lending is not that strong and i recognize that. but i have to tell you. >> the companies i deal with, warehouse companies, businesses are strong, well above where it was last year. and this is a group of ceos that i have had. u.s. concrete. again, these are big companies. martin, marietta, big aggregate companies that do business around the country. how can you sit there and say if u.s. concrete is having the best year, that we should be worried about a quarter. >> you are referencing some charge that shows loans flattening out a bit. >> you know, new corps yesterday was talking about steel that goes into residential construction. a big uptick.

these numbers that i get are aggregates and the largest steel company in the country is seeing a real, big surge. you can say, wait a minute, jim, some of that is because you can't dump anymore. new corps, the low coa-cost pror is basically giving a forecast which says it's all systems go. and a quarter point doesn't mean anything. a half point doesn't mean anything. that's how strong the demand is. >> when we've seen the broader market, we've seen wti down and that's pressuring some parts of the market and then we've got -- i don't know if i want to call it a -- we just had senator thune on. >> it's a swamp. >> is it getting drained? >> no. >> it's like a bayou. >> the question becomes how long, if ever, is that going to

take. and if it doesn't get there, then what does that mean for tax reform. >> you need these repatriation. it makes you feel like you want to jump up and down. >> called a qe 4. >> yes. >> i don't know if you know that, jpmorgan -- >> i've heard that. it's like fort knox. >> yes. u.s. producers are producing 100,000 more barrels a day each month that he is why you need the saudis who met with president trump. there's been various stories. goldman says, did they cut back? didn't they cut back? the level of whether they cut back is whether the u.s. producers are really pumping here. why? the permian is a good number at 35. >> that's a good point.

it shouldn't be lost on people. the cost of production and ability to actually make money to lower prices dramatically moved lower over the last few years since oil started to make its move lower. >> yes. >> in certain areas. >> you know what's so fun about the backan, crude was sent by rail before then. >> the cost of crude will come down making it more economical. >> the backan has been obliterated by this. some parts will be back in action with more drilling and more rigs with the dakota access. >> right. >> by rail is a crummy way to transport oil. >> it would seem like it. >> to the point that i was making on the aca repeal and replace, many people believe you will not end up with tax reform

but to mr. dimon's point, they believe that you will end up with a tax cut and repatriation. that's seen as likely, not necessarily the broad parts of tax reform as presented to us so far by the blueprint. >> i agree. on page one of "the post," trump allies call the ryan bill a trap. more discussion about whether the president just jettisons this thing and let's the senate take up what is being called a repair bill. would that speed the pace of tax reform? >> president trump is having a really hard time with this swamp. i watched "squawk box." two senators and representatives arguing about everything. honestly, it's like the old days. let's not kid ourselves. we have ryan saying we've got the plan, the president maybe not scrapping it. >> it's supposed to work. >> that's democracy. that's the way it's supposed to happen. >> yeah, but democracy takes

forever. we need a tax cut now. we need a repatriation now. >> keeping the balls in the air and you don't like the weight. >> i'm actually fine in terms of the stock market but i would say that the country could use it. the stock market, we like it off. we like it out there. so when it happens, we've got something to look forward to. if you're president trump, i shouldn't have used the word "we." that was probably a mistake. >> yes. >> because that's like the mandate. >> yes. >> i'm saying if you're president trump, you're saying, well, wait a second. right before my eyes, jobs, jobs, jobs but there is often deregulation because he is deregulating. >> much more able to be felt by corporations almost immediately as a result of the ability of the president to actually make it happen. >> we're going to get a taste of that today. he goes to detroit. he'll make remarks with auto executives and workers before going to nashville where he

probably will try to sell the health care bill. but the detroit appearance is about deregulations and pg standards. >> another day that they are not working. they've had the few west days at work since this guy got elected. >> i think they would claim that it is work going to the white house. but you're right, their travel schedules have included washington, d.c., and following the president wherever he might be. >> they don't put fenders on when they are not meeting with the president. >> no. >> this is a very complicated -- when that cbo came out and no one wants seniors to lose -- when i heard seniors losing health care, well, i tell you something, guess what -- >> it's actually that -- it's like 60 to 64 where you're potentially crushed because then you get medicare once -- >> actually, you are that group. >> that's right. i'm telling you --

>> cold, dead hands off my benefits. >> one of our good friends mentions the core inflation rate. he would call it a trend and i remember the days when the fed's fund rate used to be 200 basis points above inflation. >> i think the feds have got a runway to really if they want to say a lot of different things and they have to be more vigilant, they can say that the risks are now even, that we've got to go back to normal. they've got so much covered, it's unbelievable. this gives them so much cover they can confidently say, listen, we've got to get back to the old days where we have somewhat of a rate, not this kind of emergency rate. there's no need for any emergency rate at all. there isn't. >> when do they start to actually deplete their balance sheet? >> well, that is just -- talk about morass --

>> but they never started selling. >> no, they never sold. >> 4 trillion, right? >> chinese have sold. >> chinese have sold. that was a great trade by the chinese. >> not quite as good as apple. it was unparalleled. >> apple price target raised. >> it's all about services. i remember speaking to apple saying would you please go out with the service thing and i hate supercycle. when you google supercycle, it says type. >> yep. rbc takes the target from 140 to 155. a couple pages of the president's tax returns from '05 have been made public. they show he paid $38 million in taxes that year at a rate of 25%. also reported a business loss of more than $100 million.

he's refused to release his taxes since becoming a presidential candidate. joe scarborough says congress should pass a bill requiring every presidential candidate to post the last three years of tax returns beginning in 2020. >> that would make it so people are compliant. no one has said this and it's going to be out there. there were a lot of people on the left who said they felt trump wasn't really making any money at all and he was one big phony. i have not heard this story. if you made that amount of money and, by the way, some of it is just in licenses, which is a fabulous annuity business, trump this, trump that. he made a lot of money. he is not a broke guy. >> he obviously denies this in tweets but david k. johnson, the journalist who says these were delivered to him, brings up the idea he did on the rachel maddow show where this was revealed that he thinks trump may have actually been behind giving

the -- >> it shows that he's wealthy. >> right. it show as decent rate. 25% or so and shows significant annual income. >> yeah. >> it's very little. and those looking who continue to look for connections in some way with russia, it doesn't necessarily mean were we to see every tax return from every year and every page of them that we'd be able to discern what is going on given how many llcs and entities he uses. >> right. >> but we're still waiting. one would hope that we would know the sources of his income and a lot of other things. >> i hear that music in my ear which often means it's time to go but not this time. depreciation, he's in real estate, the greatest break in the world. it's a fabulous thing. it's why people go into real estate. depreciation. when we come back, irish prime minister enda kenny in the u.s. to visit the president. take a look at the premarket, oil up for the first time in eight sessions after the 11% decline. back in a minute.

their experience is coveted. their leadership is instinctive. they're experts in things you haven't heard of - researchers of technologies that one day, you will. some call them the best of the best. some call them veterans. we call them our team.

irish prime minister enda kennedy is getting ready to meet with the president tomorrow. hey, eamon. >> good morning, carl. prime minister, thank you for being here on cnbc. appreciate your time. you're meeting with the president tomorrow but you've once called him racist and dangerous and you're taking some

criticism back at home for taking the meeting. tell me why you decided to take this meeting with president trump tomorrow. >> well, first of all, what i said was that the language used by the president was racist. i never said anything beyond that. and responding to an invitation by the president of the united states and very happy to do so. this is a tradition that's gone back very many years enhanced by tip o'neil and ronald reagan many years ago. it's not about me or the president. it's about the symbolic contribution that the irish made to america over 250 years and we'll continue to make. so we want to work with the administration as a microcosm of the european union. we want to work on that and i would say that after the 1840s when the irish came here because they believed in america, they believed in the compassion of america and they believed in the opportunity of america and we

still believe in that. >> the estimates is that there are undocumented irish living in the united states right now and what's your message going to be about the undocumented irish immigrants here now. >> i think there's two important things here. you normally have with countries with the united states allocations of visas for young people to come and live here and work for a period to get a feel of american business and society. the undocumented is part of the bigger process of immigration reform. we know there are 11 million people living in the united states who are undocumented. 50,000 of those are irish. there are people here who do not have full documentation yet made the choice to come here many years ago, they are married, contribute to american society and in some cases have worked and in some cases died for america. that's a bigger part of the

immigration reform that is a matter for the american administration. so i would say to president trump and vice president pence and others, it has to be part of the overall immigration process. we would like to see a far greater allocation of short-time visas for young people like we had in the past which is, indeed, part of the schumer bid where up to 10,000 could be felt with the election process. >> after brexit goes through, you're going to be bordering a non non-eu country. how are you going to handle that tension? >> this is probably the most difficult economic issue of the last 50 years. we have great relations with united kingdom, trade of 1.2 billion across the irish sea every week. but when uk leaves, ireland will be the only country with a land border internal to the european union. it brought with it sectarian

violence and troubles. we don't want to go back there and we are not going back there. my political agreement with the british government is that there would be no return to that hard border. that's a political challenge but that foundation is one that we both agree on. if you drive from dublin to belfast today, you would not know that you crossed the border except when your phone goes click. we're not going back to that kind of border which brought sectarian problems in the past. it's a political challenge with which both governments agree. >> prime minister enda kenny, we're out of time. a lot of this conversation will be available on cnbc.com later in the day. >> my privilege. thank you very much. >> carl, back over to you. >> our thanks to you, eamon javers. >> a fabulous friend ireland is and how prime minister kenny is one more person part of the irish miracle. i remember when i went to

ireland during the actual depression and you could -- there were just homes shuddered and everything has come back. >> u.s.-based corporations have made their home in ireland. >> it's a remarkably well-educated population. i love going there. it's probably my favorite place to visit and it is -- they are such great friends of ours. i think people have to go to realize, you really don't want to -- you have to go far to alienate the irish because they are real friends. >> yes. >> you go there a lot. it's true. >> my wife's family and her uncle was an as bmbassador to ireland. >> we'll get cramer's mad dash as we look at the opening bell. back in a moment. carl. ♪ oh no. schwab, again? index investing for that low? that's three times less than fidelity...

...and four times less than vanguard. what's next, no minimums? ...no minimums. schwab has lowered the cost of investing again. introducing the lowest cost index funds in the industry with no minimums. i bet they're calling about the schwab news. schwab. a modern approach to wealth management.

sometimes they just drop in. always obvious. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

♪ all right. it's a hump day, as we like to refer to it here. man, it's cold out there. >> miserable. >> one of my absolute favorite companies, msci, some people saying that the s&p, which is sp global, wants to buy them. they want 120. this company is ran by the legendary henry fernandez, an unbelievable ceo. we've been recommending him forever on "mad money." we've been saying it's the best way to play the emerging growth. china should be part of which index and they are the people

that you have to use them. >> s&p not that many years ago -- >> i have to tell you, candidly, on an earnest basis, no. this was totally in play. we recommend it in the '60s and '70s. if you really think the emerging markets are going to become more and more part of it, it's a low-risk way with no debt ran by a great guy. it looks like people want it. henry is roughly my age, maybe a little younger. but this is a fantastic index in an analytical company and i don't think people ever really understood him but s&p global would. >> where is this story coming from? >> we're seeing press reports from overseas. so therefore, i've been schooled by you to be careful.

i would not -- the idea that there's this talk that they want 120 or 130, i don't know where that comes from either. i would tell you, it's doing fine on the earning basis here. now you're in that world of speculating but it's such a good company. >> well, we'll be watching as we get to the opening bell in a few minutes. that big ring here at the ncse. stay with us.

what's happening here? this is my new alert system for whenever anything happens in the market. but thinkorswim already lets you create custom alerts for all the things that are important to you. i guess we don't need the kid anymore. custom alerts on thinkorswim. only at td ameritrade. yeah, i just saved a whole lot of money by swhuh.ing to geico. we should take a closer look at geico... you know, geico insures way more than cars. boats, motorcycles... even rvs! geico insures rvs? what's an rv? uh, the thing we've been stuck on for five years! wait, i'm not a real moose?? we've been over this, jeff... we're stickers! i'm not a real moose? give him some space. deep breaths, jeff. what's a sticker?!? take a closer look at geico. great savings. and a whole lot more. i'm vern, the orange money retirement rabbit, from voya. i'm the money you save for retirement. who's he? he's green money, for spending today. makes it easy to tell you apart.

that, and i am better looking. i heard that. when it's time to get organized for retirement, it's time to get voya. you're watching cnbc's "squawk on the street." the opening bell is in two minutes. what a busy day. it's not just about the fed. we're going to keep our eye on the polls in the netherlands. jim, this dutch election, the first of three in europe where these nationalists and anti-immigrants are trying to make a stand. >> when i heard that the nationalists could win in the netherlands, i said, give me a break. and then i started thinking brexit and trump and we can't call any of this anymore. the people who vote for nationalist candidates are not necessarily the people who are polled. so i think that we've got to pay very close attention. >> they may get the most votes but -- as one party but they are

not going to control the government. >> a coalition of many different types. we just don't know. we don't think. >> our weather is good over there. 13 million voters, clear skies. so they are looking for high turnout. >> we have to watch it because the euro i believe is undervalued. if everyone wants out of the euro, it won't be -- >> snap is going to open around 20. a nickel over 20. we have cantor today inniitiate underweight. >> at 17, i still think you want to buy it. i'm a huge believer in the content model and i do like snap as an actual going to more than just message. but 17 is my price. [ applause ] >> that's where it became

public. >> right. >> it's the opening bell. down here at the exchange this morning, ringing the bell, a packaging company r1 rcm, a cycle management company. we haven't touched on retail sales which were in line january advised up but department stores down 5.6 year on year. >> department stores, whoa. i don't know. >> department stores down 5.6. nonstore, up 13. >> department stores are a dying institution. it just is. i do think that people have to recognize that it's traffic. the traffic issue is so, so important. because you've got to get to the mall in order to shop in the mall and amazon has defeated that. look, raising numbers for amazon

on a snow day. i mean, literally. how much did you buy from amazon yesterday? >> one package arrived. i don't know what was in it? >> how about $140 for me yesterday that i normally would have gone out to get it. nothing was open in brooklyn. >> you needed to buy $140 of stuff yesterday? >> no, but i also got some interesting books. >> you did? >> yeah. my nephew who writes my show said, listen, you've got to read this and this neil ferguson book and i can't believe you haven't read them. i'm going to be on a plane. >> pretty good distribution mechanism for the written word. you know, speaking of malls and traffic, i have noticed simon property group, one of the largest owners, we were talking prior to the show, it's up today but it's finally started to suffer for quite some time it seemed immune to concerns about

mall traffic. >> right. >> and to their defense, they don't have that much exposure to jcp or macy's. but there is this concern that when you lose two anchor tenants in a particular mall, if that is the case, that's when your other tenants typically pay pretty low rates. if you lose both, then the other tenants in your mall typically can have an opportunity to take their own rents down. >> right. a vicious cycle down. simon properties went up and this is a shopping center company just precipitously down, frp. i had them on a few months ago. their rent is still going up because as you roll off, you have people coming in new and they are doing things to make it so that there is more than just a center. they are putting residential property next to it because of the idea that you want it now and they are filling with stores

that cannot be amazon. remember, this is a group in terms of 4%, simon group, 3%. there's no -- it's a strip mall and this theme is taken over not just the equity markets but the debt markets, people are looking for opportunities to shore what might be at least pools of mortgage-backed securities if they can find ones that have a good amount of exposure to retail. >> there's something called the cmbx 6. >> what? >> 2012 vintage pool, 20% retail, 10% malls. >> does it represent anything or more of the nonsense? >> no, it's not mirroring

another portfolio. it's the actual tranches -- >> that's where we are in terms of theme mall traffic. >> you look at the equity and debt and opportunities if you're an investor out there to take advantage of what seems to be a trend that is not going to change. >> when you talk about the border tax, one thing that i can say i've got to watch this. i've been dealing with this thesis now and i think don wood, they saw the need and there are a lot of stores that cannot be

amazon. pet stores cannot be amazon yet. >> you mentioned gap, of course. >> some people are still trying to work their way in. >> kids clothes, kids changing size and trying stuff on, you order it online and they hate it and order it online you have to fit them in it but you're mentioning it's so easy to return. >> it's very easy to return. why are pet stores on amazon? you can get your food, leashes, toys. what are you talking about? buying the actual dogs? >> no. people buy animals -- you can't send an animal. >> that's not the main revenue producer for petsmart or petco. they are not selling the animal. >> we get all of our pet food on

amazon. and our guys go through -- jesus, the stores are closed, i'm like, i'm going to amazon. like, knock it off. >> this relief in oil, jim, is translating to the freeports of the world. >> people saying the dividend is fine at 3%. it's one of the most poorly run companies in the patch. you've got to be careful. it's been the worst performer because they don't know what they are doing. but bank of america says don't worry about the dividend. i'm worried. they have good cash flow and the permian is good but a lot of these guys have gotten it together. >> twitter is worth watching. a couple of things. high-profile accounts were hacked apparently by a foreign group, put racist symbols on accounts. the other one is a long-time

investor tweeted yesterday, not only is funds selling when jack returned but personally selling all of his shares. >> yeah, that's not an endorsement, jack did buy stock. and i happen to be fascinated by lacrosse because my kids went to a nationally ranked high school but these kinds of things. niche programming, not just nfl football, when you do lacrosse league, that's what i've been telling them to do. stay a little more niche with these sports that are growing and anthony is doing that and i think that we forget that they are just not sitting there getting walloped every day. that doesn't necessarily move the needle. it's not like they are sitting there saying, what are we doing now? they are doing things. >> intel is the dow laggard. call it is a better company than

a stock after the mobile ideal. >> i don't know. i mean, to me, this is such a good idea. you can't just have this company be so much pc. i think autonomous car is so big. a brilliant acquisition. they needed a pre-emptive bid. >> but there is a school of thought, jim, that says they were getting caught on an innovation front by a number of competitors, even companies that you did not know because they were not public. things are moving quickly when it comes to autonomy, the symbols of mobileye. >> they say they are not using the chips because they are too expensive. they are using their own. what i think is happening is there's amazon and google and you've got really kind of --

>> some wonder, did intel know that competitors were starting to arrive at its front door. the deal is expected to close on a shorter timeline. it doesn't need chinese -- >> it does not? >> it does not. >> as opposed to qualcomm and nspi. that's one of the reasons that qualcomm bought them. i continue to believe that the winner in this space will be google. because who has the most miles? who has the most miles and fiat has teamed up with wamo. >> it's all about the data. >> yes. thank you. >> you're finding new behaviors that you can then start to tweak your ai for. >> just like digital marketing, speaking of which, did you see

e-marketer, u.s. digital spend will be up 16% this year. the lion's share of that is going to -- >> how much more facebook and google are going to get year over year and that literally is everybody else is getting hurt. it's almost like every other site is losing to those two. google, because it's that point of purchase that you want, and facebook because the ads are so embedded in a way that people like and so clever. those two companies, i don't know. i think it's kind of game set match against everybody else. the johnson piece made me feel like if you're in this business and living off the ad revenue, well, you're going to be -- it's not good. it's not good. two guys, david. two guys. >> yes, they dominate. >> they dominate. >> they dominate. >> you actually agreed on something. >> i know.

you know how he does that thing -- >> yes. >> dow's up 28. let's get to bob pisani on the floor. good morning, bob. >> good morning, carl. nice start to the day. let's take a look at the sector moves and finally a bounce in energy. we've been talking about those problems with oil recently to get a nice bounce we had the api last night showing a draw in crude. that's helping oil, materials, banks, consumer staples. threats to the market right now, let me point out, the energy etf down 8, 9% so far this year. a lot of oil stocks down double digits so far. that's the main threat here. in terms of like broader macro threats, a lot of talk about the dutch election going on today. we'll see how that ends up. i think the most important thing -- the two most important things is whether or not the fed is going to be hawk issue day and whether they changed the gdp forecast. we'll talk about that later in the day. and, of course, concerns about slowing and maybe derailed trump agenda.

the market is not showing any signs of being concerned about that but it floats out there as a potential concern. in terms of where the market has been moving in the last few days, take a look at stuff that's off but not that much. energy is the big issue. it's not necessarily related to those issues. it's related to the drop in oil but banks, transports, all 5% off of the highs. i'm talking about the recent march highs, the historic highs. russell 2000 up 4%. i wouldn't call this any last-minute worries about a correction but are you ready for a correction? do you know what a 10% correction is these days? it's about 2,000 points in the dow. the historic dow, 21,115. a typical 10% correction is now 2,111 points. that sounds remarkable but that's how high these numbers have become. here's a bigger number. how about 3,000 points. the average intraday move in the stock market for the last 30

years from the high to the low has been about 14.3%. so do that for the dow. 14.3% of the do you is a 3,000-point decline. i have no idea if that's going to happen but that's the historical average, high to the low, in a one-year period in the last 30 years. bear that in mind. big numbers that we're talking about right now. ipo is starting to get more active. we've got several going on here. of course, we're waiting for glass container to open on the upside. canada goose, talking about them, trade here at the nyse tomorrow. this is going to list on the toronto stock exchange as well. a very high-end outerwear. mulsoft, that was an up great at

14 to $16 a share. it's a software business here. the one i'm most interested in, we're going to have an energy ipo. we're going to have propetro holdings, which is fracking services in the united states, 20 million shares, 16 to $19. you know what's going on, there are several energy ipos that are floating out there. three or four that were set up when oil prices were a lot better a short while ago. that's going to be a very interesting one to watch to see how it prices down here at the new york stock exchange. right now, the dow is up 43 points. carl, back to you. >> bob, thank you. let's go to rick santelli at the cme. hey, rick. >> good morning, carl. it's pretty amazing when you consider the inflation data that we've had. granted, it has been hotter. when you look at the macro

entirety, the year-over-year numbers are definitely on the luke warm side but yet the market doesn't pay attention. maybe that's because in front of them there are a lot of hurdles, whether it's the f1-c committee even though march is, for all practical purposes, built in, french elections, dutch elections. so when i look at one week of 10s, i see a range. it's the crowning achievement of changes because it's at the top of the range. you know like a nail on the top of a chart that's significant and then look at all of the other markets in a relative fashion. let's do that right now. let's put up july 2014 as the day. let's look at our ten-year note. you can see there's a lot of important tops here. this is such an important boundary line. now, how did two year look in the context of this? wow. they have come up. makes sense. and when you consider we're going to most likely continue to

always have to stack on 25 base points on the short maturities, it explains a lot. you contrast that with the long-end of the curve which unlike 10s and 30s, it's a downward sloping which shows you the curve. plications as of late. when you look at bund yields, it's more aggressive. mario draghi has been trying to push down these rates for a long time but, hey, who knows what happens when they have a flush or an exit. things could get messy. dollar index from the same period. boy, it really has come a long way and we get so microabout it. yes, it's down on the year but definitely bold on that chart. of course, the euro versus the dollar. all right. back in the game. >> rick, thank you very much. still to come, the trump effect on the auto industry. we'll talk to former chrysler

ceo bob nardelli. oil is up 63 cents.

♪ we're drowning in information. where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. morgan stanley. is it because so many go after it the same way? chasing after short term returns. instead if getting caught up with the crowd, the investment managers at pgim take a long term view,

teaming specialized active investing with risk-management rigor, to seek out global opportunities. we manage over a trillion dollars this way, attracting many of the world's leading investors. partner with pgim. the global investment management businesses of prudential

we can find out later today who was behind the yahoo hack that impacted millions of customers. the doj will make a formal announcement about the hackers potentially with ties to russia as the s.e.c. looks into why it took so long for them to disclose it. >> someone who was an original dot-commer, one of the things you heard about was russia was always hacking from day one. the russians were inflating and doing crazy things with the web

almost instantly from when the web started. so i find these things to be like, are you kidding me? are you that surprised? why don't you monitor everything they do since they've been messing with the web since the web became the web. the russians aren't coming. they have been. >> they have been here. they are getting bigger all the time. as for yahoo, it's getting smaller and changing its name, as we know. the deal should close in april, if not sooner. and then you're left with alternative baba, as i like to call it. it's going to be regulated as an investment company with alibaba and a lot of cash. and then the question is how do

they go about managing that portfolio, what do they do with the cash. and that's it. see you later. >> i believe at some point we'll hear from verizon that they have done something but verizon is still trapped with not a lot of growth. >> you don't hear much about that, do you? >> no, you don't. and i know fios is making it easier to -- verizon is still, in the end, a cell phone company, as opposed to apple which is a revenue stream from services. >> all that and we're watching the market up. dow is up 41. stock trading with jim in a moment. kevin, meet your father.

kevin kevin kevin kevin kevin kevin kevin kevin kevin kevin trusted advice for life. kevin, how's your mom? life well planned. see what a raymond james financial advisor can do for you.

i'm ricardo, a sales and service consultant here at the xfinity store in bellevue, washington.

here at the store, we offer internet, tv, phone, customer service, home security. every situation is a little different. it could be about billing, simple questions like changing the phone number. sometimes, they want to upgrade, downgrade, but at the end of the day, you want to take care of the customer. one of the great things about comcast, there's always room to move up. of course, it depends on you, how hard you work. ♪ time for cramer. >> the market sells off of the fed is now amgen and they have a meeting on friday and they have a better pipeline than people realize. keep in mind, i'm looking for situations that are not fed rate

sensitive and what a great company they are. >> repatriation as well? >> oh, my, absolutely. in terms of the market cap versus -- >> how much cash -- >> thank you for reminding me of that. there's a pipeline there that is fantastic. i really like that company. >> what's on mad tonight? >> great bank in texas we'll talk about rates but just talk about them. people who short that company just haven't ever done -- they've never looked at an annual or quarterly report or done anything except for just say, well, they are in texas. they must be idiots. who survived all of the big downturns? >> actually, an amazing story. >> that is. great guys. >> we'll see you tonight, jim. >> thank you. >> 6:00 p.m. eastern time. when we come back, the trump economy and we'll talk to the chief adviser under president obama. plus, ceo of chrysler, bob

nardelli. dow is up 44. 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? where we can get our fees and commissions back if we're not happy. so can you offer me what schwab is offering? what's with all the questions? ask your broker if they're offering $4.95 online equity trades and a satisfaction guarantee. if you don't like their answer, ask again at schwab. it's a very simple procedure, mr. diaz. we're just going to make one small incision here, then we're gonna go in and remove your '67 corvette. my vette!? it's just a gall bladder! you don't have.. aflac! paying you cash, so you might have to sell that sweet little muscle machine just to cover your rent. more funny juice. but my papa gave me...that...car. what do you wish you had? aflac. ohh, i love doing that. health can change, but the life you love doesn't have to. keep your lifestyle healthy with- aflac!

why pause a spontaneous moment? cialis for daily use treats ed and the urinary symptoms of bph. tell your doctor about your medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, or adempas® for pulmonary hypertension, as this may cause an unsafe drop in blood pressure. do not drink alcohol in excess. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have a sudden decrease or loss of hearing or vision, or an allergic reaction, stop taking cialis and get medical help right away. ask your doctor about cialis.

( ♪ ) it just feels like anything is possible here in upstate new york. ( ♪ ) at corning, i test smart glass that goes all over the world. but there's no place like home. there's always something different to do like skiing in the winter, jet skiing in the summer. we can do everything. new york state is filled with bright minds like samantha's. to find the companies and talent of tomorrow, search for our page, jobsinnewyorkstate on linkedin.

good wednesday morning. welcome back to "squawk on the street." i'm joined by jim cramer and sar sarah eisen. we're watching the fed today, retail sales and a lot more. >> let's get over to rick santelli in chicago. rick? >> absolutely. our january read on business inventories, we were expecting the number around 310. spot on. analysts, kudos. and i'll tell you what, that's in the solid numbers considering .8 goes back to january 2013 which is the number we had in november. all right, now, if we want to know a more current read, how about march for national association home builder sentiment? for that, i'll toss it to diana

olick. >> wells fargo monthly index showing the highest level in 12 years as in before the housing crash and president trump is behind the surge. builders say the renewed confidence is all about the president's actions on regulatory reform, particularly the executive order to rescind or revise environmental rules. builders say 25% of the cost of a new home today is regulatory compliance. the current sales conditions increased 7 points to 78. sales expectations in the next six months rose five points and jumping eight points to 54. the builders caution they are still facing challenges including rising material cost and rising mortgage rates and sho shortages of labor. >> it feels like the home builder sentiment is tracking

investor sentiment. very excited about the trump policy and ignoring the higher interest rates which is likely to happen today. >> it's already built in. we started to see them rise last week and that's why the builders are even saying this was a bump and a moment of excitement that we'll moderate back. >> diana olick, thank you very much. that brings us to the markets. it's fed day. investors are buying today. dow up 48 points. s&p 500 up a third of a percent. the discussion around the fed not so much about what happens today. the interest rate hike pretty much banked into the cake. if there's a shift in tone, is that going to come as a surprise? is that going to be a jolt for the markets? and can the markets handle, say, four hikes instead of the projected three hikes from the federal reserve? is that going to matter with so much focus on washington and fiscal policy?

>> indeed. a cnbc survey, interesting, 60% of respondents saw three hikes. 25% see four hikes. we'll see if that four-hike number starts to go up. >> what would represent a change in tone? what will steve liesman be telling us when we see that statement? >> basically, it's the forecast from the individual fed members on how many interest rate hikes they think they can do this year. the last time we got this, it was in december when they raised rates and they were three for the year. if they change it to four, they are responding to the improved tone and outlook on the economy, jump in markets and look at language like gradual to be removed when it comes to the pace of raising interest rates. we got the message that they want to see the hard data and

the proof. they are not going to speculate about fiscal policy or the bump in confidence. well, we are starting to get hard data in the form of better jobs data. both adp and the government report. is it enough to shift the center of the fed if we're thinking about faster interest rate hikes? we'll see. >> she was asked about balance sheet normalization. she said she wanted the rate cycle to be under way before they had that discussion. you saw goldman which upped their forecast for when the fed would begin that process from mid-2018 to the fourth quarter of this year. yellen will be asked about that. >> the balance sheet, interest rate spike and politics. meantime, speaking of politics, president trump referencing the business round table survey yesterday. "ceos most optimistic since 2009. it will only get better as we continue to slash unnecessary

regulations and when we begin our big tax cut." business leaders are concerned about trump's trade policies, that they may drag us into a trade war. our jackie deangeles joins us with more on the results. what did we find? >> there is a concern out there. these cfos represent some of the largest companies in the world. collectively, they manage more than $4 trillion in market cap. in this survey, we asked them to weigh in on a number of key trump proposals. they don't believe that we're going to see anything tangible in the near future. the ceos we spoke to are confident that we won't see the border wall or repatriation by the end of the year. they are concerned that trump's hawkish stance will spark a

trade war with china. and then when asked where u.s. trade policy uncertainly falls on their company's biggest external risk list, roughly 18% said it's the biggest one that they face. that came in second only could consumer demand. they oppose the border adjustment tax. go to cnbc.com for more. they were talking about rate hikes and where they think the stock market goes from here and share thoughts on trump's proposed tax plan as well. >> jackie, just one question. how much of the cfos that we survey are from the multinational companies that do business abroad that would be worried about broad versus domestic-oriented ones. >> it's across the board. we try to make it fair and balanced in that sense. we looked at global conglomerate corporations. >> jackie deangelis, thank you.

>> yep. our steve liesman is joining us from washington. we had a discussion about all of the data we've gotten in the past 48 hours or so and how that's going to play out this afternoon. >> it's been pretty good, pretty decent. the question is the market reaction. it's put on notice by officials that a rate hike is coming and from all appearances you think the market is ready but is it really? the fed fund's probability of a rate hike is that 94% for the hike and the fed works to make sure it doesn't surprise the market. now take a look here at this chart. so far, the market has been very well behaved. first, it's priced in a rate mike in march and priced in a third rate hike. you're looking at the rise of the fed fund's probability but look how well behaved the s&p has been. it hasn't gone up much but it hasn't tanked. the fed hasn't surprised the market since 1993.

sometimes, even when the market knows what is going to happen, it acts like it's surprised. we want back and looked at the stock market reaction in all of 2016. only the last one took action by raising rates. look how volatile the market can be even when it's completely telegraphed in and knows what is going to happen. they didn't think there would be a heek ike in january or septem. and then, of course, on the day when it did hike, there was more volatility and the market went down. we'll see if there are any surprises today. the fed is hiking because it says it is at or close to hitting its jobs and inflation targets and the economy operating close to its potential. that creates a possible conflict together with military spending and taxes and infrastructure. so today we listened for hints about possible fourth rate hike this year about how close the fed is to thinking about reducing that $4.1 trillion balance sheet and how fed chair janet yellen thinks it should

react if president trump gets those policies through congress. >> steve, thank you. we're looking forward to an interesting afternoon. of course, republican senators taking a pause on the gop health care bill offered by the house suggesting changes after that critical report by cbo. we're joined this morning by the former chairman of the council of economic advisers and deputy nac director jason furman. >> good to be here. >> it's nice to have you on and answer a fed question that you can answer. what's your take on whether or not they are at an inflection point here? >> you know, we're going to -- we all know what they are going to do today. the bigger question is what they signal for the rest of the year. and i'm not that worried about that signal because they've been so data dependent. if the rest of the year is great, then maybe they hike the rate three more times. if it's softer, maybe they only do one.

in the middle, it's two. so i think you're not going to have some situation where they are going to add some instability. they are going to be leaning against whatever else is going on in the company that's data dependent. >> what do you think of some of these sentiment numbers? we're digesting housing sentiment just now but it's rare that that number beats by the margin it did and the times it has happened, it's come in the last few months. >> you've seen a lot of optimism across the board, large businesses, small businesses, home builders, consumers. my only hope is that the optimism is proved justified. i worrisome of it is based on thinking that everything that would be good for gdp that the president has talked about is going to happen and everything bad, like the trade restrictions, immigration restrictions, some of the unpredictability about how he deals with businesses won't be materi materializing and it's a little more optimistic than i'd be

about him but we'll see. > . >> you mentioned that the fed should take it by the data, which is what they do. when it comes to striking the right tone today, how optimistic should janet yellen be and place faith in the confidence readings and some of the job numbers we've got? >> i think the fed should feel great about the job numbers. 4.7% unemployment and participation and bouncing back over the last couple of years. at the same time, we got inflation today and saw inflation is pretty much at the fed's target. janet gave the speech about running the economy a bit hot and running through that and being open to that. that's certainly what i hope their orientation is. that's not inconsistent with rates being a little bit higher. it will be an expansionary stance, just not as expansionary as it would have been without

the rate hike. >> jason, larry kudlow joins us on the set. buckle up for that. larry, i don't know if you want to start. >> jason is an old friend of mine. it's a pleasure. it's a little hard getting here. >> little late than never. health care, process, what? >> it sounds like i agree with jason the fed. i think they are making the right move here. we've seen a bump up in commodity prices and a bump up in inflation and it may prove to be temporary. i want the fed to normalize, albeit slowly. i guess they are going to start drawing down their balance sheet soon enough. i'm fine with all of that stuff. what i'm not fine with is the logic. you've heard me say this before. i don't think more people working and a little bit higher wages are inflationary. i don't buy that. i never have. i'm not a phillips curve guy but i think this moment is right for them and they'll probably do it a couple more times and what the

fed really needs is broadbased corporate income tax cut. it's shocking to hear that from me. that will grow the economy a little faster and led the fed normalize faster. >> does that happen on the calendar we expect given all of the drama over health care this week? >> what is drama over health care? look, i think the -- the republican party is going to get this done. that's my first point. my second point is, the gop may have to practice bipartisanship with its self. okay? that is very important. with itself. i think you're seeing that, by the way. president trump is now on the phone in some of the meetings and i believe they will get a bill through the house. the ryan bill needs some changes. definitely needs some changes. we can talk about that, if you want. but basically, i think you're going to get it done and it's going to take another couple of months to get it through. i will argue this case, jason may disagree, but technically, i'm still saying this,

technically, you can draft a nice simple three-step business tax cut for large and small businesses onto the health care reconciliation. technically, that could be done this spring and it would be a home run. >> although, nobody really is talking about that, are they, jason? don't you have to have -- aren't they talking about health care before tax cuts and now we have this health care mess. can investors and economists draw any conclusions about what that means for corporate tax reform? >> i think it's a real shame for an economic strategy. the president had an opportunity to put business tax reform and infrastructure investment first. could have squoined the two of those and been, you know, midstream working together with democrats right now and instead he's doing this health thing. i don't think he's going to succeed on it. it certainly wouldn't be, you know, particularly good for the economy if de. and it's a distraction. i agree with everything larry

said. if he can just change one word, corporate tax cut, he made that corporate tax reform. he made it revenue neutral. that's what the people in the house have called for. larry, i'd even do some dynamic scoring as long as we left it to the cbo to do it. that would be great for our economy. >> this is not the first time that jason and i have nearly agreed with each other. i just wanted to note that. i'm for dynamic story. you know i am. there's no surprise there. i would have preferred, by the way, i think jason is right, the business tax cuts be first. absolutely. on the other hand, sara, i just want to correct you, with all of the greatest respect, i don't think this is a health care mess. what i'm going to call the ryan bill for the moment, ryan 1 or ryan 2, look, this thing does a lot of good. a lot of good. it opens up choice and competition. it's going to have major reforms

on medicaid, it's going to repeal 13 tax increases which is good for the economy. >> i wasn't talking about the policy itself, to be clear. i was talking about exposing the factions within the republican party. >> well, that's called democracy. as i said, the gop has to practice. they've got to practice some kind of bipartisanship with t m themselves. by the way, my opinion, we're giving too many tax credits to the upper end, not enough to the lower end. we're giving the insurance company this 30% add-on penalty if you're a little late. i think that's nuts. i think medicaid, which is controversial, needs some reform. on the other hand, here's the key point, you've got to separate out the healthy from the ill.

i just want to make this as quickly as i can. we must take care of the ill. absolutely. you must take care of the ill. and if the government has to, it should stand behind and guarantee a risk pool. a subsidy of a risk pool. now, if you do that, you take the healthy out of the insurance company, take it out. and if you do that, you're going to see plunging -- i mean, plunging premiums which actually will increase the enrollment, contrary to what the cbo is saying. that is a package that can be done and i hope it is done. >> in later years, in ten years or sooner? >> the whole period. look, the whole issue here is premiums. and, of course, deductibles, too. but they go together. premiums. so the insurance companies don't want to pay for all the ill. they can't do it. they need government -- let's just take that out. create a massive risk pool or you can give them vouchers, let

them choose themselves. but we're a generous nation. we must take care of the ill. don't get me wrong. but once you do that, you open the door for vastly lower premiums and that, in turn, opens the door with new choice and access on the part of the exchanges to what may be a record-breaking enrollment. to me, that's just as plausible as the cbo. >> larry, use a little bit of commonsense here. this legislation gets rid of a requirement that you buy health insurance and it cuts subsidies for health insurance but for medicaid and for the tax credits by over a trillion dollars. of course you're going to have more uninsured. of course you're going to cover fewer people. the cbo, you know, maybe the number is 22 million, maybe the number is 26 million. maybe it's exactly the 24 million they just said. but there's no doubt that the number of uninshired hured has p when that's the structure in

your plan. this bill actually doesn't have cost control in it. the one bipartisan cost measure that economists on both sides of the aisle agree on is either, you know, taxing health insurance in some form, ending the exclusion, having a cadillac tax, that's delayed five years. that's going to drive up the cost of health care. and the other problem here is premiums and deductibles don't go together. they go in opposite directions. this plan is all about higher e deductibles. they've been talking about lower deductibles and the cbo said correctly that this plan would raise those deductibles. >> jason, i would just say to you, if the premiums come down as much as i believe they can come down, if we do this risk pooling for the ill and the sick, i think you'll see the

deductibles come down as well. it's a defensive measure by the insurance companies. they might not need that. on the subsidy point, jason, i guess we'll just agree to disagree. an interesting point here, first of all, there have got to be limits to medicaid. all of obamacare was about medicaid care. that's where the increases came from. it did not come from the private exchanges. the cbo is saying you're going to increase 22, 23 million people a year on the private exchanges. the number came in around ten. they can't estimate that. >> right. >> we've flirted with this going back, jason, one of your older bosses, bill clinton, took a look at this in the middle '90s when we had welfare reform. unfortunately, we didn't get to the medicaid piece. a lot of people talked about the cpi limit. i think that would be very wise. a lot of people talked about giving the state flexibility. a lot of people talked about, as the ryan plan does, by putting these refundable tax credits in,

i would put them at the low end. not the high end. i don't want to give them the 150,000 people. age adjusted, income adjusted, okay, but put them at the low end, get them out of the poverty trap and you've got to worry about a mandate, i understand that, but to me the subsidies should be focused around 40, 50, $60,000, not $150,000. so i'm not getting rid of the subsidies. i'm just saying i'd like to lower them. i'm actually more liberal on this point than a lot of my friends are. >> larry, you should take a look at something called the affordable care act. that's what it does with the subsidies. you might actually like it. >> jason, don't, don't, don't. we've got to go. >> there were parts of that i was okay with but not many. but you know that. >> jason, larry, thank you so much. >> my pleasure. when we come back, republican senator david perdue is with us.

thoughts about a possible border tax and the gop health care bill. and why the fed is expected to raise interest rates at this afternoon's meeting but are the markets ready? we'll here from former fed governor mark olson. the dow is up 36 points. after this break. your path to retirement may not always be clear. but at t. rowe price, we can help guide your retirement savings. so wherever your retirement journey takes you, we can help you reach your goals. call us or your advisor t. rowe price.

invest with confidence. experience exciting offers on sales event is here. our most thrilling models ever. get up to $2,500 customer cash on select 2017 models for these terms. experience amazing at your lexus dealer.

there are parts of the

republican party that are questioning the divide in the gop. joining us is congressman perdue. are there issues like corporate tax reform because of the splits we're starting to see in your party? >> reporter: sar >> sara, they are anticipating what this president is proposing will actually work. look, business knows that is going to work and i'll tell you the other thing, consumer confidence is ebbing up ever so slightly. we're on the cusp of a real turnaround, sara. >> but when it comes to the divisions in the party, can you

address that? it's happening on health care and on the very issue that you speak of with the border adjustment tax. you're not in favor of it but members of your party, including house speaker ryan, is. >> our president has been in office for seven weeks now. if we can implement his agenda, we'll get this economy going. what we have going on in the senate, though, i'm concerned about people who are so concerned about getting to perfect that we're not going to get to an 80% solution to get this economy going. i believe health care and taxes are the two issues of the day that will get the economy going, in addition to pulling regulations back. so what we've got to do in the senate is put self-interests aside and focus on the national interests. what really will be necessary to grow this economy? it's not that complicated. >> yes. so you know how the sausage gets made. let's talk about the border adjustment tax. you've called it regressive, hammers consumers and will grow the federal government.

how are you going to convince your fellow republicans of that and how does tax reform and lower corporate taxes get paid for? >> i think we've already convinced the senate that the border adjustment tax is a bad idea. i've watched this in europe. i lived over there. when they did something similarly, it caused the economy to shut down and also the government dramatically. this would pay for the corporate rate reduction, elimination of repatriation and reduction of individuals rates. there are ways that we can deal with that but i just think we should not put a bad idea along with these great ideas that the president wants to implement because that will cause us to really shut down this opportunity that we have to really change our tax structure and get this economy going again. >> senator, proponents would say we faced this all the time in the form of a b.a.t.

>> that's a shallow argument. here's the reality. what we should be talking about is trade. individual tax reform, corporate tax reform, repatriation and bilateral trade will put us on a level playing field. we don't need to do it in our own corporate tax structure. i'll tell you why, it won't give us a level playing field. >> that said, we had gary cohen on on friday about this being deficit neutral, that being tax reform overall if we get there. how do we get to a deficit neutral? even if we assume a higher gdp growth rate, how do we get there if we don't have a significant revenue-raising portion of tax reform? >> you just highlighted what is really wrong in the process. the budget process since 1974, we've only funded the government four times under this process. in the last 42 years, we've only

passed 2 1/2 appropriation bills. this is ridiculous. it's binding our hands right now. the united kingdom in 2009 eliminated the repatriation tax and they are about to do it again and their economy came out just like ours will. so what this is is an accommodation to a very bad budget policy and we've got to get around that and there are ways to do that. >> finally, i wanted to ask you about the fed. it's fed day, a huge deal for us. we're expecting higher interest rates this afternoon. third since the financial crisis. do you think that that is going to hurt the economic reform agenda if the fed picks up the pace of its tightening, strengthening the dollar and getting in the way of all of this optimism? >> i really don't. i think we have enthusiasm out there that is not going to turn around. the president has ignited this renewed spirit of optimism out there. this one interest rate change is not going to change that. let me tell you what i'm concerned about. this $20 trillion of debt.

the increase of rates in the last 15 months means we've got a tremendous increase, $150 billion of new interest we're going to have to face up to. we've got to fix this budget process and get our spending under control. this debt is phase 2 and the president is talking about that right now. he mentioned it in his speech to congress. right now we've got to get the economy going, fix our tax system, solve the health care problem, pull back on regulations and, by the way, we're going to nominate and confirm a supreme court justice which will calm the market. >> senator perdue, if you fthanr joining us. carl? let's get over to courtney reagan for an update at this hour. >> good morning, carl. here's your cnbc news update at this hour. polling booth opened across netherlands. the elections are being watched for a possible indicator of the strength of far right populism

ahead of votes in france and germany later this year. secretary of state rex tillerson arriving in japan for the first leg of his three-nation trip to asia. high on the agenda, forging cooperation with japan, south korea and china against the nuclear threat against north korea. at&t has won approval for its planned $85 billion purchase of time warner. and washington, d.c.,'s cherry blossoms are in real trouble. for the first time in close to a century, the blooms may not happen because many of the flowers were coated in ice. that's your update at this hour. let's head over to jackie deangelis. jackie? >> for crude we had a draw down of 237,000 and for gasoline, a draw down of 3.1 million. it's really the gasoline number supporting the market here.

we saw a bounce in oil after the api data and crude numbers are in line with that. we're trading at 48.55 at the moment. it's been a rough trade in eight days and you definitely have some buy in the dip here. goldman underscoring the importance of opec at the compliance that we see. we were down 9% in a month. down 3.5% in a week. not unlikely to see a dip here but still trading back to 50. >> jackie, thank you for that. with the dow holding on to its gains close to session highs led by caterpillar, we're back in just a moment. manage my portfolio.e i td 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. today i am helping people everywhere do what they do... better. i work with startups like alpha modus to predict markets five times more accurately. i am helping tv networks use social data to predict what people want to watch. and i worked with marchesa to turn fan feeds into a dress that thinks. hello, my name is watson. working together, we can do things we could not do before.

hello, my name is watson. ♪ heigh ho heigh ho ♪ ♪ heigh ho heigh ho it's off to work we go here's to all of you early risers, what's up man? go-getters,

and should-be sleepers. from all of us at delta, because the ones who truly change the world, are the ones who can't wait to get out in it. taking a look at shares of snap, canfor fitzgerald with an underweight rating. priced at 18. snap priced at 17 almost two weeks ago but opened for trade at 24.

it's trading right around $20 a share. much more ahead. stay with us. this car is traveling over 200 miles per hour. to win, every millisecond matters. both on the track and thousands of miles away. with the help of at&t, red bull racing can share critical information about every inch of the car from virtually anywhere. brakes are getting warm. confirmed, daniel you need to cool your brakes. understood, brake bias back 2 clicks. giving them the agility to have speed & precision. because no one knows & like at&t.

the federal reserve is expected to hike interest rates in a few hours. are markets ready? joining us now, barclays head of research and managing director and bank of america head of economic global research. welcome to you both. what could really rattle the markets today, ethan? >> i think what will rattle them is the so-called dots move a lot. right now, the fed is forecasting only three hikes this year and next. people will be watching to see whether that median dot moves up to four. i think we'll be watching very closely what yellen says in the press conference. everyone agrees that the economy is looking better. the question is, does she try to

dampen that optimism in the press conference? that's where the action will be, not on whether they hike or not, which is virtually certain. >> so it's the actual projections that the members of the fed make when it comes to how many interest rate hikes they think they will do this year, et thhan. do you expect that to change at all in today's announcement? >> everyone focuses on the median dot, the middle of the committee. the median dot is three for this year. it's very hard for it to move up to four. four members have to become more hawkish in order to move to four. that probably doesn't happen. but for next year, all you need is two people to move and then the median dot moves from three to four. and so that would be where you might get some interesting action in the fed's announcement. >> i wonder, michael, if the fed is caught between a rock and a hard place because, on one hand, if they don't do anything, then they might be accused of not responding to this great market surge that we've seen since the

election as we look at the u.s. economy under president trump and then they get criticized for skrumpi jumping the gun and potentially ruining the optimism. >> ethan is right. you're going to get a blend, that they will respond to what they've seen in the soft data. the sentiment is stronger, equity markets have moved stronger. perhaps it's altered their balance of risk and therefore warrants a rate hike in march. i agree, the curve is not going to steepen all that much. we could get a median of 4 in 2018. it will be hard to get that this year but the average funds rate across the curve should be higher. so i think you'll get a modest boost there. i agree. i don't think we're looking for a sharp upward move in the dot chart which could have negative implications on sentiment. >> ethan, a couple of trends are

getting people's attention. one is lower year-on-year loans and subprimes related to lending and housing. how much of that is on your radar? >> there are some headwinds in the economy but if you look generally at what is going on, we see growth pick up late and not just in the u.s. but globally. that momentum seems to continue into the new year with the latest two employment reports. so, yeah, we're seeing a little bit of issues around subprime. that's something we've been waiting to see and with c & i lending but generally it's on a healthy growth track. >> not disputing that. but there was an op-ed written today for cnn that it is ignoring the precrisis number

ts. how mu how much of this do we have to pay attention to? >> normally housing would be prime for a pullback right now. really only about 2 or 50 reporting banks in the feds senior loan officers surveyed said they made subprime loans. i don't think the problem is in the housing market. i think you could point to autos where that would be a problem, 30 to 35% of new auto loans are subprime in nature. i think i would look to autos more than housing. housing looks balanced at this point. i don't think the major potential contraction is in housing as it is in other areas. >> we're going to look for commentary this afternoon from janet yellen on housing, the outlook on fiscal policy. give us a sense of the language which would really stand out to you. >> well, she's going to sound cautiously optimistic the way she has in recent speeches and other fed officials have.

but she's not going to promise anything specific on timing of next rate hikes. she's going to want to keep her options pretty wide open. and, you know, right now the reason the fed was so clear going into this meeting is not because they are super hawkish right now. it's more that they want to avoid political criticism and avoid surprising the market. so i don't think that they are like bound and determined to go at every press conference meeting. i think they want to keep their options open going forward and that's the kind of tone i would expect out of janet yellen. >> it raises the question about the communications policy which we know this fed in particular has worked very hard on. i mean, look, was it three weeks ago that the market was not pricing in an interest rate hike for today? they totally successfully changed that mentality but it makes you wonder why all of this guessing and is the market going to be okay with it going forward? >> i think the market will be. it's just the state of the world that we're in. and, yes, i actually looked for

a stronger message coming out of the january meeting. we didn't get it. i was kind of where the markets were, around 30 to 40% and then obviously we got the communication. the fed just doesn't like to have a lot of uncertainty to resolve on the day of the move. so there was a coordinated message that got markets up to expecting a march hike. there's not a lot of resolution or uncertainty to resolve on the day and then it's more about the future path, what do you think about the balance sheet, so on and so forth. it's just where we are with fed communications and it's a little tricky. we've got the soft data doing well. markets rallying. the hard data immediamediocre ae waiting on the data of the fiscal policy. some of this is feel as you go. >> so far, investors are playing it all pretty cool. gentlemen, we'll leave it there. thank you, michael and ethan. when we come back, former fed governor mark olson will talk to us about the fed meeting. dow remains in a tight range of

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

more squawk on the street is coming up.

in a little less than an hour, we may find out who is behind the yahoo hack that impacted millions of users. a top official says the hacking to be discussed was, quote, done with the backing of a nation state with others saying the nation involved is russia and as cramer and david said in the 9:00 a.m. hour, russians aren't necessarily coming. they have already been here. >> they have. he pointed that out. in '95 they were concerned about the russians. yahoo was lowered the price of its core business by a small amount, given the liability it faced and the concerns overall. it didn't seem to impact, though, the business in a

significant way. >> we're going to find out more about that later on this morning, obviously. dow is up 37. let's check in with jon fortt. >> good morning. we're going to track what president trump is doing with the auto industry in detroit. we'll bring you that and then reed hoffman joining the microsoft board. why that's important for microsoft's transformation. finally, we'll track that news from the doj about yahoo and more on "squawk hour" coming right up.

welcome back to "squawk on the street." now it's time to go to rick santelli in chicago with "the santelli exchange." happy fed day, rick. >> yes! happy fed day, sara, and happy fed day, that's why we have our guest, mark olson. thanks for taking the time, mark. >> thank you, rick. always good to be with you. >> all right, i want to hit on all the fed topics, but real briefly, we had the national association of homebuilders sentiment index at 71, best of june of '05. it matches other feel-good indexes like consumer sentiment from the conference board in michigan. we've had data on inflation, retail sales. we're talking about 50 and 100-year bonds.

do you want to weigh in on any of that quickly? >> sure. i think briefly, the consumer has been a very active participant in this rally, and i think that the markets, the stock markets, the equity markets have had something to do with it, but i think the underlying sentiment is simply strong. now, the source of this, rick, is not entirely clear to me, but it's also reflected, for example, in the jobs number. we have 1.5 million more people employed today than we did a year ago, and so, i think that there's some underlying real strength there, and the consumer sentiment indexes all support that. >> all right, now let's get to the heart of the matter. fed meeting today, second day. seems to be built-in quarter point, 75 to 100 the new target range. your thoughts. weigh in. >> i think the only thing that they haven't done is have a brass band go down constitution avenue announcing it. it would be a huge surprise if they don't go up a quarter. and i think it's unlikely that they'll go more than a quarter.

so, i think it will be up a quarter. the more important point, i think, is two things. number one, what chair yellin suggested at her press conference, what they might do in the future, and what the statement says about the underlying economy. those are the important things to watch. >> all right, listen, i'm going to go back to the well of information you've given me many years ago along with robert heller, an associate of yours -- the balance sheet! lower the size, make the balance sheet smaller, reduce it. dig into that for me, mark. >> sure. that's long overdue, but i think understandably put on the back burner, because i think that the markets would have -- the other name for that, as you know, rick, is passive tightening. but i think -- and what chairman yellen said in her congressional testimony is that we're going to start having advances in the rate first. then we'll address the balance

sheet. so, i think we'll get some signal of it, but what i anticipate happening starting this year is maturing instruments will be allowed to roll off and not be replaced, and we'll return the balance sheet to some degree of normality over the course of this year. and i think that those will begin first with future rate hikes. >> perfect. we have one minute left. and in that last minute, you know, we have bank of england tomorrow, bank of canada, bank of japan, a lot of central banks top of the pyramid. the bottom of the pyramid, the real base, we have dutch elections, french elections, ultimately german elections. weigh in on the global side and weigh in how and if in any way that should impact the decisions of our federal reserve. >> sure. there are implications, i think particularly in europe, particularly as a result of the elections that are coming up. the level of uncertainty in europe has to be very high right now.

in terms of the impact of the central banks on the u.s. market, i think it will be of interest but not of any significant consequence. >> mark olson, board of governor from 2001 to 2006, i thank you for your time on this second day of meetings. ( ♪ )

upstate new york is a good place to pursue your dreams. at vicarious visions, i get to be creative, work with awesome people, and we get to make great games. ( ♪ ) what i like about the area, feels like everybody knows each other. and i can go to my local coffee shop and they know who i am. it's really cool. new york state is filled with bright minds like lisa's. to find the companies and talent of tomorrow, search for our page, jobsinnewyorkstate on linkedin. and the wolf huffed like you do sometimes, grandpa? well, when you have copd, it can be hard to breathe. it can be hard to get air out, which can make it hard to get air in. so i talked to my doctor. she said... symbicort could help you breathe better, starting within 5 minutes. symbicort doesn't replace a rescue inhaler for sudden symptoms. symbicort helps provide significant improvement of your lung function. symbicort is for copd, including chronic bronchitis and emphysema. it should not be taken more than twice a day.

symbicort contains formoterol. medicines like formoterol increase the risk of death from asthma problems. symbicort may increase your risk of lung infections, osteoporosis, and some eye problems. you should tell your doctor if you have a heart condition or high blood pressure before taking it. symbicort could mean a day with better breathing. watch out, piggies! (child giggles) symbicort. breathe better starting within 5 minutes. get symbicort free for up to one year. visit saveonsymbicort.com today to learn more.

welcome back to "squawk on the street." i'm morgan brennan. home-building stocks building momentum after a monthly reading on builder sentiment jumped to the highest level in 12 years. d.r. horton, pultegroup, lennar and kb home gaining 1% or more, though starting to come off the morning highs right now. the spdr home-building etf and fhb up as builder confidence has strengthened on hopes that deregulation will cut construction costs. so, with that, i'll send it back over to carl and the gang to start "squawk alley."

carl? >> morgan, thank you very much. good morning. it is 8:00 a.m. at yahoo headquarters in sunnyvale, california, 11:00 a.m. on wall street, and "squawk alley" is live. ♪ ♪ good wednesday morning. welcome to "squawk alley." i'm carl quintanilla with sara eisen, jon fortt here at post 9. market treading water ahead of the fed decision this afternoon. our top story for this hour, the president is about to depart for michigan, where he will be meeting with auto ceos and union leaders to discuss his