now. ♪ live from new york where business never sleeps, this is "squawk box." ♪ good morning everybody. welcome to "squawk box." we are live from the nasdaq market site in times square. our guest is senior managing drengter at investment partners and great to see you here. >> joe's very enthusiastic this morning. i appreciate it. for a monday morning. wow, he's fired up. >> something about -- >> the markets. >> the nasdaq market site. >> i'm working on the bacon. we talk about it last week. >> this is an issue. joe wants bacon in the morning. >> i have can tell joe gets what he wants. i'm without a jacket right now. >> joe made the mistake of showing up in his jacket.

>> and he takes it off and gets -- looks down and dirty. working hard. and giving people information, tradeable stuff. what you come here and suddenly -- >> i'm being respectful towards you. i enjoy you feel comfortable enough to say take the jacket off. >> and i said why are you not respectful to waner and he said because i'm not. >> standing up for him. >> and he's probably watching right now. >> i bet he is. >> you know what he loves to do? tweet about officiating. he loves that. >> he also loves that duke is knocked out of the tournament. he hates dock. he just doesn't like duke. >> he does. i had north carolina. i got 10 out of 16. and -- i still have north carolina. i didn't think i was going to

have north carolina. they almost blew that game. >> how's yours? >> not too good. not too good for msg. that's not what they wanted. you've got wisconsin/florida in one game and baylor in the other game. south carolina, i don't think that's what msg wanted. >> they'll be okay. >> ucla/kentucky, that's going to be a good game. >> xavier, you see them? >> who are they again? >> i don't know they beat florida state by 40 points. let's take a look at the u.s. equity futures. last week the markets were slightly higher for the week. you can see slight deshriclines. s&p futures look like they would open 4 1/2 points. overnight in asia, the nikkei was closed in japan for first day of spring. that's why the japanese market

was closed. the hang seng market was up and in europe, this morning and some of the early trading you're going to see already that there are downward arrows. the ftse 100 is down by quarter of a percentage point. and interesting number to watch. 10 year yielding 2.499% and last week the 10-year yield picked up above what the dividend yield would be for the s&p 500. many people starting to relook at some of these issues. >> got to read this bond yield shift. 249 looks like another 1% gdp. >> it was just that the dividend yield for the s&p 500 is below -- >> 2 1/2. >> capital flows. >> all right. >> got a couple of elections in europe. >> that's true. >> that's right. >> he still thinks le pen has a

chance. >> no. >> it's interesting to see mark say it. >> are you going to watch that? >> there is a big one on. he's like a former investment banker. he might be 100 times better, even if it is him. >> tepor said that? >> right. he said either one would be better than the current. take a very quick look at crude oil prices. it picked up a little bit of ground after losing 9% the week before. >> here are several of the big stories that we're watching. not all. there's a lot of them. going to all die in a horrific nuclear arm gedden. i don't even think that's in here. >> good morning though everybody. happy monday morning monopo. >> anyway, g-20 finance

ministers have dropped their joint pledge to avoid trade protectionism. and the u.s. treasury secretary did not endorse the group's long standing commitment to tariff free trade. >> we do have a new administration and we do have a different view on trade. but again i want to emphasize that view is making sure that trade works for the american workers and works for our counterparties. that it's a good deal for both. >> yeah. >> and while they argued about trade, the g 20 ministers backed their long standing warningsing against competitive devaluations and disorderly foreign exchange markets and secretary of state rex tillerson wrapping up two days of meetings. convrsations between tillerson and president g appeared to strike a cordal tone with him

expressi expressing. he only made little progress coming towards an agreement on the north korea nuclear crisis. a lot of people would like china to get a little bit tougher and some people wonder whether they can. >> tillerson said that. >> i think they do this though. >> they do and they don't. i mean, i think they have tried to push but i think they've been growing -- they've had growing frustrations because they have not had the control they thought they might over north korea. >> one way or the other this administration is going to have to deal with north korea. >> and probably it comes through china. >> through china or -- >> strike. proactive strike now that he's trying out new missiles that could reach the west coast. >> and he looks happy. they have pictures of him as the successful launches were occurring and he's happy.

but he looks demented. i'm afraid to say that. >> historically we come out on the right side of these conflicts. not that you want one but generally we do okay and i think we'll do okay on this one. >> world only once. so we need to be 100%. >> and if you don't bet against the world ending, you usually lose. >> and ibm and a unit of china's group are teaming up to bring more cloud services to chinese companies. a lighter week ahead for economic data. on wednesday we'll begin february existing home sales. and on friday it's the february durable goods. big names reporting earnings including general mills, lemar, fedex, gamestop.

and we have an interview coming up, minneapolis fed president joining us at 8:30 a.m. eastern time this morning. and later, the president of the philadelphia fed patrick harker will be joining "squawk on the street". the house intelligence committee's going to hold its first public hearing on russia and fbi director james comey will be testifying before law makers. ammon, obviously a lot of questions. you think we'll have answers by the end of today? >> i don't think we will as many as we want. james comey going to be in the hot seat. he's one of several people who are going to be testifying today. but he's the one a lot of americans want answers from particularly on whether there's an investigation into donald trump's campaign and any potential collusion or interaction that the campaign

had in terms of the 2016 election. he has refused to say whether or not there is such an investigation. what's he going to say on that front? and there's the question of donald trump's assertion that president obama wire tapped trump tower last year. will comey be asked about that? will he publicly refute the president? there's been refuting that he privately asked to push back on that. today might be the day for that. in terms of the chairman and the ranking member of the committee was asked on fox news over the weekend whether or not there was any efrtsvidence of cuclusion between the trump campaign and the russian government. >> i'll give you a very simple answer. no. >> no evidence of any collusion? >> no. >> the ranking democrat on the committee went further.

obviously there's a split. take a look at what he had to say. >> there is circumstantial evidence of collusion. there is direct evidence i think of deception. >> so a split there between the it republicans and the democrats as you might imagine. it's a political season in washington and we're going to get that throughout the day today. as for his part, president trump has a meeting with bill gates in the white house today. we'll wait and see what the agenda is for that as well. a lot going on in washington today. >> it's weird. >> yes. >> it is weird. the circumstantial. >> all of it. >> you get a clear no and then you get a i don't know, mayby circumstantial. >> circumstantial just sounds thin. if you're the democrats. you're saying implicitly that there's no actual evidence. >> i hope, to avoid saying no we don't see anything you throw in

the circumstantial with the -- that's almost like saying well, there's some smoke and therefore, there must be a fire. i don't know. sglm munez said over the weekend it's clear that the russians were medaling in the election but there's no evidence of collusion. that is that the russians could have been medal without the trump folks having anything to do with it. but they didn't conspire and plot with the russians, which would be a dramatic escalation of that scandal. >> wrun country's medaling is another pushing forward its own interests. like telling british voters they're going to be at the end of the q and making sure netanyahu doesn't get elected in israel. >> look, it's one thing to do it overtly and in public and say it

on national television. it's another thing to do it through all sorts of covert and not visible means. that gives it a much different feel. >> too bad all those emails existed with all the todry and distasteful things going on. comments, everything else. shining a light on them. that's just showing us what was going on. >> the other question for comey today is what does he say about donald trump's assertion about being wire tapped by president obama. will he publicly say the president was wrong on that? we'll wait and see what he says. >> what was it about a month ago that he said it, the leaks dried up. there hasn't been one additional shoe to drop on the collusion side of things. >> what's your point --

>> john mccain said this is a centipede and there's a lot more shoes to drop. >> let's get back to the markets. i guess have some effect on the markets. chief economist and managing director and cnbc contributor. our guest host, jacketless joe turno. investment partners. when you see -- you knew the 10 year was going back under 2 1/2? >> i don't know if i knew it was going back under 2 1/2. joe talked about capital flows. they have been very short tenure notes, assuming the fed would be more aggressive or sell its balance sheet. right now the markets diskoupting another 1 1/2 hikes. given the inflation is.

given the markets uncertainty that trump will get things through. 250th makes sense. my guess is it will push up higher, closer to three by year end. but given where inflation is -- >> i didn't think we needed to digest what was it a 40% rise in yields? it's still only 2 1/2. so they say that's even more. so we have to digest that little incremental move? that takes time to consolidate. >> if you're trading a book, obviously the duration is such that a 40% move is large. but in terms of corporates and household s it's sort of irrelevant. if rates are rising because people are more confident in the out look, that's a good thing.

since the election you've seen pretty much every measure of sentiment improve. >> butted we can't get a first quarter gdp print. he's done work. >> steve highlighted this. did a very good job. >> even with all this. >> i think we'll be above 1%. whether it's 1 or 150 or 180. i'm at two at the moment. we adjust and there's clear seasonality. the bureau of analysis looked at it. that's why nobody really cares because they weren't worried about q 1 and we'll get a snap back in q 2 or q 3. >> concerns last week. you had the third biggest out flow. i think $4 billions. >> it's more oil.

i think people are worried about oil. the energy still a very big piece. and the markets get nervous. joe talked about the next 50 basis points on 10s if it were to happen, probably would hurt high yield a bit more. but i get the sense from talking to investors that we're just sitting waiting. what happens with health care? if the ahca goes through, then you'll see the market get more excited about the tax cuts and more aggressive fed and rates gradually moving up a bit more. >> what's your twitter handle? >>@luvoer lunomics. >> when we do this from now on, i'll be joe squawk. you can be taranova joe. >> how about joe jacket. >> you're the joe with the

jacket. >> yesterday was st. joseph's day. >> in 3rd grade there was a joe, a joseph, and a joey. >> mary's husband, joe. st. joseph. >> only one? there is? dam good name. solid if you're catholic. you can't go wrong if you're naming your kid that. >> just not joey. >> that's a kangaroo. and stick around. thank you though. what was it again? @luvornianomics. who came up with that? >> my wife. >> then you love it. >> i love it. >> great name. when we come back, what did you do this weekend? was it all about march madness? did you see your brackets get busted by the big upsets or was it all about "beauty and the

beast." but first check out this day in mystery. history. ♪ it's been over 100 years since the first stock index was created, as a benchmark for average. yet a lot of people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? why invest in average?

welcome back to "squawk box" tributes pouring in for the late chuck barry. what if he never lived? i don't know. passing away at the age of 90. mick jagger saying your music is ingrained inside us forever. and you just wonder. because there's a lot of new music, obviously. but if you listen to music, you hear songs and oh, yeah. these songs are 35 and 40 years old that we hear. they're iconic. they're just ones that i know that song. and we haven't really come up with anything. >> everything builds, builds. >> but -- >> but with his passing you could introduce the kids to the music because they're curious.

>> i mean you think about the big band era. there wasn't anything close. boogie woogy bugal boy and it inspired all the guys. paul mccartney. >> john lenin. >> be much poorer. >> we would be. >> so who's movie is this? >> this was disney. it was a huge box office debut for "beauty and the beast." the live action movie raking in 1$170 million this weekend. the movie stars emma watson and dan stevens. this is the latest blockbuster for disney who had the sequels to "guardians of the galaxy" and of course "star wars episode 8"

in december. i was there. lots of people filing in. it was playing nonstop in the movie theater. >> so dizmy was lucky enough to grab that novel because it was written in 1740. >> no. but if you ask any of the girls that were there, they did it up. al. a $90 stock and they all believe the days have past. pumping up again. >> not all time highs. >> no. >> people that did get negative on it, i mean espn is hurting disney. >> but the parks just like universal's parks are able to print money. >> that's true.

you probably have somebody today about this. the sweet 16 is set. the it chief of sports side sb nation what has not surprised me is that anything could han at any time but -- and i see it more and more. seton hall almost beat arkansas and arkansas really could have be beaten north carolina. is nothing mg really good? >> michigan is really good. it's the third straight time they've outed north carolina out of the tournament. michigan 's on a heck of a run. this is their sixth straight win. >> only at high level.

so i didn't take her to go that far. >> i'm sorry. >> but so how about xavier? almost 30 points over florida state? >> they were people were picking in the first round and they a stuck around. >> they lost one of their best guys. >> exactly. chris mack is a wonderful coach and xavier's win was ntd everybody manufactureses favorite. 11 over six maryland. >> so who's your dream final four? wisconsin looks great, too, right? >> i'm a big fan of wisconsin. nigel hayes, if he goes strong to the hole on the baseline, his

spin move is basically unstoppable. i'd like kentucky to come out against ucla. that should be a barn burner. two of the most efficient offerenseoffe offense. i love kansas to come out of that region. gonzaga is an interesting one because usually this is the time when everybody jumps off the gonzaga band wagon but they have the best defense that program has ever had. and the number two rated offense in the country. so they're solid at both ends of the ball. joe's already getting flak from twitter people that you're throwing shade because you're so noerk centric.

>> no villanueva. that's not -- >> that is one of the big heart breakers is that everybody was speck reulating that he was gearing up for this maech. >> there could be some great final match ups though. >> they had nine and there's only one left, north carolina. >> and they beat each other fairly well in the conference. the seam thing you saw. you can wear. no one's left. there was one guy who got 31 out of 32. made it all the way to the south carolina upset and he's the one who won the hundred thousand. he works on a plant. but the beener of the within

hundred thousand for getting the closest bracket of all employees works for one of the precision plants in west virginia, i think. >> nobody won again. too bad. >> but for the excitement it builds, i think he would like to see that. >> chump change which is why he's the richest man in the wuld. frrsz. >> he was watching every game waiting to see what happens. i mean, he was really into it himself. >> i'm proud i have 10 of 16. is 10 of 16 any good? it's excellent. >> really? >> yes. >> i have nine of 16. >> remember he said alphabetically? >> i don't even show up in the pool because i am in the wrong

place. >> you do have kentucky. >> i have kentucky to win it all. i like john. he's a good man. >> i filled out three brackets and i have a player poij eer po and a 64 rank 'em. i went with kentucky. >> you did? >> yes. vegas is going congragau 5-1 odds. >> thank you. we should mention that nbc universal tae-- why right now the market could see a surge and it is officially spring as of 6:29 eastern time. yes?

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♪ welcome back. you're watching "squawk box" live from the nasdaq market site in times square. ♪ don't listen to keecoldplay. >> i like coldplay. >> really? >> i do. >> really? >> good warm up music. >> really? so you like listening to coldplay? >> for the youth hockey, it's good warm up music. >> that's a good reason. >> equity futures -- >> i like that you stand up to him. >> here's equity futures down 240. >> but the jacket's off.

>> there's some cupeling going on with their apartment. >> whose? >> gwen and -- >> more conscious uncupeling. the futures are awful. does comey effect the markets? >> depends on what he says. >> look, yes. i don't know. i think sauce nl is tough to make. i'm not convinced this is going that badly pch i think it will go to the senate and be able to hammer something out but you would think nothing is happening. the gallop pole is 37. and the more the media hits and hits and hits. he's had a huge impact on the election twice. >> the regulation is very difficult to see but the market clearly likes the deregulation.

>> small business optimism. >> it's kienld of invisible. but it's applauding the move towards deregulation. >> see how much political capital is being spent on whether it's immigration or whatever it is and if it starts running dry, you can see that start to feedback because everybody's koupting on tax reform which can't happen until repeal and replace. >> many have argued rilts not there but there's a policy under the market. >> for seven years obamacare approval never got above 42%, never even to a plurality. 53 approve, 53 disprove. so as you're trying to fulfill

this campaign promise, suddenly when -- i don't know if it makes sense and it's actually not imploding and i saw on some of the weekend shows. that's a false narrative that something's going wrong with obamacare. >> the fanyou can say it's all all bad. whatever it is, you're going to find exceptions to the rule thousandther side. health care providers pulling out of certain markets and other people who say i'm not going to be able to take care of anything wout this. >> and ted cruz said premiums continue to sore -- >> then it's yours. in total deals volume remains well below the prior cycle peeks.

some signs that an mna surge could be upon us. all the pieces are really coming together and even though last year was a nominal record, it was only equivalent to 2007. so as a percentage of gdp, it's trailing well with lined prior cycles. obviously very high stock and bond prices and the receptivety is a big show. and it's usually an imput to more deal making. obviously the regulatory picture hard to know how it breaks industry by industry. and it's going to tilt in the direction of ceo's trying deals, even if they don't know the full rules of the road. so in this cycle, when acquirers announce a deal, the stock has tended to go up, in fact more than past cycles.

basically ceo's are getting more reinforcement. they've been up nicely. they're kind of the markets telling you that pipelines should be refilling. at this point if we don't get a surge you have to ask yourself why. is this cycle a little bit different that they're not going to jump in as much as they're used to? >> what would it be if it's not risk averse? >> obviously this generation has been told that mma doesn't add value and riltser such a winner take all set up where it seems there's a couple of dominant players. plu plush, prive lt equity is yurnlally sayurn norm -- and is there an argument that the animal spirits are

being unleashed and you should do it yourself? >> i think there's a case to be made that economic dine mmp has lagged. again, if you had this industry structure where basically the strong just stay strong and there's less movement around the edges, i think there's a possibility. you see these uses of cap capital and twobackets in the same yare yup and you're finally beginning to see a little bit of the animal spirits beginning to come about in oo sector that was dormant for the last four or five years. that would be the kpunt sfrort me. everywhere else -- >> asset managers, exchanges, consolidati consolidations, things of that

nature. coming up, another executive departure at uber, the ride sharing giant's president taking off after a six months on the job. more coldplay. >> it's for you. >> that story next. and we talk about the fed lettest decision to lost to rauj urfed hfr 3? what anyhow what he called him? >> what? >> an arsenal. bp uses flir cameras - a new thermal imagining technology - to inspect difficult-to-reach pipelines, so we can detect leaks before humans can see them. because safety is never being satisfied. and always working to be better.

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welcome back everybody. right now it's time for today's executive edge. more tur moil at uber as another top executive leaves the company. he's quit after just six months on the job. he joined uber from target where he was the chief marketing officer. he says his believes and approach to lm are inconsistent to what he saw at uber and they suffered a loss in court on friday when a judge in washington state upheld an ordinance in seattle allowing drivers to organize and give them the ability to negotiate

fairs and benefits. saks fifth avenue inadvertently released information online for thousands of customers. they say saks, guilt, and lorden taylor were storing customer data in plaintects. it showed internet addresses and product ids. the brand's parent, hudson bay has taken the information down and is quickly moving to resolve the situation. and prosecutors in munich reportedly searched the offices as part of their investigations into diesel emissions tests. german newspaper, build searched the headquarters in the factory as well as the vw. and searched personal calendars, notebooks and smart phones. the ceo was targeted because he's also ceo of the supervisory

report. getting to the next frontier. mars. what needs to be done to get humans beyond the moon. famed science fiction writer will join us next. right now we're headed to a break as we do. let's take a quick look at what's been happening that european markets. red arrow with the dax and the cac down. stick around "squawk box" will be right back. our first name has always been 'american'. at at&t, we employ more than 200,000 people with good-paying jobs. connecting consumers and budiness through mobile, internet, and entertainment. at&t invests more into america's economy than any other public company. bringing american's more choices, more freedom, and entertainment everywhere.

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. after test launches and cargo deliveries in the last few year as new generation of space rocket companies are becoming closer to becoming a part of daily life. and humans still haven't managed to reach other spots in our solar system. we're join bide a writer who spent a career giving perspective snap shots on where humanity will be in the future. we want to welcome kim stanley robinson. we're going to talk about 2140 but we're space freaks.

we watch guys like elon musk and bransen all trying to get into space, mars, the moon. what do you think is realistic and what should we expect in the next 10 years? >> i've been been to spacex. their factory in hawthorne, california, is a beautiful thing to see. people making rockets from scratch from flat sheets of aluminum in los angeles near the airport. and the falcon and falcon heavy are tremendous rockets. we need them badly. i love seeing that stuff. you can't make a profit in space except for communications industry. lower orbit, satellites up there you can make money because people want to pay you for what satellites can do. the rest of the stuff that's in space is just as common as dirt. it mostly is dirt. so if you think about it as a business proposition, you never see a payoff.

it needs to be a public project. for these private millionaires and billionaires interested in space, it would be like a legacy project. going back to the moon strikes me as the one that could happen and should happen. either the chinese government or our private companies combined with nasa, get back to the moon, set up bases, start doing interesting things there. also start doing manufacturing you drop things into earth's orbit rather than rising them from earth. >> what do you mean when you say getting back to the moon. what would we do? what kind of space plans would we have once we're there? >> i think go to south pole and north pole because there's water there. there's ice in these craters that never see sunlight. it's enough for human purposes. without water you can't operate very well. so go to the poles and set up observatories and begin to do maybe some manufacturing that we would drop into earth orbit, maybe solar power. there's still nothing very economical about going to the

moon. it's more scientific. it's more a matter of exploration. mars, everybody is interested in mars, including elon musk and me. there's a tricky problem in terms of landing on mars. we've only had 50% success rate in landing robots on mars. if you have humans on board, a 50% success rate is just a nasty proposition. you would want it to be safer than that. i think mars is a little further out than people want. >> is it a gravity problem? >> it's the problem of an atmosphere that is dense enough to burn you up but not dense enough to slow you down properly. it's a trajectory problem. coming in too fast and not having an atmosphere you can aero break in like around earth. >> was the martian mostly correct? >> mostly correct to the nth diagnosis compared to most science fiction movies. the whole game of "the martian" was to try to play it start.

>> why can't we land on the moon with no atmosphere. >> light gravity, put in rockets. >> gravity makes a difference because it's smaller. >> yeah. you come into the moon slower. so mars has the problem of its atmosphere and its distance. >> you go pretty fast. >> you're going too fast. >> do you see any way around the vast distances in space for us to really go somewhere outside of our neighborhood? accelerating -- getting anywhere near the st. pete of limit, takes forever to accelerate and you turn into mush and decelerate. >> having to decelerate. >> we can't go anywhere. >> we can't go anywhere. >> we can't. >> no. my latest book before this new york book was aurora, we can't get out of the solar system, a fantasy. >> unless these other -- i'm sure there's infinite life but

how does it travel? is it possible to go into a worm hole. can you go faster than the speed of light if you get through it? >> i don't see how you would survive it or do navigation. >> that's why no one has contacted us. they are out there but -- >> that's what i think. life is a planetary expression. it's all over the universe, we're looking at each other but we can't cross these distances. they are too vast. >> do you think, stan, people say it could be silicon-based, i think dna is so amazing, if matter is constant throughout the universe, i wouldn't be surprised to see a double helix somewhere else. >> this the great unknown. i'm confident we can't get out there. when you ask is there life in the universe, it could be that we're the only life in the universe would be very bizarre or could be that it's everywhere like your oppoeuropa, mars. >> we need these chemicals reactions dramatically. i wonder if you're outside this

temperature range there's some other way to do it we don't know about. >> there might be or might not. this temperature range is very kmob. >> very common. >> every sun will have a goldilocks zone where it's not too hot and not too cold. >> we figure matter is constant throughout the universe, helium, carbon. >> and distribution of it. >> we can tell -- we can look and say that's helium out there, hydrogen out there, even though it's 10 million light years away we know what it is. >> yeah. >> stan, very quickly. almost out of time. the new book is "2140." it manuaimagines it's the new v, under water. even takes markets into account, people using financial markets to make bets on the new market. >> a novel about finance and how does finance deal with the real world. we are in the beginnings of climate change and sea level rise. we've already baked in a certain amount of climate change

already. sea level rise if all the ice on the planet would melt, it would be like 220 feet. >> a big if. >> not very fast because antartica is a giant cake of ice. >> we're doing an eighth of an inch a year, 3 millimeters a year. since 1880 we've done a grand total of 18 inches since 1880. >> at the high level of projection. >> 8 feet by 2100 if we double projections right now. you've got 50 feet by 2140, but it's science fiction so it's okay. >> in scientific terms that's one standard deviation. that kind of thing happens all the time. it only needs a couple of perched ice in antartica. it happened to be one temperature rise that led to 10 meters of sea level rise. we've done the one temperature rise. it looks like there's ice perched in antartica. >> those are based on models and

models we've already looked at have far overcalculated the sensitivity of co2 we've seen so far. they are up here. we're barely setting new records. >> my impression is that every time scientists recalibrate things are going faster and more intense. >> we'll see. >> stan, thanks for coming out, we really appreciate it. the new book is called "new york 2140." >> coming up, the white house about to open bill gates.

washington watch, from health care reform to the trade debate, it will be a busy week on the hill. how it could impact the markets and your money straight ahead. crude realities. oil prices slipping. we'll tell you why next. plus get on board, a record

number of travelers will take to the sky this spring. we'll tell you what's behind the surge. check in qantas ceo as the second hour of "squawk box" begins now. ♪ ♪ ♪ >> announcer: live from the beating heart of business, new york city, this is "squawk box." good morning, everybody. welcome back to "squawk box" here on cnbc. we are live at the nasdaq market site in times square. i'm becky quick along with joe kernen. andrew is off this week. our guest host this hour is richard bernstein, the ceo of richard bernstein advisers, also a cnbc contributor and we'll have more from him in a moment. thanks for getting up. good to see you. >> good to see you. thank you. >> a check on futures, we have seen things agents lower. dow futures indicated oun by 6 points, s&p off close to 2, nasdaq down by 3 1/2. this comes after markets ended slightly higher for the last week. oil prices, which rebounded a

little bit last week after being down 9% the week before are down once again this morning. a drop of another 1.3%. wti sitting at 4815. among today's top stories it will be a busy day on capitol hill. fbi director james comey will be appearing before house intelligence committee. this is part of a probe into russian interference in 2015 u.s. election, also about president trump's accusations that trump tower was wiretapped by president obama. the confirmation process by the supreme court nominee begins as well. neil gorsuch has a date with judiciary committee. it's expected to be another highly partisan battle. ride share uber lost a top executive after seven months. he said approaches are incompatible with what he saw and experienced at uber. >> couple of stocks to watch. sprouts jumping in premarket trading. organic grocer held talks with

albertson's. helped lift whole foods. abbott under pressure showing abbott dissolve vascular stint caused more adverse events than in patients treated with an older stint made by abbott. however, researchers did say change in guidelines should produce fwer results. >> president trump is going to be meeting with billionaire technology pioneer today. y lan joins us with more. good morning. >> reporter: he's scheduled to meet at 11:00 a.m. global health and public education as potential areas of bipartisan agreement. but the budget blueprint the white house released last week cuts funding for both of those things. the gates foundation called these reductions deeply troubling, warning they would make america and the world less

safe and prosperous. another point of contention could be climate change. epa administer scott pruitt is skeptical of global warming but it's something bill gates is passionate about. you might remember he was on "squawk box" a few months ago talking about his billion dollar fund breakthrough energy ventures. back then he was hopeful the two sides could find common ground. he sounded cautiously optimistic in that interview but a lot has happened since then. there's also the travel ban that tech companies including microsoft have ardently opposed so far. there is plenty for these two businessmen to discuss today and we'll be bringing you more as we have it. back over to you guys. >> thank you, ylan. fbi director james comey will testify today, p.j. crowley, former assistant secretary of state and author of "red line, american foreign policy at a time of fractured politics and failing states." so you've been watching

everything swirling around these things, p.j. both sides have something riding. you have one side that wants to prove collusion, the other side wants to prove wiretapping during the campaign. any indication that either thing happened? >> i think first of all from becky's summary, it's important to understand that inside all of the swill of politics that we'll see today is a very important question, what did russia do to try to influence 2016 campaign. you're right. on the democratic side there will be probing, what were the contacts between trump operatives and russian officials and did that rise to the level of collusion. probably not will be the answer we find out. on the republican side, there will be concerned, and rightfully, so about the leaks of all the information we've seen. for example, transcripts of conversations between the russian ambassador and former national security adviser michael flynn.

rising above all of that is the question of was there wiretapping of trump tower. one would hope that fbi director james comey will be able to say definitively in public what he said in private, evidently no, there's no evidence of that. whether that is good enough for the white house we'll have to wait and see. >> what if there was -- can you say, no, there was no wiretapping. yet, if they did get the legal go ahead to monitor michael flynn and monitor, let's say, stone. who was the other operative they said potentially, so that any of those calls were being monitored. that's not specifically wiretapping the white house but they could have been in on conversations between prump aes trump and those three individuals. will that come out? >> i don't know that will come up in public testimony. of course, that's the by-product of perhaps the white house attempt to steer the

conversation away from russia. the president is concerned all this talk about russian interference undermines the legitimacy of his election. the dilemma is that in trying to change the subject to this question of quote, unquote, wiretapping he's undermined the credibility of his presidency. so have to see how that falls out. obviously if there is an indication there was an active investigation of some of these people around the trump administration, there's a there there, and that obviously will put the white house in a bit of a box. i'm not sure we'll get to that level, but i'm sure that there will be questions around wiretapping about surveillance. you know, the surveillance of the russian ambassador is something that the national security agency does as a matter of course. i think that's how the -- we came to the intercept of a conversation or conversations between kislyak and michael

flynn. >> the only data point we have is jeff sessions as a senator ran into the russian ambassador as did a lot of people. i mean, i don't know. you say maybe it doesn't rise to the level of collusion. where do we see anything approach that at this point? >> that will be the subject of the conversations today. >> jeff sessions has faulty memory, conversations with ambassadors, that's what ambassador do day in and day out. i don't know there will be a there there. i think coming out of today, one of the major questions will be should director comey or others try to put to rest this question of wiretapping. what will the white house do? for whatever reason, they have

tried to keep this alive, even brings last week two allies into the conversation with gchq and that accusation and trump turning to angela merkel and saying, well, we have something in common. so i think if i were the national security adviser h.r. mcmaster, i'd be working very, very hard after today to have sean spicer say, look, the president's questions have been answered. i'd be working very, very hard to have the president of the united states say nothing further about the subject. >> so i'm going to make a statement and you tell me on a scale of one to ten what you think the influence is. there are holdovers in the state department that constitute something called deep state that wants to undermine the new administration. that's possible or not possible that there are people left from the obama administration that it's in their interest to undermine the current administration.

that is possible? >> i don't think of this in terms of the deep state. the state department where i worked for two years, it's about promoting american interests around the world. on the one hand, sure, there are people in any agency of government that didn't vote for president trump and don't like what he's doing, absolutely. by the same token based on 30 years in government, other people that are working hard to try to promote the national interest every single day. so i'm not an advocate of this concept of the deep state. that's much too sinister and to conspiratorial for me. >> it's like a two or three but it exists. >> are there agencies of government? yes. the president of the united states now leads those agencies of government. at some point in time he's got to arrive at a comfort level in terms of how to exercise his leadership. he came into office as an outsider. here in washington he's the leader of the free world. he has to figure out how to lead

the government he has. >> we know in one of the midnight hours before the prior president left, he disseminated -- he made it much easier for all these different agencies to share information about russia, right? in purely intelligence terms, what was the reason for that other than trying to undermine the next administration? how can you attribute it to anything else? >> i think what vladimir putin was trying to do, he had a preference in the 2016 election. i was in some meetings with hillary clinton and russian officials. she didn't like vladimir putin, he didn't like her. he chose to try to intercede and, you know, create a dynamic that worked in president trump's favor. that doesn't in any way change the outcome of the election but it is something that we have to get to the bottom of not only for our future security but also

the fact that we have key elections in europe this year. we just had one last week. and ultimately the western world has to have confidence in its democratic processes and that's what vladimir putin is trying to undermine. >> that's true. i think russia is all over the place. they are doing the same stuff in europe we do. anyway, p.j. crowley, i appreciate it. thanks for your time this morning. >> a pleasure. when we come back, ceo call is in session. chief of airline qantas airways will join us on set next. plus impact on big pharma. sam wak sal will weigh in how president trump's pick may impact things. we'll talk about all of it. the only federal president that voted no to rate hike. we'll talk to neel kashkari, first cnbc interview. you're watching "squawk box" on cnbc.

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welcome back to "squawk box." >> ask for it and you will -- >> the nasdaq is very generous. they are in tune with our needs. >> you ask and they respond. >> that is really beautiful. >> thank you so much. >> that is beautiful. >> last week. >> thank you very much. >> we had -- the guy in charge of ipos. >> yes. he was here as a guest. >> were we still on camera? >> yes, we were. >> joe put him on the spot. >> a lot of times they have a spread out here, usually for companies that are going public or having meetings. the company if they care enough about the company they have bacon. sometimes eggs bene, sometimes unbelievable spreads so. we're here, we're putting the nasdaq on the map, you know what i

mean? >> joe has been known to steal away from the set and steal some of the bacon over there. >> you go public on nasdaq you get bacon. >> not necessarily. it depends how much they like you. >> for opening bell. >> if they ring the opening bell they get bacon. >> if you ask. >> do you think this is going to be every day now? >> we're going to move that down here. becky, you noticed your whole one. i'm going to share with you. >> that's kind of you. >> i rang opening bell and i didn't get any bacon. >> you didn't get any bacon. >> you know what, we're going to take care of that right now. >> maybe because i'm guest hosting. >> each piece -- i'm going to take some home now that i look at it. each piece looks cooked to perfection. none have the slimy -- >> beautiful. >> beautiful backon. >> thank you, nasdaq. >> that is still open, the other

one down here? >> we won't mention. i don't think they have any bacon there -- when did they even -- >> bacon is the future. >> qantas airways in the midst of navigating three-year turnaround plan. latest update dream liners in the fall making qantas first carrier to connect every continent with australia nonstop. joining us ceo of qantas airways. thanks for being with us today. >> nice to be here today. >> you've made a phenomenal turnaround, getting new jobs, new aircraft, retiring old plants, getting rid of some of the nonprofitable routes that were there before. people are sitting up and paying attention. people trying to copy what you're doing. >> we've increased customer service, if you products, new seats, no loungers. we've increased the engagement

of our people. we talk about travel of transformation, financial results, customer service results and engagement results. >> how do you do something like that. a lot of times for carriers here that try to do that, you run into problems with some of the employees not being thrilled because their pay is being cut or benefits being cut along the way. how do you take care of those issues. >> you reward employees in good times as well. we made record results last year, made 1.5 billion. we gave a significant bonus. last few years, $160 million in bonuses. also right by communication continuously talking about the issues the company faces, what the future is and talk about bright future when the company makes money. you can invest in aircraft, invest in their jobs. i think if you get that right, you can get people to come with you. >> you make it sound fairly easy but i'm guessing it's not that easy. >> i take every airline and every company goes through

different changes that it has to face. it depends. we're very lucky in australia. qantas is probably an iconic brand. a lot of people want to work for it of it's a company that around the globe is recognized. one of the few companies that flies to every continent. when you have that getting people motivated to work for a company like that is easier than creating screws or something. there's something emotional about the company. >> "rain man." >> it was. for the last three years in a row have the safest airline in a world. >> never had a crash, fatality. >> we haven't. we're the oldest continuing operating in the world. >> it's not a world. >> queensland and northern territory aerial services. >> you don't see a lot of qs without us. i want to buy a vowel for you, get you one in there. >> on april 1st we got so fed ep

people adding into it, we did an april fool's joke with the u in it, actually painted an aircraft. >> qatar, not many. qatar i think is not really spelled. do you know any? go ahead. >> no, i wanted to ask a real question. allen, what happens if the australian dollar appreciates 10 or 20%. what ld thwould that do to you ? >> for the moment it's a sweet-spot where it is. it did appreciate, makes us more expensive as an airline because aussie dollars and attracts more airlines in. that's not a good thing. the way the trend is going with the u.s. dollar, interest rates here increasing, it's more likely to weaken that strengthen, so we think that's a good thing in the longer term. >> what about competition? you've kind of changed your

views, at least the airline's views on competition and partnered with people like emirates seen as the antithesis of anybody you've cooperated before. >> we've decided to team up with the best airlines in the world. for europe the best network we can team up with is emirates in dubai where they serve 40 points in europe. our biggest partner is american airlines. we have more destinations through the u.s., l.a., san francisco, dallas and new york. we think that partnership is a partnership that has the biggest growth going forward. actually demand from u.s. and australia we take over next few years should see a build and it's something we're pretty excited about. so the best airlines in the world, i think you have to team up with this day and age. you can't fly to every destination on your own and those partnerships are extremely important. >> in the united states, u.s.

airlines has seen a resushlgence over the last few years. a lot of it has been because of declining competition. is eight similar story around the globe? >> it's not. in australia we've had a huge amount of capacity, particularly chinese carriers. we've seen chinese build, 100 million tourists last year. top country to come to in awareness it's number one, but in actual visitors it's number ten. all of the numbers have in the next decade an average chinese visitors. so we had this growth of 20% capacity coming into australia from china. in the next decade we could see over 4 million people from china coming in. theres a big boom happening in the asia-pacific region and qantas is lucky to be able to participate in it. >> alan, want to thank you for joining us. >> thank you very much.

i want to get make bacon since i didn't get them last time. >> we have cream cheese, too, and like bagels. >> probably. >> have you ever done that? >> i certainly haven't done that. >> it's for fat people. i'll show you. you have to be. but i've been sitting here thinking about that, which shows you. coming up, bye-bye duke, bye-bye villanova, march madness. the stunner is next. we'll be right back. plus his take on the global economy and rolling back dodd/frank, an interview you won't want to miss starting at 8:30 a.m. eastern time. stay tuned, you're watching "squawk box" on cnbc. ♪

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when we come back today, we're going to get you set for the week on wall street. we will talk market strategy

next. you can see, look, the futures basically flat lined at this point. they were down this morning. right now dow futures down by one point. s&p indicated open down by one. what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter.

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good morning, everybody. welcome back to "squawk box" on cnbc. we are live from nasdaq market site in times square with bacon. among stories front and center disney's "beauty and the beast" smashing box office records. the movie debuted with $170 million in north american ticket sales. that is the biggest ever opening for the month of march. retailer target opening up 43,000 foot small format store in new york's harold square. it does have stores in harlem and tribeca. the new store is scheduled to open in october. the world's largest coal company set to emernge after various claims gold mining subsidiary. joining us to talk about the market, portfolio manager forral pine finds, david blitzer, dow jones, and our guest host is rich bernstein, ceo of richard

bernstein advisers, also cnbc contributor. welcome, folks. let's talk about what we've seen in the markets. probably more uncertainty in the last several weeks about what's happening with aggressive plans, policy plans put forth. sarah, how does that impact the market or does it from your perspective? >> i think it definitely does. i think a lot of the positive action you've seen is anticipating on tax side, regulatory side and various possibly stem lew as well. right now looking at details. very easy to skip over details in the beginning and prior to the administration starting. now i think there is a desire for longer term plans so we can see what those details are because people started building in some of that. i think you've gotten a lot of optimism out of the new administration so that hasn and of itself been positive for markets.

>> where the market stands right now, is it fairly valued based on what you see or undervalued or overvalued based on if these things get through. >> if some of the changes on the corporate side come tulua boost to earnings. i think some of that is reflected. i also think we don't know what the details are yet. you've seen some of the stocks and multiples expand on the basis you could have earnings growth because of that as well as a little better economy. it's hard to say exactly how much of that is priced in right now. i think you have a fairly well priced market so i think you need to see positive data continued. i think if things slowed down it's going to start to look expensive. >> rich, where are you on this? >> i agree. i think one thing people are missing is the underlying earnings trend is still very -- people think it's about about the election. rotation of cyclic always began well before the election. upd lying earnings trend is good. one thing i'd point out, because

the economy is healthy, we're not in a recession, the program you get from washington doesn't have to be big, but incremental. if they can manage to get something together that's a net positive for the economy, and i think that may not actually happen, but if it's a net positive, i think the risk to the economy is overheating because we're not in a recession. so i think people rather than worrying about slowdown and deflation should be worried about deflation and overheating. >> you're chuckling? >> i think the market overall quickly has periods, it's running on hope right now. the economy is good. that's definitely a plus. it was set up to take off in november when the election came. the economy better then than anybody knew. probably better now than most people realize. i would agree the risk in the next few years is not deflation in any way, probably inflation. i think for sure it's going up over 2% by the end of this year. >> by the end of this year you think it will be over 2%.

>> i think inflation is right now close to 2% if not at, and it's going to go higher over the next year and so on. but i think for the market, we got all pumped up on hope, euphor euphoria, excitement about the election, excitement about the idea that we're going to have big tax cuts and so on. at some point we've got to deliver. i don't think anybody can tell you the date by which we've got to deliver. but if we're sitting here next year and it hasn't been delivered at this time, believe me, it's going to look a whole lot different and we're not going to see very many smiles in that kind of thing. you can't go for hope forever. have you to have real hope at some point. >> there's a story talking about bond, ten-year note is now yielding 2.5%, that compares with dividend yield of 1.9% for stocks. the journal suggests that will make people reassess how they look at stocks versus bonds and their investments there.

do you agree with that? >> i think there's a lot of concern about interest rates going higher. so that might scare people away from the bond market. the trend is now since the fed is raising rate. the idea is the trend should be higher. they raised rates and the long bond came down to ten-year. whether or not historical relationships in the short-term, that's going to be a question. i think the equity markets have done well and people are worried that the bond markets might not do so well. if you trade-off on the interest rate alone, i think you're not going to see as much of a push into bonds. i think if you look at certain parts of the dividend yielding spectrum you can be higher than the average. but i do think there's a question as rates go higher as to where you want to put your money because you've had so many years of no bond interest at all and people being afraid to be in the bond market as rates start to go up. at some point there's a tipping point. i'm not sure exactly where the tipping point is. >> the funny thing about the article, underlying assumption

is there's some euphoria building here and maybe you should be more cautious on the margin and nothing could be further from the troop. asset allocations, individual, institutional, makes no difference, people are very income oriented. they are not cyclically positioned. that would argue there's euphoria building, people think we're in a new world and this going on forever. asset allocations are the opposite. people are still worried about downside protection. >> the 1.9% the way it's going to play out is not that the market is overvalued, it's, geez, i'm only getting 1.9% yield. i want more. you know, if we look at where people are moving their money, it's strictly income -- the indexes they want are indexes. >> thank you. >> deregulation, nationwide overhaul, fda might mean big boost for pharma sector. we'll talk to dr. sam waksal after the break.

welcome back to "squawk box," everyone. we have breaking news just from across the atlantic. the uk has informed european council it does intend to invoke article 50 on march 29th.

that would be the first formal step in the uk's exit from european union. previously prime minister theresa may said this would happen before the end of the month. now we'd know the day march 29th. joe. >> president trump's regulation rollback will have a big impact on the pharma industry. joining us now dr. sam waksal, founder of gene therapy company, myra gpx. did you found some other company? that's right. in clone as well. good to see you. >> good to see you. >> you're not herba tucks, what are they doing. >> millions. >> okay, great. so we've got trump. he's doing certain things in terms of regulation. you like scott gotly?

>> i think scott gottlieb is an enormous plus for america. >> you've also got at least some talk about drug pricing that could bring pressure on in accelerators and possibly hurt innovation. you've got that. you're hot to talk about nih. any budget cuts for nih. you've got big problems with that? >> i do. >> net net is it positive or negative this presidency? >> we don't know what's going to happen. people look at regulation and health care differently than they look at regulation for everything else. you had richard lefrak on talking about rebuilding america's infrastructure regulation. i love richard. there people don't feel infrastructure is a right.

everyone feels health care is a right. it gives you a different mind-set. we've got to be very circumspect about what we do. nuance isn't a part of politics any longer. >> when you call it a right. if everybody has the ability to get health care if they do what they need to do in terms of personal responsibility, if the right is out there to get, is taking away the mandate, can you do that and be right -- do you need to force it? do you need to make them get it? >> no, i don't want to do that. i'm not going to get into that debate right now. >> how are you going to do it? >> first of all what you do do, if you've got a society right now that is aging. >> speak for your self. >> i'm not and you're not and becky is not. i don't know ore. >> i'm aging. >> you look like you're aging. but one of the things that's really critical is if we don't

come up with real cures for diseases that are affecting this population, alzheimer's, parkinson's, als, neurodegenerative diseases. >> chronic. >> we will bankrupt america. so the nuance of how to deal with pricing is very important. you can't have crappy 50-year-old drugs being priced at thousands of dollars. so that we need to effect. you can't have commodities priced highly. so if you've got 10 of something, you compete. that's what we do in america. >> so priced at $85,000 a year. >> things that change outcome. if someone comes up and nih budget doesn't get hurt badly, hurt at all, we should be increasing funding at the nih so we have more young scientists, more brilliant people that are changing outcome for patients,

discover new things, we won't bankrupt society and we'll have new companies that come out of that research, hire more people and actually it will be a net plus for the economy. >> all right. i offered you all the climate change money for the nih. >> i want it. >> you'll do it, cut it to zero. that's what i'm going to work on. i think i can get that done. >> that would be great. >> you have no problem with that. >> i have no problem with that. >> you're a scientist actually. go ahead. >> in terms of the budget, money for science, money for spending on these things, how much more do we need? >> a lot more. a lot more. interestingly right now you have young people that are brilliant young scientists, whether they come from university of kentucky or university of michigan or any of the march madness schools or they come from harvard university in chicago or

rockefeller, they need to start working and they need grants. if you don't give them those grants, they can't do science. there was a reason jonas salk and sabin never won a prize for polio vaccine because they didn't do anything. the guy that did it was a guy named john enders at harvard who learned to grow a virus in tissue culture. that was the breakthrough with nih funding, just doing great science. once that great science was done, the other stuff was easy. that's what happens in society right now when we do research. we do it on nerve net and hydrajellyfish. we come up with ideas that change neurobiology. >> they become the building blocks. >> that's what we need to tib doing. just fund great science, the pharma companies, biotech companies. >> this needs to be heard this

message. you don't care about big bird, pbs, npr. >> i do. i care about the national endowment of humanities and the arts much more than i care about worrying about some other things. >> all right. so you do want to fund the arts, even though the arts -- >> they make us human. >> i know. i understand that. >> they make you human. they make your wife human when she sells a piece of art. >> that's right. sam waksal, thank you. this needs to get out on nih, national science foundation. >> we need to deal with pricing in a nuanced way so we pay for things that change outcome. we do it properly so we save innovation in america. >> we do see that the president we hear does watch and he heard about the nih. >> i hope. >> thank you, sam. when we come back we have more of this morning's biggest movers ahead of the opening bell, plus a final market call from our

guest host richard bernstein. stay tuned you're watching "squawk box" on cnbc. 00 years aa benchmark for average. yet many people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? it's time to bench the benchmarks.

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big bird was sold to hbo? shake shack neutral to underperform. net boong based on evaluation. tiffany william blair firm says luxury goods retail business has become more stable and stock is

likely to benefit from either comps, same store comps. >> big bird is still on pbs but on hbo first. they pay for it. >> i know what i pay hbo for my cable bill and they are okay. >> you're subsidizing big bird. in other news prosecutors in munich searched offices of volkswagen ceo into part of diesel emission test. audi headquarters searched as part of the base of v wchl. say prosecutors searched personal calendars, notebooks memory cards and smart phones. ceo targeted because chairman of audi's supervisory board. >> in case you missed it big upset in ncaa tournament. second seed duke knocked out late last night by south carolina. the seventh seed in the region south carolina trailed by 12

points in second half before taking over. the stunner ended up with a score of 88-81. south carolina earns a trip to madison square garden in new york to play baylor on friday. that's the first time the school has reached the sweet 16 since 1973. probably at this point a little bit of a conflict if you are south carolina given what happens in north carolina. >> north carolina constantly. >> between duke and the tar heels. you'd be like, okay, i'm coming to south carolina to play. good for them. you know, my mind i watch all these games. south carolina i had the other team to beat south carolina and i was sure they were going to -- i can't remember who it was but i need a lot of -- it's so stupid to try and pick upsets. >> because we're losing. >> you're done. >> i'm done. >> i'm okay. i got 10 out of 16. i got kansas still and i have

north carolina still. i have north carolina. >> i'm a big rick pitino. >> i had louisville in the final four. i was surprised. they had it won, i thought. >> there was so much at stake. >> obviously they didn't have it won. those guys are good. i had michigan in the previous game. it was michigan, wasn't it? who was louisville playing when they lost? i loved what they did. i was sick watching. >> bizarre, stupid little bracket. i watch these things, i had to turn off -- >> excitement every year until you start getting beaten down in the bracket wars. >> last night it turned off. they were losing by five with 2:00 to go and i had to turn it off. then i was watching on my phone. >> started coming back. >> our guest host today is rich be bernstein. rich, aside from the brackets, what else should we be watching

today? >> i think number one, the more washington can focus on important things for stock market, tax reform, corporate tax reform, these type of things, fiscal stimulus, i think the market is going to do fine. the more we get sidetracked into all these other issues, i think the market is going to wobble. you know, earnings are okay, as you pointed out. not exactly cheap. what's the next story, doesn't have to be a big story, just incremental. if they can keep their eye on the ball, the market will do well. >> infrastructure. >> exactly, whether infrastructure, tax reform, deregulation, any of the big three people like to talk about can be fine. it can be a cocktail of those three. it doesn't have to be big just incremental. we're not in the depths of recession. that's the big thing people are forgetting. we don't need a big package here. >> is the fed not as important as it had been before? if they start raising rates a little more quickly than the

three we'd expected this year does that matter? >> i think the headline inflation rate is up to 2.8 now. two years ago had a negative sign in front of it, so the inflation story is changing. inflation expectations trofd more than a year ago. something is changing in that backdrop right there. i think in most cycles the fed gets caught and inflation starts picking up and they rush to catch up. i think that's going to happen in this cycle, too. i think the fed is playing by the normal playbook where you wait, you wait, you wait and it's too late and they have to play catch up. i think we should expect that in this cycle, too. >> happen and it will be 20 years from now. >> twenty years, maybe a longer cycle. >> the first or second derivative. like bonds. they go to 2 1/2. the percentage is big but still seems low. i think inflation, so much supply, so much oversupply in the world, seems like we're okay, not going into that deflationary spiral or

inflationary spiral. >> inflationary spiral a la 1970s is very far. >> that's what i mean. >> even within the last cycle, i think 2008 headline inflation got 5%. we were so consumed about financial debacle we forgot about inflation. that's one of the reasons the fed was tight think. nothing bad happens unless the fed tightens too much. >> thanks for being here, and you say thank you for having me. >> thank you for having me and thank you so much for the bacon. >> you get to come on for an hour and speak on high and his clients go, he's so good, he's on "squawk box." really, where we thank you or you thank us. >> it was a real pressure. >> thank you. >> thank you. >> you're welcome. we'll see you again. you can on for again for an hour, your clients go, look at my money man. "squawk box" up next former

senator kerry, the good senator kerry. we'll talk taxes, health care reform and deregulation. a little bit later on cnbc an interview with minneapolis fed president neel kashkari. that's 8:30 eastern time. stay tuned, you're watching a bacon monday on "squawk box." bp developed new, industry-leading software to monitor drilling operations in real-time, so our engineers can solve problems with the most precise data at their fingertips. because safety is never being satisfied. and always working to be better.

"squawk box" newsmaker minneapolis neel kashkari joins us live. the loan at center of fhoc makes his case coming up. tough talk. white house says tax reform may begin in late spring, so what should companies and individuals expect in we'll ask chairman and ceo mark weinberger and former senator as the final hour of "squawk box" starts now. ♪ ♪ >> announcer: live from the most powerful city in the world, this is "squawk box." good morning, welcome back to cnbc. i'm joe kernen, this is becky quick. right now the futures have

been -- now they are up. they are down now up 1.38 on the dow jones for your radio people. down 1.4 on the s&p down just under 2. on the nasdaq treasury yields have now moved back below 2.5. now just above, between 2.5, 2.49, 2.51. then oil prices, we see mark grant will tell us it's fudderwacken. that was from alice and wonderland. some weird dance. >> johnny depp goes into. >> uses it when a market starts selling off. >> is that what chuck berry did?

>> i don't know. >> what if there was no chuck berry, what would we listen to? >> what do we listen to now. >> article 50 march 29th, this will begin formal brexit process open two-year window for negotiations. in corporate news uber president jeff jones quit after six months on the job. in a statement he says his beliefs and leadership are inconsistent with what he saw at uber. earnings central will focus on consumer. among names to watch, general mills, lennar, fedex, nike, winnebago. joe. >> stock to watch. barron's thinks apple stock could jump another 10%. barron cites growth in service and new iphone model. unilever preparing for sale, flora margarine and stork butter

brand. private equity working on offers. deutsche bank kicking off capital raising to shore up books. the firm hopes to raise over 8 billion euros by selling shares at a 35% discount. president trump will head to louisville, kentucky. that's where he's expected to pitch gop plan to repeal and replace obamacare. the house is expected to vote on the republican bill on thursday. our guest host this morning former u.s. senator former governor of nebraska. senator, glad to have you with us today. >> nice to be with you. nice to be with both of you. >> i've given you high praise already, in the makeup room. i don't know why they bother with you, perfect before hand. guilding the lilly. say go easy on it. >> no. full on. >> in washington, it is seeming like it is going to be difficult

to get some of this legislation passed. it seems like the sides have kind of set in and even among the republican party they can't seem to grow on what they want when it comes to obamacare. how do you read the tea leaves on how things are shaping up. >> well, the country is pretty badly divided, has been for sometime now. this is going on away from washington. you've got significant opposition to the president. i think his inaugural address was very divisive and whacked all living presence behind you. obama did the same thing with his inaugural address. if you're trying to unify the country you have to reach out to people who might be independents and have a liberal view and weaver seen very little of that. on the street people organizing against him and democrats saying you have to vote no on everything. it creates a difficult environment especially for

things like health care and tax reform where if you don't do it in a bipartisan way. it's easy with health care to demagogue from the left and right. it's very difficult to tell people the truth in what kind of environment. >> tell people what? >> making ourselves sick for openers. people want high-quality affordable health care, what they really meant is they want the best and don't want to pay anything for it. no question it's more expensive, high deductible plans increased. at one level what we all want is for somebody else to pay the bill. that's difficult. right now rising obesity and type 2 diabetes and diseases associated with us behaving badly. >> you're talking about the bacon. not a great day when we have vats of -- you can see it's not disappearing quickly. >> we ate one barrel. >> always one behind the screen. >> can we eat that? >> yes. >> i'll be eating it when the camera goes off. >> want me to get you cream

cheese and bagel. >> cream cheese i'm not for but the bacon. >> what's wrong with cream cheese. >> what i'm paying attention to these days are carbohydrates. >> it works. >> it does, but it's hard to satisfy what your body wants without carbohydrates. >> i know. >> bacon you're fine with, it's the sugar that gets you in trouble. >> chips. >> if you stand before an audience and say 40% health care isafter attributable to diabetes, hyper tinge, associated with obesity, that doesn't get you a standing ovation. but it's the truth. the other is you'll get a little more of it later, but my biggest problem with the president's budget right now, not telling the truth, we've got to have an $80 billion increase on social security and medicare. we're robbing from the future to

pay for the past. why? because we geezers vote in very large fractions. a lot easier to screw young people than older people because they don't vote and we do. >> someday it has to be means of the we have to tell health care beneficiary where is the money coming electric, a tax transferred to pay for your social security and medicare. that's where it's coming. and the tax is going very obvious on working people, working people who have no capacity to buy their own stuff. >> the response any tomb you try to cut back from social security or medicaid or say you're going to do it years now is it's my money and i want it back. >> it isn't their money. that's a great example of where we have been unwilling to be honest with the audience because the audience doesn't give you a round of applause if you say it isn't your money. you're taxes one group of people to pay for your benefits.

yes, you were taxed in the workforce to pay for people who were beneficiaries at the time. but right now more and more of our national income is going for those retirement programs and it is genuinely robbing from the future to pay for the past. >> is it fair to say people take out more than they put into the system? >> of course they take out more than they put into the system. there's some people that don't. for the most part the answer is yes. it's a very progressive system meaning you'll get more back out than you put in. >> senator kerrey, there's so many people in washington. ette felt five years ago there was a growing number of people, there was the whole rise above campaign we did here. there were a number of people on both sides of the aisle that were willing to come forward and say these things. it's harder now. >> it produced legislation but there was a pitiful number of people. what happens if you introduce a bill. you see with ryan, i have fault with the ryan bill but at least

it's a bill. what happens is once you get specific everybody will attack you. what i think has to occur is those who are supporting the do nothing plan, the president right now and almost every single member of congress, the do nothing plan has tax increases, spending cuts for anybody under the age of 50. that's the reality. the do nothing plan has real quo consequences. unfortunately not much in the way of political consequences. >> how do we change that? >> if you get people on this show who supporting the do nothing plan, you have to hold them accountable. have you to say, senator wind bag, your original co-sponsor of the do nothing plan. did you know, senator wind bag, as a consequence of that there's going to be a big tax increase for people under the age of 45. there's going to be a big cut in their benefits. that's current law. your proposal cuts benefits and increases taxes senator wind bag, why do you defend it? the defense is, i won't be around. i'm only going to run for three

more terms. that's 18 years. as a consequence, i won't be here to face the music. that's what we've done with pensions across the board. >> we've had people like ken langon say tax reform. have people worry about that. >> human nature is if there's 1,000 people out here in a room and you gave me two scripts, one that gives me a standing ovation and one that gets me booed, i'll do the standing ovation. that's the problem. what we have to do as nonpracticing citizens, that is to say we're not elected office, we've got to say to individuals on this issue, senator, you are supporting the do nothing plan. you're the original co-sponsor of that bill. the do nothing plan will produce the following consequences. you're supporting a big tax increase and big spending cut for beneficiaries that are under the age of 45. you have to hold the incumbent

accountable, otherwise they will continue to do what they are doing. >> it's easy to be cynical. you've got guys in the house. as soon as they are elected, less that two users before they are going to have to do it again so they are immediately worried. then you've got the senators. i think you need like senator wind bag one, two, three, four, five. you need all senator wind bags really. you give them six years and then they are in for three or four terms. mccain -- some of these guys are just institutions and they are not going to get voted out but they haven't done anything for so long but bloviate their own self-interest and pr machine, sometimes i wonder about term limits. last week andrew and i actually agreed, i'm not sure it's the right thing. >> yeah. i don't think it's actually easy to be cynical. it's easy to be skeptical. you choose to be a cynic. even you haven't made that choice. so i understand the motivation,

let's put term limits in place. >> how many house guys willing to vote on something they know they won't win in two years. >> the problem is they are going to want to -- you say it's a 12-year term limit. i'll stick with my original proposition. original proposition if you have a choice between standing ovation and round of boos, you go with standing ovation. there's much in the ryan health care bill i don't support, that i don't like, but it's a bill. i can look at it. i can analyze it. at least it's an answer to the question, what do you want to dd do. >> it's like so many things, i look at there's pros and cons. do the ben franklin close, there's one more reason to do it, ten on each side. term limits seems like it makes sense, then the answer was experience -- >> friends running. >> you've got to learn. you should get better at what do you if you're there for a while but there's no evidence of that.

>> i think there is. >> something might get done. >> terms effective. >> there are rules, you learn how the place works. >> i think you should get better the longer you're there. >> senator kerrey our guest host, much more to talk about with him. >> tax reform can it be done before summer recess. neel kashkari will join us live. at f mulch oc meeting. philadelphia fed patrick harper will join steve liesman "squawk on the street" at 9:40 eastern. you're watching "squawk box" on cnbc. what if technology gave us the power to turn this enemy into an ally? microsoft and its partners are using smart traps to capture mosquitoes and sequence their dna to fight disease. there are over 100 million pieces of dna in every sample. with the microsoft cloud, we can analyze the data faster than ever before. if we can detect new viruses

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welcome back to "squawk box." an executive transition by cnbc comcast. chief operating officer dave watson has been named president and ceo of comcast cable. he replaces comcast vice-chairman kneel smit. nabisco and navy s.e.a.l. >> he was a supporter of "squawk box," good guy. sounds like he's going to be

find, neil smit. >> ceo, a lot of bench strength at comcast. >> that's great. >> vice-chairman. white house meanwhile says tax reform might again in late spring among things expected in the president's plan, lowering corporate rate and reducing the number of brackets on individual taxes. joining us now mark weinberger, chairman and ceo of eny. you guys pitched the academy on doing the envelopes. >> but for the grace of god i feel for my colleagues over there. it could happen to anyone. >> you didn't swoop in there immediately and say this would have never, ever, ever happened. that was -- it doesn't seem like it's that hard to get the right best picture out there. >> human error. human error. it happens. >> would you have been taking selfies of scar jo.

>> joe, i'm not going there. >> tax reform, obamacare has to be done first of is that the right way to go or can it all get bogged down in that? a lot riding on it. >> the budge, senator kerrey knows better, budget intricacy. has to get done first. 2017 reconciliation bill. have to get that done. 2018. doesn't look like democrats are going to sign up for tax reform. got to get through 51 votes, turn it after they do health care. >> thursday, i bet you it passes on thursday in the house. >> i think the house is going to get it done. >> then it goes to senate. they get to do what they want over there, right? they can rewrite a couple things. they will make it more obamacare like, then they have to send it back to the house. >> then conference. >> tax reform is going to be the same thing. the house is going to do what they are going to do, senate do what they are going to do, the key is to get it to conference. then everything is on the table. they can rewrite the whole bill.

>> the house has to make things more conservative to get their membership to sign off on it, then water it down. >> sign off on it. so you think it gets done. >> i agree. >> this year? >> yes. >> from tax reform or health care. >> health care. >> i think it gets done. i think the president is going to have to really instead of rallying the right to support this thing, he's going to have to appeal to the people in the middle. i haven't seen that yet. what's happened, best seen, mark, in the good old days when we were there, you almost always had republican, democrats forming in a bipartisan group looking for an alternative. there is no such thing. >> when you have elizabeth warren and bernie sanders, where does that put the middle? the middle is out here. you would be a right winger. you would be a right wing conservative in the senate right now if you were there. you would. >> i don't know if i'd go that far. >> you wouldn't even recognize

poem. >> the hardst thing in politics is make your friends angry. it's easy to make your enemies angry. that's what's going on right now. democrats are afraid to make their friends angry. republicans are afraid to make their friends angry. as a consequence bipartisan thing going on, nothing. >> what's going on, everybody smiling when you're at the white house? >> no, no. there's a lot of hard work going on, i will say. >> all the ceos, ones not supporters, obviously, they are trying now to cooperate and get things done. >> they are, joe. as the senator knows i worked directly for senators clayton and bush, an obama task force. trump is the most hands on in terms of get things done, gives ceo things to do between meetings and we have tasks to work on and come back with proposals. we're not going to do them all but we really feel like we're being heard. >> you know if you do not do the homework what's going to happen.

you're fired. >> respondent hands on, that's not your -- >> mark said it, i believe it. >> see, that's why you're not a democrat anymore. you can't even say that. >> that's why he and i are friends. whatever he says i believe. >> we went through a lot. senator kerrey will hold us to not what he says but what gets done. he will measure it on what gets done, always did, that's why i admire him so much. i do think we'll have tax reform this year. >> what's it going to look like. >> lower rates. not 15%. >> above 20. >> could be in the low 20s. depends how much pain we're willing to take. has to be fiscally responsible. doesn't mean revenue neutral every year. >> is 22% something that will make us more competitive. >> if you can get down to the low 20s and have an international system that's competitive to let companies bring home their cash without consequence that would be

competitive internationally and drive capital to the united states. >> what you're describing sounds like something that leaves out the border adjustment tax. >> the border adjustment tax is a powerful mechanism to get investment here in the united states. the problem is the for governments aren't going to like it because it's not like a value added tax exactly and so they don't have this anywhere else. two, right now we have about two paragraphs explaining it and we need a lot more detail. the business roundtable had a meeting. all the ceos there, had people coin and talk about it. a couple are opposed, a couple in favor. vast majority waiting to see what it really is and how it's drafted. >> barron's this week had a cover story really taking it down saying this is not a good thing, too much uncertainty and even opponents can't agree. >> it's going to be hard enough to get the corporate rate down to 21, let alone replace it with a system, saying basically to walmart, target, do not worry, dollar will revalue and take care of itself.

that's going forward. >> you think a bridge too far. >> it's difficult to make a case cut medicaid $300 billion in order to get room for tax reduction. that's a tough proposition for republicans or democrats, by the way. that's the general proposition. when you get into corporate tax reform, you've got to have off sets of exemptions that were currently in place. you've got to take things away. taking things away is hard. >> there is no easy way to do it to your point if you want to be fiscally responsible. it has to be fiscally responsible because after 10 years it has to be budget neutral unless it goes away under budget reconciliation rules. whether it's this adjustment, reductions, credits, exemptions, other things, there is off sets that are difficult but i think they are going to get it done. >> all right. >> give me some bacon? >> we have plenty to share. >> there's perks when you come on "squawk box." >> i can't wait. thank you. >> i'll have some bacon, why

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good morning, everybody. welcome back to "squawk box" here on cnbc. we are live from nasdaq market site in times square. among the stories that are front and center this morning, "beauty and the beast" had a record setting debut this past weekend. the disney movie took in $170 million in north american ticket sales. that is the most ever from march opening. they steered clear of "beauty and the beast" because they knew fans would be out. fans of nectar therapeutics, opioid painkiller.

treatment is just as good as standard opioids but comes without the feeling of euphoria that can lead to abuse and addiction. cnbc said the issue limited to saks and none of the other hudson bay claims. no credit card, payments or password information was disclosed. the issue affect add small percentage of customers. hudson bay says it takes matters like this very seriously. >> check this out. "sesame street" adding a new character to its main cast. the new muppet named julia is autistic. elmo introduced julia to the world on "60 minutes" saying we really like julia, she is really special to us. >> they have two things they are trying to do. first of all make kids with autism feel more included and then make kids who don't have someone they know who has autism maybe have a little insight into the world as well. >> it's getting better i think

in terms of other kids understanding. thank god for the awareness of everyone and legislation that puts teeth into something parents didn't really have anything to do. new jersey harassment, there was teeth thane thing. you don't want that on the record. that's what you need. these kids need to be protected and the teacher can't always be around. >> fmoc voting almost unanimously to hike benchmark interest rate by a quarter point. there was a lone descenter, neel kashkari, president of federal reserve bank of minneapolis and he joins us this morning. neel, it's great to see you. thanks for being here. >> good to see you, becky. thanks for having me. >> the other nine members voted to raise rates. you did not. why was that? >> well, nothing has really

changed for the last five or six years the federal reserve keeps predicting inflation is around the corner and those predictions end up being wrong. if you look at dat oorks sips last fmoc in january, core inflation that we focus on basically hasn't changed, moved sideways 1.74%, short of our 2% target. at the same time the job market continues to perform very strongly creating a lot of jobs and the unemployment rate has been stuck around 4.7%. that's because labor force participation keeps climbing. that's a really good things. americans are reentering labor force or staying in. so if we're coming short on inflation and the job market shows more signs of slack, my question is why do anything? why not allow this to continue until we see reaching maximum employment. >> your argument is wait until you see the whites of their eyes when it comes to inflation? >> i want to see inflation, core inflation move up towards our 2% target. it's supposed to be a symmetric

target. i think we're behaving as though it's a ceiling. we're 1.7% core inflation. that means 2.3% if we were above it shouldn't be any more concerning. so we have a lot of room here to let inflation back to target, allow the job market to continue healing, allow wages to start creeping up. we're just a long way away from having anything to be concerned about. my reaction is, my concern is why are we raising rates until the data tells us it's time. >> because monetary policies is supposed to be forward-looking. here is something that obviously argued this for a while. this guy has more money than god, and he made it by looking at the markets. he goes, why do we need negative real rates of 120 basis points with unemployment at 4.7, core cpa at 2.3 and even core pce within statistically significant range of the target. you're there. you're already there and you're

supposed to be forward-looking. so that's his point. why do you need these emergency measures when you're basically right there? >> well, here is the thing. we all -- i think we would all agree, good to see you, too -- economy growing more slowly than we like, growing more slowly for the past several years, yet had low interest rates. if we were providing monetary accommodation, i would have thought the job market would be rocketing, the unemployment rate would be dropping much more quickly, inflation would be taking off. >> none of those things are happening. >> neel, what do you mean, rocking 2% unemployment? when has that ever happened? you're almost already at -- i know you said participation rate is one thing. how do you know that by not allowing savers to make anything and by forcing corporations -- not forcing but allowing them to do all this financial engineering with these low rates, how do you know you're not the reason the economy is growing slowly?

it's not that it's not enough, it's that it's too much already that you're doing. >> well, you put a lot in there. let me respond here. look at labor force participation. you look at the charts, i'm not talking about the aging of society. if we look at working age americans, a lot fewer working age americans are working today than were working before the financial crisis. so there's still room to go getting working age americans back into the labor force. that shows us that the labor market is not fully recovered, number one. you're right. headline unemployment rate does suggest it. if you look at other measures like u6, which includes part-time workers and people who end up looking and labor force participation, there are still many more americans who want fulltime jobs that have them. second of all, push back on your guests who are arguing for higher rates. somebody needs to explain to me how higher rates leads to more investment, faster economic

growth. at the core of this, people saying the fed needs to get going, they need to sit there and explain to you and your viewers and me how higher rates leads to more and faster economic growth. i don't see it. >> they would say corporations obviously have not been investing long-term, have not been investing in capital and things like that, they have been buying back stock. they have been -- so money is so cheap they are able to buy growth through mergers and acquisitions. they have been doing financial engineering instead of what they should have been doing for growth in the future. that's what they should say. >> let's test that. >> what do insurance companies do that invest for pensions. they are lucky to get 2 or 3%. >> i understand. joe, let's take this for a second because it's a really important point. somebody needs to explain how we raise interest rates, so it's higher cost to borrowing for businesses. they are going to say i'm not going to buy back my stock, i'm going to build a factory because

interest rates are higher. that makes no sense. >> you would have thought you keep rates at 0 all this growth would come. the converse of that if rates go up a little, it doesn't necessarily mean they are not going to do these things. it's not going to hamper growth because keeping them at 0 didn't spur growth. what stimulates an economy. we grew like crazy at 5%, 20, 30 years ago. >> i understand. we go back to the last five or six years. i agree growth has been slower than any of us would like, but i still argue how can one rationally say if we just had higher interest rates that would have led to faster economic growth. i think if we had higher interest rates, slower economic growth and tougher job market. >> neel, part of the thing you've said you're concerned about, though, is trying to figure out what to do with $4.5

trillion dollar balance sheet. we've had other people, richard fisher talk about that, how do you feel about that and running off some of the issues and let them rundown. >> i agree with you, becky. the piece i published friday, that was one of the points i made. when the data do call for removing some monetary accommodation, my preference would be we first articulate a plan of exactly when and how we're going to roll off the balance sheet and then we allow the markets to react to that plan, absorb that information. then as we move forward, we allow the balance sheets to start running off and then we can return to fed fund rate hikes when the data call for it. i'm in agreement. my preference is we get going on the balance sheet next. >> let me ask, why aren't we in a position to start letting the balance sheet rundown now. just because $4.5 trillion dollars, i get it when we're in an emergency. seems like a long way from an emergency, though. >> i agree. i think that's why all of us are

looking at is very seriously now. this is a point of active discussion. i think we're going to do it at the right time. i'm pushing us to try to go sooner rather than later. you think about it, the reason the fed expanded balance sheet back several years ago, once we hit zero, the question was, is the fed out of ammunition, longer bonds to push down the long end of the yield curve to encourage that investment joe and i were talking about. that all made sense. now as the economy heals and calls for removal of accommodation, i do think the balance sheet should be the next move. >> the participation rate is all things to all people, too. like your argument, liesman has been telling me for like years it's got nothing to do with people wanting to work. all baby boomers retired. demographics, no, no, no. four seven is really, blah, blah. you use the opposite. you use it as evidence there's plenty of slack left and not really 4. %. i don't know what to believe

anymore. you're smart, liesman is charge, who is right? >> well, i'm right. he's wrong. i'm just teasing. we're both right. here is the thing. if you look at the overall participation rate, liesman's demographic factors absolutely show up and the trend is gradually down because we're getting older as a society. that's one way of looking at it. what i prefer to look at is work age duties. a level deeper. working age adults. there's no good reason why that should be dropping yet it has dropped because of the financial crisis. >> people under 50. 30 to 50 show up and not participating in the workforce. see, i'm with you on that. >> that's exactly right. >> doesn't feel plik four serve that's for sure. you'd have more wage growth. >> correct. so even now wages have started to creep up. >> started. >> but they are not creeping up to a level that is concerning in terms of inflation. they are not back up to the levels they were at in growth in '05 and '06.

so core inflation on inflation expectations on wages, none of these are showing alarm signs right now. that tells me we've got room to wait to allow the labor market to continue to improve. once the data shows it's really time to remove accommodation, i'm going to be all for it. >> for a guy that was there trying to deal with the housing bubble, that would be the other thing that people would bring up to you, you don't know what low rates are really doing. you don't know where the next dislocation is going to be based on -- you're not seeing a lot of benefit from zero. who knows you might be inflating something that comes home to roost in the future. that's probably what you would say. you must know there's nothing on the horizon. >> no. it's a very fair question. people point to the stock market booming. my response to those folks is we care about asset price movements if we think a correction could lead to financial instability or financial crisis. think about the tech bubble.

the tech bubble burst. it was not good for the economy. obviously it hurt. there was no risk of financial collapse. not like the housing bubble. the difference is housing market has so much debt underneath it, it's much more dangerous if there's a correction. if equity markets drop it's going to be painful for investors but there's so little debt relative to housing, it doesn't look like it has a risk leading to any kind of financial crisis. so our job is let the markets adjust. >> i think you and all your friends, janet yellen and co might get bailed out. you inflated asset with qe and zero, now tax reform and deregulation, the underlying economy might catch up. you could have gotten bailed out for staying at zero too long and actual underlying economy may grow into where you've inflated the assets. so you should thank donald trump. >> i hope that happens. >> you want to say that right now, thank you, mr. trump. >> i'll just saying this, i have not yet changed my economic

forecast. >> that's common. that's common. you're going to do that. >> have you seen -- neel, have you seen anything the animal spirits we talk about all the time where the market has gone -- where we've seen consumer confidence, where we've seen small business confidence? how do you kind of measure that? >> well, we measure it a number of different ways. one way we measure it is what's happening on inflation expectations. after the election there was a bump. if you look where treasury prices went and backed out what underlying inflation expectation, there was a little bump but not to alarming levels. we're paying close attention to that. i also talked to my contact, other directors and business contacts around my region, is it translating to different activity on the ground? are people making investment decisions based on this optimism? the feedback i'm getting is not yet. people are feeling good, they are optimistic but waiting and seeing. i'm waiting and seeing, too. what does congress end up doing, what does the white house do?

then we will adjust our economic models based on the reality of that legislation. >> neel, can i ask you, you persuaded me, ask you a question, if you examine all these things, are there other things we need to do to increase workforce, negative income tax, given thoughts to what other things need to be done to increase workplace participation? >> well, i do think you mentioned -- i think earned income tax credit has proven to be an effective tool. people on both sides of the aisle generally like that. anything we can do on education. still huge education gaps. if you look at unemployment rate, unemployment rate is directly tied whether you're a high school graduate or college graduate, et cetera, things on education. of course anything congress can do around productivity growth. this is the big conundrum totally outside federal reserve is how do we get productivity growth again. as congress is debating their fiscal plans, anything they can do towards enforcement,

education, productivity growth, that will be very good for america's long-term economic competitiveness. >> neel kashkari, i want to thank you for joining us. >> thanks. >> thanks. great to see you. see you again hopefully. coming up stocks to watch. later today don't miss an exclusive interview with another fed head, this one federal president patrick harker, join steve liesman, the aforementioned steve liesman "squawk on the street." stay tuned. squawk will be right back.

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wen we return we have a list of stocks to watch for the day. you might have an interest to them. don't miss arne sorensen, join us live. he has the biggest hotel company in the world now. so anything that has to do with vacations, lodging, leisure time arne can talk about. you're watching "squawk box" on cnbc.

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the week after the fed raises rates, the s&p 500 biotech index tends to jump up an average of 1.5%, outperforming the s&p.

welcome back everybody. some stocks to watch this morning, or at least one, shake shack, the restaurant chain stock was upgraded to neutral from underperform at wedbush. the firm cites valuation and lowered expectations as the primary reasons for its move. >> have you had a shake shack? >> you know, i never have. have you? >> i have. i love it. >> andrew swears by it. >> i ask the nasdaq for some bacon. you know, we would really like a shake shack for tomorrow. like a shake shack couple of cheeseburgers. >> what do you think this is like -- >> i don't know. they're nice. >> -- rub the lamp and the magic genie gives you your every wish? you're empowering him, folks, be

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our guest host this morning is former u.s. senator bob carey. >> mad i was disparaging drunken sailors by comparing the last eight years, spending, i know. >> senator, what should we be looking for? our viewers care about what's happening with the markets, what's happening with the business community? where do you think they will be getting from washington? >> i think the health care debate is a really important one. i repeat it. i think the president's got to make when he's talking about this instead of rallying people who agree with him, he's got to make an effort to reach out to people who don't agree with him. that's the only way you're going to get this thing done. what has to happen is rye kwan will struggle to get the votes he needs to pass it. he'll likely get it passed on thursday. it will go to the senate. it will move, politically speaking, to the left. and then they'll conference. >> but you pointed out -- >> the question then is can ryan get the votes when it comes back

to the house. >> but nobody's going to say yes on the democratic side because their constituents are saying resist, resist, resist. >> that's why i say the president has to reach out to those constituents. >> the constituents? >> yeah. the people right now who don't like it are disagreeing with it. he keeps provoking. he keeps sticking his finger in their eye with tweets and other things they're doing that makes it difficult for people. you saw what happened to sheldon whitehouse, about ran him out of rhode island for his vote. what's happened is i believe strongly actually the president's got to be much more conciliatory to the people right now who are disagreeing with. >> but they didn't run him out of rhode island? he's still there? >> he's still there. >> that guy is -- he is a climate. >> have you had the governor on? >> no. >> sheldon whitehouse is --

>> you should have her on. she's spectacular. >> what was she before? >> we've eeither had her on or talked to her before. >> another one on the other side is casey. you can't pigeon hole him either. he said we got to help those people in the shadows. he expanded medicaid. >> he did. >> i think in an altogether reasonable way. so did mitch daniels when he was governor. >> what about what's in the bill now about medicaid? letting the states have a say. >> we have a tenth amendment that gives states lots of authority. i think giving states more authority is a smart thing to do. >> off camera probably won't admit it now as former democratic senator, but you talked about how beneficial it can be to stay at home and not work. >> oh, yeah. i think we have a number of things right now that make it easier for people not to work than to work. i think the more we can look -- that's why i was asking neel.

the more expanded -- lower payroll tax, consider a negative income tax, anything that you can do that's minimally regulatory that increases the value of somebody going to work, the cash value of going to work -- >> this is not a popular position in your party right now. it's almost harrassy. the dignity work is what makes like worth living. >> i don't think it's heresy. i think if you went to democrats and said what if we expanded the eitc, lowered payroll tax -- >> disabilities, food stamps. >> in order to look at paying for it you have to cut back on programs that encourage people to not work. >> so mistake by the current democratic party. >> well, look -- >> you got to either come back in or talk to -- make some calls

or something. >> once you're out of the game, once you're on the sideline, i'm like you, just another loser on the sideline running my mouth. >> well. >> senator kerrey, thank you for being here with us this morning. >> as i said, good to see the good senator kerrey, make sure you join us tomorrow. "squawk on the street" is next. ♪ good monday morning. welcome to "squawk on the street." i'm carl quintanilla, sara eisen and david faber as jim is off today. supreme court nominee, russia's influence and the u.s. election, three fed speakers with kashkari on squawk a few moments ago, the ten-year dips below 2.5 and oil remains on the offensive. roadmap begins with major hearing t