business never sleeps, this is "squawk box." good morning. welcome to "squawk box" here on cnbc. live from the nasdaq market site in times square. i'm becky quick along with andrew ross sorkin and brian sullivan. joe is off today. let's look at the u.s. equity futures a strong day yesterday for the markets. major averages saw their best day in about seven weeks. you saw the nasdaq closing at another record high. this morning equity futures are indicated up once again. yesterday the good news was the french election, as far as the markets were concerned. they looked at that as a good early indicator of the polls being right for the first time in a long time. this morning building on those gains with the dow futures indicated up 43 points. s&p futures indicated up 3 points, the nasdaq up six. let's look at what happened overnight in asia. you're going to see at least when it comes to the nikkei that -- first we'll look at the

u.s. dollar versus the canadian dollar. again, all of the things that have been happening with that potential trade war. tariffs being slapped on canadian lumber. we will talk more about that in a moment. take a look at what happened in the asian markets. the nikkei ended up by 1%. the hang seng market was up, too, up by a third of a percent. there are green arrows for most of the major markets. the cac in france is indicated up 0.25%. the dak x is is slightly lower. if you look at crude oil prices, wti is trading below $50 a barrel. it's up 13 cents, but wti for the june contract at 49.36. among the other top stories, tensions with north korea on the rise. today the country reportedly conducting a big live-fire exercise.

all to mark the foundation of its military. top trump officials will hold a military briefing tomorrow at the white house, which will include the entire united states senate. the trump administration plans to impose a new tariff on canada. wilbur ross announcing the plan to implement a 20% tax of imports of canadian soft wood lumber that would be effective retroactively. ross said the trade dispute centers on canadian provinces that have been allowing loggers to cut down trees at improperly subsidized costs and selling them at lower prices. the canadian dollar is down 0.4% against the u.s. dollar. a big interview coming up. commerce secretary wilbur ross will join us at 7:00 a.m. eastern time in a first on cnbc interview. and new details emerging on president trump's tax plan. reports say that he has asked aides to draft a proposal that would cut the corporate tax rate to 15% from 35% this could set up a fight with some republicans

on the hill. because the lower rate could mean a loss of revenue and that could drive up deficits. >> is that even real? i don't know. 15%? i know people in the white house who say 15% doesn't make sense. i'm not sure how this is an opening gambit. >> an increasing the deficit perspective? the top line is 35%. we know most companies are probably in the 20s. this is like alice in wonderland. there is no way to make 15% in terms of the math working. >> do you take the red pill or the blue pill? >> unless you look -- >> unless you dynamically score it into the money heavens. which is which steven mnuchin has told us they're working on. >> and larry kudlow and the other guys who wrote in the op-ed last week were talking. >> dupont earnings out right now. an adjusted number of 1.64. the street was looking for 1.39. several different numbers. continuing operations of 1.52,

actual earning of 1.27. looks like a beat of expectations. dupont came in with sales of 7 $7.7 billion versus 7$7.5 billion. the stock is unchanged right now. other headlines coming out. they say that they are looking for that dow chemical merger to close in august. they also say they see the first half adjust the earnings per share of about $2.90. really quickly trying to do the math. that's above where the street estimates are now. if you add up the first half and second half, estimates are closer to $2.40. so, it looks like they're raising guidance for the first quarter. >> a little more color. you know the numbers, like you said, a beat on eps, beat on the top line. gross margins up. volumes rose 4%. a new soybean variety in latin america driving sales as well. top line, bottom line, guidance,

everything looks good for dupont. >> yeah. stock is unchanged now. we'll keep track of this. >> the other big political story of the week, we were talking about whether there will be a shutdown later this week. political leaders faced that midnight friday deadline to reach a spending deal or face a shutdown. president trump indicated he's willing to back away from his demand that a government funding bill include money to build the wall on the u.s./mexican border. u.s. officials say trump is open to obtaining funding for the wall later this year. this has been a major sticking point in negotiations to avoid a shutdown. but reality on the wall has finally arrived. >> i can't say it's surprising to see this, because it would have shocked me to see a government shutdown based on this. >> it was shocking to me that we were talking about the wall in the context of the shutdown. that was thrown in a hornet's

nest. on today's agent dafshagend, the monthly s&p case-shiller home price index out at 9:00 a.m. followed by march new home sales and april consumer confidence at 10:00 a.m. when it comes to the earnings front, we just heard from dupont. that's one of five who report before the opening bell. the others are 3m, caterpillar, coke and mcdonald's and we'll hear from eli lilly and lock seed millie. at&t and chipotle report after the close. coca-cola's incoming ceo, james quincey will be on "squawk alley" today at 11:00 a.m. eastern time. all week we've been taking a closer look at president trump's first 100 days in office. on thursday, becky, joe and i will be in washington to speak so some of the most influential names in government including kevin brady, steny hoyer,

senator rob portman, senator david perdue, house freedom caucus member, david schweikert and democratic caucus chairman, joe crowley and commerce secretary wilbur ross, who we will also be seeing this morning. we want to get over to washington. the trump administration still has a lot of positions to fill. just 23 positions confirmed by senate, 473 appointments awaiting a nomnominee. let's find out where the white house is lacking staff. kayla tausche joins us this morning from the capitol. good morning. >> to deal with those political battles you have been talking about, funding the wall, government spending, healthcare, tax reform, you need people. as of last night that number went up to 23 with the senate confirming sonny perdue as secretary of agriculture. in total 1242 positions require senate confirmation.

the trump administration is behind progress of other administrations. the president prioritized cabinet secretaries, but only one agency, homeland security, has a deputy secretary. many offices like the comptroller of the currency have leaders serving past expired terms. reince priebus said this weekend there are hundreds in the queue because of historical unbelievable obstruction from u.s. senators that are wakactin inappropriately. some of the vacancies have impact. it's harder to draft and pass policies in a timely manner. treasury has more than 100 people working on tax reform and tomorrow we expect just an outline of the principle that's white house is pursuing. the other impact is advisers

without confirmation consolidating power n this specific case trump's family. >> if you try to run the government as you would a family business, run everything think one single office you won't get much done and small things will become crises because you won't have the opportunity to get to them. >> ivanka trump is in berlin on official business today promoting women's empowerment. she had an op-ed overnight on that topic. it's unclear if the president is choosing to run the white house as a family office out of preference or out of necessity and whether that will continue as some of those vacancies get filled. >> thank you for that. we look forward to seeing you in person hopefully in just two days. looking past the geopolitical risk of the french election as the dow surges more than 200 points following sunday's outcome. let's find out what else is on the radar that could upset the markets. joining us is ian bremer. you make your money as president

of your razor group. >> yep. >> i want to talk france. can we talk about this headline on the front page of the "wall street journal." u.s. readies candy lumber tariff. we will talk to wilbur ross at 7:00 this morning. >> first point, if you want to do something on trade, this is the equivalent of quind of liki shaking down the little kid for lunch money. it's canada. it's relatively small. soft lumberment g mentlumber. they have no plan "b" but the united states. they don't -- china is the bigger problem. but we've given 100 days to wilbur ross to figure out how we'll work more closely on a broad swath of trade issues with the cli these. a chinese and trying to get their help on north korea. if we're changing nafta, i expected it would be mexico that we would be slapping tariffs on first. that was all the rhetoric early on.

a couple months ago we were still buddy buddy with trudeau. >> they were hear, there was a lot of nicy nice talk. >> i heard from canadians around those meetings afterwards that we're worried, we don't know who to deal with. it will be challenging. they were slow-rolling it in part -- >> that was before rwilbur ross was commerce secretary. >> i think the actual one-on-one with trudeau and trump went well because trudeau was cautious and trump was asking for help on immigration. oh, that's good, they're asking us for something. as you know, these headlines can come from anywhere. the big mistake people made is the narrative, you have bannon on one side, gary cohn on the other side. trump is in between. trump, jared, and i think most of the team on trade, they've had a feeling from day one that

economic nationalism is required. that american corp ralorations fundamentally globalist, that the american presidency has to get better deals by being tougher and pushing american strength. we could win. you remember davos, scarmucci shows up and said we can win a trade war with the chinese. frankly, yes. it will hurt both of us, but who's bigger? you put that together with 100 days, they want to make some announcements on something, this is what you get. >> this an opening salvo or a little shot of nothing? >> i think it's the economic trade equivalent of what we did on syria you have a range of ideas, you pick the one that allows you to say you have done something without risking much. that's what they're doing. >> people looked at syria and said this was the right measure. it was very measured. it was not something that was going to stretch beyond any of these issues.

is that same story here? >> dems are not happy with the canadians on dairy. almost anyone you talk to say this is one where you may not like trump, but there is a trade problem here. it needs to be addressed. it's not like soft lumber has come from nowhere. >> this is the culmination of a dispute that began in 1982. i knows there going to be reaction to this. trade war coming with canada. the initial deal expired in 2015. it looks like the trump administration is just continuing what previous administrations had already put into -- >> the futures market -- the futures market knew this was coming since the beginning of the year. lumber prices have been shooting up because they expected something to happen. >> you can make a clear and bipartisan argument for why this is an okay measure. you could have done the same thing on syria. saying this is obama's chemical deal, didn't come through. trump won't put it forward that way. he is made for tv, but the

reality is not much. >> you're corporate clients are reading this story this morning and calling you and asking what? >> they want to be calmed down that this is not going to lead to a broad american anti-trade protectionist regime. >> you plan to calm them down or stir the pot? >> for now i calm them down. but we recognize taking steve bannon off the principles committee of the national security council did not suddenly mean goldman sachs took over president trump's trade policy. number one, bannon has been involved in this. number two, there's a feeling that trade -- the first thing that trump did of meaningicy pe of the transamerican trade deal. >> nobody was campaigning on that. hillary clinton was not campaigning on that either.

>> hillary said she wanted a legislative fix, here's what i'm doing to help the workers. now we'll do tpp. >> when he talked about the jobs picture this is the one thing that polled for him very well. on both sides of the aisle, they wasn't fair deals for americans. >> the "wall street journal," i see america first. you have had no legislation in the first 100 days, but you have had executive orders. you got beaten around on immigration. >> the headlines president trump seeks to revive 30-year-old lumber deal is not as sexy as president slaps 15% or 20% tariff on imported canadian soft wood. >> like the syria strike, it probably sends a message. >> this is the sexy evident "wall street journal" sed dine he headline he's had since the syria strike. >> it sends a message listen up or we will take steps to impact you. >> i think all of american allies look at trump and say

this guy has more capability to do volatile things that could damage the relationship. he's not as committed to us. certainly there are some negative aspects. if you're a company like germany, you will hedge away from the u.s. if you're mexico or canada or the uk or israel, saudi arabia, japan, whoever you are run by -- the united states is the only superpower. you have no choice. >> so, trump called the first 100 days his contract with the american voter. has he kept the contract? >> no but that's okay. he changes his mind on a lot of stuff. like the wall, for example. we are not ready for the wall. china is not a currency manipulator. nato is now -- before he was against it, now he's for it. if you're going to check him on facts, then, no this is a disaster. but let's leave that aside. do we feel -- does america feel more great again under trump

given what he says and what the base is watching? yeah. i think they feel happy. if your wat're watching "squawk in the morning, i would say on balance trump is not your guy right now. >> okay. ian bremer, thank you, sir. >> my pleasure. we have much more to do including fallout from wells fargo's fake account scandal. shareholders will vote today on whether to oust some board members and shake up the board's governance. we'll get a live report from that meetings next. at the top of the hour, are we starting a trade war with canada? commerce secretary wilbur ross will tell us why the u.s. is slapping new tariffs on lumber. that's a first on cnbc interview. "squawk box" will be right back.

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welcome back to "squawk box." shares of express scripts getting crushed this morning.

they announced yesterday that anthem would not be renewing their contract. here's what the ceo had to say on "closing bell" yesterday. >> our model allows us to create competition, not only amongst retailers, and the supply chain, the manufacturers, the generic companies, all of those are things we'll have tremendous scale to do. we don't need to be associated necessarily with any particular part of the supply chain. i like the fact that we're independent. that we can drive down costs for our plans and our patients by creating competition. we'll be plenty big enough to be able to do that. >> anthem sued express scripts last year saying the company was overcharging them and not passing along the savings. >> express scripts was the main company at the epipen scandal. once the news broke, we spoke with heather bresch, she threw the needle at express scripts. this whole pharmacy benefit managers, they talked about them

in congress. they're bubbling up from what companies and industries few people have heard of. >> i never understood that entire blame the pharmacy benefits manager. maybe there was markup there. a lot of the original markup came from the company itself. >> if i seell ian a cup of coffee, you take your cut, andrew takes his cut, but then let's pull an amazon, jack up the prices -- >> wasn't all the market came from me and andrew, it started with you, brian. >> don't blame me. it's just an analyses. analogy. >> but they take a percentage of the hike. the more i hike, the more you hike, the more in other corporate news,

marcato capital said buffalo wild wings made an astronomical error in proxy materials filed last week. marcato said that the chain falsely outperformed the s&p 600 restaurant index over a five-year period. last week, marcato called for ceo sally smith to resign. the relative share price performance there for you. fireworks are expected at wells fargo's annual sharehol r shareholders meeting today, this is because of last year's scandal in which the bank admitted that some employees opened multiple accounts in customers names without consent to meet sales goals. that resulted in the resignation of john stumpf.

leslie picker has more. >> reporter: i'm told votes are still being tallied. we are told, this is according to a person familiar with the matter, that several directors are actually close to that 50% threshold. anything below that 50% threshold would cause them to need to submit resignations. wells fargo clawed back hundreds of millions of dollars. they had hundreds of millions of dollars worth of settlements. executives have resigned but some share holders want more flesh, and the influential proxy advisory firm such as iss are urging shareholders to vote against 12 out of 15 of the directors, including the chairman, steven sanger. this is extremely rare. in the last five years iss has done this seven over times. in this type of situation where there's no shareholder putting up a competing slate, their sway, the proxy advisory firms

sway can be more powerful. that's what one proxy solicitor told me. >> my sense is that management and the board are treating the recommendations seriously and have gone out and communicated with investors. >> wells fargo shareholders seem to have a mind of their own. warren buffett owns about 10% of wells fargo stock, he's likely to vote in all of the directors, one thing that could help the board of directors is that the stock has rebounded quite s substantially from post-scandal lows. >> leslie picker, thank you. we'll see you all day. get ridedy. > ready. president trump expected to release new tax cut details tomorrow. we will hear more from jason furman coming up.

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♪ welcome back. you're watching "squawk box" live from the nasdaq market site in times square. good morning, everybody.

welcome back. take a look at u.s. equity futures. they're higher once again even after the big gains we saw yesterday for the market. yesterday it was the french election, relief that the polls were right for once. this morning you can see that carrying over. yesterday was the best day for the major averages in about seven weeks. the nasdaq closed at a new high. this morning s&p futures are indicated up by 3 1/2 points. dow futures up by 54 points. the nasdaq indicated up 8 1/2 points. have some stocks to watch today. first up, humana reporting better than expected profits. the health insurer is raising its full-year forecast and being helped bay stroy a strong perfo in its retail business. whirl p profit

guidance over temporary integration challenges. this comes as a result of the company's 2014 purchase of an italian appliancemaker. whirlpool off 1.8%. alcoa posting upbeat earnings for the first quarter saying its expected aluminum demand to rise this year. the company reporting weaker than expected revenue growth. alcoa up 3%. >> developing overnight, the trump administration planning to impose a 20% import tax on soft wood lumber imports from canada. the move comes saying canada is providing unfair subsidies to lumber producers. canada denies those claims. they could have an impact on the housing market. housing markets rely on soft lumber in new home construction. canada exported 5$5.6 billion o soft wood lumber into the u.s. next year. look at some of these u.s. lumber company stocks, particularly wearehouser, that stock up 1.5%.

louisiana pacific also up. we expect to hear more about this from commerce secretary wilbur ross. he will be here at 7:00 a.m. eastern time. >> ian bedroom ser wiremer is w morning. when i woke up this morning and saw the news, i thought is this the beginning of a trade war? you're not so sure that's the case. >> not at all. i think they're doing as much as they can before this artificial but important mark for them, the 100 day mark. one of the best things trump has done in foreign policy is a reasonably successful meeting with ping pixi jinping. it will be hard to maintain that over 2017. for now he doesn't want to hit them. who does that leave? canada and mexico. canada lost the flip. >> blame canada. >> earnings out from eli lilly. the drugmaker earning 96 cents per share, beating estimates by 2 cents. revenue slightly above forecast. we will talk to the company in

the 7:00 hour. arconic wants to settle its proxy fight with elliott management. the company is giving elliott which owns a 13% stake until tomorrow to rerespond. this a week after arconic's ceo resigned after sending a letter to the shareholder. these letters went back and forth yesterday, a new series of letters, got personal all over again. they said she thought they had a deal, then they didn't have a deal. >> arconic thought they had a deal with -- with elliott? >> paul singer thought he had a deal with arconic, then might have asked for more. trying to create an operating committee that didn't exist before where he has majority control of the operating committee. arconic sends them a letter, sends elliott a letter saying we

appreciate your statement that you're prepared to overlook this contest more personal elements, we feel such personal elements do not belong in this contest. having said that we must add we don't believe your firm was chosen to rise above these attacks, to the contrary your elaborate fight deck has a number of personal attacks against the former ceo. we hope to go forward, blah, blah, blah. it gets into a whole thing. if you have time on your second screen, google the letter. >> he is not going to let it go. singer has been in nasty fights before. >> he sieged an argentinean warship in africa. a hedge fund. >> he waited them out for years, right? you can't just say -- you can't let him stay quiet. let's talk about what is amounting to a big battle in washington. one over taxes. president trump expected to unveil some details in his plan to overall and cut the nation's

taxes. joining us to talk about the trump agenda, jason furman. and still with us, ian bremer. good morning, jason. you've seen the headlines this morning that the trump administration planning to announce they'll go with the 15% corporate tax rate. a lot of people thought the math never made sense. but they are going to start there. does that make sense to you? >> this white house really doesn't seem like it's learning. it was a month ago that their efforts to repeal the affordable care act failed. right after that, a bunch of stories about how on the next set of stuff, they were going to reach out, work with democrats, try to figure out a bipartisan path forward. instead this latest leak suggests they're coming in with an opening bid that's to the right of where the house republicans are starting. that's a problem because it's

bad economics, adds a lot to the deficit and it won't help the economy if it can't pass congress and something like this won't be able to pass. >> so you think this is an opening gam you about tbit to o negotiations? >> the negotiations have to begin with we heard you, we're reaching out. we're trying to do something bipartisan. i say that partly because you want -- i'd like to see business tax reform passed. that's the way i think it can pass. second of all, it's more likely to be a better idea. something like this that adds trillions to the deficit, that's a bad idea. that's bad for our economy. our deficit is okayish right now at 3% of gdp. it is set to rise to 5% of gdp. with this it would rise even more than that. that would undue any benefit that the tax cuts themselves have. it's a bad idea. it's an idea that can't pass. they should show instead they can reach out and try to work together to try to pass

something meaningful. >> i know you're not a dynamic scoring kind of guy. >> i don't mind dynamic scoring. >> is there a way to make the math work? >> i'm fine with dynamic scoring. i think dynamic scoring should be done by the joint committee on taxation and the congressional budget office. they're the score keepers. they have a good model. they do it in a rigorous way. >> we all know the cbo has not gotten it right either over the years. let's call a spade a spade. >> they -- sometimes they're too high. sometimes they're too low. on average about right. you tend to see outside advocates always think their policies will work miracles. or they think the policies they don't like will destroy the economy. usually the truth is somewhat smaller than either of those. if you look at reasonable dynamic scores you tend to see it, they offset maybe 10%, 20% of the costs of what you're proposting. proposing. so you propose 2.4 trillion,

that takes the price tag down to 2%. so you get a benefit from the rate cut, but that extra deficit hurts the economy. when i was in the white house, we saw people parading through saying nothing is worse than deficits. deficits are uncertainty. deficits are a problem. >> i have a question for ian, you look at these numbers, you have corporate clients all over the world, but here at home, do they look at this number and say this is great? i'm very excited. or do they say this is not going to happen, i don't know if i should be excited. >> they know sthey shouldn't be excited. i fell there's too much made out of this he backed himself into a corner. he said i will give you the biggest numeric tax cut that the planet has ever seen. once he did that, he's anchored himself. it's not anchoring around the democrats versus republicans. it's around what he initially said. now he has to come up with an initial headline number, not

tethered to reality which will go into the ether as quickly as one of his tweets and forgotten. >> why do you say that? >> what, 15%? >> why not? the effective corporate tax rate is probably below 20 -- >> s&p 500 has it at 23% on average. >> on a worldwide income, that's u.s. income. on a worldwide income, the numbers are as low as 10%. if we can go from a fake 35%, because then you deduct everything, to a real 15%, wouldn't that be something? then it wouldn't be magnitude of the cut that people are concerned about. >> i'm not an economist, but andrew asked what the ceos think. i don't have a single ceo client in the u.s. or anywhere else who thinks 15% is remotely close to reality land. they're talking 25%, 28%. >> trump in the past has said a lot of these opening numbers that he uses are negotiating tactics. he told us that on the show before.

with the chinese, with the tariff levels. that's an opening gambit. maybe the number comes down from there. >> i remember in a conversation he had back at "vanity fair" when kellyanne conway was sitting next to him, he was throwing numbers out about golf. how many times he golfed. obama had golfed. the head of golf digest was in the room. he had the actual numbers. kelly aanne conway was like tru math. trump numbers don't mean the same to him like it does to the rest of us. >> jason, we've been talking about this canada lumber tariff. we will talk to wilbur ross in a couple minutes about it. where do you come down on that? >> i have to be honest, i once read a mem move o on the topic this debate has been going on since canada became a country over a century ago. i stopped reading there. but having these things as

theatrics, part of the 100 days -- >> if it's been going on for that long, maybe it's a good thing somebody is standing up and doing something about it. the last agreement ran out in 2015. >> right. this is a little bit like -- a long-running dispute, there's a lot of blame to go around on both sides. i think this type of theatrical rollout as part of the 100 days doesn't thrill me. but we need to make progress on this dispute with canada, and our deal ran out in 2015, we need a new one going forward. that's not crazy and unreasonable. >> jason, infrastructure, there's some talk at least with the tax plan that we'll hear about that you might marry infrastructure spending with the tax proposal? does that make sense to you politically in terms of trying to get some democrats on board? >> it makes sense to do both together. it makes sense xhekly. if y economically. a lot of democrats like

infrastructure spending, these two have been paired in a number of tax bills over the last couple of years. that's the way i would move forward. but you can't move forward with a big deficit increasing. by the way, it will be a temporary tax cut. who wants a temporary tax cut? we need something permanent and stay in. the only way to do that is with buy-in from both sides. jason furman, thank you. >> thank you. >> we thank ian bremer joining us as well. i wanted to talk to you about aramco on the front page of the "wall street journal." is it worth $2 trillion or not? >> they're doing everything possible to make it $2 trillion. >> if it's not, what happens to him politically? >> i think he's okay. everyone understands you have to give him time to do this vision 2030. it's him or the end of the kingdom. >> the whole thing is how much tax is the kingdom going to take from aramco. we talk about taxes here.

some say they want 93% of aramco's revenues. what do you think? >> they're trying to make it much more attractive. >> 15%? >> exactly. no. they're trying to make it easier. so far the internationals have been responding well to it. >> thank you. when we come back, we'll bring you three big interviews. first on cnbc, commerce secretary wilbur ross will join us at the top of the hour. he will tell us why the trump administration is slapping new tariffs on canadian lumber. then an inside look at earnings from pharma giant eli lilly. ceo david ricks will break out the numbers. and later the ceo of the largest auto retailer, autonation's mike jackson will talk earnings, auto sales and why tesla could be one of the great ponzi schemes of all time. stick around, you're watching "squawk box" on cnbc.

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welcome back. right now it's time for the executive edge a modern day gold rush is happening now. luxury real estate. robert frank is here to take us inside. good morning. >> it's known as the platinum

triangle and it's home to a massive gold rush in super homes. the question is how long can it continue? average sale prices soaring 66% in beverly hills in the first quarter to $8 million. sales volume in bellaire and hombe homes is up 6%. wealthy europeans and royals has touched off a new arms race among spec builders. this is the latest entry, it's called opus. over 20,000 square feet. an infinity pool, has a gold champagne vault filled with $250,000 worth of krystal, and a gold lamborghini and rolls royce. there is a glass waterfall, wellness spa. the builder said 1$100 million

the is fair due to what's nearby. if you take the comps that have told, i think this price is well at 100 million. >> he is building the biggest most expensive home in america. it's nearly 100,000 square feet. it's 5$500 million. there it is. the first ever pictures on television of that construction of the 5$500 million house that will be finished next year. we will be the first to bring that to you as well. >> nice. >> looks amazing. robert, thank you. >> thanks, guys. when we return, earnings alert. s.a.p. reporting this morning. the ceo, bill mcdermott, will join us next. as we head to a break, a quick heck check of what's happ in european markets. the ftse and cac are up. dax is off.

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s.a.p. beating on nearly every metric. bill, you need to settle a debate. you didn't even notice this. and you're a worldwide company, but i'd like you to focus right now on your u.s. side of the business, which you also used to run >> okay. >> you beat onning earnings, revenue, clout, how much has been a jump because of a continuation the previous quarters and years? >> in our case it's been a continuation. we've been on a seven year -- or core software business, and as you know, we've nearly tripled the stock price and tripled the revenues of the company, so we've been on a roll now. >> so becky during a men break

was talking about unleashed and animal spirits the the major markets, they have taken off. do you think the economy has changed, or is there something else? >> well, what's interested in our business, in cloud businesses, double very healthy in has to have a digit at backbone, so that's the way we think -- how do you automate my supply change so i can win, now

they're moving into machine learning, artificial intel convince, the internet of things, how do i connect to things. how do i drive new business models. what we have is a soft way platform that does all that, and it's fully integrated, customized in 25 industries. one of the things you might want to think about this goes into public or private sector. the ceo wants a digit at boardroom, complete visibility with their management team, what is going on in my business, how do i know? how can i make adjustments on the fly? >> you run a german company, as someone who's effectively importing services into the country, they raise tariff, how do you feel about that this

morning? , well, you have to think about our role in the u.s. economy differently. we have over 20,000 workers in the united states. i can go on and on. >> you're betting on a 50% tax rate? >> i'm knot betting on anything. what we are doing is building great software, taking care of our customers and keeping our shareholders happy. >> great answer. we have the commerce secretary joining us when we come back, and coca-cola is out with earnings. really want to be there... but you can't. (cheering) at cognizant, we're helping today's leading media companies create more immersive ways to experience entertainment with new digital systems

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today's market test after a stunning rally, attention turns to washington, and a very busy earnings agenda. we have the numbers and reactions straight ahead. new this morning, with a government shutdown looming president trump suggestses he's opened to waiting on funding for the border wall. commerce secretary wilbur ross will join us for a first on cnbc interview. and a new book on the influence on capitalism and why he says the very success is dangerous. the second hour of "squawk box" starts right now. >> announcer: living from the beating heart of business, new york city, this is "squawk box." good morning, welcome back to "squawk box" right here on

cnbc, wee live at the nasdaq marketsite today. joe is off today. we should also welcome, the circus is here from showtime. mark halperin is in the house. we have cameras all over the place, and we'll have wilbur ross in a moment. looking at the futures, it looks like the dow will open up higher, the nasdaq up higher as well, as is the s&p 500 looking open about 4.5 points. yesterday the dow gained 216 points, the best day since march 1st of this year. yesterday france's crack best performance since auction of 2012. the ftse has gained nearly 15% since the brexit vote. we have a lot of earnings, including coca-cola, i know brian is going over those numbers as we speak.

>> kind of a mixed bag here. he came in at 43, the consensus 44. revenues declined 11% on a net base, but we're slight will you above consensus. revenuesenen ko senses 8.9 billion. volume growth was flat, but they said, hey, the shift of easter and weakness in some of the latin-american markets were really to blame. the stock is up about 0.7%, and of about 3%, so the market focused on may be of what may come. >> slight will you below and ask slightly above. will that 3% projected organic volume growth be enough to save the stock today? we'll see. a couple other things to pay attention to eli lilly reported -- revenue also above street forecast and lilly's

results were helped by higher demand for diabetes treatment. david ricks is going to join us to review the quarter and talk about health care as well. the u.s. and canada now in the middle of a trade dispute. commerce department moving to impose a tariff on softwood lumber that enters the united states from canada. secretary ross, thank you very much for joining us this morning. >> thank you, becky. >> it's great to see you. is this the beginning of a trade war with canada? >> i don't think so. by and large things are pretty calm between the u.s. and canada, but within the last week there have been these two incidents, the terrible event with the dairy farmers in wiscons wisconsin. last week ago when i was in japan with vice president pence, president trump was out in wisconsin announcing the buy

america/hire america program. there he encountered some women whose farms were being taken away. they are losing their farms because the canadians had apparently ended the importation into canada of certain high-filtered milk, so it was a very emotional scene for him. now it's being followed this week by the unfortunate necessity of having to put a billion dollar tariff on softwood lumber that was subsidized coming into the u.s. >> this has been a long-running dispute, i know, in terms of the lumber that's gone on for decades at this point. do you think this is something that's fixable. the canadians are saying they're going to sue. what do you think the next step is? >> first of all this is a preliminary finding, a whole process of another x days until we get to the final, but

generally speaking, the preliminary finding and the final are pretty much the same. i'm sure the canadians will take whatever appeals they can. one of the peculiarities with nafta, one of the very bat features is often the panel turns out to be three canadians and two americans, so you have the strange situation of foreign nationals deciding whether or not the commerce department properly applied its rules. if you're a ceo -- global ceo waking up, reading this news, is this something larger? not just about a trade war with either canada or mexico, but a larger discussing about trade and a takeaway that's different from this particular issue? >> i think there is a larger takeaway. the trump administration has been much more focused on

enforcement than had been true. the u.s. is the least protectionist of the major powers, yet we have the highest deficit, 500 billion. the other cunning that talk about free trade are very protectionist -- europe, china, japan, so they have the rhetoric of free trade, but the reality of protectionism. that set of facts is not going to be permitted to continue. their rhetoric must match their behavior, and hopefully by changing their behavior, and if need be, we will do more to defend or borders. >> mr. secretary, earlier this morning we were joined by ian bremer. he likened this move to something like the strike on syria. it's very targeted, very measured, and sends a clear message. would you agree with that analogy? >> well, i wouldn't regard the canadian situation as being

anything like the war with isis, but it certainly is a very precise set of tariffs on a very precise set of imports. the reason we're putting it on is canada's forests are owned by the various provinces, and the provinces charge very discounted, we believe, very subsidized prices to the lumbermen which in turn lets them get a subsidized low price coming into the u.s. it simply seems unfair, because in the u.s. most of the forests are privately owned, and therefore they pay full market rate for the stumpage. >> do you worry that canada will respond -- listen, one of their biggest is cars and machinery, but things like fruit juice, coca-cola's earnings were out today. a lot of sugar in some of these products, you can't make the argument that the united states does unfairly subsidize sugar.

do you feel that canada is going to reciprocate with something on a product that would be close to a big u.s. corporation on -- >> i think they already have in effect with wrecking the dairy industry. it seems to me you would effectively prohibit dairy products from the u.s. going into canada. they have this very complicated system for dairy management up there but it basically is very, very protectist. so i think between that system and the dumping of lumber, you have some signs that nafta is not working very well. if we really had free trade between the two countries, how are they blocking u.s. exports of milk to them? and how are they dumping lumber down here? so it just shows what a terrible arrangement nafta has been, not

just at the southern border, but also at the northern border. >> hey, wilbur, talking about trade, we are hearing an outlip about the tax plan that we're going to hear about tomorrow from the trump administration, but the one thing we haven't heard about is the border adjustment tax. is that dead? >> i don't know that it's dead, because the budget that's being put in will be an opening salvo in the whole tax negotiation. so we'll have to see what come out the other end. i think what is a little different is the president seems to have been making it clear that if he needs a little higher near-term deficit out of which he we can grow with all the stimulus, it sounds as though he may be up for that. >> and therefore, we might be taking on more debt. dot think that's politically palatable. we were having a conversation about making the math work. it's hard and there are going to be conservatives out there and

democrats obviously on the other end who are going to say know. >> jason, if i recall correctly, was part of the democratic administration, and under obama, there was more new national debt incurred than cumulatively for all the presidents before. so i think people from that administration have very little grounds for criticizing a near-term deficit by the president. >> but just so we understand, in terms of the math, you're willing to take on debt. how much debt do you think will be political palatable to take on, if you will? >> the whole thing about tax, while i'm obviously very interested, it's not directly a function of the commerce department. it is in fact more the treasury department and the people in the congress. >> right. >> so i don't want to comment before they actually come out with their final budget. >> where do you expect to see

new trade deals developing? what areas of the world do you think we're most likely to strike -- >> think about it. the first actually has very few trade agreements. some mexico, for example, has had 3 agreements, including with the european union. we don't have a trade deal with the european union. we don't have a trail deal with japan, we don't have a trade deal with china. i think there's a real reason for that, a structural problem. prior administrations have made so many unilateral concessions to our trading counter-parties, that we don't have a lot left to give them. for example, the tariff on autos going into europe is 10%. >> wow. >> our tariff is 2.5. tariff going into china with autos is 25%. how do we go to china and say

you have a 25% tariff, we have 2.5, we'll get rid of ours if you get rid of your 25. it's not a very proportionate thing. so the sad part is that in the misguided unilateral effort at free trade, we have actually weakened our ability -- or the prior administrations more properly, have weakened our ability to make future trade deals. >> let me just follow up on that for a moment. you've made that point in the past, wilbur and it's right, and it sounds incredibly unfair when you lay out statistics. how do we adjust that without expecting that these other nations, even though the deals were set that were unfair, how do we expect to fix that without having other nations come back and take some sort of -- have some sort of reaction and put other things up as a result. they're not going to turn around

and say, oklahoma, we'll do tit for tat a this point. >> we're starting with stricter enforce innocent both with the canadians and lumber and on the other side. a few weeks ago we put a $1 billion-plus fine on zte, a chinese telecom equipment people. what they were doing was violating the sanctions on north korea and on iran. so the policy of this administration is, first of all, we will strictly enforce the wto rules. whatever trade deals we have. that's number one. number two, we will try to go to our trading counter parties, particularly those with whom we have big deficits and say, look, there is a number of items you buy some from us and some from

others, since you're running a big surplus, you ought to give us a better market share of things you are buying anyway. that costs them nothing. >> transition to manpower, wilbur. if you're right about everything. people i have talked to have suggested that i agree with everything that trump and the to commerce department is doing, it comes down to manpower. multilateral deals are struck, because you can make a lot of deals at the time. do you have the manpower, the time, the people that can literally go and negotiate with mexico, negotiate with canada, negotiate with china? no matter how complex something is, doesn't it come down to people and time? >> it does, but it also comes down to willpower and philosophy. i have, after all, negotiated quite a few deals over the years, so it is something that i'm not unfamiliar with. and it's not so much the volume of people, it's the way that you handle the process and the

determination with which you go forward. you've mentioned multilateral deals. sure, you can make a multilateral deal and what happens is, first of all, they take ten years to do, because you have so many moving parts, and that means, with the way the world changes, they're practically obsolete by the time you settle it. but worse yet, there are two structural flaw, the first one is, let's say you're japan, i go to the u.s. and want some agricultural concessions. you say, okay, mr. united states, but now here's what i want back from you. so they took a nick out of it. let's say they go aniest next to vietnam. they'll say, sure, we'll do that's correct but here is what we want out of you. think take another little nick. now we've been nicked twice. japan will benefit from what

vietnam got. vietnam will benefit from what japan got, so that's one problem. when somebody has been negotiating the same deal for eight or ten years, you get so invested in the process, that you just want to get a deal done, not to get the deal done, so i think there are several flaws with multiple negotiation. it doesn't say it's impossible to do a multilateral deal, but if you look at a tpp, it was a mess. there were some good things in it, but also some very weak things. nafta is a mess, and nafta is also an obsolete deal. i think we have adequate man pow tore deal with what we need. >> mr. secretary, i wanted to get your comments on a story picked up by politico this morning about peopler navarro, who's been on this program. they write -- is navarro losing

influence, prompt's reversal on labeling china as a currency manipulator, as well as an overall softer stance. have raised questions about the role of a top member of his cabinet. what do you think about that? >> first of all, i think politico and other people observing the white house love to stir up controversy, and it makes people read that media. that doesn't surprise me too much. but if i'm not mistaken, while i was in japan, peter was very much with the president out in wisconsin when they were announcing the buy america/hire america program. i don't see any signs of the sort of dissent that are being chronicl chronicled. what i do see is something you would normally see in a new administration. there naturally is some pulling

and tugging within the administration, some different points of view. there's always a shakedown cruise for any new administration. but that's healthy. that means that different views are vetted and when the president gets to make his decision, he's now heard various sides of the argument. i would view that as constructive, not destructive. mr. secretary, i just wanted to also help clarify one point. earlier you made a comment suggesting the tax proposal is an opening salvo. does that mean it's not something the president thinking is going to happen, it's part of a negotiation, sort of anchoring one point to begin a conversation, or at 15%, it's something he thinking is a realistic number that can get done? >> well, the president doesn't bluff, he doesn't put forward make-believe proposals. i'm sure he has strong

convictions that this would be a good proposal. the only thing i was pointing out was that obviously you have the two houses of congress that have to go along with it, and then win the houses, you have the parties, then it's hardly a secret to "squawk box" we're in a very partisan environment and we have a small rep majority in the senate, so the idea that there should be some pulling and tugging as this goes through the process ought in and out to surprise anyone. senior ross, i want to thank you very much for your time today. >> well, thank you for having me on. stay tuned. >> okay. thank you, sir. >> we will. thanks. to other stores making headlines. we have hearty from duepont, an coke, we'll have, and mcdonald's will report shortly after that. also ahead, some fresh housing data, case-shiller

prices expected out, expected to show a 6% jump year over year, and new home sales data for march. and can mart, the retail pharmacy unit has cut the cost to epineff run, and free for some of its insured patients. okay. coming up, when we return david ricking will join us after the break. later autonation ceo will give us a read on the automobile sector. and poem ko as former chief commit as a guest host. stay tuned. you're watching cnbc.

drug maker eli lilly reporting a profit, and joining us is david ricks, the ceo of eli lilly. good morning. >> good morning. thanks for having me on. >> great lazy on the earnings.

it's always nice to beat the street. in terms of looking through the truly the sales of trulicity has taken off. >> we grew the total business 7% in q1, 9% for the pharma business, and ten points for the nine. more than all of it was attributed to our new produces. other new launches are all taking off is a very exciting way. the strategy is playing out, we're executing well, and it was a good solid operating quarter for the company. >> we always talks about policy and talking about trump win his first 100 days, and there was a lot of talk about the future of aca. how did that play into what's happened in this quarter? >> first of all we don't have a big business in the affordable

care act plans, the exchanges. in medicaid expansion, we serve a loot of patients, but the prices are extremely low. that's actually an opportunity, i think, as people look at revising the current law or perhaps changing it altogether, innovations and newest products really aren't included in a lot of those form helaries. fda decline to approve the new rheumatoid arthritis drug. what's the state of play there? >> that's right. earlier this month, fda informed us the current package wasn't approvable in their eyes. this is a drug for r.a. we disagree with that decision. they have asked us to look at more clinical data, to look at

the difference between two doses and additional safety data. the process is once we receive the letter, we'll go back and meet to deeply understand the concerns, and recalling that it's landlords approved in europe, same package we submitted to the fda. we're looking forward to digging in with them and figure out how to get the drug to patients who need it. >> what's the timeline look like? >> we'll be meeting over the next month or two. the timeline to market is what depends on what happens in that session and what they view as the gaps in the clinical profile. as i said, we don't disagree with that. we'll have to talk it through and find a path forward. how should we be thinking about the kind of targets you should be looking at -- >> collusive is a great transition for us. sort of a readymade phase 3

asset and it will be off the submission next year. most of our focus, actually is in the earlier clinical phase, where we're looking to attract assets into our oncology portfolio, immunology and diabetes. dave ricks, good to see you, sir. >> thanks for having me on. appreciate it. the biggest auto retailer, autonation is set to report results. is the industry ready to roll over after a multiyear boom. we're going to speak with the ceo. >> announcer: time for today's aflac trivia question -- who is the current ceo of mcdonald's? the answer when earthquake "squawk on the street" continues you don't have.. aflac! paying you cash, so you might have to sell that sweet little muscle machine just to cover your rent. more funny juice. but my papa gave me...that...car. what do you wish you had?

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. a cnbc exclusive, the new incoming ceo of coca-cola james quincy on earnings, the economy and what investors can expect. now the answer to today's aflac trivia question. who is the current ceo of mcdonald's? the answer -- steve easterbrook ♪ i'm just a cheeseburger in paradise ♪ good morning. welcome back. wee live at the nasdaq marketsite. a takeover deal may be upsend the. it's received a new takeover bid

from an unnamed multinational telecom company. that is above at&t's agreement to buy straight path for $95.63 per share. straight path has notified at&t of the bid. it now has five days to respond. you remember we look at the stock the day the deal came out. the stock had been trading at about $40, and then a huge premium. the senate has confirmed sonny perdue as prison's agriculture secretary. all but one cabinet position has been confirmed, that of labor skerritt. 15 directors are all up for reelection and 12 have faced negative recommendations from i.s.s., coming in the wake the the bank's scandal. guys, we have breaking sinus

on 3m. it's a good number. no way to characterize it. eps 216, that is nine sentence better than the consensus of 2.07. revenue at 7.7 billion better than the consensus. 3m also raising the organic local sales growth forecast basically the ref guidance is become jacked up versus the previous guidance of 1% to 3%. thinking their tax rate will fall a bit. cash flow was strong. sales up 4.2%, so eps, revenue, guidance, sales, different divisions, 3m beating on nearly every single metric. there's your headline. caterpillar shares, another dow component out this morning, coming out with earning including restructuring costs, street was looking for 62 cents, the company also beating in

terms of the revenue numbers. street had been looking for 9.27 billion, and they're raising their sales outlook for the full year. they now say they expect between 37 and 40 billion for sales, street was at the low end of that. you can see the stock is indicated up about 3.3%. comments from the chief executive, new ceo jim umplebee. they say that they had strong first quarter performance and they are seeing signs of recovering in several of the industries they serve, but geopolitical and market uncertainty, continues to prevent risks for the year. >> you know, so what we're looking at here, if we frame this, five dow components, we have mcdonald's coming, you but if we look across the board. they had some volume issues. >> beat on the revenue number.

>> but depont was solid across every single business metric. 3m solid, caterpillar, the numbers you gave is pretty good. these are numbers that have been in the works for quarters and years. i mean the economy seems to be humming along pretty solid. >> and on a global basis, too. >> but this has been the sort of push/pull of this conversation. is it policy? is it the economy, a combination of both? is it, you know, just the animal spirits? what is it? and you're right. it does feel like the economy is stronger, the question, though is sort of the trump rally. the question becomes, was it that it was a trump rally and people didn't appreciate at the time that the economy was as good as it really was. >> the futures this morning as we came in, was up about 50 points, now seeing triple-digit gains, up 102 points, as brian mentioned, most of these dow

components having strong numbers across the board. >> is it a combination of things? nitro, you put it into fall and get your car a bunch of extra horsepower, as a car guy, i sort of wonder, did we have all these things in place and this pro-business administration added some nitro to the economy, so we got that extra turbo boost? everybody is trying to frame it as it's my credit, this credit, why not say it's everything? >> nothing is black or white. >> like the weather, which is very gray today. mike jackson will talk how the economic policies will impact the auto industry. "squawk box" returns in just a moment.

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autonation rolling out quarterly results. on the top line. joining -- you beat on the

bottom line, but not on the top line. we're very opt mystic about preowned long term. we look at the number of off-lease vehicles coming back to market, increasing from below $3 million to over $4 million over the next couple years. we'll have a greater supply at a

better price point that we think we with grow or preowned business significantly, and also in the-second, we look forward to opening or first freestanding down in texas. >> let's talk about that preowned hangover. what do you see as supply, and where do you think we stand as the industry overall? primarily around takata. we had to move to a full disclosure policy rather than not selling them at all. it simply became overwhelming, we had aged inventory that we had to use quite frankly price to clear.

when we look at the new vehicle business that you touched on earlier, we view that as flat to slightly down. you know, if i look at incentives now at 10.5% of msrp, you know, becky, you and i have talked about this in the past. to me the red line on incentives is 10% of msrp, where they begin to lose their effectiveness. incenti incentives% 16% higher than a year before. i think really at the last left of what's prudence. then i look at industry new vehicle inventories at 4 million units. that's 100 billion of finished goods, meaning that the production has not been tempered

at all. the salvation for the industry, of course, is the stampede to a truck mix, so that transaction prices for the manufacturers are still net of incentives increasing, so their profitability is fine, if we had reverse mix, it would be a could taos troy, but the trucks are here to stay, and again long term, that points again to the obama regulations on fuel economy most likely will be mott rated in league of artable gasoline. >> hey, mike, you made some provocative, perhaps even incendiary comments about tesla last week. it was a quote we all found fascinating. tesla will either be one of the great ponzi schemes of all time or it will work out.

i assume you mean that at the moment. is itti scheme, or is it going to work out? >> andrew, thanks for reminding me about that. i forgot i said that. i was asked about tesla's valuation versus gm. i said it's incomplicaexplicabl. i think general motors is far more than what the marketplace is putting on it. i think investors have underestimated how much general motors has changed and how this shift to trucks is structural and permanent and underpinning future profitability. and i'm not saying tesla -- they built a good brand, they build a good vehicle, but the valuation being higher than general motors is inexplicable. i threw in a few more inflammatory words, that can happen with me. i think the point is valid and we'll see. mike, can you talk about tax

reform, where you'd like to see things? >> well, for this economy to keep moving, there's two important steps, with you regulatory reform. i think that's under way, and that's been a huge encouragement to business already. you don't need congress to do it. president trump has appointed professional deregulators who are extremely effective. corporate tax reform, absolutely positively has to happen. everybody agrees that the corporate tax system for america, for the united states of america, is broken. you have trillions of capital trapped overseas, you have this global taxation system that makes absolutely no sense and the highest marginal rates in the world. so the dilemma that i've been waiting for to hear an answer to, is you're not going to be able to do all of that without

either getting less revenue or increasing deficits in the near term, or you've got to put something in place like that cockamamie border tax, which sounds like a bad high school science experiment. so i think -- and i anticipate it's a major signal from the administration they're willing to add to deficits in the near term for the sake of long-term growth. >> thank you, michael. good to see you. >> good to see you. more stocks to watch ahead of the open, a lot of movement out there. >> and pimco former chief paul mcculley, and how it all impacts your money. check out european marngts this morning after yesterday's strong gains. we are up again a lot. they are all higher. say that again. >> [ speaking foreign language ] >> we are back. oh yeah? ended up saving a ton of money on car insurance.

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into welcome back, everybody. two dow components out with earnings this morning, caterpillar reporting profit of 1.28 a share. that more than doubled estimates. actually when i think you look

at caller pillar those were 64 cents, revenue beating expectations. and they raised their outlook for the full-year revenue numbers. the street was at the low end of that. you can see that the stock is up by 5%. now, they did make some comments where they warned a bit about the potential volatility and global markets and in the commodity markets, but still the street seems to be ignoring those concerns. caterpillar shares of. coming up, one nations's most enduring symbols of capitalism and pointed criticism. ought thor of "new york times" best-seller did you have mcdonald will join us to talk about the new book. we are in the green in a very big base. about 109 points. we are back with the debate

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welcome back to "squawk box." harvard business school is a training ground for c-suite executives. it's a comprehensive history form the book is called "the golden passport" and what he calls the failure of the mba elite. good morning. >> good morning. >> the booic is on you today?

>> the book is out today. it's causing a lot of commotion in the c-suite and world of academia. this is a bit of an indictment of harvard business school and the business world. the point of the book is simple. the school was founded a century ago to try and respond to the fear that corporate america in that time was going to eat the rest of the country. i'm trying to get them back to the first principles. >> is this an indictment of capitalism? >> no, not at all. do i advocate for the abolish

abolishment? no to keep it honest as part of an university, and instead early on they said forget it. >> no, no, having read the book, there's a fascinating history. you seem to make the case that things changed, shifted if you will that effectively the school was somehow co-opted by wall street. >> yeah. we american management was revealed as not the greatest thing ever in the '70s, and that they had been coasting post war they had a choice. the schools could double down and figure out where it all went wrong, or they could jump on to the shareholder/capitalism boat, and they did. they hired michael jensen, bought into share prices, the north star of everything.

here we are on cnbc, and basically sold their soul. includes a gentleman named jamie dimon, who you know very well, because you wrote a biography about them. do you think that something like jamie dimon was effectively corrupted? >> no, not at all. i don't think everybody who goes there comes out corrupt. i think that the school could do a better job of keeping in its curriculum the idea that management can be an enlightened exercise. i don't think they do that effectively enough. the fact that people come out and they're enlightened and talented managers, that's not a surprise to me. i don't think that counters the thesis. >> is it a harvard problem or business school problem? >> at this point it's a business school problem, but it was a harvard problem. >> chicago, some of the other -- do they take their cues from

harvard? >> it used to be that everyone took all their cues from harvard. more recently, you know, they're one of a group of elite schools. >> when i wrote a column about this book, which i think is a tag nating book and people should read, the feedback -- i got feedback from people who have been to harvard business school in the last 10, 20 years who say did you have mcdonald does not know what he's talking about. this is a group of people actually fighting back against whatever you think of as the corruption of capitalism, it's one of the most enlightened places in america these days. do you agree with that? >> i think a lot of people sort of missed the point. you spoke about pikal jensen. there was an excerpt in po -- but i think that definitely the business schools have said we have moved on from that.

it's like, well, you may have moved on, but the culture hasn't, the society hasn't. we're still dealing with the ramifications of that. >> did you have mcdonald, the book "the golden passport." thank you. >> thank you, guise. paul mccully, and later on shark tank investor daymonn john. ck a benchmark. flexshares etfs are built around the way investors think. with objectives like building capital for the future, managing portfolio risk and liquidity and generating income. that's real etf innovation. flexshares. built by investors, for investors. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully.

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find your awesome with the xfinity x1 voice remote. that's amazing! earnings alert. five dow components rolling out results this morning. the numbers and market reaction straight ahead. new this morning, the trump administration, on imported canadian lumber. highlights with our interview with wilbur ross coming up. and why ben bernanke ben bernanke is worried, and why you should be worried, too. good morning, everybody. welcome back. we are live.

i'm becky quick along with andrew ross sorkin and brian sullivan. joe is out today. our guest host this hour is a senior fellow at cornel university. great to see you, paul. >> good to see you, becky. check this out. the futures are sharply higher again this morning. we started up with the futures about 50 points. we've company after company that has beat expectations. as a result the dow futures are up above fair value. the need dak up by ten, brian will give you more details in a moment. check out treasury yields in the meantime. the ten-year is yielding 2.3%, brian? >> yeah, you mentioned it. mcdonald's numbers are coming out. the theme this morning, folks, mcdonald's beating estimates. 1.47 on the eps side. revenue it is also coming in at 5 if the 68 million.

. so continuing the trend of what we have seen, which is beats on the top line -- it's one thing, as we know, to beat on the bottom line, right? >> right. >> you can tweak or massage is a nice ways to put it earnings numbers. revenues are a different story. you had highlighted the quarter for caterpillar, as you noted, was so much bert. >> the number was actually 1.28, so more than doubled the expectations. >> 3m was nine kretz bon. dupont was about 24 cents above. >> mcdonald say the first quarter was helped by the expansion of all-day breakfast offerings, really getting back to what it does so well. steve easterbrook getting tons of credit for this. >>, i will say this, all the

analysts the last two weeks, we've seen about three or four major upgrades. they have highlighted this. to your point, they took -- you took my market share? i'm going to take it back. you know mcdonald's marketing budget is larger than the next five fast food restaurants combined. >> they say they're continuing to focus their effort onsh but -- probably where that money is going. >> i would say earnings are strong. is it time to bring in paul mcculley. do you think it's as good -- >> the economy is in a mature expansion. i stress mature expansion. it's in recovery anymore. the last recession was almost a decade ago, so it's actually humming quite nicelies. there's nothing fundamentally wrong. the issue, the political issue that led to mr. trump being in

the white house is income inequality, not whether or not the economy itself is doing well. >> we'll have more from paul in a moment, but andrew has the details on all these other stocks out this morning. >> caterpillar reported a profit, more than double the estimates of 62 cents, also raising the full-year forecast as several of the key markets recover. 3m's full share was ten cents above maker of scotch tape and post-it notes -- so it's not just a u.s. story. also mixed story, but revenues this time topping estimates. you don't want to miss the company's new ceo on "squawk alley." also some deal news. tyson foods finding

advancepierre foods. and then we should talk about straight path community indications it now sets it's received a new bid from a multinational telecommunications company. it's not saying the name of that company. it calls the bid superior to at&t's offer of 95.63 cents per share. earlier reports said vising had considered topping at&t's offer. that's a big gamble on spectrum as we all move towards 5g and super-fast bandwidth speeds. the trump administration is planning to impose a 20% tax on softwood lumber imports from cana canada. this moving come as the united states says canada is providing unfair subsidies. canada denies those claims.

commerce secretary wilbur ross joining us in the last hour, first on cnbc. >> i think there's a larger takeaway. the trump administration has been much more focused on enforcement than had been true previously. there's a good reason for that. u.s. is the least protectionist of the major powers, yet we have the highest deficit, 500 billion. the other cunning that talk about free trade are really very protectionist, europe, china, japan, so we have the receipt ricks of free trade, but the reality of protectionism. that set of facts is not going to be permitted to continue. >> news of the new tariffs sending the u.s. dollar higher again the canadian looney. weyerhaeuser and

louisiana-pacific, right now weyerhaeuser, he has asked epps we are expecting to get details tomorrow. add political leaders reach a midnight friday deadline. with the clock ticking, president trump has said he's willing to back away from the previous demand that a government funding bill include money to build a wall. officials say trump is open to obtaining funding later this year. we're ben bernanke and democrats the -- that view is

backed up by the new survey that says your politics increasingly define your view of the economy. bernanke said he's worried that would lead to bad policy decisions. and he's going to join us in a week, so we'll be able to continue this conversation. paul, this is a theme that we have heard echoed time and time again, steve balmer was here, robert ruben, all of these concerns about taking numbers, hard facts, and using them to push your agenda on one side or the other. >> it's an incredibly polarized way of looking at the world, which i think describes our political system, and also our society. the choice is not in the dumps those are both facts.

if you're on the political spectrum, you can make those particular aspects the end all and be all of life, and i think in terms of what mr. trump is looking at, he's talking about a huge tax cut, increase in the deficit. they finally have recognized what they're willing to do. that's what you do in the early stages of a recovery in order to prime the pump. you don't do it in the last stages of an expansion. this expansion could last a number of years. >> you're implying we're at the end, not the beginning. >> we're not at the end, but back to quote/unquote full employment. we can stay at that level for a long period of time. maturity doesn't mean you're going to die tomorrow. i just turned 60 next month. i'm not going to die tomorrow, i hope, but you would call me

mature, i hope. there's so many different viewpoints to why he haven't gotten back to better gdp numbers. >> it's a mystery to many of us, because we've had strong job growth, and we've had weak productivity growth. at the time you're seeing incredibly powerful earnings, and earnings at the high share of gdp in my lifetime. when you look at the facts of full employment and strong earnings, you think in terms of productivity can't be going sideways, but you look at the d gdp data, and that's what it says. >> i'll do a comment/question. steve liesman is not here, so he may disagree. i think the way they calculate gdp is screwed up. i've that you could to some

people who believed the way the number -- we're not say the numbers are rigged. do you think -- the way we measuring product activity now and some of the indicators are just not reflective of the way that things are actually working? >> that could very well be the case. this is not the place to get deep into the wonky weeds, but reality is stronger than the productivity number. >> let me ask it a different way which is specifically de-wonked. do we specifically ignore it? >> no, you don't. you never ignore the macro data, but you put it in the context of what we are seeing out the window. the reality is usually somewhere in between. >> so if we were to pursue a tax agenda like the one that the trump administration is which you're going to hear a lot more about tomorrow at a 15% corporate tax rate, what would happen? meaning what would it do to employment?

what would it do to the economy and then of course bhald it do to the debt? >> a big physical stimulus package, we're talking about cutting taxes, increasing the deficit, which is fine, that will stimulate aggregate demand and actually want to push the unemployment rate lower. so it makes a great deal of political sense for mr. trump to want to do that. the big question then becomes what's the fed's responsibility? would they allow a physical stimulus to push the unemployment rate down another full percentage point to a three handle? that's the big question. >> you think it would? >> actually, i think they would. >> they would allow it, and it would work in terms of bringing the unemployment rate to that low number? >> old-fashioned keynesian

theory would work. i think the fed would underwrite it. they won't tell you they will do that, but i think they would. >> sustainable? would it be sustainable? meaning if you could get the rate under 4%, is that sustainable? >> it would be a very interesting experiment to run. sustainability on the unemployment rate is, can you complete inflation contained? actually i think you can keep inflation contained. i don't think you'll be south of 2, you'll move towards 3, but i think that's a policy choice. would you trade off another full percentage point decline in the unemployment rate, knowing that you are pushing towards 3% inflation. if you put that question to the america people, i'm not sure they would say keep inflation at 2. >> but i think the question is would i trade that for potential more trillions of debt? what are the implications there? by the way, both of democrats

and the freedom caucus are going to take. >> i never worry too much about the national debt. >> you don't? >> i really don't. >> okay. >> so therefore i would not put that high on the calculus. i think put put that far too much. why? >> the music started. >> we're going to let him answer the why. when we come back we'll continue that conversation. congressman luke mecir is the chairman of the republican policy committee. he'll tell us what investor shoos expect from congress in the coming days. you're watching "squawk box" right here on cnbc, back in a moment. yet alternatives can tap opportunities that traditional assets can't. and even though they're called alternatives, they're actually designed to help meet very traditional goals. that's why invesco believes people should look past conventional models and make alternatives a core part of their portfolios.

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the republican policy committee will launch the task force for the american worker. it aims to deal with the challenges facing everyday american workers, some of the issues slow economic recovery add rising living costs. joining us today. luke messer is the chairman of the republican policy commit te.

what you're up to today is not just this, given all the other issues, potential for a shutdown in the government loom over us, but in terms of the american worker, is that your number one priority? at least this morning? >> i think that's the american people's number one priority. i was fascinated about the conversation you just had. you know, where the rubber meets the road for the average american is wages. economists will tell you in real dollar terms, the performs power of the median wage has gone up about 84 cents in the last 50 years. i believe that's what fueled the rise of bernie sander, so they get a piece of the american dream. we're going to talk about those issues today. larry kudlow is coming in to speak to us. mayor blare milo, who is from a

small town, is going to speak with us. i do they some of the others issues we're debating help to contribute to that. and tax form is another one, the trump administration planning to announce at least an outline. we're already hearing that in terms of a corporate tax rate, which may go to wages and how fast you think the economy and businesses grow,less a 15% corporate tax rate. would you be prepared to sign on to that. >> clearly america's corporate tax rate is not competitive with the rest of the world the only real way to raise wages is to -- but here's what i'm a little concerned about. i want to make sure as we make america's corporations more competitive, we don't make america's small businesses less competitive. so i want to see that part of the plan as well. i think we've got to look out for small businesses in america,

which are almost always one of the biggest engines of job creation and wage growth. >> congressman, paul mcculley is here, and he made the argument that we shouldn't necessarily worry about the debt. i don't want to put words in your mouth, but obviously you have to take on debt even with -- >> listen, we have to worry about our debt. we can't spend away our kids' future, but the only real way to get after the debt is to have a growing economy. we somehow have to break out of this pattern of 1% to 2% growth into 4% growth, which would, as i understand it, basically add the german economy to the american economy every year. that's what happened in the 90s when we paid down the debt. the biggest way we were able to tackle is all task revenues that come from that.

>> congressman, you're absolutely right from an arithmetic perspective. do you think the federal reserve is willing to underwrite and the -- >> well, i smile, because they probably won't consult with me before they do it, but my hope is they will. listen, we've got to get at they frozen paychecks and stagnant -- we have to break through this pattern of the last decade where frankly things went pretty well, but for working americans, it wasn't happening. i think the only way that really happens is the kind of dynamic policy and the kind of growth where employers are willing to compete. to pay their employee alternates more. >> congressman, we spoke with wilbur ross earlier this morning in particular will the story. u.s. readies canada tariff. are you some support of this?

and do you think we'll be launching a trade ward both with canada and perhaps with other countries? >> i think the idea of mr. trump's america first policy that is we look out for american industry is important. i'm very leery of tariffs. i think they have all kinds of economic consequences and eventually retaliation from countries we throw tariffs against. i want to learn more about it. i think the best thing we can do to protect american businesses is to create the economic conditions in america where people all over the world want to invest here. >> with regard to the jobs market some may this i we're at full employment. year not at zero percent, but statistically you don't get a lot lower than this. if we want to grow, we're going to need people. how do we square this up with immigration. are we going to need more people here if the economy continuing to grow? >> again, a lot of folks in this

economy are underemployed, a lot of folks have jumped out workforce, because they're better off new york working with the government benefits they might receive. so there's growth with folks that are already here, but i also agree with you, we're going to have to have an adult conversation about what's the appropriate approach to immigration policy. i think president trump has a lot of the fundamentals right here. if we can secure the border and have a conversation with the american people about the fact we're not going to create a -- a giant flame here that folks from all over the world continue to come illegally, we can start to deal with what do we need to do particularly in skilled trade and have the kind of success that this nation has always enjoyed. >> congressman, we appreciate your time this morning, and we wish you luck with your plans as well. talk to you soon. >> thank you. take care. he said we need adult conversations.

can we have them in d.c.? >> we've got having that here. >> i know, but in d.c., can they? virginia tech used to have nickel beers. we could use that it d.c., and then we could -- >> nickel beers. how old are you? >> and i paid ten cents for a hershey's bar. coming up. good things apparently are cooking at mcdonald's the earnings coming in very strong. that stock set to hit another record high. the futures are indicating a big jump, 200 points open at the dow, another big day for the earnings. you're watching "squawk box." stick around. at fidelity, trades are now just $4.95.

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jobs. >> anybody who thinking they missed out out trump rally, i think you'll get a better buying opportunity in the next few months. >> i think you're going to be disappointed. coming up, a potential board shake-up at wells fargo. shareholders are voting today. we'll take you live to that meeting next when "squawk box" returns in just a moment. the road can change in an instant. but with lightning fast shifts and dynamic track-tuned suspension, what the road demands, the gs delivers. experience high performance through high technology,

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good morning, everybody. welcome back to "squawk box" here on cnbc, we are live from the nasdaq marketsite in new york. if you want to know why the dow futures are indicating another strong open, you can look no farther than the dow components. coca-cola is the only one of these five to miss on the bottom line. all five beat estimates on the top line. you can see caterpillar is the big gainer, but dupont and mcdonald's both um by better than 2%.

the nettic would be to at about 85 points to the dow. we were up by about 50 points, but you can see things have taken off. we'll talk to an analyst about mcdonald's in just a moment. we have a key read on the housing market. the february case-shiller report is expected to -- and there's a dispute arising over just how much saudi aramco is worth. the "wall street journal" is reporting that the company is worth about $500 billion less than the $2 trillion that the saudi government has suggested. officials working on the deal have worked the numbers in a varies of ways and reportedly can't come up with more han $1.5 trillion. still a massive ipo. joining us now is will slaybaugh on the surface, top

line, bottom line guidance looked good. is it? >> i think it's very good. i think it was a poorly kept secret they were going to have a good quarter. so most expecting things to be better than where the street numbers where. i think the biggest thing by far is the u.s. beat. i think the investor bar was some of the in the 0.5 to 1% range, so to retake some market share that they had lost in the past few years and get the u.s. back on track was encouraging and to see the bottom-line beat as well, i think there's nothing negative to point to here. >> we noted earlier in the should mcdonald's marketing budget is bigger than the next four, five quick-service restaurants, fast-food, whatever you want to call it, but does this recapture something they

can continue, or is it a one-quarter wonder? >> i think it is. that's something we highlighted recently, refocusing on the huge transactions that they have lost. that value guest is going elsewhere, because mcdonald's is focused onall day breakfast or on some premium items that didn't work quite as well. so what they do well is volume and convenience, and the stores -- i think it's the right thing to do. i think there's a long runway, the mac junior worked on the well, innovating around a core item. that i was dollar drinks in the summer, more value items later on to augment some of the innovation happening, too. >> you think this is just management 101, good managers making the places run better? >> i hate to make it so simple, but i think, yes.

i think easterbrook has done a good job on refocusing on what matters to the guest, speed, convenience, value. he's improved the quality, bask blocking and tackling, but i think refocusing on that matters, and giving the managers more power to do that themselves, and regionally as well. not making just one mcdonald's change, but making it renalently. >> will you raise your price target? >> we've seen a nice little move here recently and been on this train for a while. it's one we continue to sly. >> will slabaugh continues to like it. thank you. >> thank you. the united states preparing to slap tariffs on canadians lumber. here's the tweet from the president -- canada has made business for you're dairy farmer in wisconsin and other borders states very difficult. we will not tooened for this.

watch. will empower ross made reference to the visit to wisconsin and some of the conversations. >> i don't think it's going to be a trade war. i think there will be lots of headlines on micro-oriented enforcement actions. kind of like early on mr. trump would brag that i brought this many jobs, which is rounding errors compared to the monthly job gains. so i think that the trade policy will be to find quick and easy wins. this is an old dispute with the lumber going back 25 years, so i think you pick disputes that are old disputes, where it's on your side, and therefore you get agreed headlines about it, but i don't see it as a harbinger of

anything serious sort of trade war. china is a big deal and there's not going to be any issue with china. the issue with lumber is small potatoes. >> those secretary ross says they are using these issues to send a broader message that kind of puts traiting partners on notice by making sure they are enforcing all the wto rules to the full extent. >> i think that's fair. there's an announcement, that we have policies and we have police on the beat, but that's simply enforcing what you have. >> which is probably good news for business. >> yeah, absolutely. in other headlines this morning, cho banni has now filed a lawsuit against alex jones, accusing jones of publishing false information about the company, saying stories that showed up on his website links cho banni's owner to a sexual assault case involving refugee children. the company is seeks at least

$10,000 in damages. alex jones has been a part of a number of scandal stories before, you may recall the pisa-gate story. he's also contended that the september 11th attacks were inside jobs carried out by the government, and there's been a number of other issues related to alex jones. worth notes, given that we were talking about donald trump's tweets, donald trump has long been a fan of alex jones. among the big events to watch today is wells fargo's annual shareholders meeting. leslie is there. most of them are snooze-fests, because nothing happens. not this one. fireworks are expected. >> reporter: that's right, brian. i left my pillow in my hotel room here. investors are already starting to trickle in.

i'm told that a stanch at portion of votes have not yet been cast even now, according to a western with knowledge of the matter. there were still several directors coming in at around that 50 merits threshold. as you know anything less could caught them to submit their recentition nations some directors are coming in between 50 and 70%, it certainly would be a rebuke of their position on the board. three of the new board members, including tim sloan, i'm told are coming in at well above that threshold. they appear to be safe. the idea here is that they're not really responsible for the scandal since most of them were not affiliated with the company at the time it took place one analyst i spoke with that it's

highly unlikely that they'll choose to oust most of the board. >> it strikes me as somewhat unlikely that investors would simply, you know i try to wipe the slate clean for an entire board. it's virtually unprecedented. >> reporter: now, unlike political voting, shareholders can actually change their votes up until the end of today's meeting, so we'll be watching for that, as well as the q&a portion, which could be quite contentious, guys. >> thank you, leslie. in the meantime another tweet from president trump -- don't let the fake media tell you that i've changed my position on the wall. it would get built and help stop drugs, human trafficking, et cetera, all of this coming aheadsh did or question mark on whether the government should shut down a friday. he's been pulling away a little bit from including the cost of the wall in the current budget, saying temperature come later.

squawk in the tank, small business optimism hitting record levels since president trump took over. we'll talk with daymond john next. stay tuned. you are watching "squawk box" on cn cnbc. ♪ 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?

box." the reason for the music this morning is the dispute that's been brewing for decades between canada and the united states. the united states now threatening or preparing to slap some tariffs on canadians lumber. you can see that that haz an impact. the u.s. dollar stronger again the canadian looney. and the equity markets here expected to open up higher. dow futures indicated up by almost 150 pounds. all five of the components beating on the top lines. the nasdaq is up by another 16 points after closing at a record level yesterday. small business optimism hitting record levels since president trump took opening. joining us now is "shark tank"

investor daymond john. good morning. >> thanks for having me. >> great to see you. i want to talk restaurants in a second, but we've got having a debate all morning. brian used a good phrase, the nitro that might have been poured on the economy. >> you go nitro for gasoline, like a little extra boost. >> we've been trying to great these first 100 days of the trump administration and understand what he has or handle down. how do you think about it? >> i think obviously the market is up and if he's going to built a bunch of mince and thickets of that nature, optimism is high, but i think we're looking at the effects of what the previous president had put in place. i can barely change anything in my household in 90 days, so i think we're feeling the effects of what happened the past four, eight years, and the optimism is

false. it's not realistic. >> are we holding him to an unrealizic expectation. >> whether we like it or not, he's the pilot of the plane, i'm a passengers, so i'm rooting for him to be successful. i am hopeful, but reality is unless he educates people and the skill gaps will get wider and wider. if you're a truck driver right now, then everything is going odds mated after that, so you don't have a job. unless you have a technical skill, you are done. >> are you -- >> robots -- by 2030, robots will take it over. absolutely. >> what do you think -- >> you don't think this is a problem or challenge from 50 years. >> i think it will be in the next ten years. the number one job for males is

operating heavy machinery. females number one job is being a receptionist but everything is going virtual. immigration is not taking our jobs. last time i called the operation, it was google that took her job. >> what's the solution? >> economic empowerment and training from a skill gap coming up. right now we're not competing with the skill gaps. all these jobs, these kids today are going to graduate 50% of them are going to graduate with college and they're going to retire with a title that a job -- of a jobe that doesn't exist today. how do you train somebody for four years in a job that's won't even exist. >> is that an argument for forget about college and get on the job train? >> no, please go to college if you're going to be a doctor doctor. i need you dove some skill before you cut me open, but if you're going to automating cars or converting social media or operating drones, you better be

able to operate that, and you can probably learn that skill gap in a over. over at bmw they couldn't fill jobs for their technicians in 18 months, they said. >> the hyundai dealership has had a sign up for mechanic. they can't find a mechanic. >> wee to deal with the big oily stains. a mechanic today pulls up a computer with a program. >> paul -- a few weeks ago i called retail the new oil. the economy is getting better, oil was stinking, hurting, costing us job. retail lost nearly 100,000 jobs? three month. i worry, is retail -- is 5.5 million people work in this industry, automated out, amazoned out, you're a small business retail type of guy. wheeze going to happen? >> the middle man is going to

get cut out. big retailers will create this opportunity themselves. >> a bunch of empty malls? >> i think we'll find a way to replace it. look at the teslas and apples of the world that bring a lifetime that make people more sticky when they go in there, but there will be a change. people are still going to want out and hopefully meeting people in a social way and touch and feel things. >> bubba q's? >> absolutely. >> you know, i did that about three, four years ago on "shark tank" it's right around -- tomorrow we're launching with burger with hardee's -- >> tell me what happened. i remember when you ball this company. what happened between then and noun? >> everybody thinking entrepreneurs and i can wave this wand and help them. i fail about three, four times

finding co-pack respect e. bubba went around the world, we finally found some co-packers that knew how to pull this bone out of the rib. the rib has a technology on the patents and the process, and then we world with hardee's and karl junior's, and they said we want to support. >> thank you very much. >> i don't think you're too much of a shatter. >> i'm not. >> i have robots and burgers on the brains now, and some dangerous combo. >> thank you. >> thanks. when we return, jim cramer live from the new york stock exchange on a day when the future is indicating a much higher for the dow. a lot of big earnings and a lot to talk about. you're watching "squawk box." stick around.

the vix has dropped about 20% in the past week. while the fear index falls, stocks tend to soar, with the s&p up 3.7%.

want to get down to the new york stock exchange. jim cramer joins us now. choose your own adventure this morning. lots of companies reporting. coca-cola we can talk about, mcdonald's, lilly. name the one you want to pick first. >> caterpillar, a little bit more sales, monster amount of earnings per share, because they cleaned up the supply chain, they've really taken a lot of costs out, mcdonald's the key

there is you got the franchisees energized, converting custers in casual to permanent and that's terrific. netflix i can't believe is only up $1.50. they're in china through an affiliate of baidu. these are remarkable stories and people are kind of looking about what trump may be doing. they ought to be looking at what the companies are do be. easterbrooks more important than mcdonald's, than trump. >> you made a point yesterday, i'm losing track of time that, perhaps there's actually no premium in the market for what could come in terms of policy out of washington at this point. >> yes. >> there's a discount. >> the rest of the world is doing better than us and go over the calls, two palm, 3m, mcdonald's or caterpillar. we're not the source of upgrowth. we need to get corporate taxes down and need to get something going. double digit out of asia and

high single digits out of europe. united states we've plateaued and if is reasonable to think maybe we're not the engine right now. >> before we go, 15% is the corporate tax rate. real or alice in wonderland? >> through the looking glass, my friend. hmm. >> touche, touche. jim, see you in a few minutes. >> yep. coca-cola's incoming ceo james quincey will join the at 11:00 app. enterprise printers by hp. which is great, unless you're a corporate spy. unsecured printing makes your network vulnerable. enterprise printers by hp help prevent costly security breaches that can compromise your network and reputation. so i'm stuck spying the old fashioned way. hey. i'm not spying. secure printing by hp. i.t. orchestration by cdw.

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a cnbc exclusive, the new incoming ceo of coca-cola, james quincey, on earnings, the question and what investors can expect. our guest host is paul mcculley, senior fellow at cornell law school, former chief economist at pimco. paul, you're of the opinion that donald trump and the fed are on a collision course at this point. what do you think is happening? >> mr. trump's acting like the economy is deep in a hole, and wants to stimulate aggregate demand. that would have been a great thing to do eight years ago at the depth of the recession. mr. trump was not president. mr. obama was and mr. obama wasn't given the latitude to go ful

fully keynesian so mr. trump is proposing policies that would be appropriate early in a recovery at the mature stage of an expansion so it has a high potential to overheat the economy. >> talking about infrastructure spending? >> infrastructure spending, tax cuts. bottom line, a big increase in the budget deficit. they're working towards the notion of saying yes we're going to have a bigger budget deficit which is a stum lus imulus to t economy which is appropriate at some some times, at this juncture, however, it raises the issue of overheating, and that's the issue -- >> the fed has not exactly been on an opposite page. they've been stimulating full bore for years and years and years, and that's been the knock on the fed for some time is, when do you take your foot off the gas pedal? >> part of the reason the fed has had to be so accommodative, we've had physical restraint for so many years. >> it sounds like donald trump is doing things that the federal reserve has been hoping somebody

would do for a while. right? >> just very, very late, but the real issue is, are you willing at the fed to let the economy overheat? >> so what would they do, jack up interest rates as a result or unwind the balance sheet to counteract? >> those are two different poll is is, the balance sheet and the interest rate but the whole issue is, are they willing to let the unemployment rate go lower? it doesn't mean that they won't -- >> it can go lower? >> yes, absolutely. you can take it lower. you can go to a 3 on the unemployment rate. the only issue, are you willing to take the inflationary risk associated with it. >> hmm. so we're going to see a moment in time where the fed has to make that decision, you think? >> yes. i think it will happen over the next 12, 24 months. >> when is the last time we had a 3% unemployment rate in the united states? >> you weren't even born yet, andrew. >> i know.

i need the history lesson. >> i'm not even sure i was born. >> it was close in the late '90s i believe. >> we got down to a low four handle. >> depends where wat group. over 25. >> brian thank you for hanging out. join us tomorrow. "squawk on the street" begins right now. ♪ ♪ like we always do at this time ♪ ♪ i get to shine ♪ throw your hands up in the sky ♪ good tuesday morning. le with come to "squawk on the street." i'm carl quintanilla with david faber and jim cramer. futures up 150 as five dow components report and some of them like cat absolutely crush estimates. stocks could be looking at the best two-day gain of the year, if this holds. will we also see nasdaq 6000? europe's adding on to yesterday's gains. ten-year climbs back to 2.3 and case shiller home