good morning. breaking news. president trump fires fbi director james comey. a live report from washington straight ahead. mixed arrows across europe and asia this morning. and blame cnbc again. disney shares dropping on concerns of sports channel subscribers. it's may 10, 2017, and "worldwide exchange" begins right now. good morning. welcome to "worldwide exchange" on cnbc.

i'm sara eisen. >> i'm mike santoli in for wilfred frost today. u.s. equity futures are under a bit of selling pressure. did see a turn in futures when this news crossed last night that fbi director james comey would be fired by president trump. we'll talk about the implications for investor confidence. for now dow futures are down 55 points. s&p futures down 4. the nasdaq down 4 as well. as for the action overnight in asia. hong kong continues to be a stand out. that index is at the highest level since 2015. it was a strong close for hong kong up a half percent. shanghai comp, the main index in china continues to get under pressure. down a percent. it is now at the lowest level since back in october. as for the early action in europe, legts sht's show you wh going on. some weakness but fractional

moves. the german dax unchanged. ftse 100 in the uk is positive. weakness in italy. look at the broader markets, a slightly risk-off response. the ten-year note. that yield yesterday hit a six-week high. the highest level of 2.4% since march 31st. it's backing off a bit now. not a dramatic move, but definitely halting the rise there. looking at oil, had a bit of a weak afternoon yesterday. it's been struggling to get out of the mid 40s in terms of wti. you can see it up 1% this morning. going to attempt another bounce. yesterday it was also looking similar at this time. the dollar has had a bid overnight. maybe not. a bit mixed. you see it there. >> the euro just under 1.09. dollar/yen is down. stronger dollar against the japanese jen. gold has been definitely under

plenty of pressure. a slight bid there up a half percent. president trump firing fbi director james comey sending shockwaves through the nation's capitol. the white house citing comey's handling of the investigation into hillary clinton's e-mail server. all of the front pages leading with this. the "new york times" has the copy of the letter signed by donald trump. we want to get straight to eamon javers in washington with the latest on the backlash. good morning. >> good morning. it was a dramatic and stunning development last night as all of official washington was caught by surprise. the law enforcement community, the intelligence community and the political community stunned by the development coming out of the white house late yesterday afternoon and early yesterday evening as the president of the united states announced he had fired the fbi director, james comey, who was leading an investigation into possible association of collusion by trump associates and the russ n

russians and the 2017 presidential election. the white house put out the details of the letter saying while i greatly appreciate you informing on three separate occasions that i'm not under investigation, i nevertheless concur with the judgment of the department of justice that you are not able to effectively lead the bureau. it's esent essential that we fi leader sh leadership for the fbi that restores public trust and confidence in its vital law enforcement mission. here's what sean spicer said yesterday. >> the attorney general conc concurred that the fbi director lost the ability to lead the fbi. >> did anyone at white house order the department of justice to do this review into fbi director comey?

>> no. >> the president's first public reaction to this came in a tweet last night. a swipe at democrats up on capitol hill. the president said crying huck schumer stated recently i do not have confidence in him, james comey any longer, and then acts ind indignant. tem democrats comparing this to the sat night massacre during the watergate scandal. democrats are now calling for a special prosecution or investigation into possible russian collusion by trump aides into the 2016 election. the political problem here for this white house is going to be the fact that they very much embraced james comey late last year on precisely the way he handled the tail end of the hillary clinton e-mail controversy. you remember james comey got in

the white hot political center of the fray last year at the end of the election campaign in which he briefly reopened the investigation, said new e-mails had come to light. a lot of those actions by james comey were praised by donald trump and his associates. >> it took guts for director comey to make the move that he made in light of the kind of opposition he had. i was not his fan, i tell you what, what he did, he brought back his reputation. there's little doubt that fbi director comey and the great special agents of the fbi will be able to collect more than enough evidence to garner indictments against hillary clinton. he's become more famous than me.

>> so as official washington wakes up this morning, it's a shell-shocked nation's capitol. we'll wait for further reaction and developments throughout the morning. >> too many questions, but one of them is what are we hearing from some of the prominent senate republicans? i'm asking because this president needs to work with them to get legislation through. we continue to come back to the ambitious agenda. we watch the market reaction this morning and we wonder how this president will work with congress. >> the question is whether republicans will support this. initially some republicans initially put out press releases saying they did support this. they also lost confidence in fbi director comey, and they thought the president was making the right decision. we also saw a number of prominent republicans, some of who had previously bee critics

of this president putting out statements saying they were concerned about this developm t development, including richard burr. we'll wait to see what the further reaction is from republicans on the hill. it's my sense that the white house was not able to pre-brief anybody really on this decision. not able to lay the political ground work or roll this out last night in a streamlined way. not able to announce perhaps a successor to james comey that the president has in mind along with this that might go a long way to assuring people this was not a nakedly political move. so there is concern among some republicans up on capitol hill. others, though, put out statements saying they agreed with the decision. >> nothing from the house speaker? >> i have not seen a comment from paul ryan yet. to be fair, i have not looked for it. there's been a lot of news over the past 12 hours or so. i was on the phone last night with officials until about 11:00

p.m. i can tell you i spoke with kellyanne conway briefly, the president's close adviser at the white house last night at about 8:30. she talked to me briefly and said you have to look at the letter from the deputy attorney general, read that letter, memorize it, that's why the president did this. they're going to stand on the four corners of their argument that what director comey did in july of 230016, holding his own press conference and saying he was holding his own investigation at that time, that was bad and improper procedure by an fbi director. that's the legal and political argument they'll stand on. >> the white house, as you said, caught flat-footed on this move. what does it tell you as best as you can surmise about the white house in terms of its priorities? that's one question investors will be asking this morning.

is the focus of the president on these things, these kind of stewing conflicts that have bothered him or are we going out with a more methodical policy agenda? >> this will consume the white house over the next 24, 48 hours, whatever time period you want. this will be a defining moment for this president. they will be defending this decision for a long time to come. it's going to consume all of overwhelm washington. the official washington. there will be hearings. the open question and whether he could nominate someone and get that person confirmed through a bitterly divided united states senate now. this is a dramatic and presidency-altering decision and too early to say what the ramifications are for the rest of the president's agenda he will have support from republicans on capitol hill, who have backed him thus far,

particularly on his political agenda, they like his agenda, tax cuts in particular. but this makes everything else the president wants to do harder. it's clear the president had this russian investigation in mind, though they're citing the e-mail issue. he went out of his way to cite the fact that director comey told him he was not under investigation for the russia matter. that is clearly on the president's mind. he's been tweeting about it, focused on it, and now taking decisive action that will shape the future of his presidency. >> eamon javers, thank you very much. we move on to today's top corporate story which is disney. the media giant's second quarter profit beat casts on the success of beauty and the beast and the new theme park in china but higher programming coasts and some subscriber losses at espn weighed on results.

bob iger did acknowledge the rising cost of sports content and the drop in cable subscriptions but says he is still confident in espn. >> we will be in a direct to consumer business for espn product. we hope to launch one before the end of this year. we're increasing agent with our apps significantly. with that becomes not only more brand affinity but also more advertising. we're rung the business more efficiently. so we're confident in espn future. >> similar message from bob iger on previous quarter when espn has been a disappointment. >> definitely. they say we know the world is changing. we'll be prepared for it. the question is at what pace are you losing that legacy subscriber business. >> joining us is christine short, senior vice president at estimize. the disney results, how far off were they from expectations? everyone was expecting weakness

at espn. >> i don't think there was anything terribly surprising. the story continues to be the same. we had the mixed results, significant beat on the bottom line, a little light on the top line. once again espn being the culprit. this was the first growth rate on the top and bottom line that they posted in the last two quarters. if you have been tracking revisions activity you probably could have called this revenue miss. we had seen significant downgrades from analysts on revenues, which foreshadows a miss, and therefore a negative return on the stock, which we saw in the afterhou hours. historically, no matter what disney reports, the stock does fall 1% in the through earnings period and then pops about 2% in the 30 days after. i don't think anyone was expecting great news out of espn, just as everyone was expecting studio and parks and resorts to be the strength as they have been the last couple

of years. that's been the way the investors had to reassess disney it used to be espn was the predictable machine, you didn't have to worry about it. it's been the reverse. you have a predictable film release slate. the box office has been good. now the challenge for analyst and investors is to figure out the pace of decline for espn subscribers. are you seeing anything of analyst projections of the analyst networks in fought chore quafuture quarters? >> analysts are optimistic, but it's the time horizon. in the next 18 months they will renegotiate cable and satellite contracts, at that point media networks can then raise prices. this will be a long costly slog for all media companies trying to make this transition from

traditional to dej taigital distribution of content. it's not going to be easy for anyone. i think disney made a lot of right moves. they're cost cutting. they let go of 1 00 employees in the last couple weeks to reallocate money to the digital distribution. they launched their slim tv bundles, they have the over the top network service late their year. they're setting things up properly, but is it a year or two years? i think it will be long, but in the end they can probably figure this out. until they do, the stock will probably trade sideways for a bit. >> christine short, thank you for the perspective on those disney results. >> thank you. did you hear what he said about running for president? >> i heard what he didn't say. >> right. he didn't say no. >> he didn't say no. >> julia pressed him on that. he said, i'm going to put in place everything i need to in the business, not really think being that. >> we'll see. that was interesting.

a look at today's agenda. before the bell we will get results from mylan and time inc. after the close, numbers from 21st century fox, snap in its first report as a public company, whole foods and elf beauty. on the economic front, import and export prices out at 8:30 eastern time. two regional fed presidents will speak today, eric rosengren and neel kashkari. coming up, investors giving yelp a bad review. stay tuned. you're watching "worldwide exchange" on cnbc.

where's jack? he's on holiday. what do you need? i need the temperature for pipe five. ask the new guy. the new guy? jack trained him. jack's guidance would be to maintain the temperature at negative 160 degrees celsius. that doesn't sound like jack. actually, jack would say, hey mate, just cool it to minus 160 and we're set. good on ya. oh yeah. that's jack.

welcome back. a defensive tone to markets. the dow almost a 50 point decline. disney will weigh on that. s&p continues to struggle. the ten-year note yield also backing off a bit. it actually had been up for a few days. you can see that now below 2.4%. >> some stocks to watch today. shares of yelp are tumbling after revenues fell short and the company offered a weak revenue forecast. negative results were due in part to a wave of local advertiser departures in january and february. look at that stock slide. down almost 30%. nvidia seeing revenue rise nearly 49% topping wall street forecasts. the company attributing success to the portfolio of products that power gaming pcs, consoles,

virtual reality and ai. the stock soaring 10.5%. electronic arts posting better than expected earnings on a 17% rise in quarterly revenue. they are benefitting from a transition to digital sales. that stock popping 7%. softbank reporting a 13% rise in full-year operating profit. the company benefitting from cost cuts and more subscribers at its u.s. wireless unit, sprint. toyota forecasting an 18% drop in profits. the carmaker expecting double digit decline in the wake of the stronger yen and slowing u.s. car sales. french insurer, axa planning to take its u.s. life insurance and asset management business public. metlife has been making similar move. more on the top story coming up, the president firing fbi chief james comey.

could the washington shakeup impact investor confidence? we'll debate that question. stay tuned. "worldwide exchange" will be right back. ght. she said the future freaks her out. how come no one likes me, jim? intel does! just think of everything intel's doing right now with artificial intelligence. and pretty soon ai is going to help executives like her see trends to stay ahead of her competition. no more sleepless nights. - we're going to be friends! - i'm sorry about this. don't be embarrassed of me, jim. i'm getting excited about this! we know the future. we're going to be friends! because we're building it.

president trump abruptly fired fbi director james comey. joining us is robert armstrong out of london. thanks for joining us. this news comes at a time when

it seems as if global investors thought we had gotten beyond some of the political potential risks out there with the french election, even south korea yesterday. i wonder what your read is on the global i investves investor this news. >> at the beginning of this presidency, there was a lot of talk about trump trade. he said there would be big spending on infrastructure, he would do massive fiscal stimulus, and the market concluded there would be a big boost to u.s. growth and that the world growth, the assumption was, would follow in train. what we've seen, not just in the last few days but over the course of the presidency is that it's more complicated than that. the president may not be able to pursue a lot of his growth agenda as successfully as he

thought. but investors have shifted focus. now they're looking at economic and corporate fundalfundamental they like what they see. the market, i think, is set it go on as it was. the emphases had already left the white house. >> so you're in london. you have a good global view there from the ft bureau. what sort of leader reaction? i know nothing much on the record in terms of leaders commenting specifically on the u.s. fbi director getting fired, but how do you think this will go down in places like moscow, in london, like brussels? >> i think the hard thing in all of those capitals is there's a sense of this administration's unpredictabili unpredictability. there's two stories about this

firing. one, a lot of people thought comey needed firing. a lot of reasons cited by the assistant attorney general in the letter for getting rid of him are valid reasons. on the other hand, the whole thing looks unprepared. they don't have another nominee. they didn't brief anybody. the whole thing looks slap dash. what we hear is always about the uncertainty about what this administration will do. this is yet another incident where world leaders will have to simply wait and see what the administration does. whether it's on south korea, whether it's on europe, whether it's on china. >> well, uncertainty for sure in terms of exactly what the next steps are and the priorities of the white house. though markets are generally taking almost everything in stride right now. so, as you suggest, i wonder how much markets really are hinging on all this. >> yeah. i think markets have sort of moved on from the politics. you got it exactly right. if anything, that's dangerous.

valuations of most assets, whether you talk about stocks, bonds, or even international stocks look extremely high right now. investors are extremely complaisant. those of white house reached a certain age remember what complacency leads to. >> robert arm strostrong of the financial times, thank you very much. thank you. disney looks like it will drag down the dow. we'll set you up for the trading day ahead with dow futures down about 50 points. stay tuned.

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good morning. a political bombshell overnight as president trump abruptly fires fbi director james comey. full details in this late-breaking story straight ahead. comey's firing putting some investors on edup, we're diggin the market action. >> disney is digging, yelp crying help. the market movers that you need to look out for today. it's wednesday, may 10, 2017, you're watching "worldwide exchange." ♪ good morning. welcome back to "worldwide exchange" on cnbc. i'm sara eisen. >> i'm mike santoli in for wilfred frost. >> let's check in on the global markets. a bit of softness for u.s.

equity futures. tou futu dow futures down about 50 points. disney down about 2% in early action after earnings. s&p futures down 3. nasdaq down 3 as. nasd well. >> when the market has been so flat most days, you definitely can notice when a headline moves it a bit. >> fractional moves on the major averages, super low vix or fear index. as for the asian market action, check out hong kong in the middle. the hang seng closing up a half percent. that's the highest level since 2015. weakness in the overall chinese shanghai comp market which closed lower by another full percent. the japanese nikkei up at the top up 0.3%.

in europe, a flattish move for some major averages, including the dax. the ftse 100 in the uk is higher. we are seeing a weaker pound. that helps that export heavy index. >> as for the broader markets, oil is going to attempt another bounce today. up about 1%. wti crude has been volatile in this tight range, above $45 a barrel. maybe get some data today that will make some desis v mocisive there. the ten-year note hit a six-week high yesterday, above 2.4%. receding off of that. 2.37. part of the case for equities another leg higher is the treasury yield started to lift. we will see if that stops that trend or not. the dollar has mostly been mixed overnight. a bit of a bid that came into the dollar. the u.s. dollar index is still struggling under that $100 mark. there you see euro just about

flat. the yen is slightly stronger there against the dollar. gold, really not doing a whole lot. but getting a slight bid overnight. there you see it at 1,023 an ounce. overnight president trump abruptly firing fbi director james comey. the white house saying late yesterday the president terminated comey for how he handled the investigation into hillary clinton's use of a private e-mail server while she was secretary of state. comey's firing comes as the fbi looks into allegations that trump's presidential campaign had undisclosed ties to russia. the white house telling nbc news, that the russia probe was not not a reason for the firing. richard burr writing i am

troubled by the timing and seasoning of director comey's termination. anthony mccabe will be taking over as acting fbi director until a permanent replacement is found. clearly the news was shocking. this doesn't happen a lot in history. this this is not juis not just presidential appointee. >> the director serves a ten-year term, he was less than four years into it. >> very unushlg. >> for a white house that is leaky, you sometimes see what's coming next, this was a surprise move. >> this is on all the front pages. the "washington post" leads with trump fires fbi director. no comment there. the times one is good. >> the times is relatively dramatic. this is the letter from the president that was essentially

explaining the move. also saying in an analysis piece on the front pages, echoes of watergate. that's been the obvious touches d obvious touchstone people are going to. >> one question is how investors are reacting to this, if at all. yes, we're talking about weakness in futures. not necessarily a sign that this is a big dent of investor confidence, but it raises two questions. number one, the congressional calendar is short. they go on recess a lot. they don't have much time to get stuff done, when it comes to getting stuff done this market wants to see healthcare, which has to come first before tax reform. that's number one. number two, the president needs to work with congress to make that happen, including his own party. if some prominent members of his party are coming out condemning this decision and questioning it, it will be a distraction and

maybe create a rift between the president and congress. those are two big questions for investors. >> market has been good at tuning out a lot of political noise, and focusing on some potential policy moves. right now if you get the sense that washington will get bogged down in this, it's not the most constructive focus. >> we're in earnings season. >> exactly. >> focus on that. >> nothing seems to rattle this market yet. let's see if that continues. joining us is the chief investment strategist from fifth third bank. >> welcome back. >> good morning. >> this market has been most notable for how it has not been moving much. hovering near highs. is it your impression that something like this in that environment has the potential to up end things? >> no, i think the markets have this about right. it could change over time, we'll see, but all we've learned today is that this is a president who has a great ability to surprise us politically, who doesn't play by traditional rules.

his opponents will be worked up. his supporters won't be terribly worked up. and what the markets will continue to focus on is the state of the economy today. particularly as we've seen illustrated by the recent labor market reports. does that mean the market doesn't move on policy until we get something concrete like tax reform? >> the market, to the degree they care about this event today, it will be will it interfere with the senate taking up healthcare reform? what does that mean for tax reform? it's a bit of a wait and see. we think the markets will start moving forward on fundamentals and not so much on policy until we get later in the year. >> arguably they have been moving on fundamentals. you have this cyclical upswing in earnings which is supporting you. bonds are well behaved. i wonder what you see out there, whether from the fed or trends in corporate profit margins or evaluations that might basically say, look, we've kind of gone a

little far here in terms of equities. >> at fifth third we're focused on labor market conditions. we see the prospects for wage inflation. what we think is different this cycle that everyone in the industry should be talking about is the state of the labor market, particularly the structural problems that we have that did not exist in past cycles. so when unemployment is down at these levels, where will you get the workers from? what we have in the ranks of the unemployed today that we did not have before, lgts long-term unemploye unemployed. >> how do you expect that to manifest itself in the data and markets? >> now that we're getting down to the point where the underemployed are back down to levels last seen pre'08/'09, it means tight labor markets and a pick up in wage inflation.

>> that will hurt corporate numbers? >> not right away. the first stage of wage inflation is you power consumers. bigger paychecks. but what it does force is employers have to get more from their existing workers. that feeds capex. existing workers get pay raises, that feeds consumers, consumption. those are positives initially. but you're sewing the seeds of this. >> we heard the same thing from david costan yesterday. what is the level of enthusiasm for many this markthis market n? >> it's better than it has been. it's the bull market everyone loves to hate. that continues, but to a lesser degree. perhaps after today's politics we'll get more people hating it again but they're still putting money to work. >> all right. thank you very much. >> thank you. disney shares under pressure this morning. the company beating on the bottom line but revenues came in lighter than expected, as

operating units at its cable unit fell. the company saw big increase at its theme parks. bob iger talking about growth at the parks last night on "the closing bell." >> parks resorts was up 20% from a year ago. we had record numbers in the domestic parks, but we did well in international parks. we had a quarter of profitabilitiprofi profitability in shanghai with great attendance. the studio is up 21%. their success story was a great driver in the quarter. >> parks and strong stud joe performance sglooifrnlgts studi performance are the main reasons. >> the tone of media earnings this season has been surprisingly negative. is there anything to worry about when it comes to disney. that's the question. >> it's the level of worry you have to have. if it's a slow managed transition away from the cable

bundle, i think they're well positioned to deal with it. the street thinks so. in a given quarter, if it exc accelerat accelerates, you get punished. >> another stock mover today to watch is yelp. shares down sharply this morning. landon dowdy has details. >> shares of yelp moving sharply lower. the online review company posting mixed first quarter results and cutting the outlook for the full year. revenue coming in at 1 tth97 million versus 198 million due to a slowdown in local advertising accounts. the company says that's a big reason why it doesn't expect a pick up in revenue growth for the rest of the year. yelp is forecasting q2 revenues of 202 to 2$206 million, below the 215 million it previously anticipated. on the conference call, yelp's cfo addressed the lower guidance saying wheel we are luring our

revenue outlook for the year, sales productivity has rebounded, we've seen promising results from newly expanded retention efforts giving us confidence to grow and expand in 2017. shares of yelp down about 28% right now. back over to you. >> that hurts. >> quite the move. coming up, making the case for comey's firing. today's must reads are straight ahead. a lot of mix of opinions on the pages today. we'll try to point out a few. first as we head to break, a look at european markets in early trade. they're sort of mixed to flat. some strength in the ftse 100 in the uk, up about 0.2%. the german dax as wilfred would say is bang-on flat. we'll be right back. [vo] when it comes to investing, looking from a fresh perspective can make all the difference. it can provide what we call an unlock: a realization that often reveals a better path forward.

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welcome back to "worldwide exchange." time for our must-reads. they're all about donald trump's firing of james comey. and there's some mix of opinions on the op-ed paged. we tried to bring you two different sides. this from the "new york times." this is a tense and uncertain time in the nation's history. the president of the united states has now decisively crippled the fbi's ability to carry out an investigation of him and his associates. there's no guarantee that mr. comey's replacement will be

chosen by mr. trump will continue that investigation, and there's hints to the contrary. this addressing the question of whether the investigation into mr. trump's campaign associates and ties to russia will continue under a new fbi director. we're told they'll continued now because we have an acting fbi director, who is comey's deputy, but sort of raises some bigger questions around democracy, around whether the president is above the law. that's clearly the take of the "new york times." >> also some reports that subpoenas have been issued, a grand jury investigation. >> cnn reporting that. >> into michael flynn's business contracts, which is separate. it's the u.s. attorney's office of virginia. a lot is percolating for a while. my pick is from the "wall street journal." comey's sdefed d edeserved dism. a new fbi director who looks at the russia evidence with fresh eyes will have a better chance

of being credible to the american people. mr. trump should now devote himself to nominating someone of integrity who can meet that standard. the "journal" had already been on record of saying comey should have been fired day one. they can call back to that and say we didn't think he was fit for the role, but everybody, even from that stance, questions the timing or points out that the timing is going to basically raise more questions. >> the "journal" makes the good point that he's been political from the beginning. it's a highly unusual circumstance that both presidential candidates -- or were at some point under investigation by the fbi. wherever he went he was entering political waters. maybe we need a fresh start, clean slate. >> a sense that he embraced that role of trying to explain himself in the political arena too much for a lot of peoples taste. >> we'll see who mr. trump nominates next. we're approaching the top of the hour. the team is getting ready for

"squawk box." they'll pick up this conversation. becky quick joins us with a look at what's coming up. good morning. >> good morning. you're right. we'll talk about comey an awful lot for political reasons, but also what this means for the markets. we have a slew of guests lining up to talk about this. it does seem that the divide between democrats and republicans is only growing further apart the more we talk about these issues. that makes you start wondering what happens to tax reform, what happens to healthcare, all of these issues that the markets care about. so far it doesn't seem to be rattling things in the markets. maybe it's a bigger political story. this is a situation where both sides at different points called for comey's ouster. hillary clinton eventually blamed comb xwey for her loss oe election. we'll talk about what it means for business and the markets.

we'll talk about disney's earning overnight. on the bottom line it was better than expected, on the revenue line it was a bit light. we'll talk about those issues. and later we have an exclusive sit-down with jack lew who will talk to us about what he sees happening now. great time to silt down with him and dig through all of these issues. former omb director. that's what we're calling him on the screen, of course he's the former treasury secretary. we will talk budget issues with him, fiscal issues, what he sees happening abroad, all of those things coming up later. >> i'm looking forward to that. maybe you'll get stronger opinions than you got when he was actually in office. >> exactly. everybody gets the chance as they walk out of these situations to maybe say things that they never felt comfortable speaking about before. we had bernanke on last week, he was still keeping things close

to the vest, but they all will say much more than they would when they were in office. >> you know what that means, you have to book james comey next. >> something to set our sights on. >> right. looking forward to "squawk box" coming up in ten minutes. >> wouldn't be surprised if the call has been made. coming up, wilbur ross cautions the administration's 3% growth target is not achievable this year. michael gapen has his take. "worldwide exchange" will be right back. thanks for loading, sweetie.

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welcome back. one big question on envesters mis investors minds is can the trump achieve 3% growth? >> i will not contradict ben bernanke per se, but i think that the economy could grow at a faster rate than its growing.

i think that our expectation will be plus or minus around 2%. i don't know whether that's 2.5% is the goal or 3%. but i'm not going to fight with that. >> joining us now is barkley's managing director, michael gapen. good morning. >> good morning. >> we're all wondering what this rebound will look like in the second quarter after a weak first quarter. what signals are you getting on that front as it relates to that discussion about where we head on growth? >> i think we got three very good indicators last week. one was the employment report, the second was auto sales. the third was the ism data. all do suggest that the economy should see a rebound in growth in the second quarter of the year. i think something at 2.5% seems reasonable. if we get a bounce back in inventories, then it could be closer to 3. it would leave growth in the first half of the year at 2% or a bit better, but not much stronger than that heading into

the second half of the year. >> that 2% trend line really is basically becoming familiar. it's already relatively friendly for markets. i wonder if you see that changing at all, because of where we are in the economic cycle. do you see certain late-cycle indicators popping up, whether it is labor tightness or some fraying around the edges on consumer credit, auto sales rolling over, things like that. >> there's a variety of measures when we look at the labor market data across the board, we look at estimates of the output gap, the bank lending data, on the cni lending and consumer loans. all of that suggests a fairly mature cycle. we think there's a significant or reasonable probability that growth accelerates next year based on fiscal and tax policies that could be forthcoming. absent those, yes, it's still the same 2% durable yet fairly unexciting u.s. growth back drop that's been good for markets.

we really need a policy boost if we want to pick up from here, otherwise it's a fairly mature cycle. >> we're trying to figure out the comey news and whether there's impact for investor confidence or the markets. as it relates to your forecast, have you forecast tax cuts for corporations within your economic outlook? if so, does that get impacted from some of the unpredictable political events like the abrupt firing of james comey that we saw last night? >> we do have -- we're assuming somewhere around 1% or so of gdp in terms of revenues is a share of gdp and tax cuts that are enacted late their year and have economic impacts next year. the smoke that we're seeing which perhaps could be fire, some say is creating a constitutional crisis, all of that, any time spent on that reduces the odds that you get

fiscal and tax policies later this year. any increase in policy uncertainty is a worry for our outlook. we don't have enough information to change that. but it's something we and markets will certainly be monitoring. >> the markets have been methodically firming up expectations for the fed rate hikes. do you think the market has it right in terms of how that will play out this year and next year? >> i do. i think the message out of the fed has been clear. we used to need accommodative policy, now the fed says we want policy to be closer to neutral. the recent statement dismissed and down played a lot of data -- the weakness in the data as being transitory. the message is we're going in june if the data pick up. you have the ism, the labor market, auto sales date tax all suggesting june is a go unless we get a major slip in the data in just the next few weeks.

>> we'll see what happens, michael gapen, thank you. >> thank you for being here. >> been a pleasure. >> "squawk box" is next. if you want to stay on top of your health, one simple thing to do -- is take the pledge to go and get screened for the cancers that might affect you. so stand up to cancer and take the pledge at getscreenednow.org it only takes a minute to take care of yourself, and nothing rhymes with "org"...

good morning. yes, you're fired. president trump dismissing james comey. disney shares are dropping as concerns about espn subscribers linger. we'll show you what bob iger had to say about the sports network's performance and layoffs. yelp is getting crushed after a wave of local advertisers abandon the review site. it's wednesday may 10, 2017. "squawk box" begins right now. ♪ live from new york where business never sleeps, this is "squawk box." good morning.

welcome to "squawk box" here on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with andrew ross sorkin and brian sullivan. joe kernen is off today. let's look at the u.s. equity futures. they are continuing what we saw at the end of the session yesterday. a bit of weakness. dow indicated down by 52 points. s&p futures down by 3 points. the nasdaq, which set a new high yesterday, is down by 2 1/2 points. we'll continue to watch all of this as we get closer to the opening bell. look at what happened overnight in asia. the nikkei was up by 0.3%. hang seng closed up a half percentage point. the shanghai down by almost 1%. in europe, things have barely, barely, barely budged in germany. relatively flat. same thing in france with the cac. the ftse in london up by