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 0.2%.

check out crude oil prices, which went fuderwacken again yesterday, according to mark grant. wti is up by just 1%, to 46.36. brent crude sitting at 44 th49.. >> president trump abruptly fired james comey. comey learning of the firing while speaking with fbi agents in los angeles. this morning there is bipartisan outrage as congressional members on both sides express concern about the sanctity of the ongoing investigation into president trump and his ties into russia. eamon javers has more on this continuing to develop story. >> good morning. it was a dramatic and stunning development last evening as the white house announced that the president fired the fbi director. this is something that caught all of capitol hill by surprise.

it caught all of the law enforcement community by surprise. it caught the intelligence community in washington, d.c. by surprise. here's what the president of the united states wrote to the fbi director who is conducting an investigation into whether or not officials close to donald trump colluded in any way with the russians in the 2016 election campaign. the president writing to the fbi director, while i greatly appreciate you informing me on three separate occasions that i am 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 is essential that we find new leadership for the fbi that restores public trust and confidence in its vital law enforcement mission. the white house press secretary sean spicer explained the events to peter alexander last night. >> my understanding is that the president was presented with the

recommendations of the deputy attorney general, served as u.s. attorney for maryland under president obama, who oversees the fbi. he made that recommendation to the attorney general. the attorney general forwarded that to the president today. the president concurred. >> scholars are comparing this to nixon's saturday night massacre. what do you think of that? >> i think it's ridiculous. >> donald trump, jeff sessions and other republican officials and white house officials praised fbi director comey for the way he handled the hillary clinton e-mail visions, the deputy thing the deputy attorney general cited in his lergt wrtt recommending the firing of fbi director comey. here's how the president praised comey over the past several months. >> 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 that presidential pat on the back will get a lot of attention. we also had the first comment officially from president trump about all of this, it came in the form of a tweet. not explaining his decision but attacking chuck schumer, the democratic leader in the senate. saying chuck schumer had gone too far in his criticism of president trump. here's the tweet from a few hours ago.

crying chuck schumer stated recently i do not have confidence in him, james comey any longer, and then acts indignant. that's the first comment from the president of the united states on this. i spoke with with the white house press secretary doing the briefing today, she said she was not aware if the president led the review of james comey has led to the firing. >> stay there for one second. is there any new information we have in terms of the timing of all this? that seems to be what is at issue in terms of what it is that instigated and was the empe tus impetus to do this now. >> that's the question, why not. sarah huckabee sanders point the out to me that the deputy attorney general, rod rosenstein who wrote this memo -- the deputy attorney general in the

hierarchy is the supervisor, the person responsible for overseeing the fbi director. rosenstein was just approved and sworn in several days ago. this would have begun under his watch, his review. there is a real open question about why this is happening now. was the president wanted and where we're going from here. i was in the white house, outside of sean spicer's office last night, yesterday afternoon around 4:00 p.m. i was talking with officials there. don mcagain, the white house counsel walked over to sean spicer's office with a stressed look on his face. and sort of very insistently asking where's sean? where's sean? i need to talk to sean spicer now. i didn't know this news was spending at that point. nobody did. it struck me out stressed out don mcagain logann looked in th

moment. >> did this stick you as something that was impulsive? or something that you think was planned for weeks on end? rnl >> there was clearly planning here. this review by rosenstein took some time. finding the predicate, citing the legal findings in the memo, that took some time to put together. how much time is unclear. sarah huckabee sanders wouldn't tell me when this review began. it began some point after rosenstein was confirmed. then the question that we'll have to figure out is why did donald trump want to do this right now? this is a presidency-defining decision by this president. they will -- it will consume official washington for the next several days or weeks. it will have impact on

everything that the president is trying to do. >> we'll bring in john ceifert, a career cia agent who spent much of his career in russia. you read the papers this morning, especially the editorial papers. some papers say this is deserved. others are comparing this to a much larger conspiracy, questions have been asked whether this is a saturday night massacre. which is it in your mind? >> well, certainly the timing is fishy. there's nothing new here, right? the information they're looking at is from last summer and leading up to the new administration. separately there's an ig investigation of director comey's actions over the summer, which is not done yet. one would think they would wait until the ig investigation is done or taken this action before. though president trump obviously praised some of these actions earlier. the questions that come up are about timing, why now, and what it leads people to be worried

about is the russian investigation, that somehow it's a means to try to stifle that or stop that. if that's true, which i have no reason to know, i don't think it will the professional investigators of the fbi and the counter intelligence squads will continue to do their business and work on this. >> that's what i wanted to ask. will they? if this is part of some kind of larger conspiracy to tamp down an investigation, can, in fact, the removal of mr. comey do that? >> i don't believe so. i do know this administration, they're new to their job. they tend to look at intelligence officers, law enforcement, judiciary and assume they're part of the partisan process and treat them as such. however the people who work, professional intelligence officers, fbi officers have been working for a number of administrations, they are nonpartisan and will follow the information where it goes. i think this will continue.

our institutions are stronger than this. if this was banana republic when the president made a decision like this, it would be a threat. >> john, let me ask you, the "wall street journal" this morning, editorial page says the fbi chief forfeited his credibility with his 2016 intervention suggesting he could not go on from either side. by the way, this is such an odd bedfellow situation, several weeks ago, probably two days ago, many democrats would have said that he was responsible for the election of donald trump. >> yesterday there were democrats questions whether they had -- whether he had any credibility to begin with. >> now, of course, now that he's done, the conversation has turned the opposite way. >> i certainly understand that. but the firing of an fbi director, it's only the second time in history where that's happened. it's a big deal to do that. certainly director's comey's actions over the summer, there

is a right to criticize that. he personalized a professional investigation. that's why there's an ig investigation of him. i think the president would have been in a much better place if he let that run its course and used that as the reason to fire mr. comey if that's what he believed he had to do. >> joe, do you think there would have been outrage had the president fired james comey back in january when he decided to keep him on the job? >> no, i don't. i think that would have been understandable and appropriate as a new president wants to bring in his own team. but at time he was praising mr. comey for his work on the investigation. that's what makes all this troubling and smack of real politicalzation. time will tell on that. i have faith the fbi will continue to do its job. what could jeff sessions or president trump do now to instill credibility in the department itself and to the degree this investigation is ongoing? >> i'm not a political expert,

but it seems to me who he chooses will be a big deal. he will be looking to an fbi director overseeing an investigation of people related to his campaign. therefore the more credibility and professionalism that that person offers allows the political process to settle down and move forward. if that person looks to be subservient or kowtowed by the white house that will create a different set of problems for the president. >> where was the ig investigation? do we know anything about that? who is responsible for it? >> there's been reports on that. these things are done in a professional manner, they take time to pull everything together. i don't know exactly where it was, but it wasn't done yet. i would assume in the space of a few months, but i don't know. >> is this the kind of thing where i imagine career people in the fbi, if they don't feel that

things are being handled properly, talking about leaks, the president complained about leaks, is this the kind of thing where you think would hear more of that if that's the case? >> people talk about the saturday night massacre in the nixon time, i'm old enough to remember that. this is where deep throat came from. i don't think most professional investigators will be leaking and doing things like that. i think they'll continue to do their work, but that's a threat that would happen if it looks like there's political pressure on career investigators. >> john, appreciate your perspective. thank you. >> thank you. >> now to the top corporate story. disney's second quarter profit beating forecasts on the box office success of beauty and the beast and the new theme park in china but higher programming costs and subscriber loss at

espn weighed on results. in an interview with cnbc, bob iger acknowledged the rising cost of sports content and a drop in cable subscriptions but says he's still confident in espn. >> we will eventually 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's future. >> iger addressed the high-profile layoffs at espn. he said he wouldn't call them major layoffs because it was a few hundred people out of a few thousand. when we return, u.s. equity futures at this hour, they are down. the dow looking like it would open off 48 points. 49 points now. s&p 500 looking to open down as well.

nasdaq off just about a half important. a full rundown of the movers after the break. and a programming note, an exclusive interview with former treasury second stair jack lew he will be with us at 8:30 a.m. eastern time to talk about everything going on in washington and more. dear predictable, there's no other way to say this. it's over. i've found a permanent escape from monotony. together, we are perfectly balanced, our senses awake, our hearts racing as one. i know this is sudden, but they say: if you love something...

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speed, coverage, control. introducing xfinity xfi. find your awesome and change the way you wifi. >> every time i get accustomed towards low volatility, like at the end of the greenspan era, we think we have the levers under control. there is low risk in the world, something erupts to remind us that that idea that anybody is in control of anything is hubris. the low volatility itself might be a bubble of confidence. we won't know until we know.

>> that was lloyd blankfein speaking to wilfred frost yesterday on "power lunch." for more let's bring in julian emanuel from ubs as well as phil orlando from federated. guys, welcome. phil, the headlines there, trump firing james comey, your job is to make your clients money. does this jeopardize the markets or their confidence? >> raises a question in terms of timing and motivation. why now? why not when trump first came in office in middle of january. i don't think ultimately this will be anything more than noise, but we have to figure that out. theoretically there could be some volatility and uncertainty over the next couple of days. >> how much of the run since the election has been optimism about trump's agenda? i ask that because if this in any way redoes optimism around

the trump agenda, should that then knock the market at knees just a bit and we see some volatility creep in? >> optimism has been part of the run. make no mistake, the fact that earnings are absolutely stellar in the first quarter is a big part of it. no question, you see the confidence measures pick up. partly in anticipation that policy is going to be pro business, will be pro growth. to the extent these headlines are a distraction, that's where confidence may come in. if confidence slips, it makes these higher multiples that we have more difficult to sustain. >> does it reduce your optimism in the trump agenda? >> we have to see how things unfold. there's no question about the fact that the victory in the house last week was a sign that washington is figuring out how to get things done. it's a slow process. the market may have been too

optimistic coming into the beginning of the year about how the legislative process works. but it is moving forward. fwan, we'll have to see whether this is a distraction. >> phil, what will you tell your clients? if they call you and say, i wanted to get into the stock market. things are good about earnings. but there's so much dysfunction in d.c., i want to sit this one out. what would you say? >> stay the course. we just hit a record high in stocks this week. if we should get a meaningful correction, we would use that as a buying opportunity. but let's look at the facts. we're enjoying the best first quarter earnings season in five years. revenues up 7%, 8%. earnings up 15%. everyone is concerned about the punk first quarter. but that's a seasonal problem that the commerce department can't figure out. second quarter, we'll bounce back. if we can get the trump agenda in, which we fully expect will hatch, perhaps by the end of

this year, beginning of next, we're looking at trend line gdp growth of 10%. that's what we're ultimately investing for. >> do either of you have thoughts on disney? because we saw them last night. saw the numbers that had come out. there were concerns about espn. that raises questions about the entire category of these stocks. >> the disney espn issue has been out there for years. sports is not going away. media has been a great category in the stock market. disney performed well. you have a bit of a hiccup that doesn't mean disney's franchise is hurt. we still like the company. >> stocks pulled back about 2.3% this morning. what areas, what sectors coming out of the earnings area that you were talking about, do you think are ones to jump into? >> technology is very strong.

we like technology. it's reasonably valued. technology as well as healthcare is where the center of the off-shore cash that could be repatriated if we have tax reform lies. it weaves back into the narrative that we need to see the political discourse stay on track. we like technology. we also think in a rising rate environment the fed will hike in june. that financials will start working again. >> that's an interesting point. phil, you think the same things? >> absolutely. the areas that we like since the election are those leveraged to the improvement in the economy. financials and tech at the top of our list. we would throw energy and materials and industrials into that list. as the economy improves, these sectors will do better. >> phil and julian, thank you very much for coming in. >> thank you. >> thank you. when we return, president trump's firing of fbi director james comey raising questions about the gop policy agenda. republican strategist sarah

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welcome back. you're watching "squawk box" live from the nasdaq market site in times square. good morning. welcome back to "squawk box" on cnbc. look at u.s. equity futures at

this hour. some stocks to watch. dow looks like it would open off by 48 points. s&p 500 looking to open down about 2.5 points. nasdaq marginally up for now. stocks to watch, shares of yelp have tumbled after revenues fell short and the company offered weak revenue forecasts. and nvidia shares jumped. those chips, that's one of those stocks you wished you owned. up about 11% just today. also electronic arts posting better than expected earnings on a nearly 17% rise in quarterly revenue. >> i wonder if yelp is a victim of the google halo. if you use google maps to look

up wherever you are, in san francisco, l.a., you look up restaurants, google maps has their own google reviews in there. are you finding yourself going less and less to yelp? >> i know the yelp guys, i was never a switcher. >> you have any de-yelped? >> i have never yelped. that's not a statement about yelp. just my own -- >> you have other places you're looking for. profrnlg >> proclivities for how i find things online. overnight, president trump abruptly fires fbi director james comey. the white house saying late yesterday that the president terminated comey for how he handled an investigation into hillary clinton's use of a private e-mail server while secretary of state. comey's firing comes as the fbi is looking into allegations that president trump's campaign had

undisclosed ties to russia. president trump saying the fbi probe was not a factor in comey's dismissal. the chairman of the senate intelligence committee richard bursaing i am troubled by the timing and reasoning of comey's termination. and chuck schumer came out last night calling for a special prosecutor to investigate potential trump campaign ties to russia. deputy fbi director anthony mccabe will take over until a permanent replacement is found. the surprise firing of comey could derail the healthcare and tax agenda for the trump administration. joining us now is sarah fagan, a cnbc contributor. i know you were not a fan of candidate trump, but watching this play out, what's your take? >> it's dumfounding.

i think there's only a couple reasons that you would fire the fbi director. one, you thought he was incompetent. if that's t that's the case the trump administration has been making the last 24 hours, but also because he was investigating you for russia. even if you assume that their intentions were pure, and they fired him because of competence reasons, this just stinks to high heaven. it is poorly executed, poorly planned, poorly thought out. every time i think a lot of us who were trump detractors during the campaign start to get excited, get excited about what he's doing on healthcare and tax reform, he does something like this. it's just -- it's just striking. >> there's been points made by the "wall street journal" and the editorial board that the deputy ag was just confirmed, rob rosenstein. and they're saying that may be why, that he was just put in place on this. what's your response to that.

if you read the letter it seems this was actually quite well thought out. something thought for some time. yes, they were waiting for him to get in place to do this if that's the case, i don't understand why they wouldn't have laid the ground work for this in a much more thoughtful place. >> from a pr perspective? >> yes, give him the opportunity to resign. have members of congress calling for his resignation. but republicans should have started to say, look, in order to investigation russia properly, because of the fbi director's ties to the last election, we need somebody new. there was a public case to be made for his dismissal. but they have not done it. they just did it late in the evening yesterday, late in the afternoon yesterday. and this probably guarantees that there will be a special

prosecutor to investigate ties to russia. >> this certainly raificatainly pressure for that to be put out there. another guest cuttinged that there w suggested there was an ig investigation of comey and why not wait for that to come back? >> if you're the trump administration, that's the way to go about this. there is an active investigation, we're eagerly awaiting the results, and once that happens turn the chapter. this makes no sense politically and policy-wise. >> how much of this was a mistake in how it was executed, planned, because these are people who are not long-time washington operatives? >> i think it's a fair point. i look at it and think only really unintelligent people would fire him because of

russia. i think their motives are pure. they don't think comey hat confidence of the american people. there's some evidence for that. but why no one walked into the oval office and said, sir, you're making a huge mistake that will koths you yocost you your agenda. >> do we know that no one did that? maybe they did. >> maybe they did. but that's a bigger problem. if you have people around you that you don't listen to, then you need to get new people. >> your point earlier, why does it seem like this administration is largely one step forward one step back? we just passed a repeal of obamacare. the gop was cheering. now you have this. which pretty much -- if it doesn't eliminate the goodwill from that, wipes it off the headlines. >> it is confounding. i think what donald trump is doing on the courts, justice gorsu gorsuch, he's doing some great

things for conservatives, but you're right, it's hard to defend him when something this ham-handed comes down at 44:00 on a tuesday. makes zero sense. >> do you think the president's most ardent supporters have the same view as you on this? we're having this conversation now, but i wonder if those with the president and have been his greatest supporters thus far look at it in the same way? >> i think they fall into a couple camps. there are those folks who have been with trump and no matter what he does, it's the right decision. they can never see past that. i think there are probably some people in the white house, senior people in the white house scratching their heads saying how did this happen? why would we take the fbi director out in such a silly

fashion. the guy was in l.a., didn't even learn about -- learned about it on the tv, as a matter of professional courtesy it was poorly executed. >> to that point, you go back to the idea of wondering if this was -- i had heard reports that the white house was surprised by the backlash at this. maybe it's just not understanding the historical context or the professional way that washington would deal with something like this. >> yeah. it gets to your earlier question, which is that some folks working for donald trump has been around washington for quite some time. very few of them have white house experience. the way the white house interacts with the press and public is so different than what it's like on the campaign. we're seeing that play out in real time, that they're learning that. perhaps had there been somebody in the white house in a capacity that had worked in a previous white house or several white houses, they would know what the reaction would have been like

across the board. republicans are often just as critical as democrats on this you used the quote from burr, i think you will see lots of republicans come out today and be very critical of this decision. >> how would you advice this administration to try and fix things? what's the proper way of bringing somebody into the administration? what role would they play? what job? what function? >> i like a lot of the people working for him. i've known them for many years. we could bring in, call it a chief of staff or another senior adviser. there's so many of those now. i think the issue is a trump issue. he will have to decide he wants to get major tax reform done. he wants to see healthcare through, the process and signed into law, and he will have to start listening to people. we can bring in josh bolton or

andy card-like figure, but if he doesn't listen to them i'm not sure what good it will do. the most important thing he can do is get out of the sideshow and focus on getting the big things done. his legacy, if he got healthcare done, tax reform done, continued to put on these excellent judges on the court, it would be pretty hard to argue with the trump presidency and a trump ree re-electi re-election. yesterday was not a good day for his legacy. >> you think this makes a special counsel almost inevitab inevitable? >> you have to get the justice department to appoint it. they don't seem to feel public pressure to do things that may be logical to lots of people in washington. i think to get out of the box, the smart thing to do now pli political politically, particularly if you're not worried about ties to russia, business ties or

political ties, yeah, he should just appoint a special prosecutor so he takes this issue off the table. that would take this debate off the table. >> sara, great talking to you. >> thank you. on deck on "squawk box," ken auletta weighs in on disney's earnings report as well as the future of espn. then former treasury secretary, jack lew will join us on the "squawk" set. this is a cnbc interview you cannot afford to miss. that's coming up at 8:30 a.m. eastern time. and later on, robby mook served as hillary clinton's campaign manager what does he think of the comey firing? more "squawk box" when we come back. the power of a low volatility investing approach. the power of smart beta. power your client's portfolio with powershares. before investing, consider the fund's investment objectives, risks, charges and expenses.

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welcome back to "squawk box." time for the executive edge. the razor wars are heating up.

gillette launching a new service to compete with dollar shave club. gillette on demand will allow customers to either text for a shipment or subscribe to get every fourth order free. gillette says price points will be flexible and better than the other guy's. unilever acquired dollar shave club for $1 billion last year and has expanded the subscription razor service to include other grooming services. >> this is what i've been waiting for. a battle for razor blades. >> i'm a mach 3 to me -- >> i was a dollar shave club guy. great company, it was -- it just wasn't -- >> what about fusion. fusion is the highest end. too pricey. >> five is not more than three. five blades -- >> i have the sensitive irish skin. there's a reason why the mach 3 -- >> they have the aloe strip --

>> there's a reason why the mach 3 is locked up at in stores. >> it's so expensive. >> the fusion is really locked up. >> also? >> yeah. >> i never tried it. the mach 3 works. >> got it. >> okay. separately, how do you sleep at night? >> terribly on "squawk box" mornings. apple wants to make it easy. the company acquired bedit, the company that make asleep sensor. the sensor looks like a thin pad that users place between their sheets. it works with a phone or other device to track heart rate, awake time and snoring, and can use that data to wake users up at an optimal time. i used to have something like this. >> i know. you didn't like it. >> i had the different things for the wrist, then wee things, which has a mattress you put under yourself. and you can get one for -- if

you have two people, you can get separate ones. i don't understand how it works. >> i'm sorry, if you wake me up ten minutes early, i'm mad. >> we had peter thiel who had the device that clips to the pillowcase. >> my under armour thing, fitbit clone used to track sleep. i had to take it off. i was so stressed about what kind of sleep data i'd have that i wasn't sleeping. >> right. >> let's go back to chickens, get up with the sun. >> roosters? >> the oklahoman. >> now there are devices that will figure out how warm it s they'll -- or cold it is. >> in the room. >> they'll hook up to a nest system -- >> to make it cooler. >> make sure -- >> you know what optimal sleep temperature is? >> 68 degrees. >> i thought it was 63 degrees. >> if you take a shot shower

befo hot shower -- something wrong with that? >> if you take a shower. go to taxes and bob iger. earlier we showed you bob iger's comments on closing bell about the company's quarter and the strength of espn. iger also weighed in on tax reform and how it could impact disney's bottom line. >> we pay a federal tax rate above 30%, about $3 billion in federal taxes this year. the u.s. is not competitive with the rest of the world. we're the highest in the world. i would like our country to be focused on exporting brand usa to the rest of the world. the tourism business is important. being a welcomed place to the rest of the world. encouraging people to visit here, very, very important. that supportsa lot of

businesses and jobs. >> that's what we heard from a lot of business leaders, how this needs to be a tax reform bill that promotes spending, making sure we look at all things equally. a lot of voices will weigh in on this. a lot of different opinions. that's why this is such a difficult bill to get passed. the trump administration is trying to push forward with this. we'll see how much success they can have with that. how much of a setback the comey situation is. >> absolutely true. when we come back, we have more to talk about. global stock picks for your portfolio, our what's working series after the break. i'll talk about showers. >> showers. >> if you take a shot shower before you go to sleep, then your body becomes cold, apparently you go to sleep -- >> keep trying. as we head to the break, a quick check of what's happening in european markets. "squawk box" will be back in a moment.

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it is time to take a look at what's working. we like to know what's working. this time we're going to take a look at what's working on the world outside of the u.s. joining us right now is the

portfolio manager of amg managers international fund. good morning to you. >> good morning. >> we talk about this all the time. a lot of people have come in and said if you could invest in the u.s. or europe or elsewhere everyone says the value play is outside the u.s. >> mm-hmm. >> so tell us what is working outside of the u.s. right now. >> hmm. i mean there are various things which are working. the world is despite what public opinion is pretty global. >> right. >> and there are lots of opportunities out there. various stocks, one we can talk about would be sony. sony is a company which over the past few years has dramatically changed. led by fantastic leadership, the ceo and cfo have moved from having loss making divisions in mobile and pc and in tv, and now make over 50% of their profit from basically great franchises. ps4, and in music. >> so but you look at that stock chart and yes, it's worked. the question is will it continue working at that pace? or is it already built in -- baked into the cake?

>> it's about what you pay versus what you get. and basically, if you look at what management are forecasting for next year they're looking for 500 billion yen of operating profit. that puts the stock on 16 or 17 times earnings. that doesn't seem an egregiously cheap multiple on head line basis but those two divisions which i mentioned, the business in music, and the business in games, they've got key secular drivers. >> how much credit, by the way, if you go back in history, about three years now, do you give to dan loeb the activist investor who came in there and made some noise early on. >> exactly. he made some propositions. >> right. >> and he didn't get precisely what he wanted. >> but in some ways i wonder whether the success in some of the sort of strategies that pushed him to this place was in response to some of the things that he was talking about then. >> it might have been. i think it's more to do with the general environment in terms of corporate governance in japan. there's been a corporate governance code. there have been some big changes made by abe in terms of intensivizing his management to do the right things.

>> you also liked the amazon of china. >> that's one way to describe it. >> that's how some people describe it. >> yeah. it's a $55 billion market cap company. they have about 25% market share in the chinese e-commerce market behind alibaba and they followed the amazon-like business model. so far they're building out logistics. they have 250 logistics centers, and they own the inventory so they're just taking a commission. they own the inventory -- >> that's much more amazon-like -- alibaba is much more like ebay. >> exactly. they take a commission on sales typically speaking. >> but your business, when i say your business, jd is a much more capital intensive business. >> which has made it difficult for the company to consistently make profits over time. but what it has allowed is for 80% same or next-day delivery and the control of fake merchandise, of counterfeit goods which has been more of a problem for alibaba. just last quarter they grow growth merchandise value, the

value of goods they still on the platform by 42%. >> investors always anxious about investing in china because people don't know whether the numbers are real. >> yeah. >> do you believe them? >> we feel quite comfortable with it. we focus on cash flow. and cash flow is typically much, much harder to manipulate than accounting earnings. and when you look at jd's cash flow, at least on the core business, it actually exceeds its reported net income. >> inmar sat is your mother pick of the moment. >> yes. >> inmarsat is a satellite operator. generates revenues from the maritime, government, enterprise and aviation end markets. they're going through a process right now of renewing, a new constellation of satellites called global express is costing a huge amount of capital, about 25% of sales. but what we're seeing is that that is going to drop off, free cash flow is going to go up tremendously and they're going to have a high quality network. >> what do you think that stock could be worth? >> i think the stock's worth -- well we think the stock can generate about $500 million of free cash flow in a normalized

scenario. which puts the stock on over 10% free cash flow yield today. really quite attractive. substantial upside from here. >> we'll keep our eyes on all three of those. thanks for coming in. appreciate it. >> when we return, former fbi assistant director rons whoco will join us after the break. he'll weigh in on president trump's firing of james comey. later an exclusive interview with former treasury secretary jack lew joining us right here on the "squawk" set. we'll be right back. so new touch screens... and biometrics. in 574 branches. all done by... yesterday. ♪ ♪ banks aren't just undergoing a face lift. they're undergoing a transformation. a data fueled, security driven shift in applications and customer experience. which is why comcast business delivers consistent network performance and speed

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you're fired.

president trump abruptly letting go of fbi director james comey. the search for a replacement has begun. we have a live report from washington and market reaction straight ahead. disney shares dropping as concerns about espn subscribers linger. the challenges ahead for bob iger and company. and amazon is looking for robots to work its warehouse jungle. the details straight ashaed as the second hour of "squawk box" begins right now. ♪ live from new york, where business never sleeps, this is "squawk box." good morning, welcome back to "squawk box" right here on cnbc. we're lynch at the nasdaq marketsite in times square i'm andrew ross sorkin along with becky quick. brian sullivan is hanging out with us today. joe is off. he will be back later. take a look at the futures at this hour. dow looks like it would open off close to 56 points down now. nasdaq will open off down about 2 points and the s&p 500 down

about 3 1/2 points. brian? >> all right to your top story now. president donald trump firing fbi director james comey. many congressional members on both sides of the aisle expressing outrage at the surprise announcement. the white house now beginning a search for comey's successor. for more on this developing story we're joined by eamon javers in washington. eamon, it is fluid. there's a lot of news and a lot of criticism coming on both sides. >> yeah, that's right, brian. we'll get to some of that. this was a development last night that stunned official washington. caught law enforcement officials by surprise. it caught political officials by surprise. it caught intelligence officials by surprise last night. all of washington waking up this morning trying to process what this means politically. it was a presidency defining decision by donald trump last night to take decisive action and fire the fbi director. here's how donald trump put it in his letter to fbi director james comey. he said, while i greatly appreciate you informing me on three separate occasions, that i am not under investigation, i

nevertheless concur with the jurmt of the department of justice that you are not able to effectively lead the bureau. it is essential that we find new leadership for the fbi that restores public trust and confidence in its vital law enforcement mission. now white house press secretary sean spicer explained the developments to nbc news' peter alexander in an interview at the white house last night. here's how he described events. >> my understanding is the president was presented with the recommendations of the deputy attorney general. he was a career prosecutor, served as u.s. attorney for maryland under president obama, who oversees the fbi, he made that recommendation to the attorney general. the attorney general forwarded it to the president today. the president concurred. >> scholars are comparing this to nixon's saturday night massacre. what do you make of those compare sans? >> well i think that's ridiculous. >> now the political challenge for this white house, though, is that even though the deputy attorney general cited as a reason for firing james comey his handling of the hillary clinton e-mail investigation in july and last fall, nonetheless,

the president himself praised james comey and his handling of that same investigation throughout the fall and earlier this year. take a look at some of what the president has had to say about james comey in the months leading up to this decision to fire him. >> 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. but i'll 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. and her inner circle. he's become more famous than me.

>> now a number of republicans put out statements immediately after the news broke of support for the president's decision here. but crucially, a number did not. and expressed some reservations or opposition including senator richard burr who was involved in the senate's investigation into russian actions in the 2016 election. he pointed out he is troubled by the timing and reasoning of director comey's termination. senator john mccain said removal of director comey only confirms need for select committee to investigate russia's interference in 2016 elections. senator jeff flake said i've spent the last several hours trying to find an acceptable rationale for the timing of comey's firing. i just can't do it. and congressman justin amash pointing out my staff and i are reviewing information to establish an independent commission on russia. the second paragraph of this letter is bizarre. referring to donald trump's letter to james comey. this caught everybody by surprise and we'll wait for more

developments this morning. i can tell you i talked to sarah huckabee sanders, the white house spokesperson this morning, who said that she was not aware of whether or not the president had directed this review by the deputy attorney general of james comey. so we'll wait and see more from the white house about how this decision came about and why it was announced so suddenly last night. >> eamon, thank you very much. eamon javers. joining us right now on the phone is ron hosko, former assistant fbi director under robert mueller and james comey. he is now the president of the law enforcement legal defense fund and ron, thank you for joining us today. what's your reaction to this move? >> it was like, i think, my former colleagues over at the fbi, shocked certainly a certain amount of sadness. i worked for jim comey. i thought he was a patriot. a good american trying to do the right thing during very troubled politicized, angry times in america.

and i trackly thought i couldn't use some of the words was pondering about how they did this. but i thought it was disrespectful to him, to the organization. you know, jim comey was at a -- at the los angeles field office at a hiring event, and essentially learned about his own termination when tv screens were on behind him in the room. and to me that is a credibly disrespectful for someone who meant this much to the organization and to america. >> yeah, very surprising to hear how that was kind of disseminated and how he found out about it. we had a guest earlier who posited that maybe this was just kind of a ham-handed execution of this situation from people who are not washington insiders. do you buy that? >> well, i think it was -- there were discussions. i mean, i don't believe for a

second that rod rosenstein in his second or third week on the job as the deputy attorney general, you know, had nothing to do yesterday and started thinking about how jim comey handled the clinton matter. that being said, you know, i think there are reasonable people out there, including some former colleagues and probably some former current fbi folks who thought the director went too far last july in his comments about an unindicted subject. hillary clinton. for whatever you believe about the underlying case, i certainly have my own beliefs about it. you know, that was a bridge too far for a lot of folks that would say that his comments are really reserved for post-indictment, post-conviction, or -- and part of the comments would have been made by a prosecutor, not by the fbi. as you know, the fbi is the investigative agency, not the

prosecutors. there's no doubt that loretta lynch committed a cardinal sin by meeting with bill clinton on her plane at a time when the american public, i think, was concerned about whether there was a legitimate, you know, driven focused, thorough investigation of hillary, or whether politics would drive the result. she only added emphasis to those concerns, and i think the director thought he could pull that back, you know, into the mainstream and tell america how serious the investigation was. looked at in another way you could see people saying he went way too far. he took over the job of the prosecutor. he shouldn't have done that. but again, you know, that was nine months ago. so you've had -- >> ron -- >> -- to correct that. >> you said you have your own views about it. i just want to follow up on what those views were as to whether you think that comey should have then come out publicly? >> i personally don't think he

should have gone as far as he did last july. but i also believe that the original sin in the matter was hillary clinton's and her inner circle, that she controlled much of the timing about the investigation which, of course, had only been disclosed the year before and that comey and the fbi were under a time clock, and unfortunately what he said then i think there's certainly plenty of america, very friends in this camp, too, they didn't care what she did or didn't do. they just wanted her indicted. and his failure to indict or recommend indictment, i think to them meant failure. that the fbi had stained itself there. so you know, there are opinions all over the place, including what we're hearing today. you know who have thought that all these democrat senators and congressmen would have been lining imon jim comey's side. >> you know the democrats were furious with jim comey ahead of the election.

republicans became furious with jim comey after the election when he refused to indict hillary clinton. was your opinion, regardless of the way he let go which most would view extremely as distasteful, was james comey competent at his job? >> oh, unquestionably. i worked for jim for probably my last eight months in the bureau. he is an incredibly smart man. he is apolitical. you know, politics or the end -- a desired end result, does not come up in our investigations. and has, you know, i ran criminal. so we had tense of thousands of criminal cases across the country, including some that were very sensitive. jim comey's not going to come into the room and say, ron this is how i'd like this case to come out. it doesn't work like that. he'd never, ever do that. he's a patriot. he walked away from a pretty lucrative job to do this, and he wanted to do it for ten years. >> right. >> and i think was very well equipped to do the job. >> that lucrative job we should

mention was that bridgewater. ron, help us with this, now that he's out, we talked about it earlier, if you were an fbi agent working on some of these russian -- russia issues, and somebody came you to and said, we're either shutting this down or we're going to look at it differently, would -- would -- would that happen or would this continue apace? what do you think will happen? in that regard? >> i think the agents who are assigned the case, this case, or you know, the russia investigation or any case will move full speed ahead in whatever their tasking is. and i think that is really the greatness of the fbi that, you know, it's bigger than one person. the fbi will survive this and you know, hopefully there will be the right person selected to lead it to the future. i think where you will see, you will hear, you know, words of a mutiny is if you have the director, who is political, who

is striving toward a political end, that means let's go investigate person "a" but shut down the case on organization "b," that's when you will have a mutiny from within the fbi. >> ron, his incumbent right now, andrew mccabe, he is currently the acting director of the fbi. he needs to be confirmed. andrew mccabe is a lifelong democrat, his wife ran for senate in the state of virginia. obviously you've got bad feelings now on both sides of the aisle. will andrew mccabe be confirmed? >> i don't -- i think andy is in there as an acting. he's really an interim -- >> he's a short-termer? >> yeah. and so i don't know that that needs any kind of senate confirmation. i would be very surprised to see andy nominated or i couldn't imagine that proceeding. because of what -- what's already been said. and even if andy didn't make any missteps, and the appearance enough is i think disqualifying,

andy's a very capable guy and can certainly run and is today running the organization. but i would see somebody coming from outside of the organization and my sincere hope is that they pick the right person and that there could be a strong consensus around the person, although, in my own mind i can't imagine anybody wanting this job, because you can expect that a blow torch will be put on you every day to bend you to some particular point of view and the job of director -- >> hey, ron, since you've been speaking the president has tweeted again about this. he says the democrats have said some of the worst things about james comey including the fact that he should be fired. but now they play so sad. maybe that just emphasizes your point, that no matter who is in this job the divisions between the two sides is going to make this a political nightmare for whoever gets put into this position. right? >> absolutely. i work just outside of d.c. but

i'm exposed to d.c. politics every day. there's a hypocrisy in this town. is miles and miles -- you see them, the various speakers switching sides. you know i thought one of the senators last week made an interesting comment after the hearing. i think it was senator kennedy from louisiana who said, you know, they were asking him about his confidence in jim comey. and he expressed confidence in the director and said i have to look at it like this. if he's defending people on both sides, he's probably an equal opportunity offender and he's probably doing the right thing. in ways that spoke the truth. it cannot be about who you're offending. the fbi has guidelines. those guidelines are there to preserve all of our civil liberties. evildoers who want to bring down our country.

>> we've got to go but did you think there should be an independent investigator before a new fbi head is confirmed? >> yeah, i would like to see some sort of independent commission of people we can trust. i'd love to see who those people are. because these politicians in d.c. cannot do it. they cannot do it. >> ron, thank you for your time today. we do appreciate your perspective. >> my pleasure. >> the james comey obviously dominating the headlines. there are other news of note this morning. mortgage applications rose 2.4% last week. both new purchase and refi activity did rise. average 30-year mortgage rates remain unchanged at 4.23%. abercrombie & fitch is reportedly seeking a buyer. reuters reports the company is working to field takeover bids from other retailers. however sources say there is no assurance that any deal will get done. and snapchat will issue its first quarterly report since it went public. snap, the parent company, expected to report a loss of 19 cents a share on revenue of $158

million. investors hoping for a beat. snap shares largely been a disappointment to many investors. that stock price still below where it closed on its first day of trading. whole foods and 21st century fox also own companies that will report this afternoon. becky? when we return, dig nothing disney's results. earnings beating expectations. but disappointing results at its cable networks like espn sending the stock lower after the bell. is it time to let it go? we're going to talk all things disney right after the break. in the meantime check out the futures this morning. been a little bit weaker with dow futures down by about 54 points. s&p just over 3, the nasdaq less than 1 point. you're watching "squawk box" on cnbc. most etfs only track a benchmark. flexshares etfs are built around the way investors think. with objectives like building capital for the future,

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here's what he had to say. >> we will eventually be in a direct to consumer business for espn product. we hope to launch one on our band tech platform before the end of this year. we're increasing engagement with our apps significantly. with that comes not only more brand affinity but more advertising. and we're running the business more efficiently. so we actually are confident in espn's future. >> joining us right now is ken auletta a writer at the new yorker, of course, one of the great legends in this business who covered the media business. he's confident in the future of disney. would you be? >> yeah, i would be. i mean, first of all, they grew. they have four income streams. and all four of them grew. espn's a problem and if you listen to the earnings call yesterday, iger spent the first ten or so minutes being defensive. before he was even asked a question, talking about espn and the problems. they have real problems. people are debundling, and espn's expensive.

they've overpaid for sports rights. so it's a problem. they've laid off 100 people in the last month. >> will they -- obviously they will make it through the transition, but will they make it through the transition anden able to continue to maintain the kinds of margins that they've had historically? >> well i mean, they're a strong company. i mean, they -- people worried before the earnings call yesterday about shanghai, disney world shanghai. did very well. you know, it's making money. it's going to break even by the end of the year in the start-up phase. that's pretty amazing. movies are growing. and the television is still growing. espn is a long-term problem. and he's trying to address that. whether he succeeds -- >> that's a fundamental question which is do you believe that viewers will be willing to pay on an a la carte basis, not $7 or $8 per sub, which is effectively what all of us are make irrespective of whether you watch espn, but whether people would be prepared to pay $21,

$28 a month to get it to effectively make up for everybody else who isn't. >> i do not. i think the bundle, the cable bundle is coming apart. and people can't afford to pay all these subscriptions. you've got broadband, you've got electricity, you've got apps, you've got all these subscriptions. and at some point you get squeezed and say i can't afford it. >> what does that say about the business overall? where are there going to be winners and losers? not just disney but beyond that. >> he's racing as others are into streaming and internet television. can i move espn from the cable bundle to, you know, playstations, et cetera. and will he succeed at that? we don't know yet. >> i watch cnbc at home in the morning on apple tv. you can stream cnbc on their app on apple. that's how i watch it. in my office -- >> only if you have cable. >> yeah, but i have cable. but you don't have to have cable on every tv now. few have three cable boxes you

can cut one if you want. >> you can save the cable box fee but you have to have the cable subscription. >> you do in order to access the apps because you've got to put in the code. but i guess to becky's point, ken,maybe the dirty secret, if espn is losing subscribers, they're on the first tier of cable. they're on basic cable. >> right. >> does that mean others -- you can't just cut espn. you have to cut all or nothing. >> what does it say about the cable company? >> the cable companies have real issues going on. the bundle is expensive. and people are increasingly saying, you know, i want to slim it down. i don't want to pay six or seven dollars just for the espn, which i don't even want. >> and listen, you know, again, we work for comcast so you shouldn't say this on the air but we all look at it. we all have our own finances. you say if i do $8.99 for netflix or hulu, plus hbo go, plus maybe espn, plus maybe whatever it might be, pretty soon i get to the cost, the same price, as the -- >> as the bundle. >> as the bundle. >> without all of the stuff

that's in the bundle, by the way. >> no the one thing that hillary and donald trump agreed on in the campaign is that the middle class, and the vast majority of americans, their income is frozen. they can't afford. so the assumption that they're going to continue to pay more and more for subscriptions is kind of nuts. they're not going to. and then what do they turn to? it's a real question. i think one of the things that i observe when i watch the analysts, and i listen in on this, this analyst call, oftentimes it's kind of pointelleism without a point and to focus on the fact that they're down a few dollars. >> right. >> in projections that were made based on guesses, anyway, i mean i'm denying they have confidence but this kind of a craziness here. and it's a craziness that wall street is focused on short-term. disney is a company long-term is a strong company. >> by the way, a ceo who pace too much attention to the short-term is neglecting the long-term. >> totally. and you just came back from warren buffett which is the opposite of that. >> would you be an advocate and people have talked about it, i

think sort of dim the speculation that a walt disney should end up acquiring something like a netflix to actually effectively acquire a true business-to-consumer platform with which then they can put all of their content, espn and everything else, onto? >> well, i think one of the things that's going on, and it's in part spurred by the at&t acquisition of time warner, and we saw this in 2000 with the acquisition of aol by time warner, people in the media world are all worried that the music play stop and they won't have a chair. so they're all saying we have to get bigger. so everyone is out there, apple is out there with hundreds of millions of -- billions of dollars of cash, will they buy netflix? will they buy disney? what about amazon? what about google. what about facebook. >> -- anybody by netflix. you're in the business of billions, as well -- pace disney for its or pays whatever, or you buy somebody who is already

paying you money? >> i think the issue on whether to buy netflix or not is more of a multiple story which is the type of investor that's behind netflix and the multiple compared to disney is a different story. anyway, ken auletta we love you. coming up when we return, amazon's search for row bolts. we're going to have some details when we return and who will replace james comey as fbi director. we're going to have the latest in the shake-up in washington. what it 3450e7bs for national security and the markets. "squawk" returns. this is my headquarters.

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go to xfinity.com/myaccount ♪ welcome to the jungle this morning. we are back it's "squawk box" on cnbc live at the nasdaq marketsite in times square. among the stories that are front and center at this hour we're now about an hour away from the latest data on import and export prices. those numbers not always market moving but the fed keeping an eye on inflation related data. as it considers its next rate move. and then another number the treasury will be watching today crude oil inventories. the energy department's weekly look coming out at 10:30 a.m. eastern time. crude higher this morning. you can take a look, wti crude at 46.37 but prices have been pressured recently because of

ongoing concerns about oversupply. also take a look at southwest airlines. it's now rolling out a new reservation system replacing 30-year-old technology. the carrier says so far so good. implementation of a new system comes after technical outage last july that forced it to cancel 2300 flights over four days. of course, none of this affects how much it costs to get into the "a" section of a southwest flight which we've all talked about on this show many times. and amazon covering a quarter of a million dollars to teams who invent an advanced robot designed to work in fulfillment centers. the company has chosen 16 finalists for a tournament it is organizing later this year. participants will need to show that their robots and software can recognize objects, grab them, execute tasks, detect errors and recover as needed. amazon currently has more than 80,000 automated robots in its warehouses but it's looking for even more advanced systems, and you know, i say it all the time that robots are going to take everybody's jobs and i know everyone thinks that i'm some kind of malthusian argument but

it's happening. >> i agree with you 100%. i'm not in that -- >> you are sitting in joseph kernen's seat and you have the wrong answer. >> i'm sitting in joe kernen's seat. it is a little lower than normal. but i am here. >> i'm saying if you were channeling joseph -- >> i'm not. there's no channel. >> okay. anyway. >> no channel. back to this morning's top story, president trump firing fbi director james comey. the president tweeting just minutes ago, quote, comey lost the confidence of almost everyone in washington, republican, democrat alike. when things calm down they will be thanking me. end quote. joining us now is mark brzezinski, former u.s. ambassador to sweden, also served as national security council staff in the clinton white house. mark thanks for joining us. >> thank you for having me. >> what does this signal to our allies in europe, our allies in scandinavia, and to russian officials? >> you do a survey of the newspapers around the world this morning, of twitter feeds, you see the reaction that the chaos,

and turbulence in washington, cannot be underestimated. that's the reaction of folks overseas. and that's important. >> are they nervous? do they find it interesting? do they find it amusing? do they find it frightening? >> they are anxious and uncertain and i'm sure that they're working hard to interpret what could be seen as arbitrary behavior on the part of the president. that's relevant. because we face a complex situation overseas. we face simultaneous challenges in syria, in russia, and north korea. these aren't just american challenges. these are international challenges. we want our international partners to join us. they will if they feel that they can trust us. and that there's a certain policymaking process in washington. >> okay. >> that hasn't been thrown -- >> you're a global guy, mark. you're a global guy. we've had sally yates premoved. now we have james comey removed. but these are all largely domestic agencies.

does what's happening domestically play or have an impact on international relations and investigations? >> we've also had a national security adviser removed within 24 days on the job and most of the foreign policy slots in the trump administration are empty. that creates great uncertainty, and question marks in the minds of our partners around the world. that's incredibly important because we want our partners to join us in word and deed. and they will only do so if they feel that we're -- if we're up to the job. you take a look at the international markets, in certain ways, the first, you know, 100 days of the trump administration people have looked in washington, and followed it, but there has not been dramatic anxiety pertaining to it. i've worked for two presidents, one of which was under investigation by special prosecutor, the other of which was not. president clinton and president obama respectively. i can tell you that when the special prosecutor begins to

undertake an investigation of a white house, it in certain ways stops the train. under president obama we had nothing like that so it was much more easy to manage -- >> meaning you were not able to get your administration's agenda passed once clinton became under the focus of a special investigation. >> becky in certain ways, an investigation freezes the situation. not entirely. but it affects everything. >> mark -- >> we have a trump administration that wants to do an infrastructure plan. a tax plan. and so forth. an investigation, particularly pertaining to overseas manipulation of our constitutional process, that can affect a lot of things. >> mark, you know, i don't know if you think the market's efficient or not, but for reasons that i have to say have vexed me, the vix, which measures volatility has been remarkably low. for many, many years the business community talked about how there was remarkable uncertainty in the world.

>> right. >> and now, despite the politics that you're talking about, people think that there's even more -- to some degree there's probably more certainty or less uncertainty than ever before. >> right. >> or less uncertainty than we've had since frankly, you know, before the financial crisis. does that make sense to you or not? >> it's a delicate time, andrew in certain ways. i think that there's been in certain ways calm despite a chaotic set of circumstances in the first 100 days of the trump administration. a constitutional crisis would change that. which depends on how the administration handles this very delicate moment in the next couple of weeks. now, that's in washington. you have to remember that it's an american goal to promote democracy and the rule of law around the world. we zero in around the world whether there's supremacy of law to power. >> i suggest you to rex tillerson may not completely agree with you.

meaning if you listen to what he said just two weeks ago, to his own state department in terms of how we are going to approach the rest of the world, the idea of a values oriented policy, seems to be not the first priority. >> well, but you know he was talking about democracy promotion as an overseas development assistance focus and initiative. i'm talking about the model of the united states as a rule of law based democracy around the world for other countries to aspire to -- >> mark, let me ask you this. a lot of -- we've had other guests who have suggested this morning that this could be -- that this is a huge surprise to the prumz that people have reacted the way that they have. maybe it's because they're washington outsiders. when you have outsiders who come and try and change things this is part of what gets broken along the way just looking at donald trump's twitter feed this morning he continues to tweet things. ten minutes ago he said comey lost the confidence of almost everyone in washington, republican and democrat alike.

when things calm down they will be thanking me. and then he just retweeted something from the drudge report, is this not knowing how things work, and being someone who's trying to change how things work, is this the type of thing that happens? >> well you know, this didn't occur in a vacuum. this occurs in the course of 100 days plus of rather chaotic personnel and policymaking process. again, personnel, people have been fired. we've talked about that. people haven't been put in slots in the administration. and in terms of policies, you know, head snapping changes in policy on russia, on north korea, on syria, if you're an overseas partner of the united states, you have to wonder whether there's long-term continuity to either the people, or the policy, of the trump agenda. >> let's talk about internationally you mentioned syria, you mentioned north korea, mark. here's the thing, you've got obviously kim jong-un is trying to flex his muscle right now. >> that's right. >> you've got the syrian issue.

and we made a strike against them. but, world leaders are trying to sum up the measure of prime minister president trump right now. is there a concern they're looking in, kim jong-un or whoever it is, saying they can't get their doemsics house in order, this is our opportunity to exert leverage? >> two things. one, if you're an overseas dictator, you take a look at washington and as you go, there i go, as well. so it's incredibly important for the trump administration to frame the decisions and acts that they've done in a rule of law context. and to explain that this is not arbitrary behavior. two you mentioned north korea. we absolutely need the help of not just the chinese but other countries that border north korea, south korea and russia. as well as the broader international community. and it will take a, in certain ways, change in calculus on the part of the chinese that -- who

up to now have been most concerned about regime change, and the collapse of the north korean system, versus less concerned about their development for the nuclear program. for them to change their calculus, they have to believe that there will be continuity in washington in terms of this administration. i wonder if there are question marks in the minds of the president xi administration based in beijing based on what they're seeing. >> mark, what happens if i told you there are certain people in the white house who would say this is part of the strategy. meaning what looks like whiplash to you or to many of our viewers is a -- and the idea of the what seems like inconsistency, actually is a strategy, which is to say that it creates bargaining power in a way that consistency may not. >> right. >> not an argument i would make but i'm just suggesting to you that i've heard that argument made and i think it's worth talking about. >> sure. and you know, andrew, great question. but to argue my anecdote with you, i've gotten just too many

calls from european officials, from middle eastern business people, asking, what is going on? in washington. this is inexplicable, and what -- >> what do you say to them? >> what is the -- what are the principles that inform this particular presidency's policies? and i think that what we've seen is quite frankly that this is a work in progress. at best. and it is imperative for the administration and just generally, people who have interests overseas to understand that there is an absolute benefit in this being framed in a legally certain rule of law context. it's how we want markets to operate overseas, for our investments, and quite frankly, it's what our partners want to see out of washington, d.c. >> all right. >> mark it was a pleasure to have you on. mark brzezinski. >> thank you for having me. >> tell your sister i said hello. >> i will. >> sometimes i see her in

person. >> i'm proud of her. thank you. when we return market reaction to the firing of fbi director james comey. we will hear from two market pros right after the break. and later former treasury secretary jack lew will be joining us for a special interview. his thoughts on the president's handling of the economy and much more. take a look at the futures. under a little bit of pressure this morning. actually the nasdaq has just turned positive up by almost two points above fair value. dow futures down by almost 50. s&p down by 2. "squawk box" will be right back. in these turbulent times, do you focus on today's headwinds? or plan for tomorrow? at kpmg, we believe success requires both. with our broad range of services and industry expertise, kpmg can help you anticipate tomorrow and deliver today. kpmg.

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welcome back, everybody. investors have a lot to focus on this morning. earning, the firing of james comey, north korea's threat of another nuclear test, and much more. joining us right now is tom manning the president and ceo of fl putnam investment management company. also gabriela santos, who is global market strategist at jpmorgan funds. gabriela, why don't we start with you. where are you expecting returns for u.s. stocks this year? >> so, if we think about just where the u.s. economy is at this point, next month we'll be starting the ninth year of the expansion, so we're certainly in a much more mature phase here, both for the economy, as well as earnings growth. so if we just think about that context we're expecting earnings

growth in the mid single digits for this year and the next few years, as well. and with valuations a little bit above average that suggests returns in the mid single digits from here on out. >> long in the tooth but not dead is what you're saying? >> not dead. because the fundamentals are still solid, right? companies are still looking lean. and are still able to grow their earnings at a decent pace. but it does mean for investors that you have to be more selective and it has to mean that you have to be looking overseas, as well, for some more opportunities. >> tom, that is what you're doing. you think overseas there are better opportunities. >> well, if you look at the valuation disdiscrepancy between the united states and the rest of the world, it's large. it's, you know, by some calculations, it's 40-year discrepancy in terms of the margin. the way we're looking at it we haven't seen these types of valuation discrepancies in about 20 years. to gabriela's point we do think that the u.s. can continue to move higher. but valuations are stretched. growth is still somewhat anemic and we do think that better opportunities are available outside the shores of the united states. >> where? >> virtually everywhere.

most pockets of the world, i think if you look at what's happened so far this year, you're seeing most of the world outperform the united states. obviously we've had fairly strong returns, very strong returns so far year-to-date here. but, the rest of the world is outperforming us, and part of it's because the dollar growth or the strength of their dollar has abated. >> that's the point. spain's up 17%, germany's up 10%, france is up 10%, every major market in europe is not only up year-to-date but it is up more than the dow jones industrial average. why do you think the valuations are still attractive given that we had a big run already? >> we have had a big run but if you go back to look at where we've come from since 2008 the united states has outperformed the rest of the world by over 100%. and it's -- there's a tremendous amount of opportunity i think overseas that we just don't necessarily see here in the united states. the next dollar is going overseas in our portfolio. >> that's a phenomenal data point last week as we looked at

the april pmi. the u.s. still doing all right but the world ex-u.s. is now surpassing the u.s. pmi. so for the first time in six years the rest of the world is actually accelerating faster. >> the good news on that means that the rest of the world is not going to in turn drag down the united states economy, right? >> also correct. it's also good news for the u.s. and good news for overseas investors as well. >> there's opportunity for multiple expansion overseas that may not necessarily be here in the united states. think of where multiples are today. we're going to need to see multiples rise from here. or economic growth accelerate for u.s. stocks to be able to produce the types of returns we've seen the last few years. we don't necessarily see that that's going to happen. >> what would change your mind either about the growth potential for overseas markets, or what would potentially change your mind about a stronger growth sector here in the united states? >> well, if you look at the earnings this quarter, obviously very strong. so that acceleration if we can see that continue then i think

the multiples that we see here can be supported and potentially expand. we're not saying that the u.s. is not going to produce positive rates of return. what could change that is some of the things we've been seeing over the last few days. obviously the vix is incredibly low. we may have an air pocket on to the valuation of the u.s. i think the markets are vulnerable to a shock. and we know as the u.s. goes the rest of the world goes, so in that type of a scenario the international markets may not perform better than the united states. i think it's really in >> would they perform course? >> they could and historically they have in those types of markets where we witness shocks. so, i'm not sure history's going to change in that regard. but if things stay stable the markets will likely move forward. >> gabriela, do you model all this stuff going on in d.c. at all? do you view it as a side show, do you look at it and go, oh, okay, a lot of stuff happening in the beltway, that's nice. earnings over fundamentals or does it have a material role in

how you value stocks? >> well the way we start is with the economy and the earnings backdrop that we have right now. and that we've had as we were saying for almost nine years at this point. and from there we do pay attention to what's going on in d.c. in terms of the marginal improvement that could give economic growth or earnings growth. but it is not the deal end-all in terms of thinking about investment for us. >> gabriela, tom, thank you both. >> thank you. >> all right coming up we're going to run you through a list of stocks on the move this morning. believe it or not there are a lot of stocks on the move this morning including a little move by apple. and at the top of the hour what the firing of james comey could mean for the president's pro-growth agenda, and who might replace comey on a long-term basis. and later on, the interview you cannot afford to miss, especially this morning. former treasury secretary jack lew will be your special guest. that interview coming up exclusively 8:30 a.m. this morning eastern time. "squawk box" returns after this short break.

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♪ they know me here on "squawk box." thank you for the rush. let's take a look at stocks to watch this morning. beauty products maker cote reporting quarterly profit of 16 cents per share. results driven by strength in its luxury products division. norwegian cruise lines beating estimates on strong bookings, particularly in the caribbean. norwegian earned 40 cents a

share. three cents better than the wall street consensus forecast. andrew -- by the way quickly on apple. i mentioned it here, jim cramers abeen tweeting about it, no downgrade that i can see but apple is down 0.6 of 1%. yes it is true apple shares are allowed to go down once in awhile. >> coming up more on the firing of fbi chief james comey. we're going to have some market reaction. find out who could be replacing them. then at 8:30 we may ask him the same question. former treasury secretary jack lew is going to join us for a very special interview. the economy, fed, deregulation, china, the strong dollar, and everything washington. back in a moment. i count on my dell small business advisor

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fbi shake-up, president trump abruptly firing james comey. the fallout plus reaction from former hillary clinton campaign manager robby mook. jack lew speaks out on tax reform, trade, and regulation. >> and more trouble at the house of the mouse. shares of disney falling. we'll tell you why corn cutters could be to blame as the final hour of "squawk box" begins right now. live from the most powerful city in the world, new york,

this is "squawk box." good morning, welcome back to "squawk box" right here on cnbc. we're live at the nasdaq marketsite in times square i'm andrew ross sorkin along with becky quick. brian sullivan is in today for joseph kernen. take a quick look at futures right now. we are in the red. dow looks like it would open down about 47 points. nasdaq would open up, s&p 500 off just marginally. 10-year note right now trading at, there you have it 2.376. brian? >> all right. now to today's corporate stories. shares of disney are under pressure off more than 2% this morning. yes, disney did top earnings expectations, but revenue did fall a little bit below the forecast. higher programming costs, and some subscriber loss at espn weighing on results. on your economic agenda import and export prices out at 8:30 eastern time and later on look for the april federal budget statement at 2:00 p.m. eastern

time. and if your twitter feed looks a little bit different this morning here's why. twitter announcing it has started using artificial intelligence to recommend tweets that it will -- thinks you'll want to see. the announcement comes just a week after billionaire mark cuban told cnbc that he recently began buying twitter stock because he believed, quote, they finally got their act together with ai. becky? >> let's talk about some stocks to watch today. shares of yelp stumbling after revenue fell short and the company offered a weak revenue forecast, as well. the negative results were due in part to a wave of local advertisers departures, in january and february. let's check out shares of nvidia. the company seeing its revenue rise topping wall street forecasts. the company contributing its success to a portfolio of products that powered gaming pcs and consoles, virtual reality, ai, and self-driving cars. and that stock is up by almost 12% just today electronic arts posting better than expected earnings on

nearly 17% gains in quarterly revenue. video game publisher is benefitting from a transaction to digital sales, and that stock is up by over 8%. all right, meantime the volatility index better known as the vix, better known as the fear gauge, touching its lowest level since 1993. joining us to talk more about it, tim freeman partner at elevation llc. as our viewers of power lunch know i'm skeptical as to whether the vix even matters anymore because of the shift in options activity, hedging, and passive and etf investing. that said you're here because you think it does matter. if so, why is it at ten? >> first and foremost, realize volatility has been in the 2% to 7% range. so a 9% to 10% vix is actually quite normal and not that unexpected. i think the biggest question that we need to ask is why is real-life volatility so low. the great thing about all prices

is there is information there, and there's great information in the vix index price right now. it is telling us, you know, that certain things matter and certain things don't. what matters right now is public policy. option market makers love time lines. we luove events and discerning what price moves we're going to get off those events. right now we're in a time where public policy matters more than anything else. the fed has put a put in the market for years, right? we've really turned the market into a huge passive investment vehicle, right? everybody is sitting there, and if there's any risk to the market, the first reaction is to sit and watch and wait because the fed has been there. also, because it is a -- it's trading like a passive market, passive investors don't necessarily listen to every single sound bite that comes out daily. right? their time horizon is very different. so the market is faced with some, in the vix's pricing public policy uncertainty -- >> okay, let's get -- i get that about the vix and i get that about passive investing. i'm not saying that volatility shouldn't be low or high.

i have no idea. you would know. however, with this move to passive investing. with all the etfs out there, isn't there an underlying structural risk to this market? given everybody's so calm and everybody's so in don't worry you're in an etf, andrew, everything's going to be fine. if everybody starts selling, is there underlying liquidity there to meet investor demand. >> absolutely not. >> that's scary -- >> it is incredibly scary. right. it is incredibly scary. who is the natural buyer when people start to exit. we'll have relative value. we'll have people talk about well i'll be in europe versus the u.s. or u.s. versus europe ar oish yeah or e.m. versus developed, value versus growth et cetera. but we have a wall of money trying to chase assets. we do not have enough investable assets globally to put our money. so as a result we're going to

see low volatility levels, low rate levels. we're going to continue to see this wall of money rush into equities. >> what changes that scenario? i mean if you're talking about investable assets that aren't there. if it creates low rates, it's the chicken and egg sort of problem. low rates is why people are chasing all of those assets if that in turn keeps rates down how do you break that cycle? >> the things i'm looking at is first and foremost policy. policy is going to change sentiment. the biggest problem that we have is, we're not going to get major policy decisions for quite some time. and with the news overnight the question now becomes how effective is the white house going to be in getting other programs done, tax, regulatory and fiscal spending plans. those are all major economic drivers -- >> you think that would be the biggest issue that would break the cycle and change things? >> any gridlock in washington is going to prolong people's desire to sit in assets and just wait and watch. right? that is going to keep volatility low. that's going to keep money flowing into markets, and that's to brian's point going to keep things one way.

but once things do break, right, and they can break, there is not necessarily a natural buyer where there is been in the past. so -- >> yeah, and tim i have a feeling we'll get you back on to talk more the structure of the mark inate. not today but soon. it's a big issue. >> it's a huge issue. >> everyone thinks etfs so safe. tim thank you very much. okay. still a lot ahead coming up on "squawk box." president trump abruptly firing fbi director james comey. we're going to get some reaction from a crisis management expert. he's also served as assistant attorney general of the doj. also former treasury sector jack lew is going to be here in studio. we're going to talk to him about road to tax reform, regulation rollbacks and later hillary clinton's former campaign manager robby mook, he weighs in on the firing of fbi director james comey at 8:40 a.m. eastern time. "squawk" returns in just a moment. tired of paying hundreds more a year in taxes and fees on your wireless bill? only t-mobile one gives you unlimited data with taxes and fees included.

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welcome back, everybody. today's top story, president trump abruptly firing fbi director james comey.

the president tweeting this this morning. james comey will be replaced by someone who will do a far better job, bringing back the spirit and prestige of the fbi. he also tweeted, comey lost the confidence of almost everyone in washington, republican and democrat alike. when things calm down, they will be thanking me. john harwood joins us right now. and john, there's been lots of people speculating that the blowback on this comes as a big surprise to the white house. >> well, it is incomprehensible if that's the case. some members of the administration were saying that last night. look, this is a blowback, whether it surprised them or not. that is threaten iing the entir continuation of the trump presidency and all of the republican priorities in a republican controlled washington. tax cuts, health care, legislative changes to dodd-frank. it becomes very difficult for a congress to act, especially within majorities in the senate, when the heat is coming so

intensely from constituents. we've seen that in president trump's poll ratings. he has now poured a gas can on that opposition and this is going to be very, very difficult for republican lawmakers, and you saw some of it last night with richard burr the co-chair of the intelligence committee saying he was troubled by the timing, and the justification for this firing. >> obviously a lot of concern that's been brought up by both democrats and republicans that have gotten through to this. when you look back at comey, though, he had a lot of detractors among the democrats as recently as yesterday, before this news came out. hillary clinton even saying just last week that she this comey was responsible, that she would be president if it weren't for comey. >> well there's no question about that. and he's gotten criticism across the board. >> no question about the criticism from the democrats, you mean? >> well, yes. he's gotten criticism from democrats. he also got criticism from

republicans. from republicans for not prosecuting hillary clinton. for democrats for the way he spoke out. and clearly the trump white house was counting on that criticism as a shield for the president, but in this moment, when james comey has told the congress that there is a significant investigation of the trump campaign and trump associates, with respect to russia after the interference in our election, this is being viewed in an entirely different light. this is the president of the united states firing the person who was investigating him. in the form of his campaign and his associates -- >> john isn't there a reason -- i'll try to find a little optimism in this, because how about this? the democrats and republicans have been unable to find common ground on pretty much anything. correct? there is no bipartisanship. is there some -- we've seen equal criticism on both sides. is maybe this the sort of bizarre weird incident that might actually express a little bipartisanship in the united states?

>> perhaps but in the opposite way that i think that you're suggesting. the bipartisanship that's potentially going to emerge from this is in condemnation of what president trump has done. you know, you've seen john mccain, jeff flake, richard burr, ben sass, all saying that they're troubled by this, mark warner who is richard burr's co-chair of the senate intelligence committee saying we now have real questions about the rule of law. this is a gut check moment for the entire republican party as they look ahead to 2018 midterm elections. they could lose control of the congress. that would be grave in its own right for president trump. but, we've seen an energized democratic opposition and the risk is that that opposition becomes supercharged, threatens republican legislators, as well as the president, and that is not a recipe that the republican party is looking for. >> all right, john, thank you

for joining us this morning. >> you bet. >> let's get some legal perspective right now from john carlin. he is the former assistant attorney general at the department of justice. he is currently a partner and chair of morrisson and for rester's global risk and crisis management team and a cnbc contributor, as well. and john, what do you think of all of this? what's the administration's next step? >> well the timing is very troubling and the manner in which it was handled. if he was fired based on a report about activities from past july, why do it in a way while he's in the midst of talking to fbi agents? why not have someone prepared to take over his spot? why not address who's going to be handling this incredibly sensitive investigation and it's an investigation into conduct that really shouldn't be partisan in nature. it's about russia interfering with our core democratic value trying to undermine our electoral system. and it's important to think about this in the context of

russia is, according to all of our law enforcement intelligence professionals, they're determined to do this again in 20 20. they're determined to attack our electoral system again in 2020 and maybe as soon as 2018. and in the interim, they're tinge this outrageous conduct all over europe. including according to news reports with the recent french elections. >> right. >> so our investigation to figure out what happened and to prevent it from occurring again, there's nothing more important on the plate right now. >> in terms of preventing this from happening again, with russia, i have to assume that there are things that are taking place that we don't know about. to try and prevent that from happening. is that your understanding, too? i don't think there's tough attention on preventing this from occurring again. there's a variety of steps you can take. one of which i think that needs to be taken now is to restore confidence in our own fbi and justice department.

and while this might not have been necessary before with all the questions surrounding the firing of director comey i think it is now important to name someone that has the trust of the american people as the lead official in charge of that investigation. because partly the way the russians undermine our confidence is they undermine our confidence in our own institutions to investigate, respond to thirngs fairly. >> how do we restore it at this point? what needs to happen now? >> i think a couple of different things. one, we need to look towards naming -- naming someone as the lead prosecutor in charge of this investigation and assure the american people that person won't be interfered with as the investigators do what they need to do to follow the facts, wherever they lead. secondly we need to consider having a similar structure in the senate or the house. i was heartened by the bipartisan way that senator burr and senator warner had been working to the. third we need congressional

focus at federal and state focus on hardening our electoral system. this is a hodgepodge of different systems that are used to count votes all across the country. and finally, i think we need to continue to educate, to learn about what happened, and then educate both the american people, law enforcement, the officials in charge of our elections system, and how to -- so they know what happened before so they can prevent it from happening again. >> john, take us inside the room right now, if you're a staffer at the fbi would was working on this investigation, what is happening? what are they saying to each other? what are they doing? >> that's my concern. because you have these fantastic career professionals at both the fbi, who i worked with when i was chief of staff over there, and the prosecutors i worked with at the national security division. and they're the sort of folks, they don't really care or pay that much attention about politics normally and they're just focusing on what the facts are, and to see where the investigation can meet. and these investigations, when you're talking about a massive

russian counter -- massive russian intelligence campaign inside the united states they're complex global investigations. they take time and dedication. i think when you're inside that room right now they're wondering what just happened. and was this in some way related to the types of investigative steps that we're taking. which is why it's important now for our officials across party to send them the signal, no, no one will interfere with your election -- with your investigation going forward. we have your back. we want you to just do your job, follow the facts, and see what the actual conduct was. >> john, it's a political question, but there has been an argument made that the senate should not confirm a new fbi director until an independent director of some kind of commission is set up. would you agree or disagree with that assessment? >> well, like you said, trying to avoid the politics but i agree with the overall sentiment that number one the person who is selected as the nominee for fbi director is vitally

important that that person doesn't have a whiff of partisanship about them. so everyone can trust that they're going to just follow the facts. number two, i do think at this point, it's time to have some type of special commission or prosecutor. not just to continue to figure out what happened in the past, but we need someone trusted to be able to tell the american people looking forward, hey, russia's in the midst of another campaign against us, here's what they're trying to do, and here's how we're going to react. that will deter them from taking action. but until we have that trusted system set up, i'm afraid we're going to see more of the same. >> all right, john, thank you for joining us. >> thank you. >> thank you. when we return, why congressman bill pass control says president trump needs a reality check. he tweeted this is not an episode of the apprentice. we'll get his reaction to the firing of james comey next.

all right welcome back to "squawk box." good to see you. happening moments ago, russian foreign minister sergey lavrov arriving at the state department. now he is expected to meet with president trump today to discuss syria, as well as a wide range of international issues. but obviously the comey firing is going to overhang any meeting, guys, especially with russia squarely in the media's crosshairs today. after the abrupt firing of

fbi director james comey democrats calling on an independent investigation even going as far as to say the president should be fired. one of those congressmen is new jersey's bill pascrell. he joins us now. >> good morning. how are you today? >> i'm very good. we're all trying to make some sense of this. >> lots of luck. >> let me start with this proposition, however. which ask to say that democrats, including people like chuck schumer and others, said historically, before yesterday, that they did not have faith in comey. now, the story has been reversed. what do you make of that? >> i can only speak for myself. i disagreed with some of the decisions that comey made, particularly the october 28th decision to go forth with the material that he should have kept to himself, i think. but i think he's a courageous man. i believe that comey is a great leader of the fbi. i don't -- i don't see why he was fired at this particular time.

and, you know, we believe in transparency in government, so a lot of people are going to speculate right now. >> just to put a fine point on it, is the issue in your minds the way he was fired? or is the issue that he was fired at all? >> both. >> both. >> both. >> so you think he actually should be in the job? >> yes. >> this is not eventually you would have preefrd to have somebody else in the job? >> no. >> this is you want him in the job -- >> yeah, i think that he made some mistakes, as everyone -- you know, we're all human. >> right. >> but i think that he exempl y exemplified what the fbi is all about. i have a great respect for the federal bureau of investigation, regardless of who the president is. we've had great leaders of the fbi. i think comey was one. i think he slipped a couple of times. during an election. it was a very difficult decision for him to make, i guess. he was trying to cover all the bases. when you cover all the bases, you make mistakes. >> put this in a larger contech as we try to understand what's happening in washington. >> yes.

>> it felt like there was movement within the gop and within the house, obviously, to push through health care and it felt like perhaps the senate might get on board, and then we might talk about tax policy and all of the things that the administration is talking about. does this set it back and to the agree it does by how much? >> oh, i think it does. and i think that comey's testifying before the committee just a few days ago really set the stage for this. i don't think this happened overnight. i think this was a letter when you read the letter, it seems that there's been accumulation of things over the last two weeks. i think they had their minds set on him getting -- getting rid of him. i think this was a decision made weeks ago. >> okay, but -- >> just to make one point on this, i just looked up an editorial that you wrote back in february where you basically say that you have no faith in james comey. >> the decisions that he made -- >> based on the decisions that he made --

>> i didn't ask for him to be fired in any stretch of that op-ed piece. >> you say we must be able to trust that the fbi director as well as the new attorney general are prepared to stand up to the new president. >> that's correct. >> i mean you don't call for him to be fired, but the entire article, the entire op-ed that you wrote basically says that you don't -- says that you don't have confidence in him. >> what he said at the time of october 28th that it was the wrong decision. the fbi doesn't work that you prematurely put out information while you're investigating somebody. if there was an open investigation. we found out that, he said himself, there was nothing that they found so he should have kept his mouth shut october the 28th. but many of us should keep our mouths shut sometimes. we make mistakes. we overspeak and we overreach. if we want an open government, however, you let people speak, even make mistakes. >> in terms of just understanding the machinations now in washington, how much bipartisan support do you think there is going to be for your

position for an independent investigation? >> i think there's going to be bipartisan support for independent investigation. and i think that that's very critical. i've asked for that from the very beginning. we knew these things are going to happen. look, watergate took two years and two months. we're only in the second or third month of investigations. this is a long way. this is a long trip. >> congressman, we appreciate it. unfortunately we got to run. but thank you. >> nice to talk to you. all of you. thank you. >> when we return, former treasury secretary jack lew is here. we'll get his take on the trump economy, tax reform and much more. stick around. "squawk box" will be right back. i count on my dell small business advisor

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♪ welcome back to "squawk box." good morning. we're live at the nasdaq marketsite in times square. want to catch up on some earnings reports that crossed the tape this morning. magazine publisher incorporated reporting a loss of 18 cents per share. that's three cents wider than had been expected. revenue falling short as

forecast print ad sales fell and the company slashed its quarterly dividend to four cents per share from 19 cents. "time" is there. now it's down -- 6.5% this morning. also, wolverine worldwide shares are jumping in premarket trading. the maker of stride rite, hush puppies and other shoe brands reported quarterly profit of 37 cents per share. that was six cents above estimates. revenue also beat consensus. another premarket winner auction house sotheby's did lose 21 cents per share from its latest quarter. that loss is 17 cents smaller than wall street had anticipated. revenue beating forecasts on an increase of commissions and fees. >> can i jump in? couple new tweets from the president just came out. donald trump tweeting this, watching senator richard blumenthal speak of comey as a joke, ritchie, meaning blumenthal, devised one of the greatest military frauds in u.s. history for years as a politician in connecticut blumenthal would talk of his great bravery and conquests in

vietnam. except he was never there. when, and we're waiting on a third tweet. so now president trump on twitter is going after richard blumenthal who has been one of the leading proposants for calling for a special counsel, special prosecutor in this firing of comey. steve liesman is with us on set this morning and he joins us with a very special guest. >> becky, thanks very much. i'm here. we are here with former treasury secretary jack lew. thanks for joining us, mr. secretary. >> great to be with you this morning. >> you knew james comey. you worked with him. you were omb chief of staff and treasury secretary. do you think his firing was justified? >> look, steve, i think if you look three months ago and today, and had predicted this happening, nobody would have believed three months ago that the world would have changed so much. the independence of the fbi is very important. i think the important question here is, is there going to be an independent investigation? how will the american people have confidence that russia's

involvement in our election will be fully investigated? and that's something that the current policymakers are going to have to be resolved. because it's critical that the american people have confidence in the outcome of this investigation. >> treasury secretary mnuchin heads overseas to the g7 meeting. what does this do to the stature of the treasury secretary of the united states, and also to investor confidence when something like this happens? >> look, i think that there are many things going on right now that are challenges to make sure that the u.s. retains its leadership role in the world. the rhetoric coming in was very jarring to not just people here but people around the world. as policy is developed, it's very important to show that the u.s. can be relied on to be a stable source of economic and security strength in the world. that's a big challenge with or without a day like today.

it certainly doesn't help when there are questions raised about how things in washington on such important matters are being handled. for me it gets back to the substance of what are you doing on trade. what are you doing on tax policy. what are you doing on health care? how are you going to explain the actions you're taking in a world where not just the united states, but around the world there's a kind of anxiety and anger amongst working people which frankly i don't think is addressed by a lot of the policy that we're seeing developed right now. in fact some of the policy goes in exactly the opposite direction. >> mr. secretary -- >> can you give an example of that? >> i wanted to follow up on one thing. my apologies first of all. we intend to talk about tax reform and trade and we will come to those. but this news broke overnight. as former chief of staff, having a person being inside the white house, can you tell me from the outside looking in what the firing of james comey says about how this white house is working? does it seem like it's an

organized white house to you or does it seem kind of tumultuous? >> i think that ultimately decisions like this go all the way to the top to the president of the united states. and there has to be confidence that the president's going to make decisions in an even handed w way. i think that the ability to advise any president is only as great as the willingness of the president to accept advice. >> but does it look -- how does it look to you? what does it say to you about the internal workings of the white house? >> look, i think that there have been questions from day one, as to who is making decisions, how decisions are being made, on policy matters. the question i'm asked most often is where do you think they're going on, again, trade, tax policy, financial regulation, and my answer is it depends who's making the decisions balls you have people with different views. that's not in and of itself unusual. it gets resolved at the top by the president. >> so ultimately the question that i now have is whether it

comes to tax policy, whether it comes to the repeal and replace of aca, whether it comes to infrastructure, what does what's happened in the past 24 hours do to that one way or the other? >> i think that these issues have not been heading in a clear, straight line. as i was starting to say, i think that the way that the policies are shaping up, is not true to addressing the concerns that voters here, and internationally, have had. so if -- i think there will be some buyers remorse if people actually look at the details of a tax policy where people earn more than $250,000 in capital gains get a tax break, and you pay for it by cutting health benefits that goes to old people who are disabled and at home with home care, and kids who are disabled in school. that's not -- >> now you're talking about the merits of all this. i'm talking about the politics of all this, which is to suggest do you think there are republicans which break ranks with the president because they feel less comfortable as a result of this or not? >> look i think on an issue like this, you're going to have a

hard time finding people on either side who want to be caught looking the other way about investigating russia interference in an american election. i think that that is something that everyone is going to want to say they did the right thing. i think that's more challenging -- >> i get -- >> 80 gop members come from counties or districts that voted 55% plus for trump. >> yes. >> so on one hand they need the trump backers to win their 2018 bids. >> right. >> on the other hand they passed the aca by one vote. >> my concern is that all of the noise around a very big event, i'm not saying that this was not a big event, all of the noise that is dominating discussion today should not eclipse the substance of what made that a one-vote margin on the health bill. it was a one-vote margin because it was a bad bill. it was a one-vote margin because it took away the protection on pre-existing conditions. it was a one-vote margin because it had the tax break in it that i described that's reverse robin hood. it's robbing from the poor and giving to the rich.

that's not a good way to make policy. so i think we have to focus on the policy, even amidst all of the tumult this morning. because when the dust settles, a one-vote margin still can pass a bill in the house and the senate. >> let's talk a little bit about trade issues. and i want to revert to something that you said to get into that. you said all of the rhetoric surrounding this and immediately started thinking about the rhetoric surrounding china. potential for a trade war, potential to label them as currency manipulatomanipulator. we spoke with charlie munger on monday and he said the flip-flops that people get so angry about in trump he's actually a fan of because some of them have flipped into a better position as he sees it. how about you? >> look, i think that if you look at the rhetoric on china and the action, the action has much more responsible than the rhetoric. it would have been very hard on the merits to justify designating china currency manipulator when they're intervening to prop up, to defend their currency.

whatever they did ten years ago, that is not a current description of what they're doing. the most important issue between the u.s. and china today, not the only issue, but the most important issue, is cooperating on north korea. on the dprk. if the united states had designated china a currency manipulator without a basis in current actions, that would have been a very bad move. i think it's important to put these things in perspective, and to leave some of the rhetoric behind, and to take a more responsible course. that doesn't mean letting china off the hook. you know, i've been a big critic of china. i criticize them on their currency practices and take some credit for having moved them into the position where they're behaving in a better way now. they're still doing things with in terms of excess capacity in steel and aluminum where the united states keeps to keep pressure on china. you don't have effective pressure if you're not credible. you have to maintain your credibility. i think that, you know, around the world, not just in china, there is a lot of focus on where is this administration going? is the rhetoric real? are the policies real?

i think it was reassuring that the decision on china was made in a way that conforms with the facts today, and the strategic importance of north korea. i can tell you i know what happens tomorrow. >> i thank my colleague from nebraska for putting the focus back on policy there. let's talk about the tax cut proposal from the administration. what was your opinion of say one page tax proposal and the idea of this 15% business tax cut that would include pastors, and has potential effects on the deficit, slal we say? >> i think i have to be a little circumspect analyzing a one-page proposal but it is not a fully fleshed out proposal. but the outlines of it do cause some concern. i think this idea of creating this disparity between the, you know, tax on pastors, and the business individual rate creates a huge incentive for whether

it's hedge funds or lawyers or businesses to work in a way where they get taxed at 15% instead of 35%. that could be a huge tax loophole. eliminating the estate tax is i don't think a good thing to do. we don't know whether that will be combined with other things. i'm not optimistic but you could increase the taxation of stepped up basis and maybe offset that. but going back to the anxiety and the anger in the population, taking a tax code that allows the most successful to avoid taxation, but still has working people paying social security and medicare taxes on the first dollar they earn does not strike most people as fair. it won't be a good outcome. steve you ask about the deficit if i could stay on the deficit. you know, this is not a tax cut that ought to be financed by increasing the deficit. i'm a big fan of business tax reform. i've been on this show advocating that we broaden the base, reform the tax code and reduce our corporate tax rate so we're more competitive and we

have a system that doesn't drive business decisions with tax planning. but the right answer is to pay for it by broadening the base, not to do it by putting it on the deficit. if it is put on the deficit, we know the baby boom retiring is the only place to get savings is either to raise taxes, cut medicare and social security and i think that's a bad -- >> do the democrats use the current tax code to paint a picture which is not necessarily accurate, secretary lew? because everything, because the top 5% pay 60% of federal income taxes, any tax rate change will automatically be a quote tax cut on the rich, will it not? you can use that phrasing to any political end that you want, because even the rich pay taxes on every dollar of that tax scale. >> there's no doubt that the more you earn, the more taxes you pay, because the base is larger. in a progressive tax code which i think is what we should have, that's what you want. it's not punitive. it just reflects the --

>> -- you think most people understand how taxes work? >> look, i think that you don't have to create a system that makes it easier for very successful, very wealthy people to avoid taxes or pay at a much lower rate. and that when you do things like eliminating the estate tax, when you do things like creating a loophole for -- you're creating an opportunity instead of to make the system more progressive to make it more regressive. at a time when you've deliberately taken away a tax in the health care bill one of the provisions takes away a surtax on capital gains income above $250,000. we have to stop. $250,000 of capital gains income is a lot of capital gains income. that is not the anxious voter in middle america. that is -- you heard on your show warren buffett -- >> i need to follow up on this which is -- $680,000. >> it's undeniable that these proposals have struck an important chord among the public

and among business. looking at sentiment surveys, looking at confidence surveys, looking at the rise in the stock market since the election of donald trump, it is clear that these policies have buoyed confidence in a way that eluded the obama administration over the eight years of its tenure there. and these -- there must be something underlying this that has the potential, by the way, to ignite animal spirits in a way that could be very beneficial to the economy. >> first i think if you look at the performance of the economy, we left an economy that was growing, they were unemployment was coming down, jobs were increasing, and that's tend. i don't think that is a new phenomenon. we saw that in the last four years, and that's something where we delivered a very strong, foundation. i think if you look at the stock market in the obama years it recovered from the worst financial cry sills and the worst economic crisis since the great depression. so it may not have been this enormous spark of investment and confidence that we all would like to see, but the economy and the markets did very well during

the obama administration. i don't disagree with you that the market, the equity markets, have been looking at the change in leadership as an opportunity for getting things that are important to them. i think they're somewhat miscalculating the likelihood of things all happening -- >> but some describe it as a pro-business versus an anti-business idea. the president has surrounded himself, meeting with ceos from all different industries, continuously, and that that has had a very positive effect on the outlook for big business. and business in general. >> i think that i met with the ceos of big business on a very regular basis. i think they knew they had the ear of people in the obama administration. the relationship with the president is obviously different when somebody is coming from the business world, and not. you know, the -- the -- the idea that there will be a rollback of all regulations is not going to happen. and i think that the direction is clear but the magnitude is --

>> but you look at the idea that a regulator policymaker today whose disposition is i want you to grow, i want you to sucticee i want this company to do as well as it humanly can is a fundamentally different disposition than the disposition of a regulator in the obama administration who might have been and it might be a post-crisis situation, to say i need to reregulate this industry, i want to tamp down and prevent bubbles, i want to, you know, maybe put people in jail, you know, that that just the -- the -- not the theatrics, but the attitude is different. >> i think that if you look at the post financial crisis world restoring confidence that our financial system is sound was of paramount importance and i think that you've seen as we've gone through shocks in the last year or two, confidence in the u.s. system is very strong. that is not a small thing. that is a big deal. we're now in a different moment. there's a tendency to kind of forget the past. if we in the financial sector

deregulate to the point of creating new risk, that won't be a good thing for business. let me give you one example. there's been debate in the last few weeks about removing something called orderly liquidation authority. it sounds like a big technical thing. what is it? it's the ability for federal regulators to step in, if there's a financial crisis, to prevent the unwinding of a firm that could lead the economy to collapse. now it costs nothing to keep that in place because it's repaid by the banks and the industry if it happens. it's not a taxpayer exposure. if you were to get rid of that you wouldn't have any tools to respond in a financial crisis. the fact that that's being debated is worrisome. it's a tendency to forget the past. >> mr. secretary i'm afraid we're going to have to leave it there. we thank you for joining us and remaining part of the conversation. we think your input i think speaking for everybody is invaluable. >> always a pleasure. >> thank you. >> thank you, steve. when we come back we'll be talking to hillary clinton's former campaign manager about president trump's firing of fbi

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distributed by invesco distributors inc. welcome back. now to today's top story, again, the abrupt firing of james comey. rob rosenstein citing the handling of secretary clinton's e-mails. joining us right now, former hillary clinton campaign manager robby mook. good morning to you. >> good morning.

>> your quick headline thought about all of this. >> well, it's incredibly disturbing. you know, i was -- i was first in line to complain about how director comey handled the e-mail inquiry last year. i have been outspoken on that. but this decision was incredibly frightening. >> so robby, is your issue with the timing and the way this all took place relating to the investigation? or with the credibility that he ultimately had or not? >> it's the former. i mean, i think there were serious questions raised about how he handled this. but the idea that the same day that we find out subpoenas are going out relevant to the russia investigation into president trump's campaign he decides to suddenly fire the director of the fbi because he claims he's upset about how he handled hillary's e-mails. the argument is absurd. and -- >> so you think the timing is --

this is a very -- you think it's a binary situation. that's the investigation, vis-a-vis, this happens. because it looks like from the letters and the other correspondence and things inside the government that this was a planned longer than that. >> well, it doesn't seem that that's the case. the memo that came from the deputy attorney general came the same day that the firing took place. and all the reporting indicates that this came out of frustration from president trump about the russia investigation. we're told -- this is all reporting, this isn't information that i have myself, you know, was that the president was continually pushing on the fbi to stop looking into russia. and to focus on the leaks that had happened, that exposed the russia scandal to begin with, and they wouldn't do that and that's why director comey was let go. i'm stunned at the timing of this. i'm stunned that president trump thought that he could fool us into thinking that he was trying

to help hillary clinton. >> robby, can i ask a question. a week ago hillary clinton said she would be president if it weren't for james comey. if that doesn't politicize office and the position that he held and bring up all kinds of credibility issues with the fbi i don't know what does. you can look at this a million different ways. and i'm sure there are going to be investigations into how this decision came down. you can question the timing on it, but the democrats have done everything to kind of cast a shadow on james comey before this action took place. >> well, i said, i have been outspoken personally and my colleagues have at how the investigation was handled and what director comey did. but again, let's step back and look at the facts. yesterday for the first time we learned that subpoenas were going out for a grand jury with regard to the russia probe. all of a sudden, yesterday a memo comes out from the deputy attorney general, the attorney

general who himself was implicated in this russia scandal. was not truthful about his own meeting withes the russian investigations and we recommend that he's let go, the president does it that day. he did nothing to put a special prosecutor in place, to continue the russia probe. and again i'm going to refer to the reporting coming out today, the president did it to stop the russia investigation. i think there's the politics around this and i think this has dramatic policy implications moving forward. i think this kills tax reform this year. and i think it brings into question whether we can get the debt ceiling lifted later this year. i think this is -- >> why do you think that is? robby, why do you think it is this move is going to impact all of the other things that our audience, the market, that cnbc cares about. health care, tax reform, et cetera. >> i think there's two things that this exasperates. one is the republican party is not united.

it's not monolithic and secondly the president does not weigh in on policy. he doesn't get in the weeds. and what we have created now is a massive distraction from the health care debate. from tax reform. and again, i will flag the debt ceiling. i do not think his party is going to be united on this. i think they have to be -- there have to be deals struck. i think policy details are going to get played with. the president can't engage on that level. you throw in a massive distraction in the middle of that. that's a huge problem and i think confirming a new fbi director is going to be enormously difficult. and you have already seen senators in the president's own party begin to call into question as i have what he did yesterday. this is not a good mix for getting something done. >> okay. robby, we appreciate it. thank you very, very much. >> thanks. >> we'll see where this goes. when we come back, the big movers and tomorrow, former yum brands david novak.

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meeting with rex tillerson. he is expected to today to speak about syria and a wide range of over issues. we mentioned this earlier, we have a number of tweets about it, including from wilfred frost. >> is he -- >> procter & gamble's gillette is launching a new service to compete with unilever's dollar slave club. it will allow the customers to text for a shipment. gillette says the price point will be better than the other guy. competitor unilever acquired dollar shave club for $1 billion last year. i'm a mach 3 guy. wilfred frost happens to be a fusion guy. he says he's a fusion guy with the battery inside the razor. so -- >> brian says no battery with water. >> somebody tweeted me with that. maybe it's his alias.

he shaves once a month so how much razor burn can there be? love you, wilf. love the hair. >> much of the morning we have seen some pressure on the futures at least for the dow and the s&p. right now, s&p down by one. dow down by 38. nasdaq up by one. brian, thank you very much for being with us today. folks join us tomorrow. right now, it's time for "squawk on the street." ♪ ♪ good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. the question of the morning for stocks -- does jim comey's firing throw a wrench into the market's policy expectations as investors brace for weeks, maybe months of fallout on capitol hill. futures are lower. europe is mixed this morning. bonds did settle back a bit. and oil is up on the inventory draw and more numbers will come in today. our roa