it's january 31st, "squawk box" begins snow. ♪ >> live from new york where business never sleeps, this is "squawk box. >> good morning. welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. let's look at the u.s. equity futures. we have seen two days of triple digit declines yesterday the down was down by 363 points, the worst daily performance since may of last year the worst two-day performance since september of 2016. check it out this morning dow futures indicated up by 0 points s&p up by 9. nasdaq up by 19. a lot of the weakness yesterday came from the healthcare stocks. healthcare was the worst performing sector. unh was the worst performer in

the dow. it accounted for about 74 points of the declines of the dow that came after we heard from jeff bezos, warren buffett and jamie dimon that they will try to take on healthcare on their own. the reaction from healthcare was swift and serious. this morning, though, green arrows across the board. >> the more you talked to people yesterday who tried to understand what they were doing, i think the selloff may have been too far >> i spoke with ana gupte who was on with us, she had time to digest it. she said this is a buying opportunity. anything that happens will take years. >> if will tait will take a lone what i did hear a lot of yesterday is other ceos looking at what they're doing and saying we should do this, not necessarily to gang up on this. >> but looking to cut their own

costs. >> the question the bigger the pool you get, the more complicated it gets. you could see the whole business roundtable deciding we're going in together as a collective. you have younger workers this gets interesting. young workers at amazon for the most part. older workers at the berkshire companies. when you think about how the insurance pools work, you have to think what companies could you put together to make the pool -- >> it's a big deal for american busines business >> they represent about 131 million people that they insure. it's a reflection of america >> i applaud the private sector for trying to answer this. history is littered with the -- what seems a novel idea, let's get rid of the profit incentives so we don't have to waste the money on profits let's do it all on delivering the service. >> the next thing you know, no

one is there minding it. >> >> at least the private sector is trying it here socialism works, we just have not done it right. i need to know whether you're this -- this pullback is enough to satisfy you >> is it 2%? >> just over 2%. month to date, the dow is up 5.7% >> yes or no, pull the trigger or wait? >> when you're up 80 this morning on the futures, we lost 540 in two days, this could turn around 80 doesn't mean clear sailing. if this is a reversal today and goes down again, then there's more to go you waiting? 5% 10%? you wait for a correction, but no one buys the correction >> this is what we discussed >> what are you going to do?

you're waiting >> i'm sitting on my hands >> your thumb is out in passaic, new jersey, trying to get to florida. >> no, i'm down in patagonia right now. >> that's where the train is >> you going to read this? >> look at treasury yields >> suddenly -- >> you should know, even though i'm looking at you, new york's finest is right behind you watching us. >> that's cool i love those guys. >> you were talking about pulling the trigger. there he is right there. >> thank you thank you. >> so as much as i can focus on your face, we have the finest with the helmet on >> he's assigned to me >> really. >> yes i wish by the way, today i'm all about unity. you will not get me involved in any of your -- >> i like this optimism. >> it's 6:04.30. ten-year was above 2.7%. >> did someone put crazy glue on the seats of all the democrats

were you watching? >> i watched >> it looked like they were trying to, but someone put epoxcy epox epox on the seat. >> president trump delivered his first state of the union last night. the stock market rally was not lost in his message. >> the stock market has smashed one record after another, gaining $8 trillion and more in value in just this short period of time. the great news -- the great news for americans, 401(k), retirement, pension, and college savings accounts have gone through the roof >> eamon javers has some of the highlights from the speech, which seems to be relatively well-received. >> that's right. he's been such a non-traditional president of the united states with the tweeting and

controversies over the past year, but last night looked very much like a traditional state of the union that other presidents have delivered he laid out some of his policy agenda for 2018 and hit some emotional highlights, inviting a police officer and his wife who adopted a heroin addicted baby and the north korea defector raising his crutches over his head another emotional moment and the president put a price tag on his infrastructure proposal saying he wants 1.5 trillion, higher than the $1 trillion that the white house was talking about last year. here's what president said last night. >> together, we can reclaim our great building heritage. we will build gleaming new roads, bridges, highways, railways, and waterways all

across our land. and we will do it with american heart and american hands and american grit. >> joe was talking about some moments where democrats were scowling in their seats, not standing and applausing for some of the applause lines that republicans were jumping to their feet to cheer. one was around immigration the president said he was open to a deal on daca. here is how he put it. >> so tonight i am extending an open hand to work with members of both parties, democrats and republicans, to protect our citizens of every background, color, religion, and creed [ applause ] my duty and the sacred duty of every elected official in this

chamber is to defend americans, to protect their safety, their families, their communities, and their right to the american dream, because americans are dreamers too >> the president there not talking about one of the controversies that's been consuming official washington this week, that's the russia investigation. no mention of that from the president of the united states during his state of the union. looking ahe ad to what he sees a two big legislative accomplishments of 2018, immigration and infrastructure the democrats chose joe kennedy iii for their response he set a different tone. here's what he said. >> many spent the last year anxious, angry, afraid we all feel the fractured fault lines across our country we hear the voices of americans who are forgotten and feel forsaken >> so joe kennedy saying

americans feel forsaken. they've been angry and afraid over the past year the president striking a much more unified tone the white house said of his delivery in the state of the union we will see whether the president can move forward on immigration and infrastructure both face challenges for immigration, the challenge is democrats, whether there's a deal there that he can sell to his base on infrastructure, the challenge is conservative republicans who don't want to spend a lot of government money on a large government item like infrastructure they would like to see more state and local spending and private spending can he get those conservative republicans to sign off on that spending >> in terms of how this speech was drafted and created, it had a more optimistic message and note than the ninaugural speech the speech given in davos, gary

cohn had a big hand in steve bannon no longer a part of the administration who do you think was behind this one? >> a lot of cooks in the kitchen there. gary cohn was involved in drafting this speech h.r. mcmaster was involved i spoke to steven miller briefly in the west wing yesterday he is on the nationalist wing of the trump administration i asked how the drafting of the speech was going, he said i wouldn't know. clearly a lot of people involved >> i wouldn't know as i wasn't part of it >> signifying i wasn't part of it i'm not in the loop. >> i don't know if it was an offhand comment or if he wasn't involved >> on a hot mike the president said, yep, i'm releasing that fisa deal. there were rumors it would come out last night could it be today? >> it is entirely possible

the issue here, remember, isna t is that devin nunes put together a memo which republicans suggested shows evidence of malfeasance in the process of drafting f ining some of the fia orders so the question is whether or not that will come out today sarah huckabee sanders issued a statement yesterday saying there was no plan to release it. and reporting that it was out yesterday was false. that could change. >> the "washington post" said that kelly said they were reviewing it and it might take several days >> on a hot mike he said 100% i'm releasing it. >> the white house yesterday said he had not read it yet and wouldn't make a decision until after the state of the union >> okay. >> thank you very much >> you bet >> joining us now to talk more about all of this is evan bayh

and judd gregg, both of them governors as well. thank you for being here today senator gregg, what do you think of the new message being sent out, that this could abbbe a a bipartisan year. >> first of all, it was an upbeat speech. so upbeat i thought joe wrote it >> i'm all about unity >> that's what i'm saying. the simple fact is they have no capacity now to pass anything without 60 votes in the senate all the rick o. wreeconciliation used up. if anything is going to past legislatively, it has to be bipartisan he picked two years where there's opportunity for that, immigration reform and infrastructure hopefully they can reach an

agreement. the nation would like to see cooperative activity and governing coming out of the congress >> it looks like there's two areas for potential cooperation, immigration and infrastructure, but both are far apart on what the democrats would like to see. what do you think has to happen? let's start with infrastructure. >> becky, what needs to happen is that the leaders in both parties, including the president, need to show a willingness to compromise and a willingness to stand up to the bases of their two parties, because there's extremes on both sides that led to this gridlock that we got. immigration, there is work to be done i think some heavy lifting needs to be done there >> on the immigration front, it sounds like there could be a two-pronged situation where there's agreement maybe we fund the wall, if you agree to go

ahead and say yes to daca. all of these additional things wrapped in by cutting the immigration issues now, is that something you think the democrats would say okay to? >> there are some in the democratic party who are behind shutting down the government a couple weeks ago because they didn't want to compromise on anything they need to be willing to compromise on the hard right, the president was speaking to this last night, they need to show willingness to compromise too as we come towards that march 8th deadline where the daca children who came to this country are subject to being deported, that will focus the public's attention and there's a deal there to be done if in the senate, senator schumer will try to encourage a compromise path. but in the house then, the president -- he showed some willingness last night to do this, he's willing to stand up to that hard right in his own party. on the infrastructure side of things, the big question is

funding. the president has a proposal there's some money from the private sector there's some money from state and local governments, but there's going to have to be a federal component to that, too in general, i agree with what judd hadto say it's a good speech, delivered well, struck the right tone. now the hard part comes, that's backing up the words with deans. >> governor senator baye, if there were 48 of you in the senate, would do that deal you've been in here enough if the president said we'll do daca, we just want to secure the southern border better than it is now, maybe it's not a contiguous wall, but you want to use whatever technology you can to secure it a couple other things, there's a deal there for people like you but there are no people like you. would you have had crazy glue on your chair last night when he says, gosh, good things are happening in the country the dow is up 50%. they didn't even stand for that.

there would be a deal if there were people like new there >> unfortunately not everybody in kcongress is as reasonable as becky and andrew who are with you today. my own personal view, i think judd would agree with this, notions of civility and respect are important. people should have attended last night. they should applaud for things like the stock market rising >> they looked silly they looked silly. like a caricature. i don't know they better watch it or they won't win in november and take back both houses >> the dome democrats need to willingness for bipartisan compromise this has been around for a long time a few years ago someone stood up and screamed to president obama that he was a liar at least we didn't have that last night the bottom line and the point i

leave you with, we had gridlock for a long time. some of that reflects the extremes in congress we have to take a look as americans in the mirror and realize we have more in common than we do that divides us we've been accentuating those differences for too long >> it's all about unity. mrs. gregg and i put that speech together for the president >> i would think so. i know you work closely together i agree with everything that evan said. especially the fact that we -- what you have to do when you're president and what you have to do when you're democratic leaders, you have to step on the toes of your base. doesn't do good to step on the toes of other guys you have to step on the toes of your base to get things done there has to be some of that i think the president laid out an acceptable proposal in fact, if you think that he's raised the number from 800,000 to 1.9 million that he's willing to consider getting a pathway to citizenship for, my goodness, it seems to me the democrats are snatching defeat from the jaws

of victory if they don't take that deal and run with it. >> they normally would they can't that would normally be -- his base, they're furious. >> it brings the question of who is the leader of the democratic party now. only the leader of the democratic party can step on the toes of their own base >> trump said he would take heat on immigration he's taking heat there are people who don't want -- anne coulter, laura ingraham or whatever who will step on the toes of the democratic base now. >> nobody. >> it has to be schumer. it has to be senator schumer he controls the votes. the only place they need democratic support to pass legislation is in the senate sfat e senator schumer has to be allowed to allow 8 to 10 of his members to vote on immigration i would hope it would be a lot more it should be but that's the guy who controls the state of play now as to who anything gets done

>> he is still stinging from the shutdown >> he should have learned from the republican shutdowns, that shutdowns don't work politically for anybody who causes them. we learned that a couple times as republicans i would have thought he would have understood that >> this may be a case where good politics and good policy are one in the same. agreeing to more border security, more merit-based immigration, that's the right thing to do for the country and also smart politics for the democrats and senator schumer. >> you don't have a gray hair, judd get back in there, will you? try one more time. >> talk to my wife, joe. you will get me in trouble >> evan bayh, judd gregg, thank you for your time. when we come back, the futures pointing to a pounce back up by about 80 points. make that 94 points for the dow.

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welcome back to "squawk box. joining us is katie stockton and jeff zout from raymond james i will start with jeff this may be a technical sentiment type comment we will a few 300-point updays we actually got sort of bored as we're moving up 45% in the averages then you get two days, one 70, three 30s, then the vix goes up. the mainstream media goes crazy. that's how it's supposed to work because it will keep going for a 2% correction we get all kinds of fear instilled in the market >> that's right. we think the secular bull market began in '08 indexes went down because banks kept going down into march of '09.

our proprietary long-term model flipped positive in '08 and never had a negative signal since then the intermediate and short-term models were positive they did target the first potential downside vulnerability. this is a secular bull market with years left to run >> katie, how would we know if this 2% we've gotten so far is the beginning of a 10%, 12%, versus something shallow so it start slowly and it's a dr drip, drip, drip when it happens quickly, they don't seem to last long. is this shallow or deep? >> it's hard to say. when it happens quickly, it's a short-term, counter move a buying opportunity what we noticed is that the

shallow pullback like we've seen in the last two days is quick to affect sentiment sentiment is the biggest risk to the market now >> people didn't get negative quickly? >> they did, but not quickly enough i think we need another several percent down to get us to that point. >> are you listening, andrew >> he's not in >> not true. >> you are on the train. so 2% should he wait for >> i've been on the train for a long time. >> i think a great rule of thumb is to look at the 50-day moving average. we are stretched above these 50-day moving averages we would welcome a pullback to that level >> what is the 50-day moving average? >> around 2700 for the s&p cash. that's 4%, 5%. something like that. that's reasonability this would work off the sentiment excesses the market

has and would be associated with increase in volatility >> there were a couple weeks in january where we said if we don't have some type of reversion to the mean, we'll be up like 4,000 percent this year or something you knew that -- that can't happen >> even with this pullback, we are looking at the best month to date >> there has to be some sideways action >> because it's up doesn't mean it has to go down immediately. you have to focus on the short-term momentum gauges, and they all went negative in the last two days. that's after having been positive all month we need to respect those momentum gauges, if they affect the medium term gauges, that's where we see correction. >> we pointed out in davos, all the elitists from last year, we needed to put them on suicide watch last year, a year later they're ebullient, excited,

optimistic have we gotten to the point where tax reform is in the stock market deregulation is in the stock market the world didn't end with trump's trade policies suddenly everybody is on board that scares you a little >> i think katie is right in the short-term sentiment got too optimistic i think any pullback will not be that great i think that we are and we remain in a secular bull market. not many of us have been around long enough that have seen a 1949 to '66 bull market, these things last 14 plus years. we're nine years into this one we have another five, six, seven, eight years left in this one. not many people believe it >> in 1999 we were at 10,000 on the dow. when trump started, it was 18,000 that's 2016.

that's 17 years we were up 80% do the math on that. that's like 2%, 3% a year. in that span, obama and dubya, and bush but we could be significantly higher without it -- it seems high at 26,000, but you go back to 1999, we have not really gone up that much except for the last year right? >> that's exactly right. if you look at the s&p on an inflation adjusted basis, it's not that much higher than it was in 1999. a lot of people should think about that >> i heard the market tripled under obama. well between bush and obama, we were up 3% a year. nothing to write home about. if you add in the dividends, you get 5% katie, thank you are you e-mailing your broker? >> excuse me >> looked like you were making a

trade. >> no. >> you're not deciding to get in >> no, you made a comment about the obama administration, and i had just read a fascinating piece that jerry sibe had written. >> i know the numbers, andrew. it won't matter. >> i'm going back to find them it was a bit different continue on. >> when you do '99 -- there's no changing those numbers if you go to 666 and you go to the financial crisis lows, he tripled it i'll give that to you. ml tripled ge, too >> this is what was so interesting to me. we have to go. let's go to break. >> when the numbers -- >> liars figure, figures lie it's -- i'll show it to you. 1,000 to 18,000 with bush and obama. >> i was going tell you something else we'll do that after the break. coming up, global reaction to

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welcome back to "squawk box. president trump did not make trade a big priority in his state of the union speech last night. he did hit that point that americans won't be steamrolled >> the era of economic surrender is totally over. from now on, we expect trading relationships to be fair and very importantly, reciprocal >> joining us now for a look at trade in a big potential trouble spot in china is leland miller

what did you hear last night that you liked, didn't like or you think the folks in china were listening to? >> i think the people in china were listening to bated breath and they were surprised there went more about trade. you had the tax reform bill, you have some good economic numbers coming out, the president wanted to celebrate the victories of the last months and the last year what people will miss here, not a lot of talk about trade or china specifically, maybe trump is tampering this down maybe this will not be a big deal in 2018 that's not the case. that's not what they should be reading into right now what should they read into this is the victory lap and next comes the fight. >> the big question with regards to these speeches, especially ones that we'll describe as the teleprompter speeches. is this a pivot, something different? >> it's a pivot.

what you saw is reading off the teleprompter, president trump, let's rally the country around a state of the union speech and let's get to the good stuff. the reality over the next few days and weeks you will see trade numbers. the trade numbers for 2017 will not be good for the president. the growth numbers will be good, but the trade numbers will be very bad >> then what happens >> then the president will be on the defensive. you have a 301 investigation, you have these section 332 investigations the administration now is just -- there's an incredible internal debate on how big to go on this stuff. section 301 is happening, it's coming soon. there's no question this will be this next step in the trade fight. >> what did you -- what do most chinese officials think of his speech in davos? this idea of saying america first is not america alone

it seemed to go over relatively well with the american and western audience i was curious how folks in china thought it >> it's fitting nicely into what the chinese want to say about themselves they've been talking about their economy, and protectionism they can say now, no, no, we're leading free trade we're the open ones. don don't close your markets to us, we want to trade with you. now that's ridiculous, but it is allowing for rhetorical comments to be made >> you see companies like apple saying they will not only be repatriates a lot of money but hopefully pursuing a form of manufacturing in the u.s is china worried about that? >> i think they're less worried about what happens with these flows than trump hitting them with major tariffs they expect mild/moderate tariffs, not the big bang. that's what they're worried about. >> great to see you.

coming up, the ceo of snapon joins us to talk manufacturing and infrastructure investment following president trump's state of the union message last night. at 7:15 eastern, in davos it's like 4 in t:00 in the afternoon something. when does the jet lag happen when you go over or come back? >> it's hit me big >> me too. >> i've been waking up earlier >> crazy >> i did have a couple of 12-hour, 13-hour -- >> sleeps? >> yes >> eli lilly's ceo will give us his take on president trump's attack on drug prices. then at 8:00, wilbur ross will join us live. you're watching squk sq"squawk

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>> together, we can reclaim our great building heritage. we will build gleaming new

roads, bridges, highways, railways, and waterways all across our land. and we will do it with american heart and american hands and american grit. president trump in last night's state of the union joining us now for america's path to rebuilding, the ceo and president of snapon. what was your tax rate last year >> 31% >> the tax bill will reduce it to -- 21%? >> no, not 21%, because we have different operations outside the united states and inside the united states. we will announce that at our earnings call next week. i won't announce it today. but the tax bill was good for american manufacturers the national association of manufacturers, council of competitiveness all say it's tremendous >> the gift horse happens a lot. i'm hearing gimmicky

it's crumbs, they're giving it to share holders >> the whole thing about the taxes is this, you could see it last night at the state of the union. >> could see what? >> the first time in our memory that a manufacturer was highlighted. steve staub and stacy keplinger and cory adams were highlighted. the idea that you need to restore dignity to work is important. and staub manufacturing grew from 7 employees to 23 employees due to animal spirits and this tax cut showed that this is a government that will focus on promoting their jobs and promoting manufacturers. you can hear this all over the place. when you talk to manufacturers,

there is a positivity around it. >> before the tax bill, too. can you point to any specific deregulation that helps snapon or helped your customers >> well, no, i can't necessarily. but if you look at this in general, i've give you statistics about the national association of manufacturers, they have got -- they say $19,000 per person is the cost of regulation for manufacturers. for smaller ones it's bigger if you are talking about snap on we would like to point to one that is not exactly deregulation but about conflict minerals associated with what is kind of a banking bill, dodd-frank but if you see that, they attach that idea on to a banking regulation showing they would sacrifice the interest of manufacturers on the altar of one of the most obscure of goals. >> for all of the conversation we've had over the past year

around deregulation and what it's doing to the animal spirits and the market, there's not a particular piece of deregulation that changed your business do it this way, is there something you were expecting to take place, meaning you anticipated regulators would take a step maybe too far in one direction and they didn't? i'm trying to look -- >> in a lot of different places. in the environment in the idea -- >> but specifically that affected your business something that you thought would happen and didn't happen >> i would think that your customers were -- in certain industries >> our customers in auto repair, but i don't have anything i could give you right away off the top of my head associated with that. the thing is -- >> is this front-end loaded? a lot of people are -- some are hoping this is all front-end loaded and we go back -- people who have a vested interest in stagnation are hoping we go back to that. is this front-end loaded and not going to last through the year

>> i don't think so. i want to come back to the idea of regulation. it is not the idea of regulation even being eliminated. it's the idea that i think if you walk through the garages and factories of america and you said to them that the congress of the united states or the government, the executive branch did something yesterday, was it good or bad for you? they would say automobile. now they feel insulated from that that's probably not going to happen as much as before the national association of manufacturers did a survey about the positivity of the optimism associated with manufacturers. almost 95%, the highest in history. so you're seeing this, when you talk to manufacturers, when you talk to people who are involved in business, you hear this the president said it last night. apple, 3$350 billion in the united states. you see the whole thing about the tax thing was this, it wasn't so much about raising wages. it was about expanding the

manufacturing base, which by definition are good jobs and how they all -- >> it's not about raising wages? >> it is >> that's the whole game here. >> i never said that i don't think people said that the think about this, wages will go up as competition occurs. but it's more like this. if you looked at the middle class wages they were stagna stagnating part of the reason they were stagnating is because 30% of manufacturing jobs disappeared they were always seen as good-paying jobs the expansion of those jobs raises the middle class. nobody has ever, ever said that manufacturing jobs are not positive and give you a living that will keep your family warm and safe and dry what they have said is they are not stable they're dark, dumb and dirty and, in fact, the changing of the tax law allows more expansion. when somebody gets an idea in

the united states and they say the next apple phone, and they're looking for an amplifier to bring that idea to fruition, they have a choice of what work force to use, the u.s. work force or overseas work force a tax law changes that balance and then the second thing you need is you need to make sure that people are skilled enough >> okay. >> all right we have -- they're playing us out. we appreciate your time today as we always do >> okay. sure coming up, the super bowl is more than just a game, it's big money for advertisers, sponers a sponsors and betters s 'll give you a website that hathe inside line. back in a moment when this bell rings... ...it starts a chain reaction... ...that's heard throughout the connected business world.

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welcome back, everybody. we have some exciting news this morning. a new member of the "squawk" family our producer, david evans and his wife katy welcomed a beautiful baby girl early this morning. this is eleanor reese evans. we're going to call her ellie. 5 pounds five ounces 18 1/2 inches long everyone is happy and healthy.

congratulations. >> where's dave's wife he didn't do this. >> there's a picture of her right there. >> i'm looking at him. he's like, look what i did. >> i think somebody else was doing the heavy lifting, dave. >> congratulations >> nice going, guys. >> okay. >> well said. we are four days out from the biggest sporting event of the year, and before i head out to minnesota for some super bowl festivities, we wanted to get a handle on how much money is being wagered on the game and where that money is going. joining us is chad millman he's the head of media and sports betting the action network how's it all shaping up? >> it's been a very roller coaster ride from a points spread perspective bookmakers opened this game with the patriots as relatively heavy favorites and -- >> give us some odds here. >> they opened at 6.5 point favorites. that was on sunday night in the middle of the vikings/eagles

conference championship game before the game is over because the eagles were winning by so much the bookmakers were posting the super bowl odds. >> okay. >> by the end of that game -- >> up 6 1/2. >> by the end of that game it was down to 6. by the end of the night it was down to 5 1/2. what you saw was all of the money coming in on the eagles, which was a surprise for the bookmakers they said the point spread unnaturally high for the patriots because they thought everybody would come in on the patriots they wanted money to come in on the eagles too much money came on the eagles so now that number is down to 4 1/2 in some places and 4 in some places because so much money came on the eagles. >> how does this work exactly? >> it honestly is a kabob. it is ten guys off shore at internet sites. >> do they call each other and e-mail each other? >> no. they have consultants. every book maker -- it's back of the envelope math.

they have a number, think about it. >> no ab testing going on? >> no. >> nothing systematic. >> this is what the a-b testing is they put a number out. if somebody comes in and bets $100,000 on the other side, they move it until they find a medium. >> sounds like they might have got the wrong number. >> they definitely got the wrong number they made a mistake by assuming that it's because it's the patriots and it's a dynasty, everybody wants to bet the patriots. >> they had to bring down the number. >> what they realized, everyone remembers what they saw last that's what they bet the last people saw were the eagles beating up on the vikings and the patriots struggling against the jaguars. it's finally evened out a little bit where the money is 50-50 now finally. >> right how have the bookmakers done this season for the most part? >> fair. >> is it a good season for them? a terrible season, great season? >> it's an okay season there was a stretch in the middle of the season where favorites kept winning at a

preposterous rate. when favorites win, that's bad for bookmakers because most often the public, you, i, everyone else who doesn't know what they're doing, they bet the favorites. this is a better team, they're going to win i'm going to bet that side. >> what are the other -- are there some other interesting bets that you can make during the game >> so during the game you can bet on basically everything. >> right >> this is where fantasy and betting have come to fruition especially in the super bowl because now you can bet on how many rushing yards will tom brady have will he have more or less than 2 1/2? will the longest field goal be greater than 47 1/2 yards. >> how do you figure odds on that >> they do a lot of research for those they do research >> there's math on that. >> there's math on that. >> math on that and let's assume that they are going to make money on this. they're not going to lose money on this. >> of course they're going to make money on this every year the handle on betting in las vegas goes up is it 132 million two years ago,

138 million last year. >> you're better off putting your money in stocks than betting on the super bowl? >> it's a much more transparent market because you know more about what's happening with the players. >> more rational. >> what sites do you think you can reasonably do this on without getting caught basically? that's basically what people need to know otherwise i can give the envelope of cash to the guy on the corner. >> you could the thing is, you can actually -- there's a dozen sites that you can go to it would be preposterous for the ones operating over seas. >> none of this is coach cher. -- kosher. it's okay to bet you can't take the bet. >> are you going to the super bowl, andrew >> i'm going -- >> to cover the super bowl. >> i'm going on friday but i'm back. >> they're actually now sending me to cover the consumer electronics show i'm going to be calling in all of my reports. >> you go to ces. >> i'll go to the super bowl. >> i'm going to call in all of

my reports on my motorola flip phone. >> you should go to the academy awards. >> yeah. >> you were at the grammy's on sunday night >> coming up, we have more of this morning's top stories inclina rk budg maetounce back u.s. equities are pointing to a higher opening david ricks will join us live. with full service brokerage firms... again. and online equity trades are only $4.95... i mean you can't have low cost and be full service. it's impossible. it's like having your cake and eating it too. ask your broker if they offer award-winning full service and low costs. how am i going to explain this? if you don't like their answer, ask again at schwab. schwab, a modern approach to wealth management.

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this, in fact, is our new american moment. there has never been a better time to start living the american dream president trump talking tax reform and the economy in his first state of the union address. we'll have a full wrapup of his comments straight ahead. wall street pointing to a rebound. we'll get you ready for the

trading day and find out what you need to be watching ahead of the opening bell plus, the ceo of eli lilly will join us to discuss the company's quarterly results and drug pricing we are expecting quarterly results from another dow component this hour as a second hour of "squawk box" begins right now. live from the beating heart of business, new york city this is "squawk box." good morning welcome to "squawk box" right here on cnbc we're live at the nasdaq market site at times square we have some protesters outside doing some with crypto task. bitcoin, net neutrality and something else we're not really sure what that's all about at the moment by the way, it might be a corporate marketing stunt because i was just looking up what that actually is. in the meantime, i'm andrew ross sorkin along with becky quick

and joe kernen we're back in the green after two down days. looks like the dow will open higher 86 points. nasdaq 21 points higher and s&p 500 up 10 points bearish day for health care stocks anthem higher in premarket this morning. it beat estimates by two cents with quarterly profit of 1.29 per share. full year forecast is above estimates. anthem also raised quarterly dividend to 75 cents per share from 70 cents. of course, the health care stocks taking a dive after warren buffet, jeff bezos and jamie dimon announcing a new not for profit joint venture to lower the costs of health care, at least for their companies some people taking that as a larger shot across the bow to the entire industry. in the meantime, we're just a little over an hour away from a key economic report. the adp report for january expected to show that the economy added 193,000 private sector jobs during that month

compared to 250,000 up for december janet yellen's final meeting as fed chair will conclude today with an interest rate decision, policy statement at 2:00 p.m. eastern time the fed is not expected to change interest rates this time around there is no news conference after the meeting. the next fed news conference will take place after the march meeting which will be jerome powell's first as fed chair. president trump delivering his first state of the union address last night eamon javers joins us with more of the highlights of the president's speech good morning again. >> good morning, becky the president struck an optimistic note calling this a new american moment and saying there's never been a better time to pursue the american dream than this time right now the president talking about a number of his agenda items looking ahead to 2018 and also looking back at some of his accomplishments from 2017 including that big tax cut bill. here's what he said. >> just as i promised the american people from this podium

11 months ago, we enacted the biggest tax cuts and reforms in american history >> throughout the speech he had a number of messages for particular industries, including the auto industry, and this message that some in the pharmaceutical industry are going to be paying attention to this morning >> one of my greatest priorities is to reduce the price of prescription drugs directed my administration to make fixing the injustice of high drug prices one of my top priorities for the year. prices will come down substantially. watch. >> the president also hit some of the emotional high notes that we've come to expect in a state of the union address, particularly effective was his recognition of a police officer and his wife who had adopted a heroin addicted baby and also a north korean defector who was in the chamber for the speech last

night who when he was singled out by the president raised hits crutches over his head in a triumphant gesture there were some emotional moments that we have seen in states of the union before we've seen the democrats responding to this they've chosen joe kennedy iii as their person to give the official democratic response he spoke to some of the anxieties that democrats in particular have felt about the trump presidency over the past year here's what he said. >> this nagging, sinking feeling no matter your political believes that this is not right. this is not who we are >> becky, the two big infrastructure -- the two big agenda items the president talked about was infrastructure and immigration. the question is whether he's going to be successful going into the mid term elections. not much legislative time in 2018 even though we're still in the month of january

political season will heat up quickly. can he come to a deal with democrats on immigration and can he get conservative republicans to vote for his infrastructure plan which he said last night will be $1.5 trillion. that's a lot of spending for some conservative republicans who might not like the idea of another big government program a lot of big challenges ahead. >> the big question is how much of that is public funding, how much is private money that goes into the pool. so obviously -- >> yeah. >> -- still a lot of area that needs to be bridged in that gap. >> $200 billion in federal spending and $800 billion in incentivized in state and local spending that was when they were envisioning a 1 trillion package. now it's gone up to $1.5 trillion >> eamon javers. back to the markets, the dow saw its worst day since may yesterday falling more than 400 points at its low. ended down by 363 points the index had its worst two-day

performance since september of 2016 the dow is still on pace for the longest monthly winning streak since 1959 1% selloffs are a pretty rare occurrence lately. the dow has only had four in 2017 and since the last one back on september 5th the dow is up a whopping 20% from that close that day joining us right now to talk about the markets is rod smith he is director of investments at riverfront investment group. also, scott nations who's chief investment officer and president of nation's shares and a cnbc contributor. scott, let's start with you just talking about this volatility that we've seen for a very short number of days i mean, it's kind of amazing how few pull backs we get of 1% or more what do you think this year is going to bring >> well, i think we'll probably see a little bit more. we know the volatility is kind of chunky and we have periods where the market is relatively quiet and then we get periods where it's very volatile, but i don't -- i think we should not be particularly surprised by what happened on monday and tuesday.

on friday the close on friday, the s&p was more over bought than it has been in five years relative strength index is really the only technical indicator i like that was posting a number of 85 on the close on friday, above 70 since the markets over bought. 85 screams and jumps up and down raising its hands to let us know it's over bought and the fact that we're going to bounce back shouldn't be a surprise either if you look at the risk off assets yesterday like treasuries, they were actually down slightly. gold down slightly implied volatility was up but by just a bit i don't think a bounce back should be a surprise. >> we had a technician who joined us this morning who said you should look at the 50 day moving average and the number she would feel more comfortable and would be an entry point for people waiting is if you get back around 2700 on the s&p. that's 180 points or so from here what do you think about that sort of thought? >> certainly if you can buy at that big a discount, then it would make sense

we haven't had a chance to buy at that big of a discount forever. if you're waiting for that big of a discount, i think you're going to be waiting potentially for a long time. you're going to miss out whatever we get for the rest of the year remember, tax reform makes stocks relatively cheaper than they were this time last year. we're worried about health care but won't most of those savings go to the bottom line of big companies like jpmorgan, berkshire and amazon. >> rod, let's talk a little bit of strategy here, just in terms of what you see, where prices are and what you think fundamentals are do you think this is a good time for people to jump in? >> yeah. i'd love to look at this from a longer term perspective. we do that we do that quarterly, but we do that especially at the end of every year, and one of the things you have to recognize is that when you have a year like last year, you have basically had two or three years' worth of normal gains in one year so if you're not lowering your long-term expectations, you're

saying that this is a period that is going to defy history. so we're lowering our long-term returns. that, for us, means that we still think stocks do better than most of the other categories interestingly, becky, i don't think this is getting enough press, but the one asset class that we have started to say it's time to get out of are high yield bonds. they have been a great source of income for a lot of your viewers and associated with that some of the stocks that pay higher dividends. >> you don't see the extra premium for the risk that comes on >> yeah, that's the problem. two years ago they were a steal. yields got back up to 12% in that big selloff high yield bonds have been a big component of how we play, if you like the risk on assets in our portfolios, that has dwindled now to a de minimis position we're holding on to our stocks

we're keeping above for a shorter time frame accounts in the bond market, but if you take a five year, i would agree with the other guest. if you take a five year or more view it's a stock market are the place to be. tactically, i think we have to recognize what your other guest said this market is very over bought and with interest rates rising, volatility is going to come back. >> rod, let me ask you this. you say you are reining in your longer term expectations for stocks. >> yes. >> which means, what, you're going from expecting what growth to what growth in the market >> yeah. so we're going -- in the u.s. we're going from expecting, you know, 6, 7, 8 to 4, 5, 6 kind of -- >> but, 6, 7, 8 has not been correct. 6, 7, 8 has way under shot what we've gotten. >> you're doubling down on not seeing this rally. >> well, no. i mean, 6, 7, 8 is -- has been actually if you look over a long period of time, that's been an

above normal rate of return. >> not the last year. >> no. no that's the point is stocks have gone from being below their long-term trend to now above their long-term trend. the place where they're still well below is in international markets. we've been stock bulls, been overweight, we've had a bias to international, which helped last year, not in previous years. i think, again, as a strategic planner with stock markets having gone up 20% and having a very consistent long-term rate of return, you've just got to pull back your long-term return forecast. >> scott, let me ask you just when what you think overall for shorter term buys in some of these things a lot of people, it seems to make sense, people think you don't short this heading into earnings season when we're going to be hearing about how they're doing but what they're going to do with the tax bill that has held to be good advice from what we've seen so far in earnings season. how long would you stick with that advice and do you agree

with it? >> i do agree with it, and, listen, we know from listening to earn any's calls that companies tend to be very optimistic as you would expect nobody wants to be dr. kevorkian on their own earnings call i think financial names will do better than most why? because we would finally expect that the net interest differential to help them out and also of the biggest names, if we do have a little bit more volatility, that will help their trading results. trading results for most of the big banks over the past several years have really been horrible and so i think financial names will do better, particularly if the yield curve does not flatten much more than we've seen recently >> all right scott, rod, thank you both for joining us today >> all right thank you. >> thanks, becky coming up, earnings from dow component boeing expected in just a couple of minutes, but up next the ceo of eli lilly, david ricks talks quarterly results. kind of interesting, posting a loss but raising guidance for

the year based on the tax bill like so many other companies we'll have that coming up right next starting a business is expensive. that's why many entrepreneurs rely on their own personal property, like their car or home computer, to help them do their work. but they might not know that those items may need special insurance to protect against costly damage, theft,

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eli lilly out with fourth

quarter results this morning beating estimates on the top and bottom lines if you back out some of the one-time items involving tax reform, david ricks, eli lilly ceo joins us good to see you. how did it work. your tax rate is going to 18% in 2018, and that's due to tax reform that allowed you to boost your guidance for the full year substantially, but it also caused you to take a non-cash charge, i guess, in the fourth quarter. how does it all work for eli lilly? all right. >> we're showing a loss in the gap. that's driven by two things, actually one is restructuring charges as we had a -- took a number of steps last year on productivity and we were running us through the income statement in q 4 but also the tax charge which is really based on the deans repatriation bringing back that over seas cash personally off

set by some reserves we had made that's about 1.9 billion of the loss going forward we're in a new system as you say, our overall rate we expect to come down 3.5 points to 18% based on the current estimation and we now have access to that global cash we're showing that in the forward guidance but talking about that in terms of investing in our own business. >> looking at some of the better than expected results on some of your individual drugs. they're pointing out that some diabetes, some new diabetes treatments, psoriasis treatments, were they better, the introductions were better than expected or the numbers were better? >> that's right. yeah we're in a middle of a growth cycle on the top line really driven by new product launches you mentioned diabetes products, two key ones there tr trulicity and tulca, psoriatic

arthritis and we have a product for metastatic breast cancer here in qf so really the beat and the performance is driven by top line growth. i think this is what patients want it's what they want to see. >> the president specifically talked about drug prices again in the state of the union. is the narrative sort of headed the wrong way in your view because companies like lilly love to point out a lot of times versus chronic care or hospitalization that drugs sometimes are the best deal in town depending on how you -- you know, how you look at it how do you view all of that? >> we maintain that position, that medications are the best deal going in health care and actually long-term costs decline because of generics when they come in. of course, there's a lot of attention on drug pricing, and that's because consumers, when they fill a prescription from

their doctor, are increasingly bearing the cost of these prescriptions. that's an insurance design issue so we would agree in that case there needs to be real changes there's no reason why consumers should be paying much more for their medications than they do other health products because medications are the most efficient part of the system in our eyes we like to see real change there. >> hey, david, when you saw the news cross yesterday that jamie dimon, jeff bezos and warren buffet were getting together to form this not for profit, at least for their employees, what was the conversation in your office what did you say to people and what did people say to you >> well, actually, i said, good. you know, these are forward thinking, innovative people. they're big employers like us who worry about health care costs. i would point out that in our own health care program for our employees we have medical inflation that's lower than the nation and part of the reason for that is how we have designed our programs they're thought leaders. we welcome choice and competition in health care markets and i look forward to

seeing what they come up with actually i don't think it's a bad thing. >> what is your insurance? everyone is effectively self-insured even though you use a technical insurer to process it who do you guys use? >> we self-insure. we bear the financial risk we have a heavy hand in designing our own programs because we believe in quality health care for our employees, but the medications and other innovations are the key to unlocking cost avings. we execute against that through anthem on the medical side and cvs caremark on the drug benefit side. >> david, how have you managed to beat inflation or keep inflation lower than the average? is it lower drug prices or is it something else >> i'm not sure we pay lower drug prices, but i think we use drugs more often actually, our costs on medications is a percent of the total mix is about double the nation and so this is, again, the paradox of trying to squeeze drug costs is perhaps we might inflate other medical costs. so our view is we should embrace

innovation -- >> drug prices wholesale, right? >> well, so this is, again, part of the challenge is employers and other insurers are paying much lower prices than consumers at the counter we have a program this year where we're passing through our own rebate savings to our employees at the point of sale that's the kind of program we'd like to see the government enact in part d and other employers enact in the commercial markets. >> what's the employee discount on a lilly drug? >> for lilly drugs into the system we announced last year about 50% of our list prices are discounted to net so it's a significant percent off that our employees receive. for lilly drugs into the total system it's half off for the buyers, insurance companies, versus what consumers have to pay. >> stocks called up. not far from a new high. up somewhere between 87.85,

87.95 so so farr so good at least for trading today. >> thanks for having me on. >> great to have you on. >> thanks. when we come back, facebook taking action against bitcoin ads. wl ll you why after the break. "squawk box" will be right back. , but there's no business track record. well, have you seen her work? no. is it good? good? at cognizant, we're helping today's leading banks make better lending decisions with new sources of data- so, multiply that by her followers, speaking engagements, work experience... credit history. that more accurately assess a business' chances of success. this is a good investment. she's a good investment. get ready, because we're helping leading companies see it- and see it through-with digital. when it might be time to buy or sell? with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity. open an account today.

welcome back, everybody. facebook is banning ads for bitcoin and other financial products that might be associated with deceptive practices. the new policy says that ads can't promote services like initial coin offerings which are a way to raise money to sell digital currency that can be traded examples include ads that have phrases like use your retirement funds to buy bitcoin that's part of the reason bitcoin was down yesterday by about 11%. it fell below $10,000. coming up when we return, the man behind the president's tax reform, kevin brady will have reaction to the president's state of the union address as we head to the break, take a e ok at u.s. equity futures. thdow is up triple digits. up 100 points. we're back in a moment for every hour that you're idling in your car, you're sending about half a gallon of gasoline up in the air. that amounts to about 10 pounds of carbon dioxide every week. (malo hutson) growth is good,

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♪ ♪ ♪ good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square.

among the stories front and center, mortgage applications falling 2.5% last week that's according to new figures from the mortgage bankers association. purchase applications and refinancing fell the average 30 year mortgage rate rose to 4.41%. more housing news coming later this morning at 10:00 a.m. eastern the national association of realtors will release its report of pending home sales that's signed but not yet closed is expected to post a rise of half a percent and xerox is being absorbed by the joint venture that it currently operates with japan's fuji film. when all is said the new company will be called fuji xerox and will continue to list on the new york stock exchange. they'll receive a special dividend of $9.80 a share. dow component boeing just out with quarterly results phil lebeau has been looking at the numbers. phil, what do you see? >> joe, this is a beat on the

top and bottom line. not a huge surprise given the execution we've seen over the last half of the year with boeing boeing comes in earning $4.80 in the fourth quarter, $1.74 of that was due to tax benefit. you strip that out, you want to get an apples to apples comparison comes in at 3.06 a share in the fourth quarter. the estimate was 2.89. revenue at 25.4 billion. free cash flow 2.5 billion operating cash billion, 2.9 billion. the overall margin, 11.9% for boeing bca the commercial airplane division, 11.9%. the effective tax rate is 18.4% for the year but in the fourth quarter it was a negative tax rate because of the deferred tax liability. what people want to focus on is the 2018 guidance. eps guidance of $13.80 to $14 a share. that's well above what the street is expecting for this year it's expecting 11.96 a share

revenue also expected to be higher than the estimates that are out there between 96 and $98 billion. the street's expecting 93.44 billion. deliveries, 810, 815 aircraft and the effective tax rate, that's really what a lot of people are going to be focusing on remember, 18.4% for 2017 it's expected to drop down to 16% in 2018 with free cash flow almost $2 billion higher in 2018 than in 2017 but, again, guys, a beat on the top and bottom line for boeing back to you. >> what is the key -- isn't delivery what people still look at what's the stock key off of at this point, phil >> well, two things. one is the operating cash flow that coming in stronger than expected is goings to move the stock higher then in terms of deliveries on the commercial airplane division, that expectation of 810 to 815 for 2018, that's roughly in line with

expectations remember, they're increasing production on the 737 as well as the 787 and when you look at the 37 and the 87, especially the 87, as they increase deliveries, that is really going to increase the operating cash flow. that money is going to increasingly flow to the bottom line as they move further and further away from the cost of the initial launch and we're really starting -- not quite into the sweet spot but we're getting close to where you're really going to see boeing leverage the 787 dreamline. >> the futures on the dow now, phil, obviously we were up by i think 80 or 90 and now you add in 10 points on boeing and that puts the futures up at 50. that's been one of the biggest gainers. i was told we were going to take a look at the futures to gauge how much of an impact boeing is having all we're doing is looking at me, which doesn't help anyone.

>> close >> anyway, the -- as you're -- >> there it is yeah yeah dow futures. >> as you're flying over -- >> up 180 points. >> you know when you go from newark to zurich, what we did, you kind of go over some scary parts of -- >> the atlantic ocean? >> you're flying in a tube at 40,000 feet, minus 50 degrees outside, there's no air and there's like ice down in the ocean beneath you and it's like you're putting a lot of faith in boeing, are you not? don't you feel that even though you're in one of your pods, andrew i know you're lying down with those things on like that, but, i mean, i'm glad they're good at what they do. >> if you think about it, doesn't matter what you're flying over. >> i know. i know but i'm going to -- let's say you happen to survive -- you know, the initial -- and you're in the freezing cold. >> look, up 170 points triple digit gains. >> aren't you glad you're in that tube that's -- >> very -- >> -- pressurized.

>> people who watch this show, by the way. >> from the air. >> they should feel comfortable, too. >> confident. >> feel confident. >> let's talk taxes. president trump touching on tax cuts last night in his first state of the union address >> just as i promised the american people from this podium 11 months ago, we enacted the biggest tax cuts and reforms in american history [ applause ] joining us right now, one of the lawmakers who spearheaded tax reform, ways and means chairman kevin brady good morning to you, sir. >> good morning. >> thanks for joining us >> sure. >> you know, one of the things that the president said when he was talking to joe in davos and again to the group that was assembled and -- he didn't say it last night but he may as well, should have, which was how surprised were you, he said he was surprised that so many companies have come out publicly with either bonuses or in some cases raises. >> you know, i haven't been

because businesses have been telling us, you know, how bad this tax code has hurt them for so many years. they've been eager to get this capital off the sideline, jump start these businesses what i appreciate about president trump's leadership is it really shook up our economy in a good way. businesses are rethinking their investment, their projects, where they're putting new plants, new workers, new investment here in the united states so it's really been encouraging to see that. and to his credit, he got to do what presidents hope they can do, which is start off every speech with i delivered on my promises from last year and you can see it in the economy. >> well, i just want to backtrack. you anticipated that the companies were going to do this? >> we know businesses were talking about under new tax code how they could compete and win, how much more investment they could bring if they had a competitive 21st century tax code it's been encouraging to see them do that i have to tell you this. last week, we live back home in

texas, i was doing my town hall meetings in my rural communities in courthouse squares, a restaurant, a mom and mom restaurant who's adding a new worker used car dealer who's adding two more workers local company buying $2 million more of american made construction equipment i think that's what echos throughout this country and really is going to drive economic growth. >> you think those decisions are being made in anticipation of profits that are going to come later or is that a function of a hot economy coming into this >> maybe all, but i'll tell you this, limited expensing ability to write off these investments in plants, equipment, software, technology is a big cap. i don't care if you're the smallest business in town or biggest business in town plus, now projects make economic sense where they didn't before i'll make this one point you know, as encouraging as this is, this tax reform was really

built for the long term. bringing the jobs back long term i think there's still a lot of benefits ahead. >> i built something, kevin, over the weekend and then i wasn't here monday and tuesday this i read in the wall street journal. i thought it was eloquently put. i want to read it to you because here's a full -- this is "the wall street journal. thank you for tax reform i don't know whether they're thanking you or the president. the secular stagnation thesis is having a bad year. riders will recall that this idea, popularized by former obama white house economist larry summers held that america is fated to endure slow economic growth but the point is that tax -- that economic policies matter. the growth rebound in 2017 show that secular stagnation isn't destiny, it was the result of policy choices by the previous administration i thought you would love that. >> yeah. >> then finally this conveniently justified the obama

era's historic slow growth as inevitable deus ex machina so those are just -- i had that built. i didn't -- i wasn't here to do it i knew that you -- if i didn't do that for you, andrew, that was in the weekend wall street journal when i got back. >> you want to make sure that -- >> i want to make sure that everyone -- do you disagree with anything that was said there the journal editorial writers are pretty smart, i think. >> they are. look, turns out that new normal of the very sluggish 2% growth as far as i can see for america was wrong and is wrong and policies do matter you can feel it. and i'll tell you, too, back home on main street it's not just small businesses. like starting today workers are starting to see more in their paycheck i just visited with a worker who's seeing $350 more in their paycheck right now all of that is incredibly helpful. >> crumbs. crumbs. >> speak to this

this is "the wall street journal" this morning. he says, when mr. trump took office the economy has added a solid 2.1 million jobs since then yet that actually represents the lowest level of annual job growth since 2010 gross domestic product grew 2.3% last year, that's above 1.5% in 2016 but below the 2.9% gain in 2015. >> we're going to see -- so that was, i think, a year where people were watching to see what is this economy going to do? what is this president going to do now we're seeing the result, the policy's rebalanced regulations, competitive tax code you're going to see that growth. but i think there's more to do the president said this. to me, maximizing economic growth we need more customers, that's good trade agreements need more workers. getting them off the sideline, moving from poverty, prosperity. we need more. >> job growth is going to be less than -- you know, at 3.7%,

probably going to be less than it was when it was 14% i imagine. >> chairman, real quick before you go just speak to this infrastructure plan because there's clearly a lot of debate about how it can or cannot work. how do you see this happening in a bipartisan way >> yeah. so the president really challenged us, no doubt, to incentive advise $1.5 trillion in the infrastructure. clearly that won't be, excuse me, coming from the federal coiffeurs necessarily. we have to incentive advise money to come off of the sidelines. we have to go to work. the president basically said, look, people are seeing more money in their pocket, the economy is starting to grow. let's work together, democrats and republicans, to figure out how we can modernize infrastructure that's a challenge we ought to take seriously i'm actually excited to sit down and see what we can do. >> chairman brady, great to see you. >> thank you thanks for having me. >> you bet see you soon. when we come back this morning, a focus on markets

after yesterday's stock skid right now the futures, check it out, dow futures up by 168 points above fair value. s&p up by 13 and nasdaq up by 27 then senator pat toomey will join us with reactn tiotohe president's state of the union address. "squawk box" will be right back. and the wolf huffed and puffed...

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>> it's check the futures out. president of jmp, a securities firm always hard to time things on the short term i don't know if it's sort of a futile exercise. do we have more work to do in terms of consolidating right now or do you think we've already hit the short-term lows and are headed back up because of what the futures are indicating right now? >> clearly today there's a combination for better earnings and the president's speech last night that will drive the market today, but volatility is up, joe. i think that will probably be a theme going into the first quarter in through 2018. people have been calling for a down draft in the market

i wouldn't call yesterday or this week's action anything concerning, but i do think you'll see more volatility >> i think you could say there's two schools of thought that after you do 35, 40%, whatever you want to call it over the last 13 months, 14 months, whatever you want to call it, that there's going to be a reversion of mean. we had someone on earlier saying that his -- you know, his wimpy 6 to 7% annual that they lowered that then i think back to the mid 90s, we had three years. three years in a row of double digit. in fact, 30% plus. are we in one of those periods are we in a reversion of the mean where we do 4 to 5% for the next couple of years after last year >> yeah. i think it's hard to see kind of a three-year double digit rise for the market, but i do think we're in a period of expectations that i think are a little bit higher than most single digits that a lot of people are calling for i just think you're going to see

the haves continue to be the haves. saw boeing this morning. i expect some of the tech giants to continue to do that i do think we're in a really good period for the marketplace. you are going to see gyrations we've had people on the show as you've said over the last year, year and a half calling for the top 10, 15% and i think the market is going higher it's ripe to keep going higher. >> we've heard a lot about -- yeah, you know, we're so confused now looking at you. your name's lehman but you're not at lehmann brothers. we have the wrong name, jpm. it's jmp i don't know what it is at this point but, anyway, it's jmp securities, right? >> got nothing to do with lehman or jpmorgan. >> that is correct although my son does work at jpmorgan. >> that is confusing. >> very confusing. >> so the 270 on the ten year and then the notion that people -- i guess that -- in

reading it, the five-year german boom went into positive territory. >> yeah. >> oh, my goodness. >> i know. instead of negative yield, it went -- we need to sell this market i just wonder, is 270, 3% or a positive five year in the german bond market, is that a reason to worry? >> i don't think so. i think rates were going to stay low for a long time. amazon, berkshire and jpmorgan's announcement will continue the theme that the companies of this country are deflating. they're lowering the costs for all consumers for a lot of different products they've done it through technology deflation, i think, again, given innovation will continue to be a theme. i don't see the days of 4 or 5% bond yields any time i just think we're going to continue things driving down prices making it more affordable we're talking about health care, we've seen it in consumer and technology that's a theme we're going to ride out through the next five

to ten years. >> just the -- not necessarily the absolute level of interest rates but -- but, you know, when they move -- you know, if it doubles from those lows people think the debt service on that might at least cause a little consternation in financial markets which, i mean, some people think the bond market's the biggest bubble in history, the global bond market i don't know we'll see. did you -- andrew, did you add a second n after the financial crisis to lehman so you can be -- >> you know, when the lehmans came 150 years ago we had two ns in our name, i'm pretty sure of it. >> but then they dropped one you're not distinguishing yourself from that failed firm, right? any relation >> unfortunately, no >> unfortunately, no you might not be working if there was. i mean -- with the inheritance and all. thank you. mark, we appreciate it. >> thanks. >> jmp securities. >> best of luck. >> banking and finance committee

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welcome back, everybody. senator pat toomey is here good to see you. >> good morning, becky. >> the president last night said the idea that this is going to be a year of bipartisanship, a year of cooperation. do you think that is likely to take place in the senate >> that's an ambitious

aspiration, but i do think there's an opportunity to get some big things done, big things that will require bipartisan work but immigration and infrastructure are two of them so, you know, i'm hopeful. >> infrastructure is probably the easier list of the two immigration though is the one that's facing a quicker deadline, march 8th deadline for daca for dreamers. do you think it's possible that there's something in everything that's been put forward that could actually get 60 votes in the senate and then push it back on over? >> yeah, i really do if you think of the president's speech last night and what he has laid out, the center piece is an offer that is far more generous to the daca people, the dreamers, than even the policy that president obama illegally implemented through executive order. i mean, he would make almost triple the number of people eligible and not just for illegal status but for citizenship over time. that is pretty much everything that the dreamers have wanted.

the democrats have to agree to border security and changes to migration rules, but i've got to believe there's a place to find common ground. >> the democrats have said there's a deal that the president has put forth is a non-starter. they won't agree to cut back immigration that significantly is there wiggle room is there still room for negotiation? >> again, when you say not the 690,000 who signed up for daca, but 1.8 million dreamers get permanent legal status and an opportunity to become citizens, how do the democrats walk away from that because, what, second cousins and aunts and uncles are not allowed to come in subsequently >> it's not just that, it's also parents, other people related, too. beyond the immediate family. >> part of the problem is it is the parents who brought these kids to this country illegally if the fact that they brought their kids illegally gives them a better legal position in the

united states than someone else who came here illegally but didn't also bring kids illegally, that's a pretty counter intuitive outcome. >> you think it's pretty hard line of an offer at this point >> look, i'm not sure exactly where this line gets drawn, but i think we have to significantly curb the chain migration, significantly shift to a more merit and skill-based immigration system and there really ought to be a way to get there. >> senator toomey, when we get to infrastructure, that's tricky it depends on public financing the original estimate was $200 billion. it sounds like it could be more than that. what would you feel more comfortable with in an infrastructure deal? >> i was pleased to hear the way the president characterized this he used the figure of $1.5 trillion, if you look closely that is not intended to be all federal tax dollars but, rather, a combination of federal, state, and local and private. and i think that's exactly the way we should approach it.

we shouldn't lose sight of the fact that the federal government spends a staggering amount of money on infrastructure every year, $50 billion on roads and bridges alone, every year. so i'm open to an increase in that amount but i do think we should bring in state and local and wherever possible private capital. it makes sense to leverage up the federal contributions. >> sir, is there a number that is kind of your line in the sand when it comes to it, no more than $200 billion, 300, 400 billion? >> no, becky not out of context, right? i think what matters is where is the rest of the money coming from how is it being used are we going to have the good sense to lower the costs the president is exactly right the idea that it takes ten years to get approval to build a road is ridiculous and it contributes a lot to the cost. if we take the kind of measures that allow us to save a lot of the money we could save, that would help, too. >> senator toomey, want to thank you for your time today. it's good to see you. >> thanks for having me, becky. >> sure. when we return, another big hour of "squawk box.

wilbur ross is going to join us. 8:15 eastern time the january release of adp employment. that report when we get you the numbers. the market reactionas we get ready for friday's big jobs report from the government at 8:40 this morning house minority whip steny hoyer will join us with his reaction to last night's state of the union address. oo we take a break, take a lk at futures we are in the green. we are up big time dow up about 235 points. big hour of "squawk" ahead with full service brokerage firms... again. and online equity trades are only $4.95... i mean you can't have low cost and be full service. it's impossible. it's like having your cake and eating it too. ask your broker if they offer award-winning full service and low costs. how am i going to explain this? if you don't like their answer, ask again at schwab. schwab, a modern approach to wealth management. we cut the price of trades to give investors even more value. and at $4.95, you can trade with a clear advantage.

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markets staging a comeback after the biggest selloff since august stocks are in the green. breaking jobs data on deck. the state of the union president trump talks tax reform, trade, and market gains. >> the stock market has smashed one record after another. >> our special guest this hour, commerce secretary wilbur ross plus, reaction from across the aisle and infrastructure ceo. earnings alert, a beat for boeing and the stock is high a rundown straight ahead 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 to "squawk box" right here on cnbc. we're live at the nasdaq market site in times square i'm andrew ross sorkin along with becky quick and joe kernen. the gang is all back together again. let's take a quick look at the markets because we are in triple digits in the green. dow looks like it willopen muc higher, 234 points higher. nasdaq higher, 36 points and s&p 500 looking to open up 15 points higher show you what's going on with treasury yields right now if you want to get yourself a mortgage right now, it's going to cost you a little bit more, 30 year mortgage it is, 2.956. becky? >> let's get you caught up on the quarterly reports that were out this morning boeing earning an adjusted $3.06. that beat $2.89. the jet maker topping revenue forecasts and giving an upbeat earnings forecast for 2008 it all has added up to $17.20

gain for boeing. that's an increase of over 5%. by the way, boeing is responsible for about 120 points of the gain in the dow because it's so heavily weighted towards boeing these days. half of the gains we're seeing this morning also, eli lily beating on both the top and bottom line. the drug maker saying new diabetes and psoriasis treatments sold well that stock is up by 1.5% health insurer anthem beating estimates by 2 cents with quarterly profits of 1.29 a share. giving the full year forecast above expectations and the company raising the quarterly dividends from 75 cents a share to 79 cents. adp earning $1.05 for its latest quarter 15 cents above revenue came in above forecast and raised the full year earnings forecast. quick programming note for you, adp coe carlos rodriguez going

to go on "mad money. just had that big fight with mr. bill ackman. after the bell, facebook, microsoft, at&t set to report lots of focus for beyond those numbers and their conference calls with investors and analysts president trump speaking out about trade during the state of the union speech he said america will not be steam rolled >> america has finally turned the corner on decades of unfair trade deals that sacrificed our prosperity and chipped away our companies, our jobs and our wealth our nation has lost its wealth, but we're getting it back so fast the era of economic surrender is totally over >> joining us now, commerce secretary wilbur ross. i love, you know, speeches for

what they're worth, wilbur, but i really want to look ahead and figure out what you can tell us about some upcoming stuff in terms of nafta, for example, and in terms of whether there really is going to be another attempt at multi-lateral stuff we heard last week with tpp behind the scenes and also what, you know, the next step with china. we had solar panels and washing machines can you address all three of those? where are we on nafta? will we try to get in tpp now that it's already moving forward? was that real or just sort of a trial balloon? what do you know >> well, nafta just is concluding its sixth series of talks, the ones up in montreal just got finished. they've made some progress again on easy issues very little has been done on the hard issues. but there is another round that

will be in another several weeks so we remain optimistic that there could be some progress made, but it is far from being completed at this point. >> so you -- you can't assign any type of probability. i would think, you know, i saw another piece yesterday or the day before in the wall street journal, an author wrote that it's nafta's responsible for our .5% gdp every year and if we get rid of it, you know, it's just going to make it more difficult. in your view, is the president still negotiating by holding out the possibility of exiting it completely or is that a real possibility? >> well, it's definitely a possibility. it's hard to debate whether the deal as it will be finally presented to the president is good or bad when the major features of it have yet to be concluded. >> okay. >> so it will either be 100% or

0%, it won't be some percent in between. >> what will be the next step to talk to the parties involved in tpp to say we'd like to consider joining? will you take that step? >> well, the president announced that in davos that if tpp is modified from where it had been he would consider joining it, the modified tpp, but, remember, they don't have their act together among themselves. the so-called group of 11 is not completely resolved on its own, let alone resolved relative to what concessions they might make to the united states so it's a little bit early to judge that one as well. >> what goes on? what would be the next thing that the trump administration would do now that, you know, you floated the trial balloon to actually take a concrete step

towards re-engaging on that? what -- would you do that? would a trade rep do it? how is that going to happen and is it going to happen? >> well, the president made clear that he needs some further conditions before he would want to enter into it, but right now the big occupation is with nafta because that's the one that's really underway. as i mentioned, in terms of tpp, they haven't resolved all the issues among themselves so it's a little bit premature. >> so in terms -- and then the third thing i was talking about with china, is there going to be -- what will be the next thing we hear? will it be china retaliating will it be something in addition to solar -- is steel next? you know a lot about steel obviously being involved with so many turnarounds there what do you think the next chapter on the whole china situation is >> well, there's three chapters. you have the 301 investigation

about intellectual property, right? you have the 232 on steel. you have the 232 on aluminum and then you have a whole host of more routine trade cases that come up every week or two. in the last year we did more than 80 initiated trade actions, which was up more than 50% from the year ago, largely because there are more infractions being committed by other parties. >> all right so you can't predict the future, i guess? you don't know what the next shoe to drop is going to be and whether it's from china or whether it's from the united states >> well, the president's made it very clear that his policy is to strictly enforce trade agreements, and that's importantly a job for the commerce department to do. and we will continue to do that,

and we will continue to self-initiate cases, but his speech last night was about a lot more than just trade i thought it was a very uplifting, very empathetic, very exciting speech and, in fact, after the 100th time that we stood up and applauded i stopped counting it was remarkable to have 100 times in a speech where everybody, with a few exceptions, stands up and applauds it's a great testimonial to the president as is the rising stock market so far this morning >> yeah. there's going to be a rebound obviously this morning the two six on the fourth quarter, it depends on like so many things, it's like a rorschach test for people because it would have been -- you know, if we were averaging 1.5 to 2 and then all of a

sudden you get a couple of 3s, then you get a 2.6, you would think maybe that's the low end of the current environment, but that's not the way -- i mean, i thought certain outlets say that was a disastrous quarter at 2.6. >> 2.6 is -- >> is better than -- >> better than most quarters that we've seen for years and years. >> there's some weird inventory bill typically in the last three, four, five years has been the lowest in the year >> you have the post christmas thing. it's a very big complicating factor so what would be -- what's your forecast and what would you be satisfied with for the first quarter? and will it average out to -- will there be -- i don't know what he had would' need to get an actual 3% year, but the naysayers until you get an average for four quarters of 3%

they're going to say that none of this is working. >> remember, the naysayers were before president trump's election, they were saying we'd never get over a 1.5 to 2% so they've already been proven quite wrong, and remember this year the tax bonuses just are being paid, almost 3 million americans are getting $1,000 or more check while nancy pelosi may scoff at that, that just shows how out of touch she is with the importance of a $1,000 check to the average working person in addition, it won't be until february that the withholdings go down. so the first quarter is going to be a transitional quarter in very many regards. it's quite clear the direction who would have thought a year ago, six months ago or even three months ago that almost 3

million americans would get checks from their employers specifically to share the tax bill. >> wilbur, i'm looking at president's twitter feed and it's quiet too quiet. just wanted to say that. there's 11 hours since the last one. i'm going to stay here expecting i will get back to you could be any second here >> i like it when it happens >> thank you, mr. secretary. >> so much good things to say hst night. >>e did. he did. >> when we come back, we have adp. stick around, folks.

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welcome back to "squawk box. adp reporting january pay rolls up a whopping 234,000. that's against a revised 242,000 for december that was revised down by eight but really blowing out the estimate of 180,000. and probably causing some to rethink what's going to happen this coming friday the nonpharmpayroll payroll estimates. adp was wrong by quite a bit

last month it was heavy we'll see what happens, whether or not the expectation that happens again. take a look, goods up 22,000 good construction, good manufacturing jobs services up. 58,000 for small, 91,000 for medium 85,000 for large we have a large trend. here's the detailed breakdown by industry trade/transport 51,000 education, 47. lea leisure/hospitality, 46. am i bringing in mark zandy? he puts this together for moody's -- for adp he's the chief economist at moody's analytics. how often do we do 200 plus adps in a row >> you know, i don't know, steve. it's obviously very strong you made the point about adp being on the high side relative to the rural labor statistics.

it has been all year adp numbers are stronger i'm not sure which is right. it feels like the job market is very, very strong consistent with over 200,000 per month. >> is there any particular trend here we see -- each month the manufacturing and the construction jobs, they're a lot lower than the service job which is the reality of the economy. they're pretty strong relative to how they were, say, a year ago. it looks like this particular -- two particular sectors are coming back. >> yeah, that's right. also resource and mining, right? if you think back a year or two ago the energy commodity sector was struggling with much lower prices versus the manufacturing sector struggling with trade because of a very strong dollar and the weak global economy. everything has kind of come together here over the last 6, 12 months with regards to the global economy global economy is on the same page there isn't a single major country economy that's not growing and the last time that happened was over ten years ago. this is a global phenomena

of course, you mix in a softer dollar, trade has improved and that helps manufacturing those sectors that were kind of on the soft side a year or two ago are now doing quite well that's added -- that's why we're over 200,000 jobs again. >> what happens to the unemployment rate? let's say these numbers are confirmed if we are indeed growing at 200,000 plus jobs a month, do we have to start thinking about an unemployment rate that gets down into the mid 3s here? >> yeah, i think so. i think we're going mid 3s if you do a little bit of a rit maine thick,particular, we're a. last time we were there was at the end of the 1990s tech boom you have to go back into the 1960s for a brief period when we had all of that spending related to the great society and vietnam war. then you have to go back to the 1950s in the middle of the korean war when they were over seas fighting. this is excruciatingly tight labor market. >> excruciating is a negative

word for people getting jobs, but do you think the federal reserve ought to pick up the pace here when it comes to rate hikes? >> absolutely. i think, you know, they've got to go -- they've got to raise rates now in a very consistent way. i think the fmoc is thinking three, three rate hikes, 25 basis points each time, a quarter point. that was their last forecast i would be pretty surprised if they don't revise that up. give us four rate increases. even that might not be quick enough here's a very important point, steve. every time the economy goes past full employment in a meaningful way you have a recession it's almost illogical. the economy overheats. higher interest rates and that ultimately lays the foundation for recession. you know, you could argue we're not quite there yet at a 4.1% unemployment rate. if we go into the mid 3s, it's going to be pretty hard to land the plane on the tarmac. the fed has to get going. >> mark zandi, thank you

andrew, down here for the last meeting for fed chair janet yellen going to be monitoring what happens to the forecasts for jobs today see if they stick around 175, 180,000 or if they start bumping them up. >> we will watch for that. steve, thank you for that interview and of course we'll be seeing much more of you today. in the meantime, when we return, president trump's state of the union address smashing records on twitter it is the most talked about moments. we will show you them in just a moment take a look at futures we are in triple digit territory in the green dow up 230 points. s&p 500 up 14 points nasdaq up about 35 points. back in two. oh, and there's the closing bell. (sighs) i hate missing out missing out after hours. not anymore, td ameritrade lets you trade select securities 24 hours a day, five days a week. that's amazing. it's a pretty big deal. so i can trade all night long? ♪ ♪ all night long... is that lionel richie? let's reopen the market. mr. richie, would you ring the 24/5 bell? sure can, jim.

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welcome back to "squawk box. futures right now pretty close to the highs up for the session. not quite getting back everything from yesterday but -- actually, they're up 230 at one point. they're up about -- they're 90, 80, 90, then all of a sudden boeing reported and it was up 10, 12 points. then we were up 150. then suddenly last time we checked we were up 230, 240. up 217 s&p and nasdaq also trading higher. >> boeing's the bins big winner today. yesterday it was unh that was the big drag down on the dow single stocks on both these days. >> a few upgrades and downgrades apple downgraded to market

perform from outperform at pimo. the firm citing concerns about a secular change for the iphone. i'm sure it had something to do with stock which was down yesterday based on cutting production for the iphone x. check out shares of foot locker upgraded to outperform from market perform at oppenheimer citing the likelihood of increased sales momentum from the new nike offering. >> okay. last night's state of the union speech making twitter history with 4.5 million tweets. this was the most tweeted state of the union or joint session address ever topping last year's 3 million tweets the top tweeted moment during the address was when president trump claimed, quote, we stand for the national anthem. coming up when we return, president trump laying out his vision for rebuilding america in that state of the union address. >> i am asking both parties to come together to give us safe,

fast, reliable and modern infrastructure that our economy needs and our people deserve >> we'll get the ceo's response to the plan, michael burke, chief executive of aecom joins us after the break take a look at u.s. equity futures. we are in the green in a big way. dow up 213 points. you always pay

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so you don't hit them when you dig. call 811 before you dig, and make sure that you and your neighbors are safe. ♪ ♪ good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. apple says it is responding to questions from several government agencies over software that was designed to avoid unexpected shutdowns on older phones users were upset over the revelation of that performance was being slowed down on certain phones but the company says the software was designed to try to extend the life of older phones.

in december apple also responded to the controversy by offering discounted new batteries stock is down by about 53 cents this morning. mortgage applications fell last week as interest rates rose the mortgage bankers association says that applications dropped by 2.6%. the average 30 year mortgage rate rose by 5 basis points to 4.41%. video game maker nintendo posting better than expected fiscal third quarter profit. the highest in eight years nintendo raising its full year forecast the company's performance has been helped by a surge in demand for its nintendo switch game console. sales of that have been well beyond initial expectations. by the way, check out shares of boeing this morning. the jet maker earning an adjusted $3.06 for the fourth quarter. that beat the street of $2.89. boeing topping revenue forecasts and giving an upbeat forecast for 2018 it's on fire up by 20 points

a gain of almost 6%. in pictures just in of janet yellen arriving at the fed for her last meeting last time we're going to be gelling with yellen at one of these meetings a decision is due at 2:00 eastern. is it the end of the golden age of the fed the bernanke, yellen -- >> we said that when bernanke left, that yellen was going to have a really, really tough job. >> yeah. >> she's managed to make her way through. >> i don't mean that, where the fed is involved in every decision >> every aspect of our life. >> my guess is j. powell is going to be unwinding that. >> it wasn't like this. >> there was a time when they tried for prices to go up in currency, full employment, you know, just a -- you know, sort of work around the edges they didn't become, you know, the -- >> not that we weren't always obsessed but it mattered to everybody else. >> it would be welcome if we didn't know, you know, everything about --

>> every fed governor and every time they spoke. >> that's a different question, whether jerome powell is going to pursue this complete transparency communicating method like will he do press conferences the same way that was a bernanke invention. >> if he unwinds the balance sheet and takes this all down, inevitably the fed will become less important in every market move. >> you've heard jim grant say that they can make things appear to be better but they can't make things better. it would be good if they're there to do what they're designed to do build it on the great u.s. economy that we have let's have that. >> although the extraordinary investors were probably very necessary at one time. >> qe 1. >> not qe infinity >> yeah. >> stocks staging a major comeback after a two day selloff. dom chu is going to tell us if there was anyone out there buying the dip dom, it looks like the answer is yes if you look at the futures this morning. >> we were taking a look at yesterday's action to see if anybody went out there and wagered for a little bit to take a look at the discounts in the

marketplace. to put into perspective, people wished they bought boeing. half of the dow's premarket gains are that one stock alone united health group, one of those stocks, amazon, jpmorgan, berkshire news took a pretty big size dip at the opening. yesterday at the far end of the chart and then throughout the course of the day we gradually saw some buying back in there. it didn't finish positive. still, perhaps a sign that people wanted to at least cover shorts or go long a little bit at united health care stock. also, the same thing hand with cvs health as well if you take a look at some of the overall pictures from these type of stocks in this kind of environment, if we see this volatility arise throughout the course of the day, it might be a sign that people want to get involved on the long side of these things check out the s&p 500 stocks that saw a bit of that dip buying a lot of these stocks dipped at the open yesterday and saw a gradual move higher throughout the course of the day. maybe not positive for the day but still something to watch

poulty group, a red hot sector, they sold off at the open but rose 4%. pacar up 5%. home depot shares, another stock that took a big dip at the open. up 5%. wynn resorts, we know there's still problems there still, it was up 7% from its lows yesterday express scripts, one of the names that sold off in the whole health care space, up 9% from the interday lows. as traders take a look at where the sentiment is, they'll take a look at the stocks where they've seen a little bit of action perhaps indicating a bullish side of the story. back over to you guys. >> thanks for that, dom. appreciate it very much. topic of the day, infrastructure infrastructure improvement a major building block for the president's economic plan. here's what he had to say about it in his state of the union address last evening >> together we can reclaim our great building heritage. we will build gleaming new

roads, bridges, highways, railways and water ways all across our land, and we will do it with american heart and american hands and american grit. >> joining us right now, michael burke, the chairman and ceo of aecon. good morning to you. we heard the $1.5 trillion number floated last evening. that's $500 billion number we had heard more the drafts before that suggested $200 billion would be federal money. what do you think the chances are that we get a bipartisan inbe from structure bill >> well, listen, i think we heard some of the highlights of it last evening, but we did see a standing ovation from both sides of the aisle last night on this point so if there is one issue that we can get through the legislature before the mid-term elections, it is infrastructure we have broad bipartisan support. it's clear that the stumbling block for the economy right now is going to be infrastructure.

we got the tax bill through this past year. we will see significant capital expenditures due to the tax incentives and now the thing that will get in the way is our crumbling infrastructure we cannot have an america's first policy when infrastructure is last. and so i do believe that the taxpayers and citizens of this country want to see an improvement to our infrastructure and we do have the will on both sides of the aisle. i'm hopeful. >> but we've heard from people like senator chuck schumer who said, a, $200 billion of federal money not enough, puts too much pressure both on states and some democrats don't seem to be on board with the idea necessarily of a huge public/private partnership where you're going to privatize toll roads, for example. he's talking about we need a trillion dollars of federal spending so there does seem to be a pretty big delta despite the fact that, as you said, both stood -- both sides of the aisle

stood when he talked about that infrastructure. >> so, listen, there are multiple sources of money here and the federal money, whether it's the 200 billion or 300 billion that we talked about that will leverage into 1.5 trillion, today about 77% of all infrastructure in this country is paid for by the state and local municipalities so the federal money does leverage state and local money today and it will in the future. what we're not using enough of is the private sector money, and what i liked was the direction that we will have a policy that will incent the private sector there are very large pools of capital whether it's sovereign wealth funds, pension funds around the world that are looking to put capital into long dated infrastructure assets, and we haven't had themechanism to to it, we haven't had the incentives to do it and we certainly know that we've had regulatory burdens to get into the way of the private sector coming into this market. so it's a combination of federal money, state and local money and the private sector. >> we've asked this question of

a number of guests if you were to pick the top three infrastructure projects you think that should start literally tomorrow, they would be what? >> well, i don't know that i could pick three there are so many demands across this country, but the gateway project that senator schumer knows very well and is very supportive of in new york is something that's been talked about for a long time. we've had squabbles between the different states in that region, between the federal government, the local governments. we've had permitting issues, but that is a project that is a key artery into new york city that is necessary to continue the flow of commerce into the biggest city in this country so that is clearly one that needs attention right away >> and what is your sense though of -- in terms of -- in terms of getting that bipartisan support that's so necessary for this to happen, or maybe not, by the way. i mean, that's the other piece of it. depends how bipartisan you think it has to be ultimately to get

there. what states do you think will be the sort of turning points in all of this? >> well, you know, listen, there still is a debate between the large city and the rural communities. i firmly believe there is an infrastructure plan that addresses both of those, and the private sector still wants to come into both rural communities and urban environments, and i think there's a fallacy that the private sector's only interested in the large urban markets we saw it in the state of pennsylvania last year where rather than look at one large project they bundled together 500 bridges across the state of pennsylvania into one privatization to allow the private sector to bid on the maintenance and operation and upgrade of those bridges for a 30-year period of time so that's the kind of infrastructure program that can be brought to the rural markets. and so i think there's something for everyone in this, but we first need to take care of the regulatory issues that get in

the way. you heard the president say it last night, that when it takes ten years to put infrastructure in place, that is just not fast enough to reduce the friction on the economy that we are going to see if we don't address this problem very quickly >> right. >> we see very developed countries like canada and germany that have a two-year permitting process why it takes seven years in this country for an environmental permitting process, we should be adjusting that issue right away. >> michael, thank you. great to see you this morning. >> thank you. >> appreciate it. up next, will 2018 be the year of bipartisanship we will get the democratic response to president trump's state of the union speech. congressman steny hoyer is standing by and he will join us next first though, check outs the futures this morning big up day gains of over 200 points in the futures. a lot of that coming from eing we'll have more when "squawk box" comes right back. and the wolf huffed and puffed...

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welcome back to "squawk box. the futures up right now based on the strength in boeing after better than expected numbers getting back 207 points of that 300 plus loss that we saw yesterday. of course, we had a loss on monday as well let's look at the ten year what was the highest you saw i saw 274. >> that was higher than i saw. >> was it? >> not today. >> at some point. >> yeah, was that the highest we've seen it? 270 right now. you can see on the year-long

chart, that's why there's a bit of consternation in the last couple of sessions, because those are sure >> historically much higher than we've soon the last decade. >> i'm ready for higher yields. >> economic growth, that's exactly what you want to see. >> exactly. let's get the democratic response to president trump's state of the union address joining us is congressman steny hoyer of maryland who serves as house minority whip. thank you for being here today. >> good morning. thanks a lot good to be with you. >> tell us what you think. the president laid out a speech that calls for bipartisanship this year. do you think that's going to happen >> well, i called for bipartisanship i don't think any of us thought on our side of the aisle it was a very bipartisan speech one of the problems was it started out pretty smoothly, but it got pretty hard lined as he went into a number of the issues that he discussed and of course criticisms of previous administrations and how he had changed. we also think he made some pretty glaring misrepresentations about why the economy is where it is

for instance, on jobs, as you know, there were more jobs created in 2016 than there were in 2017. there may be reasons for that, but the fact of the matter is this president was advantaged by inheriting a growing economy, an economy that was -- stock market had increased 300% between the end of the bush administration and the end of the obama administration so we were disappointed with the speech he says america's stronger i'm not sure that's the case i think -- he said we could be proud. we're certainly proud of being americans, but when you look at the respect that america's held in around the world, you see a very sharp decline, very sharp decline in the confidence in america as the leader of the free world all of those, i think, lead us to being less confident as a nation in many respects, and i think that the president's

unpopularity or lack of popularity, if you want to say it that way, reflects americans being disconcerted about how he's leading this country. >> so i'll take that as a no when it comes to bipartisanship. >> i think no would be appropriate as you looked on our side of the aisle, we didn't hear a lot of bipartisanship we heard a lot of good things, but not a lot of bipartisanship. >> when it comes to where we see the economy right now, where we see the stock market after the tax cuts, what do you think the impact of just what we've seen this earning season has been from tax cuts? >> clearly the stock market is up that's somewhat fragile although it's been a continuous rise. that's positive news that doesn't reflect what's happening in middle class america. it does give some moderate help to working people but it gives

the overwhelming majority, some 83% of its benefits to the upper 1% of our country. we thought and we believe and president obama indicated we needed to bring corporate tax rates down so that we could be competitive with the rest of the world. so we think bringing those rates down was a good thing. now whether or not -- we certainly didn't agree to bring it down that low because we think the debt is going to be exploded and that's going to hurt the economy long term and hurt future generations long term. >> steny, help us with this. you heard the president talk about the infrastructure plan. he floated the number $1.5 trillion. >> trillion. >> half a trillion dollars more than the number that some people talked about earlier some of the early drafts we saw were talking about a $200 billion federal infusion can you see a bipartisan way to get some type of infrastructure plan together here

>> joe, clearly in the -- >> it's andrew -- believe that we need to invest in infrastructure so i think there's not disagreement on that the issue is where you get the resources. another $1.5 trillion, there was nothing in the speech that said how that was going to be raised, how that was going to be gotten so that we could invest in the infrastructure the president proposed i certainly want to see the details of that. the democrats want be to see the details of that. what we don't want to see is an increasing exacerbation of the deep, deep hole that we're creating for our debt with the $1.5 trillion from the tax cut, $1.5 trillion in infrastructure and other programs the president mentioned and his very substantial increase in defense, but there are no ways that the president has indicated that we're going to be able to pay for that, therefore, future generations apparently are just going to be pushed deeper, deeper, deeper into debt that's not good for our country.

it's certainly not good for future generations. >> so there's no -- >> go ahead. that was andrew, steny if it was me, you know i'd talk about the terps to start out we'll always have -- we'll always have the terps. we'll always have boomer esiason, you and i. >> you've got that. >> purdue tonight, which are they really that good? anyway, we'll see. >> you know, we've come close, joe. a number of times. >> seen a couple of games. >> play michigan state, i guess, this coming sunday the fact of the matter is that we've come close but we haven't gotten there yet of course, we had two very substantial injuries. >> a lot of parody this year see xavier lose and then i see -- it's like anybody can do it anyway, what i was going to ask you -- that was softening you up a little bit so i can go to -- so five -- five different responses, and i saw -- you know, a republican, kind of, ari fleischer, but he said that is

a -- sort of representative of -- that there's no clear democratic, i don't know, message or candidate for 2020 and as we get closer everybody's going to go further and further left until they actually fall off the face of the earth. and knowing you, do you ever look at the geographic center of the democratic party right now and kind of look around and just say, how did i get here? what happened? are you uncomfortable where it is right now, steny? >> let me tell you the good news, joe, from my standpoint? >> okay. >> i think you're going to see us win a lot of moderate seats around the country, moderate seats that can go republican or democrat, swing seats. we see it throughout the country in many, many areas of the country, the opportunity to take back seats that we've held or seats that republicans are losing so i think you're going to see a balancing, but i also think you're going to see a continuing

unity of things that we think need to be done, investment in jobs, investment in infrastructure, maintenance of health care for all-americans access, which has been undermined substantially by this administration and by the tax bill where some 13 million by this administration premiums go up very substantially. i think you will see a lot of the moderate district. >> it sounds like you are saying you wish the party was less, you know, has not move quite as far left >> the democrats ultimately, that's what we are going to be focused on, making sure that americans, working americans who don't think we are advantage by this tax bill that working americans have a better job and future >> thank you

steny hoyer, i want to thank you for your time. >> i am taking up a collection to try to get the right sculptor and the right person >> when we return, jim cramer is joining us live from the new york stock exchange on his take of all the market moves. here the futures are sharply higher on monday and tuesday my experience with usaa has been excellent. they always refer to me as master sergeant. they really appreciate the military family, and it really shows. we've got auto insurance, homeowners insurance. had an accident with a vehicle, i actually called usaa before we called the police. usaa was there hands-on very quick very prompt. i feel like we're being handled as people that actually have a genuine need.

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welcome back, the big story this morning is shares of boeing soaring. the company beats at the top and bottom line and gave upbeat earnings forecast for 2018 raising guidance of positive effects of the tax reform. lets get down to the new york stock exchange, jim cramer, is joining us now i have not talked to you yesterday or the day before. do you know the super bowl is coming up? you are aware of that. >> oh yeah, this one does go to the birds. it is not a blow out but it is

time to recognize who's not the spirit defense on these games. it is disappointing that betting is going the wrong way it is been wrong the whole way >> consensus is always wrong, jim. i saw on trending on twitter, i thought alex smith, i thought that was huge for the redskins would you want him instead of kirk cousins in a minute maybe he gets along better he's four years older. they do save some room for the cap. i think kirk was unhappy what are you going to do with a guy unhappy making $30 million i don't like the rest of the nfc except for the eagles. >> pull back, short and sharp, do we have more work to do or was that monday and tuesday? >> look, i got up this morning and i said jesus where is the

apple downgrade and where is the guy negative about apple and a few minutes later, i appet appe, listen, we stop selling iphones, it could be something that involves revenue streams and products that's much better. you take facebook today. look, my son is on facebook. does that really have to go up every single day when that conference call is always a nightmare. the last few quarters have been down they always say listen, we have to take revenues why not let it come in there is some moron who's buying it there is plenty of opportunity to buy it. >> thanks ji wll sm,e'ee you in a couple of minutes. >> thanks. >> meanwhile we'll be right back with "squawk box."

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liklike like -- right? mom and dad and baby ellie are all healthy and happy. >> yeah! >> yeah, dave and katy on the squawk family. all of us. >> all right, everybody, have a great day today, make sure you join us tomorrow right now it is time for "squawk on the street. ♪ good wednesday morning, welcome to "squawk on the street," i am carl quintanilla and with jim cramer and david faber. futures is up strong as we reclaim some of tuesday's loss a lot to get to. the final day of january, and europe is mostly green adp is strong of 234 oil is on pace on a third day down ou