good morning it is 8:00 a.m. at broadcom headquarters in san jose, california 11:00 a.m. here on wall street and "squawk alley" is live ♪ ♪ good morning welcome to "squawk alley." with me at most nine, morgan brennan and david faber. carl kinquintanilla is in pyeongchang. >> we have mainlior averages

pulling out of correction territory adding to friday's gains following the worst week we've seen in the markets in two years. christine lagard weighed in from the world government summit in dubai. >> you compare valuation, you know, from a week ago, there's been a market correction off anywhere of 6% to 9% which frankly given where asset prices were very high, it's in our view a welcomed correction. and we have observed suddenly despite the volatility the market channels and pipes and mechanisms have worked well. and we also see the financing is still plenty and very much available for the financing of the economy so, you know, corrections happen they were due to happen. and that's where we see it >> for more, joining us at post nine is citi's chief strategist tobias letvowich

>> we have a lot ofthings happen i think the markets were ahead of the skis. it's the olympics. i have to use the winter application. but, look, the sentiment we saw, they have been showing us that euphoric levels have been in place since around christmas time investors kept on buying thinking the economy is strong and earnings are strong. and that model suggests that over 70% probability of losing money. so we were kind of warning investors be a little careful here don't chase the tape and we saw it in exactly the places we thought we would see it in the inflationary data. most of the work on wage inflation continues to suggest we're going to see an upward trajectory and as a result, there are certain things you should be doing and shouldn't be doing. >> what are they if you -- and where do you see sort of rates going given your view on wage inflation. >> we look at the gap between the unemployment we almost suggest you look at something from 2.5% inflation to

3.5% wage inflation in the year's time. we got a good bump a couple fridays ago. the trend is certainly not your friend and bond yields have to adjust to it. what it really means is you buy value stocks and cyclicals and move away from growth and defenses and that's where investors have liked to be, particularly technology >> so what are the markers that you are looking for if the market is due a sustained turn down whether it's in march, april, may, some time are there specific numbers that you're looking for whether it's continued wage growth, whether it's inflation and some other metric >> we've been watching wage inflation particularly you've also seen other stuff going on with regards to commodity prices so wages are about 60% of corporate costs and then raw material input price is another 10% to 15% then if businesses are looking at 75% of the cost going up, they're going try really hard to push some of that along to you and i as consumers having said that, it's not that the market is due for this

massive look it was just thinged were ahead of the skis. we still have 2800 on the s&p 500. current levels plus dividends, you're talking 10% upside by year end people got too excited it is that simple. >> ten year, 2.9% yields today there is this debate emerging whether markets are pricing in 3% yield on a ten year what do you think? >> i think if people see 3%, they're going to worry about 3.25% and 3.5% sentiment will start to shift to something more worrisome we think north of 3.25% is where you have to worry about the impact on valuation on the economy. but actually one of the really good things that got lost last week in the kind of jie ragyrat and wild swings is they came out and asked banks, are you easing or tightening? credit conditions are extremely easy right now for business. they can borrow money easily,

even though the feds raised rates five times, we've seen credit spreads come in, financing costs are really attractive and businesses usually grow if you look at that data for commercial industrial loans, usually it is economic activity by nine months and very bullish for economic activity. >> where are you on the euphoria index now? have things calmed down sufficiently >> not enough yet. we're tracking positioning i should state up front, we're trying to grab your attention with that. you know, we have to learn to do marketing as well as you guys do so if we look at the model, it is trying to pick up nine factors in positioning in markets. so i'll give you one example put-call ratio two fridays ago, after we sold off the first data off the wage inflation is .77. that is one of the inputs to the model. this past friday, we were down 180 points, it was .75

it whats actual was actually lo. so investors still itching to buy here we need a little bit of that enthusiasm, kind of to calm down further. so we're still in euphoric territory for the propability of losing money i don't think it will stay there if we continue to have this type of volatility markets. eventually people will ease off. >> how do you define that fine line between euphoria and confidence is confidence just informed euphoria in some cases >> so again, that's where i'm really careful by defining it. it isn't we're measuring a feeling. we're measuring positioning and then market outcomes i always say to people, i don't care how you feel. i care how you act sometimes that gets me into trouble. but the idea is what are the probabilities of outcomes and markets not what do i wish markets would do i think too much of people's ideas are oh, earnings are good, economy is good, stocks should go up. there is such a thing called a good, you know, a good company and a lousy stock. >> thank you >> thank you very much

>> joining us from citi. >> let's check in with carl in pa pyeongchang, south korea >> exciting day. one of my favorite stories of the day is that if you're a snowboarder who loves the olympics, you're kind of in heaven right now red girard is the first american to win gold at these games 17 years old in the men's snowboard slope style. and then jamie anderson wins gold in the women's snowboard slope style. the first woman to win multiple snowboarding gold medals her final run had been delayed due to winds but she nailed it today. the u.s. is now 4 for 4 in snowboard slope style having won men's and women's in sochi and now here in pyeongchang. we always talk to athletes about how they're building careers both as an olympian and after they are finished being an olympian we caught up with jamie anderson and asked who is on your wish list of sponsors and why

>> i've been so blessed this year working with united airlines being a super hero in their campaign and i signed with audi this year i'm working with polo ralph lauren i'm working with procter & gamble i'm like holy moly how did all of this connect? but dream sponsor? it would be cool to work with like a big solar plant or some company that would deck out my house with sustainable energy. i'm all about trying to be efficient. >> really? elon musk, get on it >> call me >> can i maybe have a little meeting? because you're amazing >> you never know with ee lon th -- elon, that may happen. the united states with four medals so we've done well in some specific disciplines we'll see if we can get that overall medal count up in the days ahead

back to you guys >> yeah, carl, it really seems like particularly with the winter olympics the endorsement possibilities are where it's at for the athletes what is your sense of the business savvy that is grown among some of the athletes who get such a spotlight around this time >> i think -- i mean, it's light years ahead of where it was 20, 30 years ago we talked to apollo ono who exploded on the scene 20 years ago. at the time, said you'd come into the games and there was no social media or internet staring you in the face. it was all about your event. and now these athletes are building careers as they become famous and we're all getting to know them on weeks like this one. so i think the pace at which you build that kind of thing is happening much, much faster now. >> and sort of on the heels of that thought process, how important has social media become to all the athletes >> i mean that's a huge part of just building an audience. they have obviously their

favorites in jamie's case, she loves instagram. others still talk about snap i think twitter still has that reputation for being maybe a little bit too confrontational to build something that is nice. and that's what you're looking for in the early days in marketing. >> yeah, it's great stuff, carl. i know it's very late there and probably cold for you. but we're just loving everything you're sending back our way. so thank you, carl quintanilla in south korea >> see you in a bit. okay well, the biggest battle in technology or certainly one we've seen in a very long time continues. this morning broadcom announcing it raised $100 billion in committed financing. behind the $82 a share cash and stock bid to acquire qual come they're scheduled to meet this wednesday to at least potentially negotiate or look like they're negotiating the man behind the plan is the ceo. he joined jim cramer and i in a

cnbc exclusive in the "squawk on the street" program a little while ago. we also how discussed mthe bid. >> nkbi is not -- will not solve qualcomm's problems. it's the broken business model that is and if, we said it too, if qualcomm raises the price on nxpi, we made it clear it's a clear transfer of value from qualcomm shareholders to nxpi >> so another walk away. you walk away -- >> we'll preserve all our options. >> that was actually an important moment because, of course, there are many nxpi shareholders focused on what will happen or won't happen as soon as this week with that on going saga between qualcomm and nxp it's a $110 a share deal the stock trading well above that they need 80% of the shares to be tendered to be able to close that deal. they are expected to get

approval from the chinese anti-trust authorities soon, perhaps as soon as this week you could see this come into play when you have tan saying we'll preserve the options, he'll saying we're going to go to the shareholder vote on march 6th. he didn't say we'll drop our bid. >> that's a bit of a shift >> i thought they would take the economic value out of their bid, perhaps, if they're paying more for nxp. but, yeah, at least publicly it's bate of a shift >> yeah. and it's also important to note, i think, how much of a cultural disconnect there is between qualcomm and broadcom. this isn't just about price for qualcomm qualcomm sees itself as this creator of fundamental technology behind wireless hock tan says the licensing business model is broken a the love people say it's been broken from the beginning. people are trying to break qualcomm's business model and fighting the legal bad lz. the licensing business has

always survived and bounced back qualcomm argues it's just because they got the patents and smart engineers who are creating the future i don't know if investors are going to buy that this time around, we'll see. >> we'll see >> as you well know, it is a stumbling block for qualcomm given that litigation taking place and the fact that the partners are not paying them any longer for the property. that said, tan asked if he's going to close the business down he didn't say initially that will be the case tlachlt that is the expectation over time we know r & d is aa key for them they spent so much on r & d. how much will qualcomm preserve of that budget is certainly a question >> do you think as somebody who kafrd m & a for many years that the regulatory hurdles for this deal to happen are surmountable and do you think it spurs even more consolidation in the chip business we've seen so much of it already. >> yeah, we have antitrust is key to this deal overall. and qualcomm has said repeatedly it is not comfortable with the

antitrust implications of this deal and wants broadcom to offer assurances to a hell or high water provision. a legal standard committing them to do anything they absolutely have to do to get approval from the various antitrust authorities around the world we asked hok tan if he'd be willing to do that and why not he keeps saying this is not going to be hard they're not willing to go there. what they're willing to go to is an $8 billion reverse breakup fee. qualcomm doesn't see that as enough it's hard to imagine as they go into the meeting on wednesday that they're going to make a lot of progress but we'll reserve judgement for now. >> shaping up to be a busy week. >> yep still ahead, we're awaiting on the president to speak about his budgets plan with a big push to fix the country's infrastructure we'll bring you that plus the man behind the campaign to impeach him, billionaire democratic donor tom steyer joins us with his thoughts on the rollout. "squawk alley" will be right back right now, the dow up 273 points

the house releasing the long waited infrastructure plan this morning aiming to stimulate $1.5 trillion in new investments over the next sen years. joining us tom steyer, founder of nexgen america. you said that lawmakers need to

submit a list of demands to the president and the republicans and not budge from it because you're saying president trump won't stick to a position and let that play out. he's not a fair negotiator what are a couple of those points and how will it affect this infrastructure plan >> well, let's start with the whole idea of rebuilding america. you know, i think there's a sense that if we spend a lot of money that the spending of money in and of itself is a good thing because it creates jobs and, you know, it basically gets the economy going. but the truth of the matter is that as an investor, i know that inst infrastructure is another word for investment so making an investment in and of itself isn't a good thing a good thing is smart investment, the kind of things that actually move the country forward and let us all prosper so when i think about what we should be talking about, we know we have to make investments in

infrastructure than will be profitable for a long period of time i know if we're going to do it, it has to be sustainable, build the clean infrastructure that will let this country compete suck s successfully for decades to come and be the creation of innovation >> so give us a couple specifics. what are two things that you think would push us in that direction? >> well, i think one of the big questions in the united states is going to be how we generate and use electricity. so for one thing, we should definitely be rebuilding the electric grid around the country to make sure that it's very adaptable and that we can put in -- we can move electricity around the country really well and that we can use clean energy from different parts and ship it to other parts of the country. so that's one thing we need. i think another thing that we definitely need is we need to connect this country

economically in the way that the highway system did in the 1950s. and that means people have to be connected through broadband. the basically every community in this country needs to be connected to the silicon valleys and the new yorks and the chicagos and the austin, texas so everybody has a chance to be hooked into the growth and not cut off and separated and isolated >> tom, i want to dig into this idea of infrastructure investment a little bit more given the fact you have a history in alternative investing and private equity banking and looking at this blue print we have from the administration that shows a streamlining of the regulatory process and thus cutting down time it would take for a new project to be sort of brought online, it looks like there is more possible alternatives for financing and then, of course, you put that on top of what is a lower tax base, doesn't that sound like a pretty good return on investment for a lot of private guys that maybe otherwise wouldn't be stepping in here? >> well, let's just unpack what

you just said. getting rid of environmental protections that ensures people's health and longevity, is that a good investment? to get rid of it so that people with build things that pollute and make people dangerous. that doesn't sound like a good investment to me lowering tax rates on corporations so that their bottom lines are bigger but in fact so that we take money away from the government so that normal programs are going to have to be slashed over decades to come, that doesn't sound like a smart idea to me so when i think about something, i really think we should be taking a longer view we should be betting on the american people. and we should be asking ourselves what really creates prosperity in america? and to me, what really creates prosperity in america is the productist and success of the american people. so everything that i do would be based on the idea how do i make americans successful

>> tom, so you're touching on something that as an observer kind of puzzles me i'm not hearing a really clear economic narrative out of the democratic party right now that's really going to push them ahead perhaps in the midterms. a lot of anti-trump, anti-republican stuff. but what is the positive pro active economic narrative that the democrats you think need to take up in order to have success in november? >> i think it's two very simple points the first one is you have to ask what is going to make a successful country in the 21st century? the answer is going to be the organization of productive, well educated people in that country. so if you look around the world, it's not going to be based on natural resources. it's not going to be based on centralized big companies. it's going to be based on the people of that country being competitive around the world so number one is invest in the american people. this budget does the opposite.

every single program that delivers health or education or opportunity to the american people will be cut and secondly, we do need to rebuild this country we absolutely need to rebuild this country but the question is do we do it in a smart way or do we do it in a dumb way and i can be -- any country that believes that future is fossil fuels and the future is the industries of the past is kidding itself when we make investments, we have to be anticipating the future we have to be looking to the future we have to be making it possible for the american people to succeed in a global environment. and that is not what this administration or the republicans are doing but it's critical for the american people that we do it going forward. >> so you don't think all of these proposals that are sort of out there including in this infrastructure one to retrain and reskill workers is -- you don't think that's going towards that >> i do.

i haven't had a chance to see the details of this infrastructure program so i know it was released this morning. i haven't seen it. but what i have had a chance to see is what this administration has done in the past in terms of the absolute dollars that they want to spend on all the programs that make american citizens productive, effective and prosperous and traditionally they cut every single one so i need to see this infrastructure program and unpack exactly what it is. but their vision of america has been one which is to look backwards, to try to re-create the past as opposed to building on the strength of the american people for us to succeed going forward. >> all right well we'll see how this plays out. thank you tom for joining us tom steyer >> thank you for having me when we come back, much more on today's bounce back the dow is up 281 points, off highs of the day but still on track for the second csetioncuve

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. european markets are about to close and they look better than last week. >> that's right. stocks are rebounding after seeing a 5% decline, the worst week in two years. and the come back is being led by germany which was the key lagger in last week's selloff. higher by over 1.5%. france, ft-se 100, italy and spain also joining this rally that we're seeing. but still an active discussion aren't strength of the euro. pushing import prices down despite last week's slide. the euro still higher by 15% over the past one year and higher by 4% in the last six months today black box research team mentioned the euro strength playing out in earnings. it is one of the key headwinds for european stocks which are lower for the year here are some stocks specific stories that are catching our attention today. they put in a bid to buy sr steel, one of india's largest

steel producers in india they do face a rival bid from russia's bt banking. shares are up over 2%. and lastly, barclay's charged with yet another criminal case by uk authorities related to cash injections from investors in 2008. that stock higher by .25%. back to you. >> okay. i'll take it, thank you, seema mody when we come back, carl joins us live from the winter olympics in pyeongchang, south korea. he got sideline time with athletes from all over the world and he asked them what else about bitcoin? take a listen. ♪ i do not own bitcoin, no, i don't. i stayed out of that whole whatever it is i don't even know what it is >> i don't own any of. i heard it it is a cryptocurrency

there are a few people that visit. for me to use it, i will see how it goes. >> i hear about bitcoin. but i'm not interested about bitcoin. >> i have had to buy recently. first one was recently >> i have friends that trade on it but i don't own it i don't own any, unfortunately >> i'm not so sure i heard so much about it i don't know it seems like it's too late to jump on it or get on the train, you know >> from what i read, it dropped recently again it was really high a couple weeks or months ago. i don't know i haven't really paid that much attention to it other than you talking to me about it >> no, i don't own it's not so popular in belgium but apparently i missed meinbeusyore making good money if you invested a few years ago. so good at this? had a coach in high school. really helped me up my game. i had a coach. math.

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hello, everybody i'm sue herrera. here is your update at this hour international olympic committee president says that he plans to visit north korea after the olympics to cement ties with pyeongchang. he said he is making that visit on north korea's invitation. emergency workers finding both flight data recorders from a russian airliner that crashed over the weekend killing all 71 passengers and crew onboard. investigators quickly ruled out a terror attack. turkey's prime minister meeting with his macedonian

counter part he says the u.s. should reconsider its support of the syrian kurds this is coming ahead of a visit by secretary of state tillerson later this week. and if you're shopping for a cheaper wireless plan in the coming months, beware. according to "the wall street journal," sprint and t mobile have signalledthey may be dialing back on offering discounts this year. that's the news update this hour back downtown to "squawk alley." morgan, back to you. >> thank you, sue. sue herrera back at hq markets continue to rally this morning after last week's wild swings. joining us now is bob michel, j.p. morgan cio and head of fixed income and ben ladler, head of u.s. research. i'm going to start with the last point that sue made about the possibility that wireless plans might actually start to see some pricing inflation. this is certainly been sort of the focus, this idea of inflation. so, bob, let's start with you. we have treasury yields at 2.9%

on the ten year today. how focused are you on the rising rates and inflationary environment taking root? >> very much so. there is no doubt that inflation is picking up. if you look at the six month annualized rate, of course, cpi, it's 2.2%. so it's well above the fed's target this time last year we were dealing with a different type of price action in wireless and that seems to be working its way out of the system. and when we look at wages, they look pretty good the last average hourly earnings was up 2.9%. and that's before all these companies are sharing some of their tax wind fall with their employees. >> what is your take on equities what does this mean for equities this correction we've seen is the worst over? >> we certainly have upside from here which we didn't have before to our 2850 target the sentiment pulled back. i think that is a good thing it was flashing red a couple weeks ago. i think markets are right to be

concerned where bond yields are and how quickly they ramped up and the wage story but ultimately you have 18% earnings growth coming out of the u.s. this year that's an incredible number for this stage of the cycle. the one caveat, the average equity pullback over the last 30, 40 years is 16% and takes you months, not weeks. and so i'd be a little cautious that we're finally all the way through this >> bob, how likely is it that we get some kind of an infrastructure deal? people will railroare already l at midterms. there is a lot of partisan ranker in washington do the republicans need a deal of some sort or icing on the cake if something happens? >> i think it's more icing on the cake there is no doubt as to mid terms are coming up if you want to get re-elected why not create a healthier economic environment? from our perspective, we don't like the additional supply we have the central banks exiting the market they were the price in sensitive

buyer for the last nine years. as they're going, we're going to increase supply. that's worry so many for us. >> there's a lot of supply coming into the market given the deficits generating this year and next with the budget deal that we just got to john's point if we get infrastructure, it adds to it. you are concerned at all the treasury's ability to keep up? are we going to find a strike at some point that results in higher rates >> bond yields at these levels just don't make sense for what's going on in the real economy and the prospect of supply in the central banks exiting. that's how much the central banks have distorted the markets for the last nine years. so there is a lot of repricing to do. how the central banks manage that glide path will be interesting. right now it's just the fed. we'll see what the bank of japan and the ecb actually do. >> and then when you're looking for signs that correction is over, you made the point that typically they go down as much as 16% a little longer what would be the signs? how will you know if it's

possible >> sentiment indicator is flashing sell a couple weeks ago. now it's absolutely average. we got the inflation number on wednesday. i think that is absolutely key the market is right to be worried about inflation if it does keep moving up. i'm not sure you fully see that. and the ten year, i mean, we're not quite as concerned here. we think you've seen the peak. if bond yields stabilize and wages remain reasonably benign, i think multiples, they, you know, i think the issue is not growth growth is great. theish sue what you're prepared to pay for that. we're going to get used to paying a little less for it than we did historically. i think there is still upside from here. >> from your view point, what's on sale right now? >> i think the surprise has been emerging markets that's our top pick globally it's performed very well throughout this correction i think that surprised a lot of people it hasn't surprised us this is where you're getting the strongest growth and cheapest valuations and where investors are the most bearish so that's the bit of the market i'm focused on >> bob, what about rates you said you think they may be

going higher how much higher? let's say a year from now we're sitting here, where do you expect them to be? >> i think over the next nine months, we could hold 3.5% this time next year, central bank balance sheets go from expansion to contraction and then i think you're headed to four >> you do? >> i do. >> equity market can hand 48%wil 4% >> lower multiples, that's what that means >> right >> and we'll leave it there. ben and bob, thank you for joining us >> thank you >> thank you let's get back to carl at the winter olympics in pyeongchang. carl, did you find somebody who is investing in crypto, right? >> we did. we saw some good short strak speed skating over the weekend and nobody knows that sport better than apollo ono, the most decorated winter olympian in u.s. history that now he's starting a business career and has a business career going is more than conversant about the

blockchain he said it will be the biggest thing since the internet recently and we asked him what he meant by that. >> i'm hyper bullish we focus on the exchange side. and i love the culture i love the idea set. will it be the currency of the future i don't know that's not for me to say i think the blockchain in general is definitely here much it's being utilized and every major organization and business and enterprise has poured billions of dollars into using this as a fundamental tool to enhance their business >> yeah. but you're separating it from bitcoin at $8,000, right, ethereum do you own any of those? >> i do. >> do you think -- i mean do you think there is fair value here >> i don't know about the value proposition, right the value proposition is difficult to articulate. i can tell you this bitcoin today whether it's $8,000 in december when it was $20,000, bitcoin is the same as it was yesterday as it is today as it's

going to be tomorrow it's worth one bitcoin and the technology that funneisd fundamentally behind that is the basis. >> where did you get in? >> i first started accumulating bitcoin in 2013. yeah >> finally, social media >> you said you love instagram and twitter. you said facebook is coming back strong what did you mean fwha >> i think there -- look, facebook understands the way that we transact value, advertisement, interaction in a way that perhaps you can't get in terms of instagram. there is more texture associated with it. twitter is a fantastic medium for conversation to keep it tight. and i get a lot of my news from twitter to be completely honest from you i follow a wide array of individuals. >> but engagement with fans, where is it strongest? >> it depends on your demographic. it depends if you're a millennial millennials are using snapchat

and heavily involved i love facebook. i love instagram i love all mediums and channels. i'll tell you, keeping up with social is like a full time job >> always fascinating to get the business sense from some of the athletes especially one like ono, guys, who parlayed olympian career into a pretty lucrative television career whether it's with nbc sports or dancing with the stars and obviously has his fingers in all kinds of pots so fascinating to talk to him. back to you guys >> yeah. now trading with the wrinkle vie. the key is to find a former olympian that made that endorsement money and they're the ones messing around with the cryptos. >> we'll be on the hunt for that later this week. >> all right carl, thanks so much good stuff we have a lot more "squawk alley" coming up for you first though, rick santelli, let's go over to you and find out what you're watching to day. rick well, of course, i'm

continuing to monitor interest rates. they've been different in 2018 versus 2017. we're going to talk about the interest rate twst aerhe eak.o epft t after a day like this,

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coming up on "the halftime report" with, stocks in the first back to back gain of the month, we're joined by blackrock's chief investment officer jim keenan we'll ask him how far rates could rise and what that could mean for the markets ge analyst of j.p. morgan is

back with us exclusively today as he makes another big call on that stock another exclusive for you as well, top energy trader mark fisher joins us on what he's doing after last week's carnage into space "halftime report" starts, jon, noon eastern we'll see new 15 minutes >> all right, scott, thank you breaking news on the budget. let's get to our reporter in d.c. >> the white house just releasing the budget proposal for the next decade. the administration says it includes $3 trillion in deficit reduction and that includes $1.7 tr trillion in mandatory spending cuts congress agreed to increase spending by $320 billion over the next two years after 2019 the white house says they'll propose reducing discretionary spending by 2% a year after that that's how they get some of the big deficit reductions but unlike previous years, guys, the white house says this budget

will not balance at the end of the decade the deficit is still expected to be $363 billion. that's environment quif lent eq. they made balancing the budget a chief priority back to you. >> you just mentioned 2% cut in discretionary spending in the coming years any more talk about the possibility of welfare reform? >> that's what would come from the mandatory spending side. the administration says they are expecting to see $237 billion over ten years in savings from medicare we're still digging through this document which is hundreds of pages to find out exactly how they're going to change some of the programs >> great stuff thank you. joins us from washington, d.c. now let's get to the cme group and "the santelli exchange." >> good morning. thank you. i have to weigh in you did such a remarkable job.

you know, to talk about any type of discretionary spending in the future that's going to make a difference toward deficit picture, all i can think of is senator simpson. it is unbelievable the amount of light that we see for discretionary spending is getting smaller and smaller. all our forced entitlement spending pretty much on automatic pilot eats up the balance sheet. and this isn't about what you think about entitlements this is about if you really want to control deficits, it's easy to get together and spend more it's much more difficult to get together and spend less and tackle where the spending is going. all right. to today's notion. you know, we heard of the two step the treasury market and all sovereign markets are doing the two step it's important if you recall, the uppattern after november 16 election outside of 2018 for equities was basically a two step it would go up two steps, hardly have a step back, keep going up, small retracements

hit a certain personality or an mo and whether that failed and things changed with regard to volatility, ranges, the market changed. same date of birth said for treasuries this year it's a two step. we go up, we come back a little bit, we keep going up. it's pretty steady for most of 2018 retest becomes key i know normally we like to pick very specific resistance levels above the market i think this is the kind of marked that when rates do go down where they hold is going to be key and if we go through key level like a 263, whatever the high is when we go through that, it could be the high for the year it's different than we normally talk b something else that's different. you've seen me last week do the cumulative balance sheets of central banks which would be the black line and blue line, global equity markets or our stock market, no matter how you pick it, it's the same. we correlate with regard to the equity markets what is going on with central bank balance sheets but what we don't talk about is

at some point in the future you're going to see the central bank balance sheets continue to dwindle. they will level off somewhere. the key is right here. nobody talks about this. are we going to follow it up and follow it down or is there going to be that what i think happens and that's key we have seen a lot of talk because of the budget. we talk about future stimulus through infrastructure but at the end of the day, three things to pay attention to. inflation. it hasn't really been the type of inflation that we're going to look at this week. we want to see if there's a notification there as well it's mostly been about wages i think last month's high wages was one off. why do i think that? i don't think we're at full employment i think we have 95 million workers that can be pulled back. finally, tax policy. don't think about it as a stimulus for the economy it is a stimplus for the

economy, not so much for the market tax reform is different. back to you. >> all right thank you, rick. as we head to break, taking a look at shares of cisco up nearly 3%. rising from an upgrade we are getting headlines on the president's budget plan. we'll take you to the it use live when squawk alley returns. stay with us 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.

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details of the president's budget and infrastructure plan is trickling out of white house. >> a meeting with local officials and state governors, a listening session of sorts has been going on for close to an hour attended by many members of the cabinet as well add the west wing staff the president has been telling the attendees who will need to pony up a sizable amount of money to fund a large part of this program let's see how badly you want it. he says the u.s. infrastructure is in dire need of improvement and the federal government has wasted money on projects in the middle east. in this listening session he's run through a gammet of other issues from immigration to the budget to military spending to nafta saying and reiterating his line that they will get a better deal and if they don't, then they will back out of nafta.

interesting to hear him sort of on such a wide spectrum of issues and one things making headline s a comment he made about a reciprocal tax he said there will be one come ng the weeks and months. we'll see what that policy looks like infrastructure has been a topic that's illicited some grimaces here they are sidelined by something else when they focus on it whether it was in june, director comey's time on the hill or in august the press conference that went into a situation where the president refused to condemn white supremacists after the

charlottesville attack now the white house is trying to refocus on infrastructure and we'll see whether state or local officials are picking up their end of the bargain from here john >> all right thank you. a story we'll continue to follow as we head to break, let's take a look at where the major averages stand right now we're in the green the dow is up 333 points the nasdaq up 95 points. more squawk alley after this

as we approach halftime, we're just about at session highs on the dow up 358 points and the s&p also in the year session highs. apple performing well up 3.5%. >> facebook one of the rare not well performing stocks on the nasdaq john, it's 20 times a lot of people's 19 estimates which is arguably cheap but this continued drum beat of negative publicity does seem to be hurting facebook a bit >> quite a cover story in the

way the controversy around fake news and russian interference has ruined the company over the past couple of years >> absolutely. sounds like a good time to head to the judge for the half. back at headquarters all right. welcome to the halftime report stocks at session highs and our top trade this hour is correction watch stocks surging now on track for their first back to back gains of february now down 14% from the highs as a great buying opportunity finally emerge with us for the hour today joe and john we begin with the mrkts. stocks continue their march higher this hour we said highs of the day