shares of major toymakers are sharply lower this friday march 9, 2018. seems late for a jobs number "squawk box" begins right now. ♪ live from new york where business never sleeps, this is "squawk box." good morning welcome to "squawk box." we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. joining us is joe terranova, a cnbc contributor >> member of the half time report >> great that you're back. >> i'm back. >> is the show back on >> no, we were guiding the investors through the equity correction during february >> during the olympics you were not on >> you were watching, i know you

were >> wasn't it curling >> everyone was selling equities >> welcome back. >> joe is on at noon >> you're on at noon >> yeah. >> you're not on at 5:00 >> mm-hmm. >> glad to be here >> good to see you >> good day to be here >> you're marine like with the hair >> yeah. >> but -- >> easy to take care of? >> a wash cloth -- >> look at andrew. >> andrew looks good today >> new hair cut. >> handsome man. >> it's a good one >> that's -- >> i will go down that route in the summer >> that's an idea. >> we talked about it yesterday. >> i have a place. >> it's jobs friday? >> it is >> what happened it's late. >> it is late. must have been -- was it the first of the month >> i think you should skip it. >> no, this is a big number. we need to know the february jobs report. we need to talk about the unemployment rate and what's happening with wages look at the futures.

after a positive day for the markets yesterday, there are green arrows this morning. dow up by 50 points. nasdaq up by 20. s&p up by over 5 overnight in asia. you can see it closed up by a half percent in europe trading is under way at this hour the cac and the ftse are flat. the dax is down by a third of a percentage point the ten-year, when you look at the treasury market, looks like it is yielding at this point 2.881% >> our top story, president trump has now officially agreed to meet with north korean leader kim jong-un for nuclear talks.

kim jong-un talked about denaukldenau denuclearization with the south korean representatives, not just a freeze also no missile testing by north korea during this period of time great progress being made. joining us now is nicholas burns. good morning did you ever imagine a meeting like this? >> no, it's a shocker. it's a surprise. i think this is positive that the president and kim jong-un will head towards diplomacy because we were headed towards a collision with north korea let's hope prognosress could be made there's never been a meeting between a north korean leader and an american leader going all the way back to the late 1940s when north korea was formed.

i think the president has a lot ahead of him but the instinct we have to have talks is a good instinct on the part of the president. the downside risk, there's two big ones one is is kim jong-un serious? he and his father and grandfather played the united states and south korea before. he's in a strong position. he has nuclear weapons he made progress on his nuclear and missile tests. it's unlikely he will want to give them up that's one big risk that he just wants the meeting, legitimacy and perhaps sanctions relief >> even if that's true, you bought yourself some time. >> you have. that's right the other risk that people are pointing to, but it can be managed, is that we don't have a team in place. our most important expert just retired, ambassador joe young. no assistant secretary of state. the bench is thin. if the meeting is in may, there's a lot of work to do to figure out our strategy. >> let's say the president

invites you to the white house this morning and says i need your help. i need to figure out what we'll do at that meeting, what will we say, and what will we say between now and then so the meeting doesn't get called off but we hold his feet to the fire >> the most important thing is to be yunited and in lock step with south korea, japan and china. china has a lot of influence here you want those three countries to agree with us on what the goals of the meeting are and the process. getting that straight, continuing to impose the sanctions on him, not letting any country skip out on the sanctions because of the process of this meeting, there has to be leverage here an pressure on the iranians for this to work. >> ambassador, you've been on a

lot talking about this when we did talk to you, how would you -- i'm trying to remember exactly -- i don't want to put words in your mouth you didn't seem overly positive about trump's bella koes icose r aggressive stance he took. i don't remember you being positive about that. i thought you were of the mind that it could be a negative to an outcome like this is it because kim jong-un is such a wildcard you don't know what will work or do you give credit for trump for the tact that you didn't agree with >> i supported the president's imposition of tough sanctions on north korea since -- >> i guess it's the rhetoric i'm talking about. >> the most important thing the president has done, he's been tough on the sanctions we've gotten bigger sanctions, stronger sanctions and

resolutions out of the u.n i think president trump has had some impact on china the chinese have done more the last career than previously. that pressure was very important here the president was able to do that what i didn't agree with is the thought we wo uld go off to war without trying diplomacy that didn't make sense if you thought of the risks of the use of force early we are where we are. this will be the biggest moment of the trump presidency. he will need a lot of support from rex tillerson and the state department what you will see, you will see tillerson now, i would think, be very active, a series of meetings with the south koreans and japanese, and i think he would want to meet with the north koreans before the president steps into this man-to-man duel at the summit. >> the more hawkish commentators are saying when north korea and

even chooina realized that this president might use the military option, that that was what got us to this point >> it may have made a difference trump kept kim jong-un off balance with all these statements that could have been a difference they could have felt the president was serious about the u.s. use of force. the other side of the coin, kim jong-un is feeling self confident. he made a lot of progress on the nuclear front. just about to have the capable to have a missile that could strike the united states it may be a combination of those two factors. >> scary i wonder if we should believe it at all they buy more time it's so important, everyone has told us that's what guarantees that regime's long-term

viability is having a nuclear weapon now he's going to give it up i don't know we need to look at this closely. >> there have been moves in the past >> his father. same with his father years go by. >> how do we make sure is there a way to police this and feel confident in things >> president clinton tried this. we had an agreement with them back in 1994, the north koreans didn't keep it president bush had an agreement in 2008, we thought they would keep the agreement they didn't. they pushed us part of what the president has to do is verification at every step if we're asking the north koreans to do certain things like limit nuclear tests or dismantle nuclear apparatus, we have to verify it and there has to be severe penalties imposed not just by us but by the rest

of the international community >> i don't know how you go, gla hand, smile. that's difficult, too, given his record on human rights, the way north korea -- the brutal regime i don't know how you can go over there, smile, shake hands. if you do come to an understanding there can't be back slapping or -- just the optics of that, because you're dealing with a brutal regime most people have the opinion that this is a bad guy we're dealing with >> there's a view among some that all he within as is that picture. >> of him with -- >> with trump, it enhances his own stature and status >> how do you do that? you can't smile when you'rewit the guy. you have to work with him but you're not endorsing his regime. >> they have the worst human rights record of any government in the world

it's an evil regime the way they acted. kim il-song, the grandfather, he wanted a meeting with our cold war presidents kim jong-il wanted a meeting with president clinton president clinton didn't give him the meeting. they want legitimacy, acceptance and i think they want to keep the nuclear weapons. >> ambassador, where should this happen where should the conversation happen >> will happen at a neutral site could possibly be seoul, more likely the border town where the fighting stopped in 1953 you can't meet him -- he won't travel to europe or the united states this is a hermit leader. he doesn't travel outside of north korea. he doesn't meet with any other world leader he never met with the chinese leadership it has to be a neutral site. i think up on the border >> such an amazing turnabout six months ago we were talking

about taking him out that's what people were talking about. >> i'm trying to figure it out, too. he wants to survive. who doesn't. he thought if it was the nuclear weapon before that helped him survive, but when you realize -- someone is always gunning for you that way >> in some ways the nuclear weapon makes it more likely that they'll take you out because they don't want your finger near the button >> if he can guarantee we won't seek regime change by getting rid of the nukes, he could stay there as bruteal as he has been. >> the markets will take a wait and see approach on this, everybody is talking about this is a miscalculation on the part of president trump and the u.s. administration bhsh administration, what if this is a miscalculation by -- >> somebody on your show said this is a miscalculation on

trump? >> somebody said this is a miscalculation on north korea's part and how serious the u.s. is about this >> the market never goes down 10,000 points when we think -- we never believe nuclear oblivion was going to happen the market took north korea pretty well. when we hear he can hit anywhere in the united states, the market goes down. >> a missile was launched over japan and the market rallied the next day >> so when it's taken off the table -- you dent take him seriously before, when you take him off the table, you don't deserve a big rebound. >> when the market is of rating under one of the most improving economic and earnings environments, where the market is now is warranted. the tariffs, tweets, the north korea chatter doesn't matter as much as the fundamentals in the market >> we will move on and thank the

ambassador >> it would be nice not to worry about when you go to sleep about a nuclear -- we were closer to it than at any other time. >> let's talk about the other big story out of washington. president trump signing steel and aluminum tariffs that exempt canada and mexico and leave the door open for other carve outs this is not a win for people looking for changing the trade agreements, but not what we had been anticipating a week ago >> it is a notable softening from a week ago. that package up veiled yesterday did leaf tve the door open for multiple exclusions that the president said would not be in this they can get that exclusion if they claim a national security

relationship with the united states the president said he opens the finalizing of the tariffs brings alleys and edallies and adversaries to the table before the tariffs even take effect they are hoping for an optimal outcome on nafta yesterday on cnbc, wilbur ross said one way they and other countries could be exempt is to slap on tariffs of their own >> our hope is in negotiation with the other countries, part of the basis for potentially releasing others will be them acting in concert with us and them holding down the excess dumping into their markets and the trend shipment through their markets.

>> republicans have been working behind the scenes to thwart the tariffs. jeff flake announcing he would introduce a bill to immediately nullify the tariffs, saying he urges his colleagues to pass it before protectionism inflicts more damage on the economy it's unclear if that effort would have enough support. there is widespread gop opposition, but most democrats do support the move. we have corporate news for you. trouble in toy land. source telling cnbc that toys toys could close down its entire u.s. business, though the situation is still fluid that news impacting shares of hasbro and mattel. mattel down almost 3%. hasbro down 2% both companies said the bankruptcy filing last year materially impacted their business toys "r" us obtained a 3$3.1 billion loan to keep stores operating after filing for bankruptcy last december, but

last month the company said they were at risk of breaching the terms of that loan following a disappointing holiday season sales and operating profit fell short of what they told lenders to expect. >> i got an e-mail from them yesterday saying 50% off at a lot of the closing stores. >> what's the hot item now >> this is -- >> this is sad >> remember times square >> it was years ago that walmart became the biggest toy seller in the nation i think amazon has just had a massive effect >> also the apps kids are all about the apps. >> the giraffe >> geoffrey. >> geoffrey. >> you brought it back with you from the olympics, the moisturizer? >> no, i got that afterwards >> you're kidding me you got a moisturizer made in korea, but you didn't get it

there. >> i was told about it there >> you are fresh faced, glowing. i noticed it yesterday and today. it's the moisturizer >> it's the moisturizer. you have to moisturize i used to not be a moisturizer now i'm a moisturizer. this is like curb your enthusiasm coming up, jobs friday forecasters expect an increase of 205,000 jobs in february. we'll get more predictions after the break. after the jobs number, we'll get reaction from chicago fed president charlie evans. first on cnbc. we'll be right back. most etfs only track a benchmark. flexshares etfs are built around the way investors think.

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9th -- >> it's the short february month. >> that's what we're talking about. but it's never -- this is about as late as it gets >> you're right. it's the 9th >> you guys better -- >> better have it right? >> yeah. >> we had a lot of extra time to figure out the numbers >> you better be more accurate do you think it's 200? >> in that range, 210. all the labor market indicators from claims on through have been healthy. everybody expects the numbers to be strong. what will be more focused on than the payroll change is the hourly earnings number after that surprise in january, the markets are very focused on inflation. i think the change in hourly earnings is going to decide what the mar rets are doing what are you anticipating? >> i think there's downside risk after december and january

some of that may have overstated the pace of wage growth. i wouldn't be surprised if it's more than that in addition to the fact that the yield would stay high at 2.9%. people believe this long awaited acceleration in wage growth is getting underway >> claims, those numbers continue to be amazing, right in is that what you use do you use -- >> i like looking at claims, because if something is going wrong, you figure someone will get fired. >> adp >> no, claims. unemployment rate. at some point the labor market will slow. >> are we there? people have been talking about that for years already >> we were looking for yields to go up for a long time. it finally happened.

sometime this year you will see the employment number slow it's not a warning sign. just that we're reaching our max capacity >> participation rate goes up. people decide they don't need three jobs anymore wages going up >> i think you'll see all of that and a run up in productivity which will restrain the impact on prices that the wage inflation will have >> you're happy about everything >> we were looking at worst case scenarios, how do you repeat 2008, that takes thinking and creativity and you end up with something that ends up worse than 2008 >> can we not recreate 2009, is there a way to skip that >> well, yeah. >> what's up, joe? >> the last couple years we had the seasonality where the federal reserve and corporations have been able to blame the

weather. you don't have that this year. how do you think the federal reserve will react to the cover of a weather-induced slowdown in the economy? >> in terms of the overall gdp numbers being softer in the first quarter? >> no, in terms of do they go three times or four times when they look at labor figures you saw in each of the last two or three winters, you had that economic slowdown that we could blame on weather you're not having that in 2018 they guided in december that three hikes would be appropriate. and then the interest would be whether or not the fed now believes that perhaps four hikes are going to be necessary. it feels like the stage has been set for that whether or not that actually happens in march or in june, it's certainly feeling like

there's confidence in inflation, in inflation returning to target has improved the data are looking better. global back drop is improved, even with market volatility. very accommodative financial conditions you hear a confidence. they're trying to message more it's appropriate to continue on the gradual path and reaffirm to the markets that even with all these positive things we don't have to get more aggressive. >> thank you >> thank you >> michelle, thank you >> and joe, whoa you'll be with us for the rest of the hour. >> i hope so. >> long day for you. you'll be here until 6:00 tonight? 6:00 that's a 13-hour day >> 6:00 tonight, i'll be nowhere near here. >> you're not doing the show tonight? >> half time -- >> you're right. >> at noon >> at noon >> will be a good show

>> never, ever, ever tell joe kernen what you don't want him to mention coming up, we'll talk trade and tariffs with an official who served on the team that talked nafta. and then later we will talk with ash carter he will join us on set as our guest host starting at 7:00 a.m. right now look at yesterday's s&p 500 winners and losers

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welcome back you're watching "squawk box" live from the nasdaq market site in times square. welcome back time for the squawk planner. they distracted me with the music. in yoga there's a third eye that you have it helps you with something. >> it's not just yoga. i thought it was more spiritual. >> now i wondered where that ridiculous name for a band came from good band. they had a lot of turnover the february jobs report is so late i keep forget we're doing it it's on at 8:30. forecast calls for an increase

of 205,000 in non-farm payrolls versus 200,000 in january. the unemployment rate is expected to tick down to 4%. in addition to the monthly jobs data, we get a report on january wholesale trade and charles evans will be here minutes after the jobs report is released. there's tariffs, gary cohn, and one thing that they talk about, it's all about the ten-year moving above 2.80 to 2.90. that create all this volatility. >> it's called the normal market environment. >> we're just not used to it we're getting back to historically what should happen where active managers have to be risk managers, investors have to

manage their own risk. the risk is not assumed by central banks. that's what we've grown accustomed to. everyone is a passive investor now we will learn who knows how to manage money. >> the moves while big on a percentage basis still historically so low, it's proving the point where it's going. it's not an absolute level of interest rates, it's a change. >> the s&p is up for the year. the nasdaq has not flinched. technology companies >> a lot of sound and fury but we have not gone a lot of places >> talking of tariffs, president trump making his steel and aluminum tariffs official. but wilbur ross saying for consumers these tariffs are no big deal >> people talk about cars. there's about one ton of steel in a car the price of a ton of steel is

$700 or so 25% on that would be one half of 1% price increase on a $35,000 car. it's no big deal >> leslie picker has a reality check on the real costs of these tariffs and the corporate winners and losers >> wall street has a slightly different opinion on what the impact to companies would be from these tariffs the companies that stand to win are those that can pass along higher steel costs to their customers by raising prices. those that stand to lose, they have to eat the higher costs in their margins. goldman sachs studied several industries, machinery, autos, building products to see how they would fair. caterpillar should do better because of distribution and oshkosh may have a tougher time. on the automaker side, they could pass higher input costs on

to customers but that would result in a 1.5% higher selling price. or they could eat the cost that would have impacted ford and gm by $1 billion each last year, representing 12% and 7% of operating income respectively. among building products, goldman says a.o. smith which makes water heaters and lenox should have stronger pricing power even though steel makes about 10% of their costs. the firm says whirlpool's products are more commoditized making it harder to raise prices it's important to note the study was conducted ahead of trump's announcement in february and assumes a 24% tariff rate. while the authors believe their finings are largely the same given the news, they note the details of the tariff plan are still in mrflux and that could impact the numbers

>> especially with all these carveouts. >> it muddles up the model there. >> leslie, thank you very much for more on this, the global impact of trump's action on tariffs, let's bring in antonio ortiz mena he is a senior vice president at albright stone bridge group. thank you for being here >> good morning. >> you worked on nafta when it was originally put together. there has been so much concern about what might happen to this trade pact at this point how would you handicap this? i've seen anything from a 50/50 shot of it being renegotiated properly to a 20% shot that it falls apart. what is your thought >> i think that the negotiations are still proceeding pretty well, though the most difficult issues have not been addressed, such as rules of origin for automobiles, a sunset clause and

the negotiators have still not addressed the most challenging issues i would say that the fact that canada and mexico were excluded from the steel and aluminum tariffs really hopes the negotiations it would be very difficult to negotiate with the threat of those tariffs coming down. >> do you think the introduction of the tariffs to begin with spurred talks? that's another thing we've been trying to figure out was this something that potentially could have thrown a huge grenade into the talks, but when you actually step back and say mexico and canada will receive exemptions, does that bring everyone back with renewed focus? >> i would say what's happening is canada and mexico will continue to negotiate as if the tariffs were not there i don't think mexico or canada will accelerate the negotiates or give some concessions that otherwise would not have given

as a function of the tariffs you cannot negotiate under threat negotiations will proceed at the normal pace. should the u.s. at some point decide to eliminate the exception, that would be a game changer. for now negotiation ate ors hav proceed with cool heads. >> i know rules of origin play out with what we've been talking about with the steel tariffs, because there is this idea that china is dumping all kinds of steel in mexico and canada and that wines winds up here becausf our agreements with canada and mexico is there a way to make sure none of that behavior continues >> yes there's a global problem with steel overcapacity the way to deal with this is

through international cooperation. the best way to deal with this is not through unilateral actions. mexico and canada will cooperate to make sure there are no transshipments mexico has some nondump ding duties with the chinese. the way to work this out is jointly, not yuunilaterally >> there was an interesting piece in the "wall street journal" that said we may be missing an opportunity here. china, you know, no argument, china is a bad player in all of these trade issues, mash we ybe need to unite and put the spotlight on them instead of us looking like a bad player in the situation. >> yes it's a good opportunity to double down and work, have the european union, the nafta

countries, japan, other countries working together perhaps have the oecd what has a forum to negotiate this to come up with a global solution. my concern, becky, is that the u.s. will be enacted under a national security clause that's a double some development. other countries could likewise say because of national security i will restrict trade. the world trade system is based on self restraint. countries do impose tariffs when there's dumping or subsidies, but it's extremely rare to impose duties on the basis of national security. i personally don't think that's the way to go. >> antonio, your thoughts on what the odds are that we will get a deal how likely is this do you think nafta will be renegotiated and there will be something where everybody can walk away and feel like they

won? >> i think at the end of the day we will have a modernized nafta. it's in the interest of the u.s. to have a modernized nafta it dpen depends on canada and as main markets, and if there are going to be competitive autos, to export from north america they will have to be producing together with north america and canada northweste north american out to. >> understood, but china is dumb muc dumping auto parts can you get to the point where -- i know the u.s. asked for an incredible amount to be produced in the united states, can you get to the point where we say, yes, we will not allow chinese made parts to be in the

supply chain >> there's very little chinese parts in the mexican auto sector there's a lot of north american parts. they need to get together to clarify the points of origin customs agencyies will have to cooperate closely. >> thank you for being with us >> my pleasure. coming up, reaction to the planned meeting between president trump and kim jong-un. our next guest host at the top of the hour will be former defense secretary ash carter he has a lot to say on this issue and much more. we'll talk tariffs and nafta negotiations with canada's finance minister he will be on at 7:40 a.m. eastern after the employment report we will get reaction from charles evans. stay tuned, you're watching "squawk box.

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it's krcryptocurrency time. bitcoin down 20% just in the last week. the digital currencycoming under pressure after the s.e.c. said exchanges that offered trading of digital assets with have to register with the agency also weighing on bitcoin, japan offering punishing notices to a number of cryptocurrency agencies yesterday and a large exchange in hong kong suspended trading after fighting off cyberthieves. we have come under $9,000 for bitcoin depending on which exchange you play. cheapest is on coinbase. >> were you around for those ken rogoff comments? >> i don't think i was what did he have to say in this cashless society >> bitcoin going to 100 before going to 1 million >> okay. >> i think

what do we call the bitcoin people not bitcoinians. >> the crypto crazy? >> where are you on bitcoin? >> surprised bitcoin has not seen significant volume. there's not the interest on the futures exchanges. that's my surprise >> therefore you think what? >> i think there are so many other investment vehicles right now that we could be paying attention to versus bitcoin where it is now, i view it as immature as an asset >> andrew, it was on cnbc. >> on cnbc no less >> on cnbc no less he said a decade from now will one bitcoin be worth $100 or $100,000 according to harvard

professor ken rogoff, the former is more likely >> more rel van evant to the ma. >> not to andrew >> you know there's a whole group of people in the valley and elsewhere who are betting big not just on bitcoin, but ethereum >> i'm not betting against them in any capacity. the end game for bitcoin is for it to be an asset class. that's the end game. the evidence as i see it now, i'm disappointed the traction has not been built in the futures market to get there quicker. >> this is much more important and much more positive news right now because it concerns bacon and chinese pig prices hit the lowest level in nearly four years. analysts say the rapid expansion of large pig farms -- do they mean they're making large pigs on the farms or are the farms really large

andrew large pig farms. large pigs or -- >> no. i think farms with a lot of pigs on them. >> either way the prices might go down. >> the oversupply. >> it has outpaced slowing demand growth. the average price for a live pig in many parts of china plunged 20% since january. it is now below the average cost of production and it's expected to put a significant damper on pork exports from the u.s. and canada out of china. china consumes about half the world's pork coming up, the former defense secretary ash carder will join us on set to talk about the president's planned meeting with kim jong-un that and more, secretary carter will be our guest host for an hour right now a quick check of what's happening in the european markets. relatively flat for the cac and

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aluminum imports has been divided. kay rogers has a wrap on what the top five players in the industry are saying, how many jobs they said they'll create. good morning. >> good morning, andrew. response to president trump's import on tariff in steel and aluminum are swift they cheered the decision. so far we've heard only commitments to add 800 jobs from u.s. steel and century aluminum. if you take a look at this wall you can see why these companies and workers in the industry are happy. employment has been declining rapidly in the past two decades just in steel down 35% since 1997 14,000 jobs were lost between 2015 and 2016 alone. but a study from global research firm trade partnership worldwide found that while tariffs may help steel and u.s. producers add some 33,000 jobs, they'll harm manufacturers using these metals costing the broader economy nearly 180,000 jobs. for everyone job gained, five

would be lost the study says that doesn't take into account any potential retaliation against the u.s. the sectors that would be impacted the most per the trade partnership would be services, which includes construction, transportation as well as manufacturing, primary energy and agriculture. the alliance for american manufacturing president told us if balance is restored to the steel industry he does believe we'll see workers hired back, shifts added and maybe even more investments made in mills like what we've seen this week, guys. back over to you. >> kate rogers, thank you for that. coming up, the jobs -- >> thank this gentleman. >> yeah, the other joe. >> i can't tell you how much i enjoyed being here i love being here. >> you know, like 13 different ways to tell someone's -- >> joe, i thoroughly enjoyed being here get to be with andrew. >> christopher -- >> you complimented me on my

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president trump agreeing to meet with north korean dictator kim jong-un. details on this major development from guest host and former defense secretary ash carter is straight ahead. on tap for the markets, the february jobs report ♪ ♪ >> what you need to noah head of the number of the month. and tech titans descend on austin, tech as. rico's karen switzer joins us with what investors need to watch as the second hour of "squawk box" begins right now. ♪ ♪ live from the beating heart of business, new york city this is "squawk box. 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 with andrew ross

sorkin and joe kernen. we've paired some of our gains this morning but the dow futures are up by 25 points. s&p futures up by 2.5 and the nasdaq up by 14. here's what's front and center at this hour we are counting down to the february jobs report that is due at 8:30 a.m. eastern time. the forecasters are looking for an increase of 205,000 jobs for the month of february and after today's job number we'll be getting reaction from chicago fed president charlie evans. that's first right here on cnbc. we're also watching the price of bitcoin, which is down more than 20% just in the last week. the digital currency came under pressure earlier this week after the s.e.c. said that exchanges that offer trading of digital assets will have to register with the agency. you can see across the board below $9,000. sources tell cnbc that toys "r" us could close down its entire u.s. business although the situation is still fluid that news is impacting shares of toy makers hasbro and mattel in the early trading today.

both of those companies were -- shares were under pressure yesterday. they had previously said that the retailers' bankruptcy filing last year materially impacted their business toys "r" us obtained be a $3.1 billion loan to keep the stores operating after it filed for bankruptcy last september. last month they said they were at risk of breaching the terms of that loan sales, store traffic and profit all falling fall short of what it had told lenders to expect. hasbro down by 1.7%, mattel down by 3%. they were off by more than that in after hours trading. the biggest story, president trump accepting kim jong-un's invitation to discuss what's going on >> reporter: good morning, andrew the time and the place of the meeting is to be determined but will happen within the next two months south korea's national security

advisor delivered the news in washington following talks with pyongyang earlier this week. >> i told president trump that now meeting north korean leader kim jong-un, he is committed to denuclearization he pledged that north korea will refrain from any other nuclear or missile tests he understands that the routine joint meeting exercises between the republic of korea and the united states must continue. and he stressed his eagerness to meet president trump as soon as possible >> reporter: those remarks were unscheduled until the president himself at 5:00 popped his head into the briefing room and teased a major announcement on what he called the big subject at 7:00 p.m. last night. the white house's north korea strategy has been to eliminate

north korea's funding through sanctions which it stepped up against on monday. trump said they'll use military force if that fails. the president is optimistic on twitter about the meeting, the likes of which no sitting president has ever taken because of the limited reward for the significant risk a senior administration official said that the reason why trump is taking the meeting is because he received an invitation from north korea. now this meeting is seen as one that does carry significant risk because it could either signal the success of pressure from u.s. sanctions or signal the legitimacy of a dangerous regime that a lot can happen, guys, between now and may and we'll see what happens from here becky? >> kayla, thank you. obviously everybody trying to analyze what this all means. we happen to have a guest host with us this morning, former defense secretary ash carter he served under republican and democratic administrations from president ragan to president obama. he is currently an innovation fellow at m.i.t. and the director at the belfer center

for science and technology we had him here to talk about jobs on jobs friday but, secretary carter, we're going to talk about this. >> isn't it here that we're going to talk about something else and 25 years i've been dealing with the north koreans this could be a very good thing. it all depends where it goes it's always good to talk the question is what you say so i think the president needs a carefully crafted plan, and if i were advising him, i know what i would do a good plan with north korea requires two things. first of all, you have to coordinate with the chinese, the south koreans and the japanese because the play for the north koreans is to typically split everybody apart. we all have carrots and sticks we're more powerful, we have a bigger pile of carrots and sticks we have a big stick and a lot of

carrots. chinese have carrots and sticks, the south koreans do you want that all marshalled against north korea in the bargain. the second thing is denuclearization is something everybody agreed to back in the early 1990s, of course it hasn't happened, and the negotiations that are practical have to be step by step that go there you say, okay, kim jong-un, there's two paths here there's an upward path where you do this, don't launch anymore missiles, and we'll give you that or not do something else to you. no more underground tests of nuclear weapons or this is what will happen to you if they keep making the right choice they go upward eventually to total denuclearization and to some kind of peace arrangement with them since we're at war with them, have been since 1953. >> that sounds like you're dealing with a child though. >> well, it is a bargaining

thing. the wrong choice you get into trouble. we will be better prepared for what happens if we have worked with the chinese and south koreans and the japanese, they will be better prepared. they're going to be at our side, at least the japanese and south koreans. if it comes to that, we'll strengthen our military position we want the upward path. step by step and working with everybody else. >> what is the worry that we're getting played here? >> worry we're getting played is that the south korea government is unlike the previous two governments.

tends to be more compliant when it comes to north korea, and the population of south korea is understandably quite concerned about war so the north koreans may try to make our allies whom we are defending there themselves be -- take a softer position in the negotiations than we think they need to and the chinese -- if i can, the other thing is to split the chinese off from it. so that is the game they have played in the past that's the game they will probably try to play here. >> it looked like that's what was happening ahead of the olympics in south korea where they were negotiating directly with them and talking directly with them and keeping us out. >> it did. that's why it was so important and i commend with the administration to stick with the idea we're going to do exercises. it was good for the olympics to be together. it doesn't change the strategic situation. >> when the south korean government says we're still talking about reunification, how

did that get -- it seems so insane. >> it's hard to see. the germanys -- >> but there's families on both sides. >> there are there are. you know, it is one culture. that's not our culture, you have to respect that. >> the regimes are too separate. >> the income discrepancy is much greater the north korean population is large compared to the south koreans, unlike the germans. it's like having a poor person move into your house if you reunify. >> the notion that talking to this guy legitimizes that regime is a real -- it is an issue. i mean, we were talking about that earlier you remember when president obama early on said i'm going to talk to iran and he got hammered for even the idea that we would have any dialogue. whether you like the iran deal or not, you don't hear that that

was a mistake, at least to talk to -- he has to -- we have to talk to this regime. >> again, it's not whether you talk, it's what you say. >> we have to. it's not legitimizing the regime >> no. no >> you're going to hear that. >> of course that's why we need to say really good things only happen in the end game after you have taken these steps. you're in the going to get something big up front or something small you give we should be careful what we're dangling that's big. we only give something big for an ultimate goal. >> pretty big deal for kim to have the president of the united states meet with him, too. >> what happens between now and then meaning some people have already speculated that we're going to want more either to get to the meeting or he's going to want more meaning there's going to be back and forths where people are going to threaten. >> posturing. >> posturing what we do, what they do over the next -- over the next two months. >> yes that's why he needs a careful plan they always play that game

there will be table shape and whether you make concessions. >> where will it take place? >> it can't take place in north korea. north korea is really pretty strange place. i've been there. >> talking earlier, this is the same person that i think you and others talked about literally taking out i mean, people -- >> we have been -- our slogan on the korean peninsula, 28,500 troops there, the slogan is fight tonight not because we want to but because we have to be ready for it. if the north koreans come over the border, we're prepared to defend south korea with our south korean allies, go north and destroy the north korean dream. that is the certain outcome of the war. he knows that and he needs to know that that's why deterrence is important and that's why the exercises that we're doing are so important you need to have that behind you as you go into these negotiations. >> we've been trying to figure

out if china was pressuring them to come to the table was it something with the tariffs? or do you think this is the north koreans -- >> my long experience is that the chinese talk a lot about doing something about north korea. they've never actually delivered so now they want tension reduced so they may use -- this is something the president needs to watch out for. they may use the negotiations as a way of softening the united states south korea and china may want us to soften our position. this may be the vehicle to do that we need to stand strong and bring them into our negotiating strategy and not theirs. >> how do sanctions ever hurt kim jong-un and his regime and all of the cronies they don't, do they? he's never starving. he's never cold. does he care that other people -- that --

>> not apparently. >> so then how do sanctions work >> that's a good question, joe to a remarkable degree he has sustained western sanctions for a long time. there's no question that it's impoverished north korea it does not seem to bother him didn't bother his father or grandfather whom i dealt with. >> you may or may not know the answer to this who is going to be talking to the president about this is it mcmaster is it rex tillerson. >> and jim mattis. >> they'll all be there? >> i certainly hope so. >> are you comfortable with that cadre of adviser >> that >> they're the right people. they need to bring in people who know history of korea, have dealt with the koreans before. this is a very complicated situation so you can't waltz in. that's why i think you need a really carefully crafted plan that's informed by our history,

which has not been good. obviously we haven't gotten over the 25 years i've been doing it, the north koreans have marched forward steadily and we have tried from time to time with a little bit of success here or there, but generally not success. where it's worked it's had those two ingredients, step by step and everybody working together. >> the president's critics think he's thin skinned. other people think he's unstable and that throws a wild card into things where it actually can be a positive, but -- you know how he's supposedly hung up on the mexican president or done this wouldn't that be bad if you're over there and something really goes really badly and someone stormed -- >> tactics are fine as long as you have your strategy so if he has a plan, he knows -- >> diplomacy, that can't han, can it, where you break off talks and someone gets so angry with something that it -- >> no, you can you can. and i think we need to be prepared if this isn't going

anywhere or they're using it as a game to say, all right, we're back to where we were. >> or maybe his hope is to just dwelt things off of a set dialogue and get things -- you know, my guess would be kim jong-un just wants to talk to him and get him off talking points. >> it's possible that he thinks he can take advantage of our president. i think if our president is well prepared, that we shouldn't have to worry about that. >> right >> we still do have that huge button that's much bigger than his. i don't think it would be -- i would not advise someone to try to put one over on the united states. >> look, if this doesn't go anywhere, joe, we need deterrence and we need defense that's why we have missile defenses i was criticized for that way back eight years ago when i was under secretary and the weapons buyer at the pentagon. >> you were in the ragan administration and obama administration >> every administrationsince. >> i can't understand that

ragan and obama. did you notice any difference? >> they were both president of the united states and we have a president of the united states now. >> yeah, andrew, we do, trump. >> it's the only country we have it's not like shopping where you can go to a different country. >> so many friends, they just can't deal. >> secretary carter thought he was going for a year to washington. >> right >> kept pulling you back in. >> he's a physicist. >> i'm not allowed to normalize him. >> you struggled for the last eight years. >> all right secretary carter is our guest host we're going to talk more about all of these issues through the morning. when we come back though, most venture capital firms are looking to back sure bets, but there is one fund that is looking for more ambitious ventures and bigger results. it's called the engine and it's investing in what's called tough tech the firm's ceo katie ray will join us after the break to discuss. we'll talk about what secretary carter is doing in terms of looking for job retraining and working with technology. and then at 7:30, canada's

finance minister morneau will ris d s to discuss nafta, steel taffanmuch more. stay tuned you are watching "squawk box" right here on cnbc gglobal bonds, and high-dividend strategies. sure, these are investments. but they're not what people really invest in. what people really invest in, is what they hope to get out of life. but helping them get there takes a pure focus. because when you invest their money

without distraction, hidden agenda or competing interests, something wonderful can happen. they might just get what they want out of life, and maybe even more.

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welcome back to "squawk box" this morning it is called tough tech. it is the future of jobs in the tech industry. joining us right now to explain is katie ray she is the ceo and managing partner of the engine, an m.i.t. powered investment firm that invests in tough tech. aerospace, advanced materials, biotech. she previously served as head of product for the microsoft startup lab and our guest host responsible for bringing her here, former defense secretary ash carter is with us, of course, as well. good morning. >> thank you. >> what is tough tech? >> tough tech are things that typically come out of break throug throughs, science tifk engineering and they take more time, capital and patience to get in the market but they address the world's biggest problems, you know, things around energy, agriculture, precision medicine anything that's going to really

cure and take us to the future >> given the patience that investments like this make, does it change the thesis, the investment thesis in terms of what the return looks like how quickly you can get the return and who ultimately is the investor >> i think it does take more patience so our fund has a longer time frame, but we are shooting for creating very large companies so, you know, we typically -- venture funds have a ten-year life cycle and ours is up to 18 years. that allows us to take really big bets into important areas and invest into the early stages of taking the risk out of technology. >> 18 years is a really long time. >> up to 18 years. >> give us an example of the coolest thing you're working on right now. >> so we're just announcing this morning a very important company in fusion which could bend the curve of climate change because it's essentially infinite energy

without adding carbon and that's commonwealth fusion. it was an important collaboration between m.i.t., the u.s. government, long, long years of funding fusion and that now a start-up company of young, incredibly committed scientists who are coming out to form this company. >> so when you go in -- go ahead. >> well, what differentiates this from other kind of investments is two things. one is the tough tech thing, which really means bringing engineering, biosciences and digital sciences, everything together and trying to do something that is really big, not necessarily fast but big >> that's right. >> not selling ads or writing an app but something bigger than that that involves more laboratory work and machine shop work the other thing is that the investors in this, i care a lot about this, want to see technology march forward they want to see it done in a

way that is good for humanity. technology's change is inevitable, but we have to shape it because all technologies can end up good or bad for human kind, and we need to steer it in the right direction. kids today, the people that we interact with, the technologists at m.i.t., harvard, boston know that in the previous generation sight was lost of the general good and public purpose too often in innovation. they don't want that they don't want that in their lives. they want to do the things that are cool, creative, make a big difference but also are good for people and that's something that characterizes the investment piece. >> what's your threshold for an early stage investment doing something in the tough tech space, if you will at what point do you say, this isn't working? meaning there's a lot of venture capitalists that get in early and after a year, two, three it's not working, it's not

working and they say, okay, it's over. >> it's a great question i mean, listen, we are patient, but that doesn't mean that we'll wait for ever. we want to see progress. we want to see the team really diving in and solving the most important risks in their company. and, you know, you see teams get stuck at certain places and push through. if they're continuously stuck, you do have to pull the plug on certain projects. >> right real quick, just one last thought. how important do you think government funding is and some of the university funding is for some of these projects >> crucial. >> one of the things that's gone away over the years is so much of that and it looks like part of the thing you're doing is stepping into that space to some degree. >> right there's government funding before companies get formed and then there's venture capital after. there's a trough where a lot of companies get stuck and that's what we're funding into. but i can tell you, there is a lot of investment capital if you take out the right kind of risks

and people then pour money into it. >> it is important i used to say as secretary of defense, i could always use more money for defense. i could put it to good use and happy to get it. i never made the argument that it should be at the sacrifice of the rest of the government the government is the way that we collectively act and science and technology is part of the future and we're going to talk about jobs this morning. we're going to talk about today's jobs, but we need to be thinking about what our children's jobs are going to be like are they going to be able to compete in the world and have good jobs. that's the jobs news of tomorrow and technology's going to be an important part in that you invest in education and also with r&d spending. it's an important part of our future i used to say to the secretary of defense it's strategically important because the strength of our nation in the long run depends on it. >> thank you >> great to see you. coming up, global trade deals, tariffs and nafta canada's finance minister bill

morneau will join us to discuss the futures. still up "squawk box" wl bk.ilbeac

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going to fix nafta right now. president trump clarifying his plans for america's steel and aluminum tariffs at a white house ceremony >> today i'm defending america's national security by placing tariffs on foreign imports of steel and aluminum we will have a 25% tariff on foreign steel and a 10% tariff on foreign aluminum. >> joining us now, canada's finance minister bill morneau. still with us, former defense secretary ash carter nafta going to get done, do you think? >> we'll work at it. that's the goal. >> how do you -- >> now no one likes to handicap

things, but i'd like to think that it's better than 50-50 at this point i hear that from a lot of people, besides all the bluster from all different sides, that it's in everyone's best interests, it's not perfect, but a new -- a nafta 2.0 is in everybody's best interests to figure out, right? >> we agree. we want to modernize something it's been working. american jobs are at stake canadian jobs are at stake making a better nafta is entirely within reason >> i find the deals take longer than ten seconds. >> the defense minister i know very well. very qualified crowd i certainly hope he can work it out.

occasionally the whole question of trade the big issue for our countries in trade is not one another, in my judgment it's china china is a communist dictatorship and we are in a sustained economic relationship with a communist dictatorship. what that means is if there are no rules and everybody just makes individual deals, china, xi jinping can bring to bear economic, military and political power in a combined way that all the rest of us cannot given the kind of society we are so it seeds the advantage of the trade in my judgment tactically to the communist dictatorship. rules based, nafta is for north america, we need something for asia as well otherwise the chinese get to pick off our companies, get to pick off smaller companies and

we seed the battlefield to them. that's the big thing that's going to determine our children's futures because half of humanity and half of the world economy is in that part of the world, and that's true for canada as well as the united states we have that in common and so sticking up for principle in trade is bigger than just an exchange between the two of us it has strategic importance for us and they are an ally of ours after all. >> how do you think canadian negotiators will eventually react to the tariffs in other words, you know, we heard we get exempted to start as long as you -- indefinitely as long as you come around on nafta. whether they take that as they like being pressured like that or will it be counter productive, productive for an eventual agreement >> i think the discussion around steel and aluminum tariffs clearly dome mon straight the strength of our relationship

there's an understanding. >> there's an understanding that we trade together, that we're part of an integrated north america. so we are clearly going -- the sense of the relationship. >> will the -- will they use that for leverage to get what they want? the first one, there was no c carve outs >> i can't speculate what exactly was originally come up with versus where we are, but i can tell you that i have spoken to steven mnuchin three times in the last week and that just demonstrates our continuing ability to work together nafta is the same.

it's a negotiation obviously we're working to get a better deal. we from our perspective see that nafta -- you know, the trading relationship helps americans through jobs, helps canadians. so getting to a better arrangement, recognizing a whole host of economic issues that weren't the case 30 years ago, it takes some working together and we are cautiously optimistic we'll get there. >> if we don't, will it be canada or mexico if we don't get there? or the united states obviously, you know, could be anybody's fault, i guess >> we're all going to suffer there's no point in this because we've got to recognize that we have a common -- we need to be fair to our own people and tough on behalf of our own people and governments do that, they should be doing that, but there's a bigger game here for all of us than steel and aluminum. it's important they are. and, you know, we all are trying

to create -- for us we call it the american dream there's a canadian dream as well we want to make sure that our children have the opportunity that they live a better life than we live and that's not automatic. it's a competitive world out there and we need to compete against one another but let's not forget who we really need to compete against. we're competing for the future for our children and those out there who aren't anything like the canadians to deal with friends, a similar kind of culture and outlook on life and what is right and others don't have that. so we're going to trade with those other governments but we need -- we need collectively to do it much more wisely quarrelling among ourselves doesn't really help. i hope this gets resolved. not my field, but i'm optimistic this is a long and strong relationship and people will be sensible, i'm sure, on both

sides and put it back together. >> you sound like you're better than 50-50 you don't believe it simply falls by the way side. there will be some agreement >> i think there has to be something. we are connected there has to be some set of rules that governs that connection, otherwise business people have no certainty they can't plan. they can't -- you can't run a continent that way, let alone a country. there has to be something whether it's called nafta or something else, someings understandings if nafta isn't entirely to people's liking they can change it, but there's going to be a something, joe, whatever it's called. >> you think that's a fair point, that canada and the united states needs a -- >> well, look, i mean, i absolutely agree with the secretary, that we're going to be the best of partners no matter what happens. we're next door neighbors. our entire business sector is

integrated this is a long-term reality of north america and, of course, we stand as a staunch ally of the united states and in nato and norad, these are key aspects of who we are as canadians and who people are in the united states so we work together and in dealing with other parts of the world that don't have the same system as we do. i mean, that's critically important and i think that would not only demonstrate in the situation yesterday but we'll get to an answer that will make sense for americans and canadians in whatever the trading relationship is in the future. >> how do you like our new tax rate down here >> we -- you know, we recognize we always have to be competitive and -- >> you already were. you think you're -- >> way too competitive >> our rates are still competitive with where the new u.s. rates are. >> what's the average -- what was the average corporation paying

>> the average large corporation in canada pays 26.8%. >> okay. >> so the new rates in the united states, when you add it up state and federal, is around 25.8. >> exactly >> so it's pretty tight. our small business rates are still lower than u.s. small business rates even with the changes. of course, there's regulations that are still being written so we're not going to react without seeing all the details, but we're going to stay competitive, absolutely. >> becky still has a -- i'm sorry about apple. -- blackberry. >> no. >> she's still got one none of us -- >> huh >> i know but, you know, that -- >> hoping. sore spot. >> all i can say is i bet blackberry like everything else is probably an integrated supply chain between canada and the united states. >> thank you. >> great to be here. coming up, the south by southwest festival kicks off today, recore kara swisher is

there. up almost 50 on the dow. nah. not gonna happen.

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welcome back to "squawk box. despite ongoing efforts, facebook, twitter and youtube all have struggled with fake news joining us is recode executive kara swisher and guest host and former defense secretary ash carter kara spent time with sheryl sandberg recently. good morning. >> hi. >> trump and silicon valley. >> yeah. >> doesn't seem like there is any. do you think for all of the conversation we have constantly about this issue and the potential for regulatory action, that regulatory action from washington is really coming? >> no, i don't actually, i just did an interview that's going to broadcast on monday, i think, with chuck schumer, senator schumer. >> yeah. >> he didn't think there was any regulation coming. he was concerned but he seemed to say that they're trying their best they're trying their hardest to

soften them, but he didn't feel there was any significant -- >> is all of this hot air -- all of the conversation that we're having about these issues almost daily, if not hourly >> no, no, no, no. i was at a facebook event last night, it was a private event, and i spoke in front of their gay and lesbian employees. they were concerned. they were asking questions about this, what do people think i think it's top on their radar screen to do something about it before something is done for them i think that is the concern is that they're paying attention now. they're trying to fix it you know, they're kind of in an interesting situation because this is something the government should be dealing with, especially around the mid-term elections, making sure that our systems are not hackable or our platforms aren't being misused it's now up to pretty much google, twitter and facebook to take care of something that probably is something the u.s. government should take care of. >> ash, do you consider this a u.s. security issue? >> it is

it is. it's broader than that because it has to do with our culture. social media has been a good thing. it's brought community and commerce there's no question that there is a side that is darkness, isolation and evil and something needs to be done about that on behalf of all of us. that something is between the companies and the government kara says the government needs to do something, on the other hand the people don't like the r word, the regulation word. what i personally advocate is i think that solutions to this kind of thing are best achieved when the technology low giists participate. i don't want to turn it over to judges, legislators. i'm urging the tech community to jump in, essentially take responsibility after all for the things we've created, it's important we do that the generation that brought me up built the atomic bomb it was a good thing. got deterrence during the cold war but we all knew it had another side to it as well and it was our duty to participate

in dealing with the other side so i'd like to see facebook -- >> but that was a regulatory framework. in this context if there isn't one is there a market-based framework that gets you to a better place, kara >> market based? >> you have some advertisers drop off of these platforms. >> sure. >> that's not where the pressure point is >> no, of course it is i think if these platforms become too noisy there's lots of different aspects. there's an addictiveness, danger of malevolent players. it's bad for the business and the problem is their business is based on engagement so they want to create platforms that people want to stay on and use and feel good about and i think that's just like any product you make i think they're quite aware of creating platforms that are meaningful you know mark zuckerberg's talked a lot about that, jack dorsey is on twitter saying we'll fix that, we'll fix that and so i -- >> let me put you on the spot. of those three companies, you have google, you have facebook and let's say twitter, you can

put snap on it if you want -- >> no, you can't it gets controlled. >> who do you think is taking -- not who's saying they're taking it seriously who do you think genuinely is thinking and working on this problem in the most meaningful way right now if you were to rank order them? >> probably -- >> who's being effective who's being effective or who talks about it a lot >> no, who do you genuinely think wants to fix this the most >> i would probably say facebook i think they understand the dangers to their business. obviously google -- google, i think susan majewski who i just interviewed is very serious about the problems, although they pop up a lot. at twitter they talk a lot about it but they don't have the juice or something to get it done. they let it go too ong they certainly talk about it a lot and they're trying things but who knows what's going on behind the scenes. it certainly feels like it continues to be an issue. >> kara swisher, we have to

leave the conversation there. >> good to see you as well. when we come back, we have more from ash carter stick around who knew that phones would start doing everything?

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the principle's a very important one. as technology moves forward, there's a lot of good that's done but let's be realistic. there are jobs that go away. however much we talk about trade and so forth, let's take cars and trucks there are a lot of people that drive vehicles or trucks for a living it will not be long before those jobs go away >> right. >> at the same time, these are our fellow citizens. these are good workers they have enough get up and go to get up every morning. they have enough composition they're not on drugs and alcohol and so forth they operate a motor vehicle these are people who deserve a future and their children deserve a future since technology moves so fast, we all get educated until we're 20 years old and then we're coached on that for the rest of our lives, that's not going to bring you to the future. >> you can't stop automation but there are going to be people needed to do all the things that are remaining. >> that's a new job. >> the skills gap, we need to figure out a way to educate

those people. >> exactly the only way to keep the american dream going, which is what keeps our society cohesive and has defined us for a long time, is if we see a path forward that gives our children a better future. that's going to be in a competitive, high tech world they need to be prepared. >> it's not an easy task though. jim cramer has made the point this week that you're not going to be able to take these people that were in these jobs and turn them into computer programmers is that the government's function or private industry >> i had a similar experience which gave me a lot of inspiration which is veterans employment you can say the same thing you used to be an artillery man, what good is that? we worked hard on that we figured out what the set of skills were and how to translate that and we did have a program that prepared people that said here is how you go into further training, here is how you start a business, here is how you work for another -- and we prepared them for it. you can help kids and adults

prepare themselves to change a job and technology enables that. some of this is online learning. there are places that do that, and it needs to be part of life. by the way, the biggest investors in training and retraining are companies because if you're a company that lives in, let's say rochester, new york, people who live in rochester need jobs. you need good workers and they're not going to come to ro chest zbl r rochester in general you need to make them the employees you need for your job change we talk about tech there's biotech also jobs and training is one of the places where we need to use everything we know about technology to help our people be as competitive in the next century as they are in this century. it's not just invention, it's

preparedness to take those jobs. >> sounds like a good time to be making this point to the private sector when unemployment is 1.7%, and it's getting harder and harder to find employees maybe they need to look harder. >> it is it is. on the other hand, you have to look at -- i'm also looking at the quality of jobs as well. if you traded a good manufacturing job for a less well-paid retail job, you'll still count the same in jobs numbers. if you left -- if you've given up looking for a job, you leave the jobs numbers, so i think this is all good news. the jobs -- by the way, our veterans are doing better and all that's good, but it also does signal to us that quality matters and the future matters if we run out of people who can do today's jobs and tomorrow's jobs are coming, are we preparing them and it's a matter of lifelong education and training being

committed to doing that. otherwise -- otherwise, other countries will steal the future from america >> all right secretary carter, thank you and thanks for being with us. >> thanks. good to be with you always. >> more stuff for you. coming up when we return, it is jobs friday the government's going to be releasing the latest jobs data it happens at 8:30 eastern time this morning yes, the markets will be reacting and we wi be rellhe with instant analysis. back in a moment and high-divid. sure, these are investments. but they're not what people really invest in. what people really invest in, is what they hope to get out of life. but helping them get there takes a pure focus. because when you invest their money without distraction, hidden agenda or competing interests, something wonderful can happen. they might just get what they want out of life, and maybe even more.

breaking news this hour, the february jobs report just minutes away ♪ it's the final countdown >> our all-star panel is standing by. the numbers and the market moves coming up. and just minutes after the report, chicago fed president charles evans in studio with instant reaction first on cnbc plus, a "squawk box" exclusive. billionaire david booth co-founded the third fastest growing mutual fund. the veteran investor joins us live a special hour of "squawk box" begins right now ♪ it's the time countdown live from the most powerful city in the world, new york. this is "squawk box.

good morning and welcome back to "squawk box" here on cnbc live from the nasdaq marken forecast expects an increase of 205,000 jobs in february versus 200,000 in january unemployment rate expected to tick down 4% the futures indicated up 33 points now they've been positive but just marginally so for the entire premarket session. treasury yields indicated -- or actually not indicated, they really are at these levels, 2.87 on the ten year. today's top story, president trump has agreed to meet with north korean leader kim jong-un for nuclear talks. that meeting will happen before may. we spoke to former defense secretary ash carter in the last hour about china's strategic interests. >> my long experience is that

chinese talk a lot about doing something. they want tension reduced so they may use, and this is something the president needs to watch out for, they may use these negotiations as a way of softening the united states. we need to stand strong and bring them into our negotiating strategy >> we should mention the president tweeting last night kim jong-un talked about denuclearization with the south korean representatives not just a freeze also, no missile testing by north korea during this period of time. great progress being made but sanctions will remain until agreement is reached meeting being planned. and then republican senator lindsey graham voicing support for the proposed meeting in a statement last night senator graham said this about president trump, i firmly believe his strong stand against north korea and its nuclear aggression gives us the best hope in decades to come to

resolve this threat peacefully he also said a wordof warning to north korean president kim jong-un, the worst possible thing you can do is meet with president trump in person and try to play him. if you do that, it will be the end of you, and your regime. senator graham has been one of the more vocal critics of north korea in congress. >> let's get back to the broader markets. turbulence characterizing the markets in the recent weeks. very special guest this morning has weathered decades of market storms and successfully outperformed david booth joins us it's known for its academic approach in investing. trustee for the university of chicago business school there bears his very name. good morning, david. thank you for joining us. >> thank you good to be here. >> we have been through a turbulent time these past couple of weeks i'm curious, given the models that you've created over all of this time how that works in your favor or not. >> well, i guess in some ways it

works in our favor in that if there were no volatility, you wouldn't have a risk premium so, yeah, a return to the volatility that's kind of within the normal range is probably, you know, what we would expect and i think it also points out the difficulty at forecasting that i mean, i know how many people in january were saying look over the next two months we're going to have a spike up in volatility these things just happen and so it points out once again why you need to have sensible, long-term approach and stay with it. stay the course. >> you know, we have lots of conversations about the politics of the moment. we obviously all morning have been discussing what may or may not happen between this meeting between our president and the leader of north korea. obviously the tariff issue so many other issues the way you've approached it has

been typically just to tune virtually all of that out, is that right >> yeah. we basically tune it out i mean, these things -- you know, new information comes into the market all the time and if you try to chase every news story, you drive yourself crazy. >> are you of the view that we're at the back half, at the minimum in terms of the bull market that we've lived in over the past decade? >> i don't know. i don't -- you know, i don't know if we're in the back half or the front half. it's -- these things are largely unpredictable and the problem people have in predicting it, the people i feel sorry for, the people that, let's say, panicked in 2008, 2009 got out and the market took off and they'r reluctant to get back in i think staying the course is the most important one of the most important things to do. >> do you worry at all about the full move into passive, meaning

passive versus active, which is to say that different that so much money is on the passive side that it has exacerbated and basically put all the games in a bucket that lives in an index and made it, a, harder for the active guys but also to some degree may have created some perverse incentives in the passive world which to some degree is your world >> yeah, i don't worry too much about it look, in aggregate, the so-called active managers hold the market and in aggregate when they move to passive they buy it investors buy the market so you're taking the market out of your right pocket and putting it into your left pocket. i don't see that that puts any particular pressure on anything. you look at trading volumes, trading volumes haven't dropped with this move to passive so i don't know why there would be, you know, a negative impact. >> and the other question i was going to ask you, you know, even

in the past couple of weeks we've had conversations about so many different indexes now that are taking so many different companies out of the index, meaning there's people who are -- want to invest sort of under a socially responsible umbrella or -- there's all sorts of different things that are being added and subtracted from these funds. does that make sense to you? >> yeah, i think it does i mean, look, when you buy 100 shares of stock, it's like voting in an election. you put a dollar in, every dollar is a vote and increasingly we see our clients interested in not only having good returns but they like to think that somehow their investments are done in a socially responsible way i think that's perfectly reasonable and i think we work hard totry to accommodate tastes and preferences everybody has a different set of tastes and preferences so it's hard to make one size fits all,

but we -- for decades we've been, you know, dealing with socially responsible and sustainable investing. i think it's been slow going it's not slow going because of us, it's slow going because it's slow on the part of our clients in adapting to that but i think it's all perfectly sensible. >> one of the reasons i asked the question, i understand senator elizabeth warren sent some letters to perhaps you. you're the largest holder of this did you send her a letter back >> yeah. of course. and i think we'll be -- my guess is i'll be making that public one way or the other it's reflecting what it said, a number of our clients are very interested in this we're interested in helping them that's what we do.

we come up with innovative solutions to address their concerns in terms of being a holder -- for example, this gun safety with alice herd issue, you have to keep in mind there are dozens of social issues from tobacco to whatever and, you know, gun safety wasn't one that really hit the radar screen of our clients until recently so we've taken action in our sustainable and social portfolios to, you know, eliminate those. they were a tiny part of what we had anyway but that was just an indication of our clients had a strong preference for something. we'll be happy to accommodate it flexibility is important >> fair enough we're going to leave the conversation there david, always great to see you. >> okay. >> thank you. >> you, too. thanks. new this hour, drop box and

sales force announcing a strategic partnership. the companies will allow them to create customized dropbox folders in salesforce software dropbox will expand its use of salesforce's cloud product. when we come back, it is jobs friday. our all-star panel is waiting in the rings. we have blackrock's kate moore, anastasia moore and u.s. chief economist beth ann bovino. we'll get you ready for the big report coming up in 20 minutes leedwes after the payrolls are reas, will have reaction from charlie evans stay tuned, you are watching "squawk box" right here on cnbc.

i grew up in the projects and so home ownership was not an option for us. i am taking the steps to own a home because i want my children to know it's all so that they can have a better life.

oh my gosh. this is amazing. we're so much closer to home ownership.

all right. we are just a few minutes away from february's employment report let's bring in our jobs panel this morning anastasia amorosa who is global investment strategist at jpmorgan kate moore is blackrock's chief equity strategist and beth ann movino at s&p global ratings

beth ann, let's start off. first of all, what are you expecting for these numbers in terms of not only the jobs numbers, the unemployment rate but maybe very specifically the average hourly earnings? that's going to be a key that people are watching. >> oh, sure. we've been watching it for a while. we're looking for a little bit of slowdown in the job gains although the adp report that came out suggests there's going to be an up side for that. we're looking for 180. >> that is on the low side. >> yeah, 180,000 on the jobs gains. looking for unemployment to stay around 4.1%. we're looking for a slow down in wage gains we're looking for month over month 0.1 and year over year 2.7. the reason we think of this slowdown we think the january ratings were a bit over inflated largely because of water >> what do you mean water? >> i'm sorry, weather. weather. >> well, it was water, really. weather. weather. you can see some low paying jobs weren't accounted for.

it was skewed towards the high paying side of things. >> let's talk a little bit about that, amoroso. if that's the case, you get those numbers and not too much wage inflation, how do you think the market reacts? >> that's the perfect combination. one of the things we've been looking at is acceleration of the pace of inflation. if we get something close to the 100,000 number, that means that the three-month average is going to be rising faster than the six month or 12-month. that's important for the equity markets to see that strength yes, i do agree that if we see a .2% rise month over month in wages, that's also a positive because it means we're not having this run away wage inflation just yet by the way, even if it is .3, even if it is 2.9% year over year, when we look at sales growth, it's still growing much in excess of that. i don't worry about wages rising so much as choking off the margins just yet. >> kate, that's one of the things we talk about we keep looking at wage growth we want wage growth. we want that to come it's been a long time coming and

the market gets spooked if you see the market coming in hot. >> we're more on the camp of .1% month over month and 2.7 year over year. i would argue if we get a very strong wage number this morning, it will spook the market a little bit there's a lot to make the market jittery around politics, around trade. i think we need to make sure that people feel confident that the pace of revenue growth to your point, anastasia, continues at the rate that you found in the fourth quarter and that companies who are experiencing higher wage pressure really have the ability to pass that on or absorb it because they have a nice tax windfall. >> what's the -- what's too high 0.3%, 0.4%, what's the number for market >> i think if we were at 0.3, it would shake the market a little bit. would be an excuse for people who are otherwise concerned with risk this year to continue to back off even if this is a good sign overall for the economy. what we want is a strong, steady expansion not one that gets really lumpy and that leads to companies making different kinds

or i think more challenged decisions. >> i just wanted to jump in on that so one of the things to take into mind, we're looking at growth year over year for wages, you know, maybe reaching close to 3%. keep m mind in a recovery or an expansion usually that's on the low side usually it will be 3.5 so it's still rather low i think the worry is both of my colleagues would agree to this, what the fed will do for the number the worry is will the feds start to move faster than is expected. >> it would give us more certainty than they would and certainly that they will do so in march i agree with kate's point. i think if we come in at .3 on top of the .3 that we had in january, that all of a sudden represents a new trend if that's the case, that certainly would make all that jay powell said in his testimony perhaps to be extrapolated to the rest of the committee. >> when you're talking about what jay powell said, for those who weren't following all of his testimony before congress, you're talking about the potential about overheating? >> yes, just the increased

confidence and that all of the stimulus measures that we got sings last year is actually translating into better expectations for this year and because of that the fed is more likely to, a, have confidence in the three rate hikes penciled in and have confidence in a fourth one as well. >> from an equity perspective what i'm focused on is where those wage gains are coming and which companies are facing the pressures. thus far it's been high skilled labor, engineers, people in management that's been the case for a while. it's been broadening out what we really want to see is whether our wage gains, companies feel comfortable with their pricing power and have great confidence in the sustainability of their own earnings and sales expansion so we don't have to worry about margin compression i think margin compression would shake the market. >> if you just look at what's been happening, we had all of these things like tax reform, all of these things that are very positive for the market, the great earnings growth we've seen now we've introduced the talk of tariffs.

that's been watered down quite a bit. where does that leave you feeling about where we stand now with valuations? >> we're pretty constructive on equities it's our favorite asset class. recently we upgraded the u.s. on the back of what is an exceptionally strong earnings growth and expectations from the tax cuts. >> you took down your european -- >> to neutral. not a bearish call it's more of a good story but perhaps on a relative basis not as strong as what we can get from the u.s what i would say is i think the tariffs and trade noise creates some confidence challenges but it doesn't necessarily change the fundamentals so at this point we remain constructive we feel really good about our u.s. over weight and think we'll see fourth quarter as a strong earnings growth. >> anastasia, what do you think about tariffs? >> when i look at what steel and aluminum imports are as for let's say the canadian economy where exports or a percentage of the chinese economy is a small

percent. .7% in terms of canadian an and .02% in terms of china the impact is not that large i would also say because the impact is not that large i don't expect to see dramatic retaliation from either one of those countries. canada is now exempted then again going back to this question of margin compression, raw material prices will be rising somewhat as a result of tariffs, but there's two things to note. first of all, they're not going to rise overnight because price escalation that are built into the contracts will materialize probably over the next couple of years, but the other important thing is companies are saying as we survey the industries that are impacted like autos, energy, beer cans, companies are saying they're going to pass this onto the consumer. >> right. >> i think they have the price and power to do so at this point. >> we're going to stick around the table. that jobs report is less than ten minutes away. and when we return, it's, yes, the final countdown to the

february numbers plus chicago fed chair charlie evans reacts just minutes after the report. he will join us on set that's upstairs in our greenroom. i don't know who he's talking to i hope there's someone in the room with him. psycho where he's saying, i'm not going to touch that fly. and to manage this risk, the world turns to cme group. we help farmers lock in future prices, banks manage interest rate changes and airlines hedge fuel costs. all so they can manage their risks and move forward. it's simply a matter of following the signs. they all lead here. cme group - how the world advances.

us. it's what this country is made of. but right now, our bond is fraying.

how do we get back to "us"? the y fills the gaps. and bridges our divides. donate to your local y today. because where there's a y, there's an us. twitter ceo jack dorsey says

the company is working to let any user become verified and get that blue check mark the social media company says it's redesigning the system so that people can verify more facts about themselves and so the quote we don't have to be the judge or imply any bias on our part >> that's the opposite of what the social media companies are supposed to be doing, which is taking more responsibility for what's on their platform we're going to have less judgment, less of a call on what's going on. you tell us who you are and we'll believe you. >> i keep hearing the uproar is amazing for all of these social media companies but facebook is still valued at 800 bazillion -- >> but ash carter just laid out, they need to be taking more responsibility for what's on their platform, not less. >> so we're talking about bitcoin again. >> yes >> so just because the sec decides they might -- it might come on their radar it goes down >> well, no, no, no. i think there's a couple of issues that's part of it. we had this hack situation in

hong kong. >> okay. >> there's been a handful of things that have happened. >> was that part of the allure is that it would never be under the sec? >> no, i think it was actually -- by the way, always an expectation -- >> some have wanted it to be regulated. >> do they want to hide? why would shining a light on it by the sec, why would that make it legs valgss valuable? >> the crypto guys would say it's going to limit cryptocurrency to some degree. it will be a process. >> it looks like you have something to hide. if you were that worried about the sec -- >> no, it means a lot of exchanges will have toget regulated. if you think there's not a liquidity, not like there will be a huge amount. >> the bigger the market cap -- the bigger it gets, sooner or later it's going to draw that attention. >> you have to wonder how much of it is operating in the dark arena. >> that's right.

how much of that is part of the allure of why it's attractive. you can get around that. >> i accept that but i don't think it's why -- all about your $70. it's like $90 now. >> my bitcoin? >> yes. >> probably less. >> i think it's a little bit less. >> less than 75? >> i don't know. no longer makes up for the donation. >> right yeah exactly. coming up, the moment -- we were still talking about dorsey, but i wanted to ask you that earlier and i didn't get a chance. the moment you were waiting for, that's right, the big february jobs report. we'll bring you the numbers and the instant market moves plus we'll have chicago fed president charlie evans joining us on set. his reaction to the payroll release. check out the futures right now. afraid to do much. now th'reye negative the nasdaq still up. we'll be right back.

welcome back we're just a little bit more than half a minute away from the february jobs report we'll check out the futures again which has now turned negative the dow now down 5 the s&p down a little less than

2. the nasdaq up about 4.5. yesterday market made a stand in the midst of all the tariff talk and actually ended up closing the day higher the ten year note is below 2.9 the last time we looked like 2.87 or so, 2.87 1/2 let's get to hamilt hampton pean the numbers please >> 313,000, non-farm payrolls increased by 313,000 jobs. the unemployment rate is 4.1%. average hourly earnings, 0.1%. 2.6% year over year. we also had significant upward revisions for december and january. a total of an additional 54,000 jobs more than had been previously reported. private sector in january added 287,000 jobs the average work week increased. it's now 34.5 hours, up .1

blockbuster numbers. construction up 61,000, retail plus 50,000, professional and business services 50,000, manufacturing up 31,000. job losses only in the information sector losing 12,000 jobs the labor reports participation rate at 63%. that's up .3% from the previous month. u-6, no change we had an 806,000 increase in the size of the labor force. that's the biggest monthly jump since june of 1983 finally, black unemployment down to 6.9% an .8 decrease from the previous month blockbuster headline numbers still not significant moves on wages during the month of february back to you. >> yeah. a lot to think about, hampton. let's get to our panel thanks, hampton.

let's get to our panel for reaction steve liesman and rick santelli are also with us we don't have to explain it, liesman. it's like, awesome 313! great! you immediately look at if the futures sell off because we don't know what it means for the fed. it didn't happen the futures ended up going up. >> wage gains were 0.1%. that's sick so nobody's getting a raise so we can buy the market. >> there's a lot of perverse motivations with this. it's a great number. >> there's a certain perversity to the numbers, joe, which is these are great numbers and let me just take a look -- >> celebrate it's awesome >> this is crazy retail up 50,000, okay and i think we're outside of the funky seasonal adjustment period which is january, december so that's up 50. transportation warehousing up 15

we've been looking for more jobs in there because a lot more retail jobs are amazon deliver jobs than they are clerk jobs. temporary help, that's a good sign government surging 26,000 as well but look at these numbers. construction up 61,000 there was some better weather apparently during the month that helped a little bit. but manufacturing up 31,000. those are good numbers for manufacturing, but here's the perversity perversity is that the unemployment rate through -- let me give you these numbers here that we've had we did 175 in december, 239 in january, a 313 in february all of these numbers are double what the fed believes is the natural rate of the work force. >> right. >> and they're not bringing down the unemployment rate. that's what's perverse about it. on the one hand. >> nice that the participation rate -- that was a pretty big move >> that is a big move. you have to be careful add one more thing. >> okay. >> which is unemployment rate not falling and wages not

rising that's the perversity of this strong job market. >> one of our canadian friends, rick santelli, he's a big viewer, noah blackstein. if nobody credits trump, i'm going to turn off the tv i'm not looking for any support around here. that one is to you so maybe you'll do it i don't think it's going to happen here. what do you think? >> leadership, justin trudeau or donald trump i know why you got that e-mail, i think. oh, listen, here's what i see -- i see a world where labor force participation is going up which means that really kind of the foundation of this whole full employment argument, 95 million people completely unemployable is not right and it's huge. and i've been saying this for over a year now. that's your pool of workers and we will draw into them and i think that's terrific. as for 2.9, never trusted it

now it's 2.6 even better. watching the year over year average hourly earning number not as lofty as people feared it would stay we still see that yields wouldn't virtually have gone down the only reason real yields went up was the fear of inflation of wages based on 2.9 i don't think so i think rates are going up for lots of reasons. that's only one small one. things are pretty good and not only are things pretty good, the cost of money should go up and central banks, our central bank, thank god, is one of the good ones moving in the right direction. this is a terrific number and it looks like we may still have the 11th day in a row ten year note yields close on the 280s. >> rick, all right what do you think? >> okay. well, i think there are a couple of things that stand out first is on the retail numbers in particular because we could see some store closures as retail gets disrupted.

last february was a weak number for retail job creation and i'd say the fact that we had 50,000 net new jobs created is a really positive sign. i would also note that with the labor force participation going up and with more and more of the u.s. consumer getting a solid and sustaining paycheck, i think that's a really good storyfor economic momentum. the one thing that we do want to watch, we've talked about this a number of times in our recent research, we were already on a very solid path before we got this tax cut and fiscal stimulus we need to make sure that we don't overheat or actually -- >> is this over heating to you >> no, this is good but i'm saying as we go forward -- >> people were talking about unemployment rate with a three handle on it today, that it would not have been unusual. the market was probably going to have to deal with that it would not. >> would that have been over heating? >> i am very interested to see how the people at the fed react and how the market reacts if unemployment goes with three. >> i don't think the people at

the fed who we'll be hearing from in a minute will react in any drastic way because this has been the expectation is that economic growth is solid even though we've seen some softening, this number clearly shows that the softening is not translating to all the parts of the economy and then wages, look, there are structural factors that are deterring us from achieving that 3, 3.5% wage growth that'spart of the equation the fact that raises are rising slowly and we have the robust growth, that's a very positive back drop for the market and positive back drop for the fed. >> i would like to add two out of three ain't bad we just had the 0.1 for month over month in unemployment rate, got the labor numbers wrong. i would say there though one thing to take into account, people are talking about the labor participation rate that's great to see that it picked up. i'm wondering if what we're seeing is people entering the marketplace and more people getting jobs that's a good combination. that keeps the unemployment rate

at 4.1% which is good news however, we can't forget that, yes, we saw a little pickup in the labor participation rate it's still near a 40 year low. that's not going away for some time. >> can i underline the importance of that jay powell in his testimony was very strong, i this i a couple times he said this he's looking at this prime age participation. he wants to see these folks, especially men, not being sexist here when are these folks working to what extent they can come back to the work force. we don't even quite understand if i look at these numbers and i see manufacturing average weekly hours. they began with it

then you don't have to be so tight. >> you said 25 to 54 >> that's not the problem. >> it's all deep >> the problem with you is with the hours you keep, does it actually count as working? that's what i don't know. >> i do so much -- you -- >> i do prep work. >> movies. >> no, but it's not -- >> it's not just a bunch of baby boomers retiring if it's 25 to 54 and they're not in the work force, they can come back. >> they can come back. >> the problem is the skills gap. when you're looking -- this has been going on for several decades. this is not something that just happened last week or the last four weeks this is a skills gap issue that the u.s. has been facing. >> have to learn how to write code i don't know how you do that. >> focus on this fed policy thing, back up you think the fed -- we'll hear from charlie in just a minute but the fed looks at it and says, hey, this is good. people are coming back in.

we don't have a falling unemployment rate. we don't have outsized wage gains. this is something that speaks to continued gradual rate hikes. >> i think it's a positive in the area for sure because it so he liddi guys that growth momentum is picking up tax reform, even though it may be fully priced into the earnings numbers for the s&p 500, i don't believe that it's fully priced into the economy generally. i think we still have to see what the impact of that is so when we're talking about productivity growth and whether we'll see that increase, if companies put cash to work in cap ex and that is our expectation. >> good deal. >> that will boost productivity growth. >> i'm slightly skeptical that we're going to see the full cap ex follow through that some of the politicians and some on our leadership want. in fact, we've had companies tell us they're going to be using their cash windfall, repatriated money or straight benefits from lower taxes used towards buy backs and towards dividends and kind of looking towards the future i think if we had a huge wave of

cap ex it would impact how they deal with their profrts. >> we have had ceos saying they are planning on putting much more cap ex to work. >> there's no relationship between intentional cap ex and what happens over the -- >> there's a cap ex issue. you talk about skills. is anybody putting any money to work on reskilg -- >> on re-educating people? >> the talk of the town. everybody is talking about it. >> they're talking about it. >> they're doing it. >> there's community college efforts. >> that's not how the tax bill is set up. >> can i just ask rick a question >> yeah, i do. >> stocks look like they're trading as if they dodged a bullet this morning. i want to know if that's the sense you get down there when it comes to both bonds and stocks is there a sense that perhaps worse was going to come, there was concern about the wage -- >> better, there you go the perverse thing. >> i don't know how to talk about it, joe. dodging a bullet by going up on 313,000, that's all perverse.

>> let me say for the record, i want many, many, many, many more people employed. >> wage gains. >> i must talk about this in somewhat dismal terms because that's the way the thing works. >> dismal science. >> rick, whatever i'm saying here, answer my question >> listen, i think -- i think -- >> you know what i'm saying. >> yeah. i think equity markets have fared very well. there have been a few bumps. volatility was an excuse for the balloon to let a little air out. i do think there's this nervousness about wage inflation but i think when you tag along 300,000 jobs, when you have somebody in office that is pushing the country in many ways outside the comfort zone but yet as you look in the rear-view mirror you see that there's a positive landscape associated with that, i think there's -- there's some magic ferry dust that continues to be a positive for all markets, but i do think if you would have saw average hourly earnings year over year up 3.1%, maybe the markets would

have had a bit of a hiccup so to that extents i do agree. >> rick, thank you very, very much thanks to everybody. when we come back, interview -- >> thank you, joe. >> you're welcome. >> he is here, the man of the hour chicago president charlie evans standing by with his reaction to the february jobs report there he is. take a quick look at the futures after we just got those jobs numbers. we are in the green. dow looks like it would open up 16pots2 in higher. we're back with mr. evans right after this what are the ingredients of a life well lived?

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welcome back to "squawk box," everybody. the february jobs report out just moments ago it turns out the u.s. added 313,000 jobs last month. that would be the most since july of 2016 economists were expecting an increase of 205,000. if you look at the unemployment rate it's unchanged at 4.1%. check out the futures. they shot up on this news. before we went into that number dao was down 25 points below fair value now the dow is up by 165 points. s&p up by 16, nasdaq up by 57. part of this also because of what we saw on the average hourly earnings. up by 0.1% not a hot number that some people had been anticipating the ten year note yielding 2.9%. you're seeing equities move higher as the yield moves higher, too. let's get right to steve he is here with a special guest this morning. >> thanks, becky charlie evans joins us, chicago

fed president. you've been herebefore >> i don't know how this gets scheduled. completely random. >> we ask and they distract you and then you say yes that's what happens. >> i'm giving a speech at the shadow of the market committee later for lunch. >> are you even allowed to talk about that so shadowy, isn't it >> this is some interesting people who have come from there, including marvin goodfriend. i've been attending the meetings for a couple of years. >> terrific colleague. >> they're like a cabinet in exile. let's talk about the numbers the remarkable thing i thought was 200,000 plus now for almost four months running. >> right. >> no change in the unemployment rate >> right. >> what is that telling you about labor supply in this country and the amount of slack that's out there >> that's very strong number sounds like a strong report. i mean, i haven't had a chance to read it obviously, but 313,000 is a very large number averaging very strong and the

unemployment rate staying where it is with the labor force participation rating to improve, so that's really good news that more people are coming into the work force, being attracted by attractive jobs, apparently. i don't know exactly what they are. i would say that i would have liked the stronger wage number average hourly earnings at only a tenth. i'm looking forward to stronger wage growth. it's really doing very well but a sign of labor market tightness with the unemployment rate of 4.1% it's lower than what most of us think is sustainable long run unemployment rate but wecan certainly enjoy that for some time it doesn't seem to be leading to wage pressures yet. >> does this change your outlook at all, strong jobs number, for what you thought was the appropriate path of monetary policy >> 300 is a very large number. you have to remember that at a steady running rate we still think that normal job creation every month would be on the order of maybe as low as 60,000

a month or as high as 100,000. if you have more people coming into the work force, that's going to be a higher number. we used to have 150,000. >> i have to follow up on that, charlie, because i asked you a question and you sort of said yes but didn't really. does this change your view of the appropriate path of monetary policy >> oh, i didn't hear the monetary policy part so i would say that my -- >> correction here. >> view has been that the economy is extremely strong. fundamentals are good. i think the most recent fiscal actions have added to the strength of the economy going forward so the tax cut was stimulative and then the spending increases even more so. so some people have said, you know, head winds have become tailwinds. i see the point there. strong growth. we might get 3% this year, and that would be a really big number at this point in the cycle. what does that mean for inflation? i continue to be nervous that inflation is under running 2%, although the strength of the

economy in most recent six-month average inflation has been about 2% so i am going to focus on the 12-month and look forward to the march inflation data rolling off and being better. >> can you speak to this when jim bullock was here he talked about the saw was one way to be proactive means to get ahead of thing and the you will was to play and see game. he said they were in the wait and see mode much more than anything else. is that true in your mind and does today's number change anything for you >> i agree with that that sounds kind of unusual for central bankers. >> yes, we can do that >> i think i come from a long period of time where our inflation is above what our target was and we needed to come down we have two jobs to do we need to bring information down we had low inflation for a long

time and the long run inflation goal has been met more than met. we don't have the first job that we have to do. that was porpt important to be of the curve >> i think we have the ability to be cautious we said our inflation objective at 2%. we have not been above 2%. >> we should be averaging 2% going forward. we should expect we are going to have above 2% at some point. >> you talk about -- what do you think of the tariffs >> it goes the other way, it is good for steel producers, they are happy about that they'll have to pay more i am not sure if that's the best -- >> you are still worry of inflation being too low or trying to help >> that'll find its way in the inflation number >> but it is interesting

you cannot get behind the curve unless you are over shooting inflation to start with. >> right >> if you below inflation, by definition, you cannot get behind the curve, if it is above then you can get out of hand >> i had people asking me challenging questions lik like -- charlie, you are not suggesting we should do anything until we get the two >> it sort of depends on you will get it really fast. >> it depends on where you think inflation is going to be next year or the year after that. >> i do want to understand the kind of parameters, you are thinking three rate hikes this year what is the tipping point where you may get to four or the other part of the question, i don't think the mark carmarket cares l that much. i think they care about the

trajectory can you talk about that when you look at the 19 or 20 or the terminal rate. >> it is the trajectory that's most important at the moment and my own preference would be wait a little bit longer and let the march inflation rate from a year ago fallout of that. let's make sure these sort of amazon disruptive pricing models are not finding their way and keeping inflation lower than that, we can go mid year and all of a sudden see wow, inflation continues to move up 2% and much more confident and we continue gradual upward adjustment of the fund rate. i think it is the trajectory that's much more important you can wait mid year and get a number of increases in we have open meetings and it does not have to be a fed conference, it could we gradual. >> you want to wait in march

>> i would like to see the data. we are going to go into meetings, i am going to listen to my colleagues as i always do. >> do they sway you change your mind >> that's a good question. >> i felt better about certain things >> have you walk into a meeting with one view and walk out with a different? >> you know i am sure that's the case it is more likely that it is a trajectory bases, it is opposed to whether or not at that meeting. there are persuasive arguments getting made, i remember janet yellen, in the green span era, did you make a comment where chairman green span changed his mind about that and i heard the answer be well, that did not happen in terms of two or three

meetings into the future -- >> i walk in the same situation everyday >> i was wondering whether you are going to bring it home >> immediate probably not but overtime >> i would say jim bullock has been arguing over a year or maybe two years, it is useful thinking of the economy being a low regime or inflation to be really low that's a challenging argument for me because i did not understand how he was thinking transitioning from the low productive to the -- >> he totally changed. >> my first reaction was not extremely positive as i thought about it more and the day to roll out, it made more sense i listen very carefully. >> this is a monumental historic moment here.

what you are talking about is holding the line of raising rates at a time by your own calculation, job growth is five times the sustainable rate 60 times 5 is 300 if i am not mistaken this is very much a '96 moment where green fans say all indicators are going in the inflation but i think something else is happening to the economy right now. >> i think the environment is unusual. the low real interest rate continues to sort of plague our thinking and sort of put a premium on us being careful on not getting ahead of the curve at some point down the line, they will and we need the capacity to lower rates so we should be careful about that having said thart, i think it is normal monetary policy it is a strong job market in a

good economy we have the luxury of it being good we have to pay attention >> great to have you today thanks, we'll be right back. at&t gives you more for your thing. your me-time thing. that sunday night date night with hbo allllllll night thing. that island without men or children would be nice to visit thing. buy an at&t unlimited plan, and get hbo included.

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came in, futures spiked. the jobs never came in stronger than expected. a gain of 20,000 or so hourly wage gain up by zero. as a result, stocks are off to the races. futures up 200 points. that does it for us today. make sure you join us on monday. right now it is "squawk on the street." ♪ good morning and welcome to "squawk on the street," i am david faber and jim cramer and scott is here with us tonight. we'll have a live interview with steven mnuchin on the president on steel and aluminum imports