and the first thing they asked was 'are you ok?' they always thank you for your service, which is nice because as a spouse you serve too. we're the hayles and we're usaa members for life. see how much you could save with usaa by bundling your auto and home insurance. get a quote today. good morning, it is 11:00 a.m. at the new york stock exchange where we're moment as way from speaking with treasury secretary stephen mnuchin and quauk all "squawk alley" is live.

♪ good morning, welcome to "squawk alley. with me, michelle caruso cabrera and david faber. martin shkreli is awaiting sentencing by a federal judge in brooklyn for securities fraud. we're in the courtroom and we'll bring that decision to you as soon as it comes down. and in just a few minutes, u.s. treasury secretary stephen mnuchin will join us right here at post 9. we'll hear what he has to say about the tariffs on steel and aluminum imports and much, much more joining us ahead of secretary mnuchin, let's bring in noted market expert jeremy siegel from

the warton business school jeremy, good morning to you. >> good morning. >> so now that you heard what the president had to say about carve outs for canada and mexico related to nafta assuming that goes well and possible exemptions for other countries, what's your take on these tariffs' impact on the global economy? potential impact >> well, i mean, i'm very pleased about these carveouts for mexico and canada. you know, i think we can play tough with china but not our other allies i think this is -- that was a very, you know, favorable development that we got -- heard of yesterday and then with this unbelievably great labor market report, wow that really -- it's the best possible news. two days of really good news on that score >> jeremy, can you square this for us though? i thought the argument for a blanket tariff was china is

flooding the global market with steel and causing other countries to have to take their supply and push it into the u.s. if you start making all these carveouts, perhaps some of them based on nato allies ponying up on military spending, doesn't that somehow defeat the purpose? >> you have to understand that trade isn't very complex and i mean i think that trump got a lot more pushback than he expected from his own republicans who are getting calls from their own constituents and i think as a result, you know, i think it's going to be a much more deliberate process so if it doesn't go much further, i'm not worried about what, you know, we see on that i would prefer none. but i'm not concerned. but i do think that, you know,

obviously if it does go much further that, is part of the agenda i think the market and i believe the odds are greatly against that >> let's talk more about the jobs report. blockbuster numbers. there was wage growth. but not, you know, too strong. not scary strong that you worry about the fed being more aggressive one reason we see a strong and by the way, professor siegel, we may have to interrupt you. we see stephen mnuchin approaching. he is walking the floor of the stock exchange but your thoughts on the employment number, the wage number that we saw today >> unbelievable and i was listening to rick santelli earlier, the jump in the participation rate is unbelievably important that's the only way that we can sustain this type of growth of jobs in a noninflationary way and we get more people into the labor force. the question is, is that jump permanent or not and we're going to have to see about that but wow, i mean, you couldn't get a better combination of data

than what we got this morning in my opinion absolutely, you know, buffo as they say in the movie and theater business >> what does that mean for what you're willing to pay for next year's earnings? when he calculates what he expects the s&p 500 number to be for next year and the year after, he said, you know, trading 17 to 18 he doesn't think that's expensive right now. >> yeah. trading it around 18 times this year's anticipated earnings and even with raising interest rates, these interest rates are historically very low. risk-return tradeoffs are very, very good. i think market is not going to do as well in '18 as in '17. >> why >> we could have gains up to 10% this year. i don't flow if it will be double digits though there is a lot of political uncertainties with elections in november that face the administration >> okay. i think that we're going to have to pause here for a moment,

professor, for a few minutes because we want you to listen to treasury secretary stephen mnuchin who just sat on the set and wants you to respond afterwards okay thank you. don't move >> all right yes. we are joined by the man we've been mentioning very often of course, stephen mnuchin is the treasury secretary of the united states he joins us at post 9. nice to you have >> great to be here. >> trade is what we're spending a the love time talking about that and a very strong jobs report when i'm sure you want to talk b let's start on trade if we can you've been addressing some questions on an even prior to the proclamation of yesterday and most recently said that you were comfortable that we're going to manage through this, that being the tariffs, so that it is not detrimental to our growth projections for economic growth >> that's correct. >> why are you comfortable >> as we talked about from the very beginning going back to the campaign, the president's number one object sieve ive is to crea gdp. a year ago everybody said we would never get to that we now had two quarters of

3% or higher so we're well on our way we got tax reform done that was the first step. it was a big part of this. but we've been doing talking about trade from day one that's part of this. and the objective is free and fair trade so the president is very focused on creating better opportunities for u.s. companies and that's going to lead to more growth so we've had very direct conversations with china that's obviously our biggest trade deficit. we're very focused on nafta. so the president is very focused on just as we were during tax reform and making sure that american business was competitive on taxes now making sure we have a fair deal on trade. >> but what gives you the confidence that there won't be effects from tariffs like this not just on the end users of the products and potential for the price going up but more importantly, as many discussed, the possibility of our allies in this, for example, the eu or china, not an ally

necessarily, responding in kind and, therefore, an escalation of a trade war perhaps that really doesn't does impact the economy. >> we have to analyze the risks any time we do anything. but if you want to move forward with the agenda for american companies, you have to be willing to take certain risks. and i would say let's look at this situation with north korea. the president went through with a series of maximum pressure we have done more sanctions in the last year than the entire last ten years and those sanctions worked so we're now sitting with a situation where north korea's prepared to negotiate. it's the same thing with our trading partners we have to defend the u.s. interests. so tariffs are important to preserve the steel industry. we exempted out canada and mexico i had many conversations with many of my counter parts we have two ways of doing

exemptions the president can do exemptions and my expectation is there may be some other countries that he considers in the next two weeks. and then to the extent that there are specific products that are going to create issues, the secretary of commerce has that authority and he will be publishing regulations very quickly on how those products could be exempted. >> at the end of the press conference, the president was exiting the room, he was asked one question about transshipments he did indicate we would deal with that. >> we're very clear in our discussions starting with canada and mexico that if we're going to exempt them, we're not going to allow them to transship chinese steel. having said that, in the case of canada, we have very good two-way trade of steel going back and forth and actually you had a comment this morning which i would also say we spoke several times in the last week already. >> secretary, the president made a statement near the end of his remarks, i believe, that raised a few eyebrows he seemed to be referring to

nato saying that some of our allies or so-called allies treat us the worst and over the next couple weeks we'll be looking alt military spending as a factor and how these exemptions might work can you explain how those two things are related >> well, the president's going take into many considerations when you look at national security but, you know, the president's been very clear. we're spending 4% of gdp many of our allies are spending 1% of gdp and not making commitments to go up to the 2% so the president is very clear he -- if we're in nato, he wants to make sure that nato gets more money so that nato can protect all of us and fulfill its goal >> do you have any reservations about tying a couple of issues like that together because some trade experts kind of weary of tying outside issues to trade that way. >> look, i understand. but one of the great things is this is not a conventional president. and because of that, we're getting results that we wouldn't

have otherwise seen. so we have to go back to tax reform a lot of people said we would never get tax reform done. a lot of people said the u.s. economy could never grow at 3% >> it did grow -- there were quarters it grew 3%. >> there were. no but i'm saying there are a lot of people that still believe that we cannot get to 3% sustained growth and you're right, we've had several quarters we're not there yet. and that's why we still have a lot of work to do. >> one more on trade there's not one but two editorials in the "wall street journal" today, hardly labor ral outlet, which say that the present moment is dangerous. the departure of gary cohn, someone that is pro free trade and trags with tsituation with s that they worry about him driving into the herbert hoover ditch s this a dangerous moment? >> first of all in gary, gary and i worked together for a long period of time i like gary a lot. we're sorry to see him go. we have a very deep economic bench. gary wasn't the only person

talking about trade. we've had a lot of economic analysis from kevin hasset and others i can assure you that president trump is going to be no herbert hoover so there is no risk. but, you know,look, "the wall street journal" is part of the classic free traders which don't want to do anything to interfere with trade and as the president said, he's a free trader but, you know, why do we have the trade deficits? why is it fair that china gets to sell anything they want into the united states other than things we block for national security while on the other hand, we can't sell into their markets. our cars have a 25% tariff going into china their cars have a 2.5% tariff. >> what cars are we talking about from china by the way. i mean not a the love americans are buying chinese cars. >> not now but trust me, they're very focused on electronic cars electric cars. and they intend to be a big competitor so i mean we just use that as an example of where, you know,

again, we can't sell cars into china with 25% tariffs >> understood. the focus on china, of course, is understood. it's interesting you took it to electronic vehicles and their advances when it comes to technology which leads to my next question. we've been covering it closely here, the fight between broadcom and qualcomm broadcom wants to take over qualcomm >> yes, i know them well, as you know >> i just want to make sure for our viewers. we're changing subjects here a bit. treasury is part of the review you close to put out a four page letter earlier this week that was somewhat extraordinary outlining the potential objections that treasury as part of sfius has to broadcom's potential acquisition of qualcomm related to 5-g, new technology advances the chinese may make why are you potentially opposed to that deal >> i want to be careful with what i say but i will comment broadly on it which is sfius is a very important set of tools that we have to protect national

security i chair sfius. it's an interagency process. and traditionally people think of it as very secretive. the reason why it's viewed as secretive, we get a lot of confidential information we obviously can't share that information. we go through the process and at the end of the process one of two things normally occurs we normally tell the company that if they're not going to get approval or not going to get approval and they can voluntarily withdraw a transaction and we won't publicize that if the company refuses to do that, i have to send the transaction to the president and he signs it. and as i tell most of these companies, i can pretty much assure you that there's a very, very high likelihood so traditionally you don't see a the lo a lot of publicity >> did you list a lot of the potential objections and concerns >> this is a unique situation. we did come out publicly where we don't normally do that. i'm not going to comment on all the specifics of why we did

that but this was a unique situation. and i, as the rest of the committee are fully prepared to use our powers to protect national security. >> so that deal is dead? >> i'm not commenting on whether that deal is dead or not what we did come out and say is effectively that the board vote should be postponed while sfius could review additional information. >> mr. secretary, i'm wondering whether there are other companies whose intellectual property with the u.s. government put them in a similar category as qualcomm you mentioned the rnd investment there are other companies like microsoft, oracle, even apple that have certain assets where can you imagine if ios or certain chips fell into the hands of a country that u.s. wasn't comfortable with, it could potentially cause issues do you look at some other companies or might you look at other companies from a sfius

perspective in a similar way >> to the extent that there is any proposed transactions on a significant technology company, i can assure you it will most lickly come under sfius jurisdiction and it will be reviewed carefully. >> but from a national security perspective, should we be thinking of technology companies, powerful technology companies based in the u.s. as more potential national security as snets. >> again, a lot of thesie issues have to deal with classified information. but broadly, can you assume that technology companies have significant national security interests to the united states government. >> but when we put together solar panels, washing machines, broadcom, qualcomm, steel, aluminum this is not a more protectionist administration >> very different situation. again, let me just be clear. sfius is a national security issue. it has nothing to do with trade

or anything else so i don't think you should in any way put those in the other situation. >> but it does have to do with the concern about china potentially stealing our intellectual property. i know the ustr is a section 301 investigation of chinese trade practices or stealing of our intellectual property. is that the next battle ground when it comes to trade >> that is something we're discussing internally. we've updated the president on this i think as you know i met with my chinese counterpart last week we had very good discussions for two days i met with the chinese ambassador yesterday so i can assure you on the trade areas, we've -- we're having very direct discussions. you know the president came out and said that our object sieve to see them reduce the trade deficit by $100 billion over the next year. so we're having very direct discussions. and we hope to make progress

with them. >> speaking of -- >> do you think the tension bound to heat up given the investigation and the move on tariffs yesterday? >> the good news is president trump and president chix have the best relationships of two other presidents in the u.s. and china. there is very good communication. at a high level, president xi and others have acknowledged that it's their objective and in their national interests as well to work with us to reduce the trade deficit. >> speaking of direct discussions, president trump agreeing to sit down with kim jong-un sometime in the next two months already there are criticisms that the president shouldn't be giving leader of north korea that kind of platform and that kind of standing why is this a good idea? >> you know, i find it incredible, okay, how people comment on these things. we had the president through his leadership had the most direct

and forceful impact on instructing me to do sanctions and come together of a pressure maximum pressure campaign against north korea. he was criticized because we were putting too much pressure on them. we worked very closely with china and our allies and the u.n. we had multiple resolutions. the president as you know is determined that there won't be nuclear weapons on the peninsula. i think this is a very important movement forward that they were willing to say that they'll stop the testing and that they're willing to have discussions. so i view this as something that, you know, this is what we want to see in terms of movement going forward. but the president is also saying that there is no sanctions relief while we're having those discussions. so i find it hard to believe that the people who criticized him for putting on too much pressure are criticizing him for talking. it's a bit amusing >> i want to get to this jobs report that got the market

rallying this morning as well. jeremy siegel just a few moments ago basically saying it hit the sweet spot how much attention should we be paying to the participation rate versus some of the other positive factors that the upward revision in this jobs report >> you know, i'm glad you mentioned that and let me first put this in perspective. i think all these numbers are important. but we do have to look at them and we want long term benefits one of the things that i thought was good about the report this morning is the participation rate increased so one of the things that we're talked about, aren't you concerned about inflation given we're at full employment and given the tax cuts and growth and the economy? and my comment is we're not really at full employment because of the participation rate so i'm pleased it ticked up a little bit. that's a number that i'm very focused on i was at jetblue this morning meeting with the workers who had the benefits of the tax cuts

and one of the things they talked a lot about is job training and how to bring people into that industry early on so i think one of the issues with the participation rate is we got to create more jobs but we also got to make sure we have the proper training for people to have the jobs. >> continued debate, of course, about just how much economic growth will be generated by the tax cuts this week at harvard, you had a conservative economist robert barrow and jason ferman, a to the left economist, both said we agree about 1 $1.2 trillion in debt will be generated as a result you obviously disagree with. that how do you rebutt the claims from two people from opposite sides of the spectrum >> i acknowledge they're smart people that don't agree with us. okay but what i would say is we fund

mentally think we'll get the growth if we get the growth, we pay for it so it's a cause and effect what i can tell you from traveling around the country and meeting with not just ceos about the workers, we're seeing this in the tax plan. we're seeing the fact that moving from a worldwide system to a territorial system is making u.s. companies competitive. when i was in davos, you know, we met with many companies that are now talking about putting operations in the u.s., building things here. there's no question, you know, one of the single biggest parts of the tax plan was changing a broken system. worldwide taxes deferral i'm going to see apple next week and meet with their workers. as you know, they're bringing back a ton of money into the u.s. tim cook's made very big commitments here we're seeing this working and already seeing workers get the benefit of this. let me tell you, for the jetblue workers i met with today, they were very excited to get $1,000 bonuses. >> i'm sure.

broad agreement on the tax cuts making us more competitive but then a lot of economists said, wait, tax cuts but there is also this big increase in spending the people who fret about all that treasury supply that's going to come on in the next year by large amounts, i mean rick santelli is going to be incredibly busy with all of the auctions we shouldn't be worried about rising interest rates because there is so much supply of this stuff coming on? >> as you know, the forward curve expects rates to go up so, again, without predicting rates, the market expects rates to go up the question will be do they go up faster and further than the market predicts? and given my view of fed independence, i'm not going to make any comments on that. >> but you're issuing enormous amount of debt, mr. secretary. >> i think we're very comfortable with our financing needs. we're very comfortable with how we're going to look at it across the curve. so we've extended the maturities quite significantly over the last few number of years but i would acknowledge longer term we do have to look at the

debt the fact that the debt went from $10 trillion to $20 trillion in the last eight years is concerning the president said a lot of that money was spent in the middle east so those are issues we're going to have to look at longer term >> you don't worry about the chinese if we talk more about trade. there are such big buyers of treasury the two issues con flat. they do a buyer strike >> as i look at the treasury holdings all around the world, they're very diversified it's the most liquid market in the world. so i'm comfortable with our financing needs. >> and finally, with mr. cohn's departure, any sense of who will replace him? is your voice one of the lone voice that's is not protectionist in the white house? >> again, the president is not a protectionist. the president believes in fighting for fair trade. but we already have a lot of people who have volunteered for the job. we'll look at this carefully as we looked at the fed jobs and other things and making recommendations to the president. >> fairly soon you think >> we're going take our time so we got a good team.

we'll look at all the appropriate people >> mr. secretary, thank you for speb spending time with us. we appreciate it stephen mnuchin, treasury secretary. >> another big story we're following this morning, martin shkreli is awaiting sentencing by a federal judge in brooklyn for securities fraud meg is in the courtroom and will bring us that decision as soon as it comes down but back to these comments by the treasury secretary stephen mnuchin. let's bring back in jeremy siegel, professor of finance at the warton business school also with us, two former members of the white house council of economic advisors. beltsy steefrnson and matt slaughter served during the george w. bush administration. welcome to all of you. professor siegel, back to you first. for your reaction to what the secretary had to say >> well, i think it's very fortunate that we still have steve mnuchin given that gary cohn had left. he is a generally pro-free trade

force in the administration. he mentioned kevin hasset, our chairman is another pro-free trade force. and it seems like they are going to make and have made that case to the president and has caused as we see some moderation in some of the initial thoughts that very good his other comments, i mean, the question of the long run debt was a $1,500,000,000,010 year tax cut. most economists think we'll get half a trillion back so it's a net cost of a trillion you know, we're in a $20 trillion debt growth debt economy. it's not something that's going to blow the lid out. what blows the lid out is medicare and social security the entitlement system

not this tax cut so that had to be reformed whether we had this tax cut or not. and, you know, it's my opinion the only way you're going to get congress to act is if interest rates start going up quite a bit. in other words, there is a buyer's strike on the treasury of which, by the way, there is no sign right now. i think that's the story on the debt issue >> betsy, a week ago we were talking about blanket tariffs that seem to be the direction the president was going in today pretty different as we heard from the secretary not only carveouts for mexico and canada but also potentially a lot of others are going to be looking at over the next couple of weeks how does this tariff look to you now? not as extreme as dilt a week ago. >> it doesn't look as extreme. i think as soon as president trump announced the tariff, we started hearing about the kind of retaliatory actions other countries are going to take.

and, you know, i know he wants to protect the steel industry. that is not the only source of jobs and economic growth in the united states. they heard how hard they were going to get hit with the retaliato retaliatory tariffs and the cost of steel where will he go and what retaliatory tariffs do we still see is the question. >> and, matt, the secretary had a lot to say defending the administration's position as being balanced are we starting to understand the trump negotiating dance right now of going pretty far to one direction and then finding gray areas in between to negotiate? we're seeing it on trade and tariffs. perhaps on north korea as well >> that's a great question the president is clear in wanting to support american workers and families

boy, there's a tlot of industrie with a lot of workers that use steals and jobs in the future. the secretary mnuchin mentioned spent this morning at jetblue. the jetblue workers, the planes that they're catering and servicing contain the steel and aluminum whose costs are going up the complexity of all this is very important to keep in mind we have large and growing fiscal deficits in the united states. those are the fundamental cause of the trade deficit that president and so many others are so worried about if you raemy waeally want to ad the trade deficit, question do that starting by talking about taxing spaenldi taxing and spending here at home >> a lot of this comes from what we heard from owe elon musk. they face many more rules and

regulations about joint ventures, et cetera. chinese company wanting to do business here doesn't face those same issues. state spansored companies that are subsidized by the federal government, there are so many things that happen in china that are legitimately unfair to u.s. businesses >> great question again. what u.s. companies are saying they worry about in china is the combination of market access, national treatment and interlekt you'll property protection sfius is one of the mechanism that's we should focus on in that perspective yes, with sfius we need to think about national at security first and foremost but sfius is also supposed to implement open markets and allow market transactions to occur we would much rather have companies like china or from anywhere else in the world trans

acting in the market and buying technology rather than stealing it so it's very complex engagement on lots of levels is essential for bringing the chinese closer to the policies that elon musk and other american companies legitimately worry about >> hold on one second, sir >> do we want to get to sue? i guess we were going to wait. let's go to sue herrera. she has an update on the sentencing of martin shkreli >> indeed i do here's what's happening in the courtroom, everyone. martin shkreli has been sworn in he was asked by the judge whether or not he was happy with his legal team he answered yes. the judge asked if he wanted to address the court and shkreli's legal team requested that he address the judge directly after the government does its closing arguments and after the defense does his closing arguments his legal team said to the judge, 15 years which is what the government is asking for in terms of a sentence is just not

appropriate. it is not warranted and he should not be sentenced solely for being martin shkreli so the discussions are still going on the government is going to make its case before sentencing and then the judge will rule and we are in that courtroom and we'll have the sentence for you shortly. we believe martin shkreli has yet to directly address the judge we're waiting for that statement. back to you. >> okay. sue, thank you sue her air yach sue herrera. >> we were joined by stephen mnuchin on set a lot of the conversation was focused on the tariffs announced yesterday and proclamation from the president. here's what the secretary had to say about the tariffs. >> the objective is free and fair trade so the president is very focused on creating better opportunities for u.s. companies and that's going to lead to more growth

we had very direct conversations with china that's our biggest trade deficit. we're very focused on nafta. >> nafta and china matt slaughter, let me come back to you china in particular, and we asked him a number of other questions related to sfius refuse and 301 which is section 301 of the trade act that ustr is currently acting on or investigating. what are your expectations whether it comes to the ratcheting up of pressure between the u.s. and china >> there's a country, why we're trying to ratchet up the pressures. it's important to keep in mind that china faces slowing economic growth in recent years. the labor force growth has fallen to zero and as they've had in many ways too much capital investment, steel being a prominent example. they need to have innovation and productivity growth to drive sustainable labor force development there and maintain broad social stability so for us here in the united states, whether it's on sfius or on trade issues, it's important

that we as a country and the administration taking the lead have a very coherent long term approach to how to engage the chinese to support market growth there. that's why the talent across the different agencies is essential in a time like this. >> jeremy siegel, we want to bring you in just one more time as we get back to the jobs report for a moment. secretary mnuchin pointed out that the labor force participation rate particularly important here and that there is still room for flexibility in the labor force because that continues to be an issue what is your reaction to his comments on the jobs report? >> it reflected what we said about br in that interview i look at that as extremely important and the jump is very favorable. one does have to take into account that we are in a long term down trend because of the babyboomers retiring what happened during the

recession is we went down twice as fast adds economists thought and now we leveled off for four years. believe it or not, we're right at the participation rate that economists thought we would get at a 2005 and 2006 i'd love to bring it up a little bit more, but the question is whether those -- that aging of the population, the retirement is going to take precedence again and drive that down. the participation rate is every much as important as the payroll number that we all focus on. i'm very glad to hear the secretary of treasury talk about. that that's what we want to bring up the question is whether dem graphics will enable us to brit up enough to keep 200,000 plus jobs a month when population is only generating about 50, 60, 70,000 jobs. >> and we're going to continue to watch it. thank you for joining us let's get more reaction to the comments from the treasury

secretary. from our team of cnbc experts. joining us now mis steve liesman is back at hq and rick santelli is at the cme. steve liesman, i want to start with you what jumped out at you about these comments from the secretary whether it had to do with the jobs report or, of course, the tariffs that we've been talking about here for days that are beginning to take shape in terms of what they might do >> i'll throw two out here not to steal the thunder of my colleagues there, but this notion that more countries might be exempt the next couple weeks in addition, i assume that means to canada and mexico, and then the comment president trump is no herbert hoover. i'm not quite sure what to do with that. but if you were looking for a lead quote, i think that would be it. he mentioned that reciprocal tax again. the important question about financing the debt, stretching

things out beyond the curve. that's important finally, i think the idea that there is an on going dialogue with china on these trade issues behind the scenes while there is all this fluff and bluster in the public that he is still talking to his counterparts over in china and the idea that cooler heads might prevail in terms of what really happened. >> guys, we also asked him about gary cohn's departure. shears what here's what he said about that >> i like gary a lot we are sorry to see him go we have a very deep economic bench. gary wasn't the only person talking about trade. we've had a lot of economic analysis from kevin hasset and others i can assure that you president trump is going to be no herbert hoover >> there's the aforementioned sound bite that steve was referring to earlier whether you see "the wall street journal" editorial page bringing up the departure of gary cohn and suggesting it mashgrks a dangerous moment for this administration, there is a lot of focus on the process within

the white house that leads to ultimate policy. >> there is the second cabinet member in the space of a week to attempt to discredit "the wall street journal" for its pro free trade stance but in addition to that, saying that this is not a protectionist administration despite being faced with very powerful line of questioning instead of data points about separate action that's the administration is taking but taken collectively would certainly appear that there is an approach toward the outside world where the president is focused on his america first strategy the secretary said the president is not a protectionist he repeated that several times trying to hammer home this idea that america is open for business and that these are one off actions whether it is high scrutiny on the broadcom-qualcomm potential deal or the steel and aluminum tariffs. >> it's often said that process is policy, hence why there is

this focus on how policy is getting nad in the white house as a result of the departure of mr. porter and now the eventual departure of mr. cohn as well. >> i think what you saw with the difference between treasury secretary mnuchin and gary cohn. he defended these types of policies in public on camera even though gary cohn in his heart did not believe in them. mnuchin has taken a very different tactic even though they come from the same goldman sachs, when you think is a more globalist background again, pointing to the fact that mnuchin said that president is not a protectionist. this underscores how broad the executive authority on trade actually is. you're seeing a lot of attempts in congress and on capitol hill to start to reign that in. unclear how far they will go any legislation that congress is going to try to pass to reign n in the president's authority still needs the president's signature to become law.

even though you're hearing a lot of push back from capitol hill, the executive authority on these issues is still quite broad and very strong. >> we also asked the treasury secretary about engagement with north korea and pushback from critics of that engagement here's what he had to say. >> i would say let's look at the situation with north korea the president went through with a series of maximum pressure we've done more sanctions in the last year than the entire last ten years. and those sanctions worked so we're now sitting with the situation where north korea is prepared to negotiate. >> rick santelli, the market was spooked at times and fears of escalation with north korea. how do the comments from the treasury secretary strike you? >> i never saw the fear about north korea in the markets or t fear of tariffs in the markets we did see a selloff when cohn left but that was in the night session wlchlt cohn came in,

there were people that didn't have a good taste about what he brought to the white house they only fell in love with him after he left. i don't think this president can win on those issues. when it comes to tariffs, i don't know when resiprocity became saynonym for isolationis and protectionism. the president talked about great length what he wanted to do. the problem is that all politicians who do that never deliver. this guy isn't a politician. he really thinks that he wants to deliver on what he said >> rick? >> with respect to cohn -- >> let me finish >> the biggest deal he is recognized that there had been some real mishandling of certain issues regarding jobs. the fact that we went from 97 million people that were employable but not counted as unemployed and not working went to 95.4 million today, worst level, 62.3 is the participation

rate, it's now 63 means that we have a lot of people that we can bring back into the workplace and full employment argument really doesn't pan out i so agree with the treasury secretary on that. and that is going to affect long term interest rates at least in terms of the path they take. >> mike santoli, we asked him about the tying nato spending to tariffs. he said this is not a conventional president and he's using all sorts of leverage to get what's good for the united states a bit of a different take on use of u.s. power in the markets, right? >> certainly yeah so i do think in general the secretary framed the entire tariff and trade conversation -- >> guys, i want to interrupt >> hold on, steve. >> we have breaking news here from dow jones i haven't had an opportunity to make a phone call on it. i will shortly let me give you the headline again, there is according to dow jones and "the wall street journal. goldman sachs's lloyd blankfine preparing to exit the firm as soon as year's end they're citing sources for that

report again that mr. blankfine will exit of course, a long time ceo of goldman sachs having taken the firm through the crisis. and having also himself battled cancer a number of years ago successfully he has been on the job for quite some time. there is certainly been a -- an active competition under way between the likes of david solomon and harvey schwartz to replace him. they're the two leading candidates to do so unless they were to go to a different generation >> somebody just became available again, gary cohn could he be back in the mix? or is that like -- that horse left the barn? >> i would doubt that. i mean the fact he is was in the mix for a long time. >>right. >> and nobody made the choice, obviously, or the board certainly didn't consider somehow moving on lloyd to replace him with gary cohn that would be surprising and certainly surprising for

goldman sachs given the history of almost always i don't think i can remember a time when the replacement wasn't splub that w somebody already at the firm he was gone for 18 months. so we'll see you know, in some ways not a surprise there's been a lot of talk about this at the same time, i think in speaking to people at goldman sachs, there has been an expectation it could be another two, three years before mr. blankfine made his exit. and that, of course, important to the likes of a david solomon or a mr. schwartz because they're not youngsters themselves so you do want to at least know you're going to be in the job for some time before you yourself are hitting the early to mid 60s and perhaps are considered to be retirement candidate. i'd love to make a couple calls as well and get more sense >> we're not ready for the commercial break yet so you're going to have to wait. there is a very different path than jamie dimon, right? two leaders making very

different decisions. >> yeah. and j.p. morgan you had a succession of exits by people who are once anticipated to potentially be the successor to mr. dimon. of course, can you always look at an organization as large as j.p. morgan and identify the people that would step n this would be a very significant move and you could argue perhaps in some ways a bit sooner than some anticipated. again, looking at the totality of the entire tenure, not unexpected >> mike? >> want to bring in mike santolli you've been covering this spags for a long time. these moments get a lot of focus when we get potential succession at an organization as big as goldman sachs. what is your take on the potential timing of this and reprecushi reprecushions throughout the banking space >> blankfein is like james gorman who have been there for

quite some time and really date back to the crisis it does say something about goldman sachs as a company, as the business being perhaps a lit more at a stable point i mean a year ago there was a real deep panic about the fate of their bond trading operation, reliance on. that so maybe there is a sense right now that it's a safer time to try to get this transition train in motion. that would be my main take away right now. if you just look at the stock over the last couple of years, you see it's obviously showing the business has stabilized a little bit right now >> lloyd blankfein started life as a trader. what do we know about his possible heir aparents and how they have come up? >> you know, there are different stories. of course, solomon was more in the banking part of the institution. schwartz is now the cfo. but he's got kind of a long history there and a lot of different areas as well. >> so different parlts ts of th bank >> they are. and this is an open competition

that has been going on for some time it's been covered by any number of people. both of them trying to potentially raise their profile. schwartz not as much as solomon has been and as for blankfein, of course, he's one of the traders. he's been there 36 years as was cohn when that was an acquisition many years ago been amount goldman sachs for 36 years if you include that tenure of course. >> do you think it says anything about the comfort of the trump -- with the trump era in the banking industry that we would even be talking about a major succession it's hard to imagine but perhaps a year ago when everybody was trying to get their bearings and how this administration was going to affect the markets and what not, that that this would have been as comfortable a move to make if this report bears out? >> my sense is that the report will bear out. there is not a decision that's being forced on mr. blankfein. it's one he's making himself i don't think there is any sense of that board of directors other than having a clean succession

plan that there was somehow a need to do this quickly. and the journal is reporting that, you know, again, that blankfein, jon, is the move behind this in terms of the timing of it but, yeah, it's not -- ten years ago this was a very different time to either see soceos comin in that are new or departing >> let's go back to the banks wloshgs is still left? so we have now just blankfinein, he'll be gone s that it? >> no, he came in after. >> let's bring in willford frost. >> gorman did go through it a bit. >> who are we going to >> you covered banking what is your take on this? what is your reporting tell you? >> first, i have a quick read of the article. clearly it's not stating that it will happen this calendar year, saying it could happen as soon as that. my own report wing when we did

big piece on blankfein did suggest that when people were saying one to three years. i said it wouldn't be a surprise fit was this yir i haven't done reporting on it since then i do think it is a believable possibility that mr. blankfein could leave before the end of the year that was as i reported a few months ago the other important thing to note about this article which is similar to the article i wrote a couple months back is that it remains totally in his control if we talk about the tenure of lloyd blankfein sure, a couple quarters of trading troubles late last year the tenure of lloyd blankfein is phenomenal the share price performance is very strong. the way he guided the company through the financial crisis was outstanding. and so his legacy is so strong that it is up to him to decide when to go or not. but let's also pause and thinking about his age at 63 after 11 or so, 12-year tenure, he will be thinking about the future

but also the ages of the two men below him are more relevant than perhaps when you consider the challenges to someone like jamie dimon who had a similar tenure in their late 50s. david solomon and harvey schwartz, the two co-presidents will be wanting to know if to lose another big potential success or in the way he did with gary cohn >> tell us more about the potential successors >> i think we've got graphics. just trying to boost the volume. two co-presidents are harvey schwartz, who was formerly cfo and has had a broader background it's of trade, but not as a pure trader he was more on the sales side

when he wasn't trading and then he had different roles of course, being cfo beforehand gives you as broad exposure to all the business lines as i think could be possible. david solomon, fellow co-president and coo has purely investment banking background. he's come up through the ranks and is seen as someone who's excellent with the clients as investment banking might well lend that. so he's someone who's strong as strong with the clients in david solomon versus someone with more background and trading risk management exposure. both of them have always gone on well there in offices. there's a suite on the top floor of goldman sachs lloyd blankfein's is in the middle people like david solomon and harvey have their offices so

they're close to each other. they are competing now it's pretty inconceivable if this report is correct that lloyd blankfein is to go in thenext 12 months. if he decided to stay on for many more year, then you've got some wild cards that could come into play. >> tell me why again, david totally dismisses this, but should we dismiss the possibility of gary cohn >> because it would sebd send such a negative signal to the team blankfein has underneath him. they would then bring in someone what the outside it is highly unlike land i would agree with david not based on any phone calls or conversations i've done since the white house, but i think the chances of it being an outsider, ie someone not currently employed, is very low and the

repotioning they need to create these two ceos was very much to tell them you know, you're in line to come next and you know, a broader question for goldman sachs over the last year or two not at the top executive level or the level below it has been that they lost a little bit of talent more son so than in previous years and decades. because of the tenure of the people at the top. i think that's a factor they couldn't make such a change now and promote someone that's left the bank already >> great perspective and for more, let's bring the in jim cramer your take on this news >> yeah, well, it comes back soon enough, i think lloyd and again, lloyd's my friend and was very helpful to me on a career at goldman is deeply committed to letting a generation, a newer generation get in and not as will said,

let's say get thdisenchanted because they don't have a chance to run the bank. lloyd is a team player and he wants new blood and he doesn't want to stay there too long. all the people that will suggested are the candidates they are all qualified and i just think lloyd is afraid that you'll lose talent if you don't eventually do what's right for the bank and he's also, had it for a long time, but he is fair and wants to keep great people in order to do that and eventually, you have to say i'm done i think and that's what's going to happen. >> when we look at the share, how they're trading, investors clearly aren't frightened by his departure. the stock is up 1.5% suggesting that what you're saying is right, that they're comfortable and pleased they're going to bring talent up from below. >> well, i think lloyd has not been exactly a -- i think he has

been as a person who clearly is the ultimate team player has been saying that he's never going to let this generation just get lost because he wants to be b the top guy. i think he's doing what's, what his heart tells him to do. which is to make brothers. he told me to goldman, that's what you do. if you're committed to gold mma you make sure the talent in the 40s and 50s gets in. martin is a very interesting figure by the way because he's a technology guy and there's a big belief that perhaps technology is going to be the way of bank ing a tough choice >> hey -- >> but i like the idea that a technologist would be included because that shows you the bank understands what the future is is >> sure. let eets bring in andrew ross sorkin, i understand you got

news >> not news per se, but i think i would caution everybody here before they get too excited that somehow lloyd is leaving the building tomorrow or at the end of this year just a little context and i've talked to a number of sources around this situation. around many months, including today. the pieces came out. back when gary cohn left dpold ma goldman, there was a real meeting of the mind of the board to find a successor and to understand what possible theties were this story started in many ways a year and a half ago. especially given that lloyd had just u come back after the cancer diagnosis and had recovered. there was always an expectation that sometime probably in 2019 given the 150th anniversary, that might be the time he steps off the stage. but i think this idea that somehow we're going straight to

the end right this second today is wrong it's very, very possible we will be seeing lloyd in some form of a position at least in early 2019 if not longer. i do think, i love jim i disagree i don't think marty is there this is a harvey or daifld solomon story, who will ultimately be the successor and my understanding is that lloyd has not given anybody a timeline at all so i just, just want to caution everybody. do i think 2019 is the year? yes. has it been articulated? absolutely not >> all right >> i just want to be clear, i think it's great that marty could be in this will mentioned him and i think it's terrific that he can cut off because it's also a sign that the bank recognizes how important computer science is. how important the codes are. but i say that no one thinks

that many being in the build, but i know lloyd has always been committed to making sure that young people have a chance to run the bank and whether it's 2019 or 2018, all i'm saying is he doesn't want to be chained. he wants to have other people have a chance while they're still young enough to be made and not pass over a whole generation of people who really deserve to have a shot among the best >> yeah. jim, it's david. to your point, schwartz is 53. solomon is 55. if you're going to give people time, you start looking down like people in their late 40s because these jobs can be held for eight r, ten, 12 years in the case of mr. blankfein. i'm going to bring in scott who's going to take over in a moment gold man stock zplsh what you said is right.

that's one of the key responsibilities certainly seems that mr. blankfein, when he leave, not even this year, is going to have a well thought out succession plan >> i'm somewhat struck and maybe the rest of you are that the price action is what it is on this news. you would perhaps have thought an announcement like this, people like lloyd blankfein or jamie dimon are so identifiable with their firm. you have to feeling like they are going to be there forever because they're the figure heads as well as running these organizations. i'm kind of surprised the stock has acted the way it is right now in the midst of this announcement to be frank, there are and have been some who have said that gold man needs to move on for some time. there's people like dick bove, a well-known financial analyst, have come out and said gold mma

needs to move on maybe they missed the trends that have become so popular out the there. passive investing or etfs. what do you make of the fact the stock is -- >> it's at the session highs now. it's moved hire in the wake of the announcement i would say it's not acting like investors are frightened, but not cheering his departure either >> i wouldn't say cheer, but i would think that if you said to me, lloyd blankfein is leaving goldman perhaps sooner than you would have thought, maybe the stock would be lower on that, o no >> you know, goldman has a long history of fairly easy transitions. for the most part. whether it's i can think of so many different people. paulson. corzine. go back a long time. >> blankfein is golden sax >> maybe it's not sooner than people thought when he says pes potentially by the end of this year, then a