momentum >> i do. >> sticking with alphabet. goog >> another semiconductor, nxpi got above 90 today i like the momentum. >> dow is still up 70 points that does it for us. thanks for watching? "the exchange" with kelly evans begins right now >> thank you, scott. hi, everybody! here's what's ahead this hour. the state of our union, as the president gets set to address the nation, we'll tell you how d.c. really moves the market a homegrown crisis trillion-dollar deficits may be coming sooner than thought and the hottest thing in the stock market right now is skin care we'll explain and tell you what people are shelling out for. but we begin with today's rally and dom chu has those numbers. >> so kelly, we are running into an area of resistance in the stock markets overall, because on the s&p 500, at least, we got to about 2738 at the highs 2741 is what traders will be watching, at least some of them.

that represents the 200-day moving average or longer term trend line for the overall s&p still, though, the dow, you can see there, up by about one third of 1% and same thing with the nasdaq composite the consumer discretionary sector, very much in focus ralph lauren a big part of that story. some better-than-expected results because they spent more in marketing during that holiday quarter. it boosted their sales those consumer discretionary stocks are moving a nice amount to the upside off those lows that we saw on december 24th and one stock to watch here, the worst performer in the s&p 500 today, church & dwight it's the company behind arm & harm and oxyclean detergents they cited among other things rising costs and tariffs, kelly. back over to you >> that becoming a theme, dom, thank you. i have some breaking news on the fed that's just in.iesman joins that >> a new essay is out entitled "the value of patience."

you can guess what he's going to say. he says the fed should not hike rates until the outcome becomes more clear and he does expect some clarity in the first half of this year he goes on to say, it's prudent for the federal reserve to be patient, saying monetary policy right now is at a critical juncture and this is important here he says the fed should be open to adjusting the normalization plan that presumably includes the balance sheet reduction. notice he didn't say "it should be changed," he's open to changing it. he says the fed needs to closely monitoring the economy there are financial uncertainties out there. he cites trade tensions, tighter financial conditions, and says the treasury and yield curve could be sending cautionary signals. the dow has lowered its gdp forecast to 2% and he cited decelerating global growth and says that decelerating growth can spill over into the u.s. inflation prices are muted and the labor market is extremely tight, kelly >> sounds pretty dovish all around thank you so much. steve liesman. let's bring in bob pisani to

react. a lot of dovish rhetoric from kaplan not seeing a lot of reaction in the market as of yet what are your thoughts >> we're a little bit weaker, but i think this is because tech is coming off of the highs kaplan's not a voter this year, but i think he's reflecting the sentiment. now we have a fed that essentially seems like they're on hold for the first half of the year but the second half of the year, the economy slows down, they're not going to do anything then. the market is kind of thinking, hey, they might not do anything at all we've never had the fed stop with interest rates this low, i don't think so maybe this is the new normal maybe 2.5 for a neutral fed rate is a new normal and the old 4.5%, that shouldn't be in there anymore. i think that's probably what the market believes right now. by the way, kelly, we're right up against the 200-day moving average on the s&p 500 when we did that last time, we had a nice move to the upside. it's 2741, is what you want to watch. we went right up against it and then fell back coming off the

highs ow >> and bob, you were saying that tech is softening. are we looking at alphabet or you know, which component here >> cisco, i just saw some trades come by. cisco just hit right near the new low and i just saw, jpmorgan was off in the last 15 minutes, even home depot is down a little bit. i think we've got a little bit of a modest sell program coming through, but it looks like mostly tech. >> thank you, bob pisani, down at the new york stock exchange it was delayed due to the government shutdown, but the president will finally deliver his second state of the union address tonight at 9:00 p.m. eastern time, this with a second potential shutdown now less than two weeks away eamon javers is live at the white house. what should we be watching for tonight? >> the white house says this will be a message of unity and bipartisanship tonight at the state of the union but the president and his democratic counterparts on capitol hill can't help but taking swipes at each other this afternoon on twitter that message of unity not even lasting until prime-time on state of the union day we'll get to that in a minute. but first, look at some of the

themes that the white house says the president will hit today all of these are areas where they feel they can reach out to democrats and have some form of bipartisan agreement, particularly on immigration, which has been such a flashpoint over the past several weeks here in washington. also, trade, infrastructure, lowering health care and prescription drug costs. and on national security, which the white house says means ending the endless wars overseas, they think that they have some bipartisan areas of agreement with democrats on that, as well. but here's the twitter exchange that sort of has set the tone for the day today. first of all, we had chuck schumer making a speech critical of the president the president not really able to resist the temptation to swipe back at schumer saying, "i see schumer is already criticizing my state of the union speech even though he hasn't seen it yet. he's just upsethe didn't win the senate after spending a fortune like he thought he would. too bad we weren't given more credit for the senate win by the media. chuck schumer responding in kind

saying, thanks for watching my speech, but you must have missed this line. even more empty than his policy promises are president trump's calls each year for unity. #stateofthe uni #stateoft #stateoftheunion this will be the first time the president has spoken in a chamber that is divided in control -- in which congress is divided in control so nancy pelosi, the speaker of the house, will be sitting just over the president's shoulder during the entire speech tonight. >> so him in chuck schumer are going back and forth, bernie and lloyd blankfein are going back and forth. >> a lot of beefing on tuesday >> let's bring in sarah factgen. also joining me here on set is stephen seelig, former secretary of commerce of international trade under president obama. sarah, i'm curious what kind of general tone you expect president trump to take here is this going to be a

pro-business kind of speech? how do you think he comes down in terms of that tone? >> well, i think the overall tone, as eamon pointed out, will be one of bipartisanship the president tends to deliver a very solid, great speech, particularly when he's working off of a prepared set of remarks and off of a teleprompter, which i would expect he would do tonight. as it relates to business, there's going to be a lot in there that business likes, of course certainly, i would expect the president to recount the successful economy that in part he delivers a lot of credit for. the tax cut plans have helped grow the economy, wages are up, growth is up, all the things trump campaigned on in 2016 have come to fruition, relative to the economy. there are some challenges on trade, of course >> yeah. >> but he'll -- he very well may find more support in the democratic party on those policies than the republicans. the one area where business may not like it, depending on what he actually puts forward in this

speech is around precipitation dr prescription drug prices and i would expect -- to me, i'm going to watch how democrats react to that. because that is an area where he could craft a bipartisan agreement that many republicans won't like, frankly. >> do democrats cheer for him or do they sit there with their arms crossed that will tell me a lot. stephen, the reason i ask, maybe from the macro point of view, there's a lot to talk about, sort of the good economy and it's good for business and that kind of thing. but when you go through srveect by sector, it feels like the themes both on the right and on the left are too highlight some of the problems, whether it's drug pricing, specifically in health care, you know, there's other industries, too. there's tech and there might be calls about privacy or whether they should be broken up and a lot of that's coming to the left, but i think there's a lot of popularity for that on the right, too >> yeah, look, it's dliecidedlya mixed bag. as steve said in the last

segment, gdp growth is slowing china is slowing down. we're going to get to a budget deficit of over $21 trillion next year. and in october, we had a ten-year term in terms of the trade deficit. and on top of all of that, we had a very ununcertain macropolitical environment we have venezuela, the fourth largest country in latin america that could go into crises, maybe even a civil war you have the upcoming chinese trade deadline on march 1st. you have the president talking about -- >> do you think he's going to say something on the china talks this evening >> you know, he may. because it is so fluid, i think he won't be running a victory lap yet, but the fact is, there's a lot of risk in the market and it doesn't seem, at least in terms of the equity markets, that it's pricing in that level of systemic risk that does exist, both in the economy and geopolitically >> sarah, what do you think about the fact that there's more than one -- >> so, obviously, there's a lot of democrats who are expecting

tru trump to be a weak candidate when it comes to his re-election. that said, tonight, there's both the stacey abrams official response bernie sanders will be live streaming for a third year in a row his own response on facebook is there reaction, those two different reactions? what does that tell you? >> it tells me that, unfortunately, this speech has just become, you know, another political event in our history, as opposed to, you know, a big moment for the country to talk about the country's priorities you know, stacey abrams lost, she lost substantially the election was not stolen from her, yet democrats put her forward as the person to give the response rather than any number of the hundreds of elected leaders they could have do that speech bernie sanders is running for president, most likely, and this is just another way for him to score points with the democratic base and republicans do this, too both parties do this now and it's not, you know, it's just another sign that we don't

really take policy as seriously as we should be as a country >> or stephen, i wonder what it would look like in howard schultz said, okay, i'm going to live stream my own response this evening. him getting in the race over the past week has also provoked a lot of howls, but it's up for grabs whether it's going to be a bernie sanders vision, a stacey abrams, a howard schultz vision that is the strongest to run against trump. >> yeah, unfortunately, kelly, none of those really are centrist visions, to your point. >> even howard schultz >> howard schultz might be i think it's unclear that he actually has a path, you know, to potential victory but the fact is is that we are existing in a world today where there are a lot of real challenges and there are a lot of real challenges for the united states and the fact is, we've had an unbelievably good run since president trump was elected where we haven't had significant global conflicts, but we do have

a president who is untested and can be a bit impetuous and hopefully none of those conflicts we're seeing around the world are ones where he actually may be tested >> good to get your perspectives thank you for joining me and be sure to join us "squawk box" tomorrow morning at 8:00 a.m. eastern time for a special interview with treasury secretary steven mnuchin of course, he'll respond to what the president and others have to say tonight. here's what else is coming up on "the exchange. >> ahead, it's the one-year anniversary of the dow's biggest point drop ever zp >> the dow is down 1,068 >> and it's being called america's homegrown crisis a look at the ever-growing u.s. debt load. and precipitations to fix our fiscal help. and calling out netflix. one big tv executive says the streaming giant's audience numbers are completely misleading my experience with usaa

has been excellent. >> announcer: this is "the exchange" on cnbc. and it really. with all that usaa offers why go with anybody else? we know their rates are good, we know that they're always going to take care of us. it was an instant savings and i should have changed a long time ago. it was funny because when we would call another insurance company, hey would say "oh we can't beat usaa" we're the webber family. we're the tenney's we're the hayles, and we're usaa members for life. ♪ get your usaa auto insurance quote today.

willy davis, who has alzheimer's. i decided to make shirts for the walk with custom ink. the shirts were so easy to design on the site. the custom ink team was super helpful and they just came out perfect. seeing my family wearing my shirts was such an amazing reminder of all the love and support that everyone has for my dad. - [narrator] check out our huge selection of custom t-shirts and more, for teams, businesses, and every occasion. you'll even get free shipping. get started today at customink.com.

you'll even get free shipping. and the army taught me a lot about commitment. which i apply to my life and my work. at comcast we're commited to delivering the best experience possible, by being on time everytime. and if we are ever late, we'll give you a automatic twenty dollar credit. my name is antonio and i'm a technician at comcast. we're working to make things simple, easy and awesome. welcome back to "the exchange." the dow was up 183 points. it's now up 66 that's a quarter percent gain. the s&p did briefly go negative. it's barely positive right now pisani is watching the 200-day

moving average today's move higher was generally coming on a day of some pretty big milestones today is the official halfway point of this earnings season. it also marks one year since jay powell took over as fed and it's the biggest anniversary of the one-day point drop ever. closing down nearly 1,200 points do you remember that >> i remember that >> we were down 1,600 at the lowest dom chu is here with me and craig callahan joins me to talk about the state of the markets ahead of the state of the union. so craig, what are you looking for? if someone said, what's the state of the equity markets, what would it be >> well, we're value investors at icon. we measure the market right now to be about 5% below our estimate of fair value so we think we're in a healthy recovery and we would expect the market to move higher over the next year. >> all right 5% below fair value, craig it's not like you're saying, this is the middle of the fourth quarter, we're off 20% i remember you said to buy on

november 26th and that was a good time. this is one of those where you just kind of own it and don't pay too much attention >> our value readings then were much juicier, as you said. we measured the market about 15% below fair value but the fears that were in place then, primarily three of them, they are subsiding and as those fierce sears subsi market is recovering and moving back higher. >> we had a guest yesterday who said, we're already overbought in a number of different parts of the market. do you agree with that are there places like the financials or some of the insurers that have come too far, too fast, craig? >> as value investors, we can find attractive stocks pretty easily in this setting we like financials, even industrials. we can find good bargains. >> and those are some of the areas i.t., even the industrials, boeing over 400 today, at an all-time high that have done surprisingly well. >> yeah, there have been numbers of stocks that have been on shopping lists for investors out there. and they've done so because they

found that the valuations for those stocks had been so depressed after christmas eve that they had -- they felt compelled. maybe not to go career long them, but to just nibble at them i would is a this, everybody's got their own determination for what fair value is, craig included but from a forward earnings perspective, valuation perspective, at the highs of the market last year, we were trading at around say 19 times forward earnings >> wow, that's high. >> right two to three months later, during that huge dip in december, we were trading at closer to 14 times forward earnings and kind of in the middle, 16 times right now if you are looking for that reason to go long the market, that is the reason why bit doesn't scream compelling like it did back in the early part of january. >> what about those who say the federal reserve's pause means there's going to be a higher multiple for equity markets. is that something you can bank on the fact that interest rates are so low and staying there >> i would agree with that assessment, but i wouldn't use the phrase "bank on.

we can't really predict how people will behave in the market but without rates going any higher, it's real sensible to have p\e ratios expand. >> one other effect of low interest rates is the fact that 17% of companies had trouble making their debt interest payments at the end of the year. that's a high number that's not as high as it's been. it's been as high as 20% going back to 2016, but are you worried that there's low-quality, you know, corporate balance sheets out there >> well, i'm not a bond person, but hearing those fears, i looked into very common debt ratios, such as debt-to-equity, debt-to-assets, debt-to-ebitda and i find them quite reasonable there was a big de-leveraging back in 2010, '11, and '12 and companies have not added that much more debt, so i'm puzzled at these fears of excessive debt >> we've heard it over the years, people have said the amount of corporate debt is up many times over since the

federal reserve began its easing that's an aggregate number, but craig, you're saying when you look company by company, nothing jumps out at you >> i can look at their debt-to-asset, debt-to-ebitda, and those are all far lower than they were a decade ago >> all right, we'll throw them a bone craig, thank you so much for joining us good to see you today. craig callahan and our own dom chu. thanks coming up, sharing genetic data with the fbi. and a retail breakout. shares of estee lauder are sitting pretty after earnings today. in fact, the shares are now up over 11% we'll look at what helped the company deliver a blowout quarter when "the exchange" is back in two. guess who just got reinstated! well, not officially. nervous? yeah. yeah me too.

don't worry about it, we'll figure it out. i'll see ya in there! just ok is not ok. especially when it comes to your network. at&t is america's best wireless network, according to america's biggest test. now with 5g e. more for your thing. that's our thing.

i'm not really a, i thought wall street guy.ns. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade

welcome back to "the exchange," everyone. i'm sue herrera. here's your cnbc news update for this hour. the top commander of u.s. forces in the middle east telling a senate committee of the 34,000 square miles of territory that isis once held, it now controls less than 20 however, he said the fight is not over >> the successful partnership with the syrian democratic forces and the iraqi security forces was instrumental in these gains against isis but it is important to understand that even though this territory has been reclaimed, the fight against isis and

violent extremists is not over and our mission has not changed. >> france's yellow vest protest movement joining ranks with a major union in a day of protests over taxes and buying power. there were brief scuffles after police fired several rounds of tear gas at the protesters and a banksy painting that shocked onlookers as it partially shredded itself after being auctioned off is now going on display in germany. starting today, it will be on display through march 3rd. the painting has been retitled to "love is in the bin after it shredded itself. i still remember that story. that's the news update this story. kelly, back to you >> sue, thank you very much. i should have brought my sunglasses >> i know, it's glaring out here >> you should have left your coat >> i had no idea it was this warm >> melissa and i are reenacting "the fast and the furious" out here, or something -- >> "thelma & louise, may" maybe.

>> this is the lamborghini suv it's a $200,000 car. this is the perfect example of a brand that creatatered mostly to males trying to expand their audience, because the people looking at this car the most are females. >> women >> which kind of makes sense their buyer, they said, was over 90% male in the past, but they actually surprised themselves that so many females wanted this car. doesn't wan of the cone of the s and jenners have one and cardi b., but it's becoming a cultural phenomenon >> but this is the teaser for "power lunch," one of us will be driving this car and that's all you need to know. because that's going to be worth -- >> maybe you should vote on who you think that's be. who's safer behind the wheel >> or maybe less safe. maybe that's less fun. >> and robert frank will join us to kind of give the whole story behind this. we'll see you out here i might just stay out here, it's so nice out. see you in just a little bit top of the hour for "power

lunch. here's what's ahead on "the exchange." >> coming up, the battle to be the biggest company heats up small businesses are waving a caution flag and a major dna testing company is sharing data with the fbi it's all ahead in "rapid fire.

val, vern... i'm off to college and i'm not gonna be around... i'm worried about my parents' retirement. oh, don't worry. voya helps them to and through retirement... ...dealing with today's expenses... ...like college... ...while helping plan, invest and protect for the future. so they'll be okay... without me? um... and when we knock out this wall... imagine the closet space. yes! oh hey, son. yeah, i think they'll be fine. voya. helping you to and through retirement.

welcome back let's catch you up on a few headlines that should be on your radar today. it's time for "rapid fire. welcome, all first up, shares of estee lauder are soaring today after the company reported a blowout second quarter the beat was helped by strong global sales of skin care, courtney, which we talked about with p&g and skii. >> everybody scares about their skin, millennials probably do care about it more than we do. you've got the selfie in your pocket all the time, you have to look good all the time, right, katie? >> yeah, i'm not even a big selfie person, but i love skin care i talked about skii, i'm a big tacha person >> a big what? >> tacha, it's my favorite brand. courtney and are both frugal people, but i will shell out

money on nice skin care products, within reason, twice a area >> and look at rodan & fields. it was much smaller when it began in 2002, and 2016, it was the number two skin care brand sales of $1.5 billion last time they reported in about mid-2017. that's huge! >> let me just point out that we boomers are not getting any younger and we're probably looking for someone to look as young as we feel >> trading up to the pricier -- >> i can remember my mother more than 50 years ago using olay products >> and i use olay. that's my low-end stuff. >> that was part of estee lauder's big bump. >> skin care sales up 16% for estee lauder that's really impressive the next biggest category is makeup and that was up just 3% by comparison. >> if you're betting on these companies, you're betting that keeps going. >> and allergan's going after the millennials. >> up next, the ceo of fx networks is blasting netflix

john langraf cited recently released numbers for programs like "you" and "sex ed" as being exaggerated, because it's not same standard. >> he's saying -- netflix said 40 million people will watch this in the first four weeks 70% will complete one episode. and fx is saying, that's great, but if you look at it compared to how we measure this, which is average audience viewership within any minute, it would about 8 million and 3 million or so so this isn't apples to apples it reminds me of the way amazon sometimes gives metrics, which is great >> netflix doesn't run commercials. why should we care how many people are watching. >> and that's what the investors are saying that the brand depends on people going there for their original content and for that investment paying off >> we look at the subscriber growth, we don't look at advertising rates. >> that's what netflix wants you to look at, that's what they

keep pointing to >> that's their lifeblood. >> i understand the need for having some third party data to equalize it. if we don't know exactly how they're measuring it, i think that's something -- there's an argument there >> or you can say people making the shows care about the total eyeballs, but we know they just want to be on netflix. that's where the cool factor is and the viewership is. and i think "sex education" was a british show, anyways. >> just to be fair, the head of fx is being bought by disney as part of the 21st century fox thing. and disney is going to have its own streaming service. so what am i missing >> possible viewership how about this who's the biggest company in the world? it's changing minute by minute yesterday and today. apple took the crown earlier this morning it also had it a few seconds yesterday. but microsoft justi yanked it back in the last few minutes on the apple thing, to quote jim cramer earlier, he said, who is buying apple the shares are up nearly 10% this year. it had first revenue warning in 15 years

it's been incredible -- so the fact that they're number one right now, whether they're trading back and forth at all is a big surprise >> you know, i read a research report the other day, do you really want to be the most valuable company in the world, when you are a $1 trillion company, think about it. if you're buying this company, how long is it going to take for that company to double in value. >> think about who is the past crown holder, exxon, going back to the '08, '09 period, economy and cataclysm, but oil prices were very high >> the law of big numbers is real and it's -- if it hasn't kicked in already, it's certainly going to kick in -- >> i wonder if it's one of those curses, when you're on the cover of madden and something is destined to happen to you if you're one of those players. >> how nice for them, but so what >> the only other thing i'll mention, it's actually pretty unusual to see companies buying like this, so many different companies, there were periods of two or three decades when the same company, whether it was at&t in the past, would be the

number one company and there wasn't much drama. it's interesting now that we have such big companies -- >> well, $1 trillion now we're talking real money >> yeah! >> that's why we're focusing on it, right? >> who cares about $1 billion? $1 trillion, now you have our attention. >> yes next up, confidence among small business firms is hitting its lowest levels since president trump's elections. this is apparently is so worrisome it merited front page coverage in the "wall street journal" this week what's going on out there? >> we've seen certain legs lower in our own skppoll i would note that both of those metrics are either at or near record highs even though small businesses are feeling a little bit less confident, in our data from cnbc and survey monkey, it was over concerns about a potential economic slowdown. and i will say anecdotally, small businesses that i speak to are fearful about that the next wave of data we'll get will be taken after the government shutdown. so i'm really curious to see if that's impacted small business sentiment. because i think it makes, you

know, consumers a little nervous. >> they tend to feel the slowdown before the big companies, right >> yeah! the ones that were more concerned, when they speak to me about a potential slowdown, survive the last recession i feel like they know some of the warning signs, and it's on their radar, for sure. >> slowdown is an existential issue for them >> they're in more danger of going belly up i think it's a little more unfair for them to have jumped to record highs, and when they come off the record highs, all of a sudden it's a small business slowdown. you're right they're still at high historical levels, aren't they? >> they certainly are near a lot of those record highs. the nfib is well above 100 their historical average is 98 our data is not as rich. we haven't been doing it for as long but we're near record highs as well in our survey monkey data they do bring it up, though. >> do they talk about tariffs, too? that's the other one we're hearing more and more about. >> small businesses that are impacted by tariffs certainly talk about it, but a lot of the nfib companies aren't saying

that they feel because they're more traditional mom and pop retailers that have regular customers on main street it's not quite the same business model. >> same reason people always say own the russell, like it's more domestically oriented, whether or not that's true, that's what they say how about this finally, a major at-home dna testing company is under fire for allegedly working with the fbi by allowing it to access its database of nearly 2 million genetic profiles, bill's and mine are among them, family tree dna is accused of volunteering access to its customer data bill to help solve crimes, which would be the first time a private genealogy firm has ever done so. what are you hearing >> full disclosure, they're friends of mine at family tree dna. that's the service that did my infamous dna test who told me about who my father was or was not. bennett greenspan is one of the cofounders of the company and he says, look, the issue, and he sent an e-mail out to respond to this article it's not like they just opened up the vault of data that they had and let the fbi raid it.

you need a subpoena or some sort of a legal document to gain access and by access, all they did was, that they tested a sample that the fbi gave them and they saw whether it matched anything that family tree dna already had onboard. it's as if you and i would go to them, give them a sample and say, let's see if you get any matches. >> but only within a subpoena or a search warrant >> but in this case, they didn't need it. all they were doing was giving them a sample and saying, do you have any people in your database that matches >> so family tree dna volunteered that they had a match? >> yes >> do you think other companies should do this >> let me say this, how many people -- the privacy issues are real but how many innocent people have been falsely accused of a crime using dna? none, that i know of but how many people sitting in a prison and sometimes on death row for years have been exonerated by dna and found to

be innocent? >> not to mention they solved the golden state killer through dna. >> there was just another example today of a young boy whose remains were found 20 years after he died and through another dna testing service, they were able to determine his identity and they've got a suspect in custody at this point. so it's doing more good than any potential harm that anybody fears, i think and not that i have a vested interest in any of this, but i am passionate about discovering the truth in any issue and dna does not lie >> if i've submitted my dna to one of these services, have i agreed to open myself -- >> yes >> that's what i'm wondering what have i agreed to? >> it's the olded adage they have the boilerplate legalese that none of us ever read >> that's what i'm knowing, did i agree to that? >> you did but you're not agreeing to open your dna to any legal process

that doesn't include due process. that's the point they're not just rolling over and playing dead for the fbi or anybody else >> what if i called them and said, can i have that back >> you can ask for your dna sample back. >> can you and will they grant it, i wonder >> as far as i know, yes >> i'll let you know how it goes thank you, guys, all courtney, kate, and bill that's rapidfire for today coming up, america's homegrown crisis the national debt expected to soar to the highest level since world war ii over next decade. should washington be doing more to stop that we'll ask. plus, gm goes all in with the latest pickup truck. what it looks like, what it can do, and how much it costs is ahead.

welcome back the national debt is expected to soar to the highest level since world war ii over the next ten years. ylan mui joins us now with how

this became a crisis of our own making ylan >> reporter: well, kelly, this is not a problem that started with president trump, but some of the big ideas he's going to talk about tonight during his state of the union, you know, money for a border wall, a $1 trillion infrastructure plan, those ideas are just going to pile on top of what is already a mountain of debt take a look at these estimates from the cbo they found that over the next decade, debt as a share of gdp, that's going to skyrocket to 93%. and if all the tax cuts stay in place, the debt is going to surpass our total gdp by 2029. the picture for the deficit, obviously, that's not much better $1 trillion deficits are on deck by the year 2022 interest payments, that's the fastest growing part of the federal budget, and the cbo says this is not sustainable. but kelly, as you know, washington is really good at spending money, but cutting back, not so much. back over to you >> ylan, thank you so much ylan mo ylan mui

as we continue our new era of government, is there anything that can be dope to rein in spending let's ask grover norquist. thanks for being with me >> good to be here >> it's not just on the left that the deficit grows, it's on the right, too, and aren't we seeing that under president trump with the effect of the tax cuts and other things? >> two things. there's several things that can bring the deficit down one is spending restraint. that's awfully helpful but what we really need is to reform the entitlement programs. those are things that continue to grow -- >> right, but this president is not doing that, grover he's never brought it up, he's not talking about it paul ryan and those who wanted to do that were booted out of congress >> okay, what he didn't do, which obama did, was add another unfunded liability, obamacare, which had many more spending increases than tax increases it was a $1 trillion tax increase per decade, but it was more than that in spending so step one, don't add to the problem. and the challenge, of course, we have is there's a presidential race and all the democrats are rung are talking about $30 trillion increases with medicare

for all. >> well, grover, even under the president -- >> and i take your point, because you know, it's true, we're talking about, you know, degrees here, but even if they add something like what ivanka has proposed, this -- and marco rubio supports, you know, this tax credit for children, for example, some have said, nope, that's a new entitlement others say, no, it's necessary in order to make sure that our economy can keep growing in the long run, but it's going to add to the deficit either way, won't it >> it is a new entitlement and ought not to be done until it's offset by reducing other spending one of the things we can do is take a look at an idea, it's a bipartisan idea that has support from the black caucus, the progressive caucus, and the freedom caucus, to deal with the funding for infrastructure by taking loans that have been made to our farming industry, the ag loans, that are owed to the federal government, $100 or $200 billion, and take those and use -- sell them and build roads with them. we've done this before in 1986

on a bipartisan basis, in order to make the tax reform package not a tax cut, but to be revenue neutral. they have sold about $60 billion. >> but let me go back to what larry kudlow would probably say, if he were here, grover. and he would say, if you would increase spending because it's regulatory, that hurts growth in the long run if you increase the deficit because of tax cuts, that should help growth in the long run. do you believe that? >> well, because what you're changing is the incentive structure. the reason why having a 21% corporate rate instead of a 35% corporate rate changes the incentives, we've seen money flow into the united states instead of flowing out of the united states. we ended the benedict arnold companies, which were being bought by other companies, because with our tax structure, they were worth more in canada, burger king. so if you're changing the incentives, this is not -- i know some democrats are keynesians and they believe that a dollar, whether it's a tax cut or spending, is the same thing

that if you spend a dollar, but if the government spends it, is worth more than if you spend it, which i think is a stupid idea, but -- what your changing is the incentives and by going to full expenses the next five years, which is what the republican tax bill did, it reduces the cost of new investment, and by cutting taxes, it increases the reward so you get more investment changing incentives is important. spending an extra dollar doesn't help >> and grover, while you're here, i want to ask you about this, and actually that gets right to the debate that's playing out right now on twitter. lloyd blankfein, the former ceo of goldman sachs, has now said that, you know, eliminating or restricting stock buybacks, as schumer proposed yesterday, is not a good idea. the response to that from bernie sanders today on twitter, is that, you know, it increases the wealth of billionaires like him, instead of making the very rich even richer, how about increasing wages for american workers. is that a bad idea grover, how would you respond to

that latest repost from bernie >> sure. what bernie sanders should look at, we've seen wages increase because of the tax cut and economic growth. not, you know, laws telling people they have to do this, but because we create more wealth and more jobs. we have both strong job creation and income growth, wage growth, at the same time that's extremely helpful policy. one of the things that's annoying, i know your viewers get this, what a buyback is, and apple brings $1 billion back from overseas, where it was parked because of stupid american laws that trump and the republicans changed to make it possible to bring money back without punishing americans, the money comes back, apple says, i have $1 billion. and they say, the most effective way -- the best way to invest it is in apple. i want to be invested in a company that believes the best way to spend $1 billion isn't to stick it in a cd or buy another company, but to invest in themselves

and when they buy back their own stock, that money doesn't disappear. bernie sanders thinks it gets into the deep freeze somehow >> but he says they should give it to workers. >> it gets reinvested by other investors. and 90% that gets invested goes to workers at the end of the day. >> grover norquist joining us. we'll hear much more from the president in his state of the union address tonight. >> coming up, the pickup wars are heating up gm unveiling its latest and greatest model phil lebeau is in flint, michigan, with more. phil >> kelly, i'm 6'1" and it's not often that i feel small around a new car or truck that's the case with the new chevy silverado heavy duty, 7'2" inches is the roof what's it pack underneath the hood we'll talk about this and the battle over big pickups when "the exchange" returns

>>

. welcome back a lot of car talk this afternoon. how about pickup sales they are red hot still and general motors looking to cash in with a new silverado. it does look humongous next to phil lebeau next to the flint, michigan, unveiling, phil.

>> reporter: this is monstrous the theavy duty chevy silverado how this pickup is, towing capacity, 35,500 pounds. that's four times the weight of this pickup truck. it is geared towards contractors, business owners, who are really going to put this through the paces and people who own ranches. they drive this kind of a truck. the full sized pickup truck market, one of the few areas that's growing in the u.s. and if you look at sales overall, yes, the f series is the biggest brand, but chevrolet, general motors say the silverado, we build more pickup trucks than anyone else. general motors reports earnings before the bell and do not want to miss our first interview with cfod cfo dhivya

it is estimated that the average is $15,000 per vehicle that's how much money is made by the big three when it comes to these type of trucks crucial for general motors and really, for ford as well as fiat chrysler they are trying to meet the needs out there. >> it's all pickups and suv. while you're out there, with chevy, can you tell them enough with the ads the chevy guy. you know what i'm talking about. >> you don't like him, huh >> no. >> reporter: i'll be sure to mention that to dhivya tomorrow and i'm sure >> she'll be like, i'm glad you've noticed we've noticed. phil, thank you so much. philip lebeau joining us with the new chevy silverado. more than 7 hours away from the state of the union the key buy signals to listen for in the speech is next when the "the exchange" comes right ba ck ♪ driverless cars.

all ground personnel please clear the hangar. trips to mars. $4.95. hydroponic farms. robotic arms. ♪ $4.95. delivery drones or the latest phones. no matter what you trade, at fidelity it's just $4.95 per online u.s. equity trade.

no matter what you trade, at fidelity and everyone i've ever opioloved away from me.thing everything. i blew my ankle out and i got prescribed pain pills by my doctor. if making my detox public is gonna help somebody i'm all for it. i just wish i would've had a warning. just about seven hours to go until the president's state of the union. investors listen to comments about infrastructure and trade with china dan clifton, head of policy

research at the research partners we thought it would be interesting because you guys actually had these baskets where you can tell us, you know, what the state of the union is. what's been working when it comes to dc lately. >> that's right, kelly we're trying to connect investment investment implications. if you look at the president's speech tonight, he has theis th going to be choosing greatness great progress on the economy thaing initiatives and further the stance of the u.s. a couple of proposals stick out. what's he going to stay on the china trade deal we see within the china trade basket, that basket began to price in higher expectations of a trade deal starting around november 1st i would say not an abrupt increase but baby steps. investors are starting to get optimistic that both sides are coming to a deal investors look at the president's rhetoric is he going to go hard line talking about cyber security and tech transfers, harder issues to

resolve or reassure investors we'll get a good deal and tariffs are not going up on march 1st? >> intel, qualcomm, so china, as you said, drifting higher since november what about ininfrastructufrastre >> the president came in and say i'll do a trillion dollars of infrastructure spending and investors have been fooled several times around our infrastructure basket driven by vulcan materials. we've seen it drift up higher today. i think the key for investors is does the president put forward specific pay force that gives the democrats comfort this could be a bipartisan deal without it, i think infrastructure is going to be a lot more noise than real >> as you say, investors fooled plenty of times and is lobbying the best strategy? >> that's right. our policy opportunities and portfolio, based on company lobby is the best way to play political uncertainty in washington it outperforms no matter what

combination of government we've had. republicans, democrats, and the big themes in that trade policy, a little bit of infrastructure and prescription drugs and immigration. all five of those are the big themes of the president's speech tonight and our companies are leverage to that. >> in a way, the more uncertainty about washington, the better who companies pay for inside perform. >> i would disagree with that. if you're not at the table, you're on the menu in washington the companies that are making. >> isn't that a problem though >> the part of the solution are the ones going to be -- >> that can't be efficient for corporate america to spend all that money on lobbyists. buybacks, what about the lobbying spend >> i think the market has a hard time pricing the earnings from washington and that's why our fund has had great outperformance over the last decade. >> last thing, any surprises, you think, on tap for us >> i think there would be a big surprise if the president calls

for a permanent dacca in exchange for a border wall or calls for indexing capital gains to inflation tonight both of those will be big events >> thank you, dan clifton joining us i'll join tyler and melissa on "power lunch" which begins right now. >> yes, indeed, you will we'll see you in a moment, kelly. welcome, everybody i'm tyler mathisen with melissa lee over there president trump set to give his state of the union speech. we'll tell you what's on the agenda, what to expect tonight stocks pushing higher but are gains for 2019 mostly in the rearview mirror? we'll tablglook at that 190 miles per hour and 200,000 price tag. it's the family car for the 1% or higher. you'll be surprised who is fueling demand for this vehicle right now. "power lunch" starts right now