for ♪ >> live from new york where business never sleeps. this is "squawk box." good morning, everybody. welcome to "squawk box" here on cnbc we are live from the nabs market site in fiemz square i'm becky quick along with joe kernan and andrew ross sorkin. equity futures are indicated higher dow futures up by 17 p points. >> the four-day losing streak. it's the first four-day losing streak of the year s&p up nasdaq up in the second straight session. we'll see where things head. this morning the thoughts are that we may not be having another government shutdown here and that the trade talks with china might be on a good path. those are the things that are really helping the futures this morning. we'll talk about that in just a little bit let's also take a look at what's what happened overnight in asia. the neeks neek up by 2.6%.

heng singe up, and the shang high composite up by .7% then in europe where you are looking at some early trading that's already taking place. green arrows across the board there, too dax is the best performer. up by 1.25%. you can also see that the cac is up by more than 1%, and in italy stocks are also up by 1% taking a look at the treasury market here in the united states, yesterday the yield was 2.66%. slightly higher this morning at 2.681. >> let's get to that breaking news taking place late last night. congressional negotiators saying they have now officially at least or tentatively, fflly reached a deal to fund the government and avoid another shutdown a source telling cnbc, the deal includes $1.4 billion of physical barriers at the border. not the $5.7 billion for the border wall that president trump had demanded democrats backed off a demand to lower the cap on immigrant detention beds in the interior of the u.s that was a big issue that was being debated for the past 48

hours. a bill could be introduced as soon as today. could also come together unclear if president trump would sign it if he passes -- if it passes in congress given the demands for the wall guys, we're going to have to see what happens next. basically, i assume this is now going to be in president trump's court. >> they got the bed thing. >> to that point, let me show you some video from last night because as congressional negotiateors were announcing the deal, minutes before that the president took the stage at a border wall rally in el paso, texas. he acknowledged the news in his speech, but then he told the

crowd just so you know, we're building the wall anyway now, just 200 yards away from the president, former congressman betto o'rork had a rally. i don't know if we have sound from either of those, but it just really does demonstrate sort of the polarized sense of where the country is on this very issue it was wet out in pebble beach >> that's what it was. >> everything plugged. all the holes were 400 yards everything plugged anyway, yeah -- >> fore! >> anyway, let's get to the other deal i want to eunice >> about china >> i want to talk about china and eunice i don't follow many -- i don't follow everybody on twitter, but when i do, i follow eunice

optimism about a u.s.-china trade deal pushing stocks higher overnight. let's get to eunice with the latest we got turned off because of winnie the pooh or something again? what's the winnie -- i need to -- >> yeah, that's right. >> why is he sensitive, president xi, about winnie the pooh or something? what about tiger >> yeah, yeah. you can't show a picture of winnie the pooh. >> you just -- uh-oh >> no, don't do it please don't show it >> off the air again >> i'm going to disappear in china. don't do it. don't do it. don't do it. anyway, the reason is because winnie.pooh kind of looks like president xi jing ping that's how -- >> i don't understand it >> people in china were starting to kind of talk about him, but using -- we're out did you guys just show a picture? >> we did. >> because there's a monitor over there of what's going on, and it is black now.

thanks a lot >> you can act like a cartoon character. i see that all the time with some of the people you can't really look like a cartoon character, can you i guess you can. >> it's not that it's a car soon character, but it's seen as a sign of disrespect. >> one of the things what's going on with the trade talks is to the robert lightheizer has arrived in beijing so far both sides remain optimistic at least officially. in fact, yesterday the chinese foreign ministry had said that

it's hopeful that they could have a good result however, i did manage to talk to a source who is close to the negotiators on the chinese side, and he painted a picture of great frustration among the chinese negotiators, and the feeling is they said that the u.s. isn't actually giving them a whole lot of room to -- that they kneel po feel that the u.s. is making a lot of demands, but not really willing to give china much in return one of the examples that he gave was that the u.s. hasn't even touched this idea of the chinese getting some of the high-tech exports. the u.s. has a lot of restrictions on sensitive high-tech exports, and it's a longstanding issue that china has had with the united states, and the chinese believe that this is one way in which you can reduce the trade deficit they said that's not even something that the u.s. would talk about then, more broadly, they said that the feeling is that the

u.s.'s attitude is very harsh towards the chinese. they're not giving the chinese any face and that at some points within the negotiations, they felt that the u.s. -- that some of the negotiators on the u.s. side are pushing china to the point that they want to see china fail or that they want to see the trade talks fail that has been the gensentiment, he said, at least privately, about within the negotiators now, also, officially, the chinese government just this afternoon had quite a testy response to secretary pompeo and his visit in central europe where he has been warning u.s. allies against using huawei equipped on their soil the statement is that the u.s. has threatened and provoked relations between china and other countries and discredited the legitimate development and cooperation of chinese companies. the actions of the united states

are neither fair nor moral i think it just all goes to show how challenging these conversations are that the u.s. and china is having right now. by the way, guys, i'm back on air. don't show another picture >> i clearly believe that. i saw your tweet yesterday i didn't really believe it, but we -- >> inside china right now, and even in some of the press in the u.s., much of the conversation around huawei and some of the technology companies, it's starting to move in a direction that is suggestive that effectively the u.s. government ---ist not about security per se anymore. it's really just about dominance on the u.s. side i'm curious how much of that -- i assume that permanentated a long time ago inside china, but what the reaction is in china has been to some of those u.s. reports because that is new. >> yeah. yeah, yeah no, there is a feeling that what the u.s. is trying to do is to

go after china more broadly. that this is a political decision and that this is a greater effort on the part of the u.s. i mean, even there is -- i thought it was interesting when president trump had issued his executive order on ai, so overnight from our perspective, we had president trump, you know, signing the executive order that was to insure that the u.s. plays a dominant role in artificial intelligence while, you know, here within chinese sishles, you know, if -- for people who are in the tech industry, they saw it as something that makes sense from the u.s. perspective since both countries are doing well on the other hand, there were a lot of questions that i got, saying, well, isn't this made in china 2025 in the u.s. version this is becoming more of a battle between the u.s. and china over technology.

that the conversation is becoming a broader conversation than the original one. that's kind of the feeling that you got. i think it is similar to what -- how you guys are -- >> does that change the dynamic with which these negotiations are taking place if you are being accused of ip theft and security issues and all of a sudden it becomes clear, if it is, that effectively this is more of a political view, i would imagine that would actually harden positions. >> yeah. no i think that that's the conversation that i was just having today, actually, that there is a concern especially what this all means for u.s. companies in the tech sector in particular because what you -- from the chinese perspective, on the one hand, the chinese are feeling like they're being told that they need to be more

market-oriented and need to be more fair, they have to be more open, and then, on the other hand, they feel like they're getting, you know, hammered and that they're not actually feeling that the u.s. is being hypocritical in that way there is a sense that there could be a hardening offing positives and that u.s. companies, especially tech companies, could be caught in it the middle if there are, say, for example, the u.s. decides to put more restrictions or something on u.s. companies doing business here or there's just -- right now there's a lot of fear about what -- of how all this is going to play itself out. >> if we grade the chinese economy on a curve, what do you really think the growth is i mean, if we didn't grade it on a curve? yesterday, we had someone say 2% not 6.6% more like 2% i don't know if you really know, but he does some -- >> i mean, it's hard you really hear of a wide range, you know, and the sense is that -- just up to date the picture of winnie the pooh >> way more winnie the -- i

thought it was a cartoon character. i didn't know it was a big deal, but apparently it is a big deal. >> the reason i ask is that i don't know what to wish for. i mean, if it's slowing rrks they need to make a deal the rest of the world, if they catch a cold, the rest of the world -- just a more fair -- >> maybe -- right. i mean, so you want to look -- you want them to be a little sick, but not -- >> you want them to be willing to negotiate >> all right >> yeah. i think that at the end of this week, hopefully we'll have some idea as to whether or not the chinese would be really willing to make some of those concessions and compromises, and make some changes to potentially kbro improve the economy.

what's interesting is that i feel like there are two camps. by the way, we just blacked out again. i don't know whether you showed winnie the pooh. >> no, we didn't do anything it could have been the g talking. that's scary >> we just went out again. >> i don't want to have a country like that. >> it happens. >> now they might do it again. >> there are two camps, and you could see it as, like, the optimistic way of -- we're out again. the optimistic way of understanding the discussion is that the chinese are just doing a negotiating tactic and that this is just -- what they're doing is not making any compromises until the last minute the other negative or pessimistic view is that this is actually their hardened position and that they're not going to make any changes it's -- we'll see what happens at the end of the week by the way, we're out, again >> good job navigating the mine field we set up for you. we apologize we'll check in with you again very soon.

when we come back -- for the position we put her. not for speaking the truth the position we put her in how is that? >> i would be -- that would be all i would be doing if i was apologizing. >> nissan out with quarterly results for the first time since ousted chairman carlos ghosn was arrested on charges of underreporting his income. we'll tell you what the company said about the scandal next. right now, though, let's take a look at the biggest premarket winners and losers in the dow. merck is leading it's up by just over 1%. i consulted with your grandmother's doctor. we can do the screening at her house. hi. this is the man that's going to check your eyes grandma. cognizant ai solutions are helping healthcare companies

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prevent problems, and to help provide the most reliable service possible. my name is tanya, i work at the network operations center for comcast. we're working to make things simple, easy and awesome. nissan out since carlos ghosn was arrested on charges of underreporting his salary. the company took an $84 million charge related to his compensation that scandal is coming at a bad time nissan also slashing its annual profit outlook on weaker global sales. nissan's margins have been squeezed as the automaker resorted to stiep discounts to drive up demand in the competitive u.s. market. the results came out after the close in tokyo in germany shares traded there under pressure this morning. nissan down by about 2% in that

trading in germany >> stocks to watch shares of gilead down today after the company reported negative results from a late stage clinical trial to an experimental drug to treat a form of liver disease. gilead says that patients who receive the drug did not show improvement marked improvement over those that were given a place placebo. ring central was higher today after its fourth quarter revenue grew by one-third beating forecasts. it issued upbeat guidance. and shares of chegg up 10% surging after the provider of on-line education services reported fourth quarter results that easily beat forecasts the company is also raising is guidance for the current quarter in the full year on aup bowl every bow, you wouldn't get that, would you

>> i would be stuck for a while. >> i don't know if chegg is a word >> i was thinking -- i wasn't going to say it because i didn't want to, you know, again show any ignorance, but -- >> is it >> no, i don't know. exxon put in a computer. >> i think i've asked him. we'll try to figure out if it's a word, but separately, marks moving on the big story this morning. lawmakers reaching a tentative deal to avert another government shutdown we will get a live report from washington first, perks of going digital. helping brands dwom their presence on your smartphone. streaming services and more. we'll tell you how adopting --

fruit bacon. >> kale bacon. >> we return in just a moment. >> it is in the urban dictionary

>> freebie alert this morning.

through sunday with the -- i don't even know what that is participating in u.s. locations. it comes with angioplasty on the side, and you can get that purchased. you need to os every use the fast food chain's app, though. you only have a small amount of time through february 17th. you are going to -- >> i'm unsure of the link now, honestly, and ingz ththings likt >> between cheese, bacon, and fli free fries. >> it's not -- it's like so many things that are knee jerk, you know, like sugar automatically causes obesity and diabetes. >> i'm not recommending that for health >> in moderation i mean, poor wendy's

you're saying anybody that eats it, can you die immediately, you do think do you die and explode or anything >> enough of it. >> like coke, like warren buffett worth $800 billion -- coca-cola. worth $800 billion he is 88 years old, and he is sharp as -- >> i just -- >> he drank coke you wouldn't drink coca-cola either >> not as much as warren i wouldn't that's just me >> that's the whole point. >> all your climate scientists actually believe in chiemt change >> maybe that was the bacon. the ceo of a company that helps companies expand their digital presence is here

dollars shift away from traditional media. we want to talk about where this is headed, what it means not just for the ad industry, but frankly, for all of its clients. joining us right now is nigel, the ceo of publicist, the division of the french ad company publicist that helps the companies make the jump into digital space. i should say publicist publicist has a little bit of an accent to it help us here the company, the larger company announced some problematic, dare i say, earnings, in large part, because clients are spending less >> i think with a lot of clients right now, the big push is moving towards digital trying to basically not only advertise leveraging digital platforms, but actually building products and services and kind of moving generally in that

direction. it's essentially acquired by publicist to help clients say, hey, look, we've been helping you build your brand relationship with skiermz for the last 90 years. now it's not just about advertising leveraging this medium it's about being a digital business understanding how you create a product, services, and move the conversation away from what the company knows about the fries and the baconator or do something about it once they know about it. >> how deep is the stuff that you are trying to build? we've worked with them to say the fundamental idea for them is how do you get more through the restaurants, and how do you optimize the journey of people getting to the restaurant to get this toir food faster? one approach we took is basically saying how do we leverage a mobile device so you place an order on that device,

and the food starts to get prepared when you hit a particular geofence. by the time you get to the restaurants, it's already there. if i'm a small business, maybe i own two or three restaurants i'm not talking about mcdonald's, but two or three small business franchises. i want this too. do i have a chance? >> are you getting cheaper i think the hard part is

basically doing something that can scale. the challenge for mcdonald's is not basically doing it through restaurants. ut bits doing it across millions of customers and actually getting that kind of scale and that is complex. the way we think about it is, you know, really how do you think about that customer's journey through mcdonald's and optimize every step of the way to create less friction in the process. >> nigel, what you talked about, when the customer hits a particular geofence, meaning when they are five miles away from the restaurant or whatever it is. that requires --

>> negotiate publicist today, i imagine you still use information brokers, and ad brokers for all kinds of data, right? do you see a time or a day where publicist as an agency, as a company says, you know what, we're not going to be in that business we're not going to deal with the -- we're not going to deal with the brokers the reason i mention, the brokers, it's i don't feel facebook, has said they're no longer going to deal with the brokers. >> the brand is the experience, and the experience is the brand. if you create a good experience for people and they choose to give you their data, this idea of zero party data as opposed to first party or second party data, is that data, which i have chosen to give you, is because

i'm expecting value back from you, and if you can create some value for me with that data, i'm quite happy to share it with you. >> what do you think the liability issues should be for both on the agency side as -- and for the client >> look, i think primarily people are never going to choose to share information with an agency, right? they're always going to choose to share data with a client. if a client is using that data for the purposes that a consumer has given it to them for and the value equation, which i think is missed oftentimes, people willingly share their data, if they're going to get something valuable back from that, and you use it for that purpose, and i don't think that's too far a social contract for most businesses to sign up to to say, hey, i'm going to use the data you gave me for the purposes you gave it to me for and go stick with that. >> me personally >> given all the conversation i have >> i think it's a platform

it has a long future, for sure >> thank you so much nigel vaz, ceo of publicist. did i get it right >> absolutely. manager paul teeter jones in a cnbc exclusive on what he called buyback mania he also made some controversial comments that he still believes america is exceptional that's not going to fly on this set. some breaking news on a republican senator backing a plan to crack down on buybacks plus, we'll show you the market response to our big story of the morning. a tentative field to avoid another government shutdown. we'll be right back. so

sfwoo oof lawmakers say that they have reached a tentative deal to avert another government shutdown here in the united states a source tells cnbc that that deal includes about $1.4 billion for physical barriers at the border, but not the $5.7 billion

for a border wall that president trump had demanned again, they say that this is an agreement in principle, but several days ahead of that friday deadline. >> we will talk a little bit more about the shutdown in just a minute first, let's go to -- we have breaking news on a different subject. buybacks >> buybacks had been in democrats crosshairs for a while, but now a prominent republican is jumping on the bandwagon as well. senator marco rubio is out with a new proposal today aimed at changing the incentive to buy back stock in the first place. his plan would raise the rate on capital begins the theory is that reducing the preferential tax treatment would also reduce the number of buybacks the trade-off for that higher rate on capital gains, he would provide businesses permanent full expensing now, currently that is set on phase out after 2022

he would also expand the kinds of investments that are eligible for that deduction a report that rubio was releasing today suggests that buybacks are now a "nonpr "nonproductive alternative "toy capital investment he says that makes it possible to live in a world of highest asset prices, lower investment, and lower worker pay guys, remember, rubio was a reluctant supporter of the gop tax law. he has been critical of it for helping companies rather than workers ever since it passed this plan fixes what he is calling a "missed opportunity. back to you. >> hey, i'm trying to understand the new twist on this because marco rubio was out in december on the buyback issue actually, interestingly, ahead of sanders and schumer i'm looking at a tweet on this he says back then he was saying we should tax buybacks the same as we do dividends, and instead favor investing in u.s. jobs by expabding full expensing and making it permanent. is this just an extension of that conversation? >> this is he sort of laid out his broad

criticism of the tax law and his concern about buybacks again, as you mentioned, very early on what he is doing now is directly linking an increase in the rate on capital gains to full expensing. one would, in other words, pay for the other. using that as the trade-off that he is proposing in order to limit stock buybacks going forward. >> if your stock is cheap and you don't -- it's a better deal than something else, it makes sense. if it's not -- if it's not, you got to know what that is the other thing that happened was when cash-based bonuses for ceos got unpopular and was performance-based. we went in the stock >> if it was based earnings per share, and you buy back shares -- >> that's what i'm talking about. >> most of them aren't just really -- >> no, but fiif it's based on stocks appreciation, if you retire more stocks so you own more of the company, ceos have

an incentive to do buy backs >> capital v. is done for a company -- these guys never know i'm not saying they know everything when they think they're going to be responding to increase demand or whatever, it makes sense, and to just try to -- there may be some tax things to where you could induce that, i think, but usually you want to let companies decide on their own what is best without sticking your -- >> it's already stilted. you are putting incentives of one behavior over another. >> we do -- we innocentivize y buybacks over divisions. the tax structure is set up that way. >> i worry about -- i mean, for -- if i own a company, i'm not, you know, shares are going

to come in we don't except for comcast. as a shareholder, if i don't like the buybacks, i can sell the stock. or if i do like it, and my stock goes up, then i'm probably happy that they're going in, right >> i'm saying the current tax policy incentivizes buybacks over dividends that's just the truth of the matter >> okay. >> but as it's coming back, do you agree with rubio, or do you think companies should do what they -- rubio was an outliar >> it's not clear to me that buybacks are a terrible thing. i think we've talked about it. i think if there's underfunded pensions, i think that oftentimes there is a perverse incentive to pursue buybacks over other things. would i prefer a dividend back i might. i don't know i think it's a larger sort of policy discussion. >> anyway, we're going to talk more a hedge fund manager paul tudor jones spoke to us yesterday in an exclusive interview >> i think we've got a mania going on in buybacks and a mania

going on in terms of shareholder premise. it wasn't always this way. if we go back to when i was a youngster, corporate pay, ceos, made 20 times that of the average line worker. things have been different and can be different again if they're not, i'm really nervous about what the ultimate social consequences are in this country. >> okay. he also weighed in on the growing debate over taxing wealth >> if i think about taxes, it's the most inefficient way to allocate resources within an economy, so that's why i think just capital is so important i would like to find an organic solution, and that means a complete cultural, social, intellectual shift of the way that we think about our companies and what their responsibilities are why don't they have greater

social responsibilities? the smartest people in the world run american companies let them -- let's bring them in to this discussion on how we take care of those left behind >> it's the overriding thing that i base almost everything on is the capital street and the private sector he said that, but then he also said, okay, if we're going to let you run wild, then let's be socially responsible we will let you make the decisions based on what's best for -- he has covered both something for all of us. that was a yin and yang there. >> it's an interesting theory on how it's -- >> he is right if you just purely, you know, tax the risk takers and the people that are putting their capital at risk and you move it to the ineffective or the inefficient government model to try to solve everything, it's -- it doesn't treat capital as

well. >> you know, citizens in every country feel that they're exceptional. president obama pointed that out that belgians think they're exceptional too. i really do think that the way that we were created here, we may be a little bit more exceptional. maybe not. anyway, let's -- >> i don't think of it as -- we have to earn our exceptionalism every single day >> we have to. >> let's talk about the equity and -- i'm trying. the equity and bond market joining us ron sanchez, chief

investment officer of fiduciary trust company. is it safe to say that in terms of risks to our -- the economy, the stock market, or anything else, is china most important in your view right now and how this plays out? >>. >> i think china has been a key. it's china plus trade, and the derivatives of that china slowdown spilling over to parts of europe. >> that's a yes then >> how is it going to play out, do you think >> i think we see signs that china is stimulating their economy. i think a key is do we get trade activity which turned negative in the fourth quarter. that source of external demand stimulus for many ktsz does that turn positive to help turn the global manufacturing sector again, i think that is key for the outlook. >> what do you think >> i think we have a good chance of reaching 28 over the balance

of the year. obviously, markets have recovered quite strongly here in january and early february i wouldn't be surprised if we kind of consolidated a little bit here it's been a pretty strong move we are still constructive not only on the economy, but on markets here, and so i think by year-end, you could pierce that level of 2,800 >> you think over the next intermediate to long-term we see 3,000, and then we continue to go above or is there a major break back to much lower levels in the cards at some point in the future >> at least for the balance of the year and into 2020, i don't believe we retus the lows we had on december 24th i think the clarity that we got from the federal reserve and if we get some resolution on a couple of hurdles, one of them certainly the government shutdown today is good news. there's a resolution there we have two more hurdles that are coming up in the near term that's both trade policy on march 1st with the deadline

there. markets can continue to move forward. >> their rates start rising again. dollars stay strong. does that all make sense >> i think, yeah, for us i think the risk rebound comes first the fed has communicated the pause. might get some clarity on potential rate hike later in the year call september dollar firm equities higher, but rates pause for now. >> gentlemen, thanks keith parker, ubs, ron sanchez, fi fiduciary trust. >> how does main street think the economy will fair in 2019? we will bring you the results of the latest small business survey right after this stay tuned you are watching "squawk box" right here on cnbc obvious.

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the national federation of independent business is out with its latest report on small business confidence. kate rogers joins us with the details on that. >> good morning. optimism dropping in january by 3.2 points to 101.2. it's also the lowest read since before the 2016 election now, this month's read still well above the index's historical average of 98 this chart is a look how optimism has been tracking over the past year. the group is pointing to the volatility we'd seen in financial markets for this month's fall now, the biggest index declines are from those who expect real sales higher and plans to

increase inventories the biggest gains this morning were to make capital outlays and expected credit conditions labor quality, though, still the number one spot again this month. responden respondents' single biggest -- are the second and third biggest challenges for main street we had our own cnbc and survey monkey data released yesterday that found 53% of business owners said a rescission was either really like or somewhat likely even though it's something that has been cropping up so we'll have to see how this continues to shake out but our respondents seemed more fearful about that >> kate, thank you so much great to see you >> thank you for that. when we return, famed former fed chair volcker was interviewed. we'll bring you what he said next

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welcome back to "squawk box. bridge water's founder ray dalio sat down with paul volcker for an hour-long conversation about the fed, global competition, and his legacy it was taped in volcker's new york home. it happened in november but was just put out online overnight. take a look. >> i grew up in a world where, you know, i moved in the united states treasury. treasuries around the world. >> you were. >> well, the u.s. treasury was >> yes >> and the federal reserve that's different now we're learning in a world where we're still top dog, maybe, but the top dog isn't so ready recognized by others as it was

we obviously have the rise of china as a clear competitor for world influence. and how that all works out, we'll see. but it's not the comfortable world of assumed leadership that i grew up with that's what i struggled with in the rtreasury and the federal reserve. the rest of the world is growing it more we kind of forget about that now as things change. but we have to learn in a world where it's not taken for granted anymore. that's been speeded up by

washington and the country the last four or five years. >> paul volcker is 91 years old. wrote a book this fall "keeping at it. should note, he should be suffering from cancer for quite some time. we wish him well healthwise. >> and he's very tall. >> he is completely with it. i mean, he is as sharp as a tack i'd spent some time with him back in october, i think, back at home. and he's looking better in that shot >> why do all these guys we interview taking our job rubenstein, tisch did it >> they're good at it. >> we can't be hedge fund billionaires but they can do what we do i guess they think that. coming up when we return, calculating the odds of a trade deal with china before march 1st. we will handicap and get the te from former commerce secretary carlos gutierrez when "squawk box" returns

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your doctor should perform blood tests before and while taking xeljanz xr, and monitor certain liver tests. tell your doctor if you've been somewhere fungal infections are common and if you have had tb, hepatitis b or c, or are prone to infections. needles. fine for some things. but for you, one pill a day may provide symptom relief. ask your doctor about xeljanz xr. an "unjection™". shutdown averted happening now, news of a tent tiff deal to keep the government running. details and market reaction straight ahead investors getting an earnings workout >> two, three, four. now double here. that's it. you're doing fantastic >> under armour the latest to report quarterly results we'll run you through the numbers and see if they can power up your portfolio. plus, will a wealth tax work it's the debate from wall street to washington. we did some fact checking and

have the results as the second hour of "squawk box" begins right now. ♪ live from the beating heart of business, new york, this is "squawk box. >> good morning. welcome back to "squawk box" here on cnbc i'm andrew ross sorkin along with becky quick and joe kernen. take a look at u.s. equity futures at this hour we're two and a half hours away. dow jones looks it would open up close to 200 points higher 61 points higher the s&p 500 would open about 20 points higher. also, let's tell you what's in our headlines at this hour. congressional negotiators have reach what had they call a tenttive deal to avoid another government shutdown. a bipartisan agreement does provide some funding for border security, but not the $5.7 billion president trump wanted for that border wall it's not yet clear if the president would approve the

deal, but obviously the future's higher think we have avoided at least any sort of shutdown this weekend. earnings just out from under armour the athletic apparel maker earning 9 cents a share for the quarter. that compared to the street's estimates of just 4 cents. revenue was also above what wall street was forecasting you can see their shares are now under by about 6 cents amazon has been raising prices at its wholefoods grocery stores according to internal documents amazon cut prices when it first acquired whole foods in 2017 but makers of the products that whole foods sells have been raising their own prices in order to cover packaging, ingredients, and transportation all of which have risen. right now let's talk more about what investors are buzzing about on this china trade deal this morning potential trade talks. kayla tausche joins us with more on that front. good morning >> good morning. two days in, we have radio science from both sides.

ambassador lighthizer arrives in beijing ahead of the high-level talks this week. the white house is hoping to de-escalate tariffs. the white house unveiled an executive order yesterday to counter china on artificial intelligence it's potentially banning chinese telecom environment in 5g. an executive order could come out this week. also dangling auto tariffs as additional leverage. the administration is trying to maintain this hard line even as it negotiates a deal that would require significant u.s. concessions. that's a dynamic that was highlighted by president trump last night in el paso. >> my administration has taken the toughest ever action to crack down on years of china's abuse and trade practices have been unfair. i have a lot of respect for president xi, but he's representing china and i'm representing the united states >> an editorial in a state afail

yited chinese newspaper says it's only that relationship that matters between trump and xi casting doubt on the role of the negotiators on the ground. quote, u.s. president trump will not be satisfied with the decision the 90-day negotiation between china and the u.s. is to implement the consensus reached by the leaders ofthe two countries. the result shall be approved by the two leaders. we will see what sort of deal, if any, can be reached this week, becky. but certainly trayvon is trying to say unless it's signed by the president, it doesn't matter >> no sign yet that president trump and president xi will be meeting before this deadline approaches >> there are talks of a meeting. it will not happen before this march deadline the hope is it will happen some point soon after that deadline during the month of march, but then some pessimists are saying it could potentially be a couple months even after that so we'll see >> kayla, thank you very much.

right now let's bring in carlos gutierrez, the former commerce secretary and currently chairman of the albright group mr. secretary, thank you for being here today >> pleasure. thank you. >> we hear president trump talking about maintaining a hard line, but at the same time he's been signaling to the markets not to worry that things are looking good it looks like progress is being made which is the right story >> well, i think it's a little bit of both. on the dates and on march 1, because the presidents are going to meet in mid-march or late march as my understanding, i could see that we'll punt the few weeks down the road. there will not be a deal or no one will close a deal other than president trump. so it'll be high drama, three weeks into march and the good news could be that the tariffs won't escalate and we'll just give ourselves another three or four weeks and see what happens in that

high-drama meeting with president xi so that's one very viable scenario and i think the good news about that is that it will not be escalation and i believe the markets will like that >> hard liners in terms of wanting to maintain a hard line with china seem to have been getting a little more nervous about what this deal is going to look like. what do you think a potential deal would look like >> i could see a deal where china agrees to some major purchases. the soybean purchase was sort of a down payment and they keep things timed very well so they don't give things up too early. so, you know, a major agreement with a big number over the next five years, ten years of purchases. the tough part will be on the technology structural side and i think there's a deal to be had there if we -- if we maintain it at the right level you know, we're talking about things like china should give up its five-year central planning

they're not going to do that >> right. >> but i think there's a deal to be had in an agreement on technology transfer, on data localization potentially would have to be an agreement in principle. it would have to be a conceptual agreement. then the challenge would be enforcement. i know that lighthizer is very concerned about that so there will be an enforcement mechanism in the agreement whether it's a snap back to the tariffs if we take off the tariffs, or the president may want to keep his leverage and keep the tariffs on until he sees that it is actually being enforced but it's that second part that is going to be tough and i think we should, you know, not try to change the five-year plan, not try to change their whole model. but, yes try to change their policy and there's a big difference there. but i think there's a deal to be had. >> a deal to be had as you

mentioned. enforcing is going to be the difficult thing. are we talking about an enforcement mechanism that takes place or two years, over five years? >> my sense is that it will be an enforcement mechanism that it would be at least during the time that president trump is in office because he will not want to -- he won't want to give that up. and he won't want to give the leverage up. so that enforcement mechanism could be a cloud hanging over this and the question is, what is the leverage do we give up the tariffs and the leverages that will come back unless they abide to it or keep the 10% tariffs. and that's something that, you know, i think will probably be decided in mid-march the -- president xi will most likely hold something back if they're going to meet in mid-march or late march. a couple of goodies that he could introduce. give the president a win but definitely the only person

who's going to close this deal is president trump he will not be able to do so until mid-march. i do believe that a viable scenario is punt a few weeks down the road and have this high drama meeting with xi and president trump and hopefully there could be signs of a deal there. but again, the pushback will be on enforcement the pushback will be on the language used in the agreement and i think that's where considerable debate is taking place right now. >> i mean, it's kind of funny if you think about it the pushback is going to be on enforcement. whether we can actually enforce what you're saying you're going to do. whether we'll do this or we're going to be talking and do something further down the road. maybe that's the big question. for china the long game has been the game trying to say yes we will do something later and later and later down the road hoping to run out the clock,

right? >> that's the big challenge. that is always the big challenge. how the president addresses that, that's why i think he wants to keep something over their head, some kind of leverage without an escalation which i think would be good news. >> so you're talking about whether it's a carrot or stick approach stick approach meaning we're not taking this off until we see the actual results >> exactly i think a little bit of both president xi is a great friend, a great leader but we've got to get hard. so i think on one hand the soft approach is the personal relationship, the charm offensive. then the hard line approach is the tariffs and the agreement and what we demand from that agreement. >> you don't think that this is something that is going to be ultimately resolved for quite a while, though. that these trade tensions will stay here. >> i think that if we reach an agreement in the short-term, it will be somewhat symbolic. big purchases, there'll be a big number that the president can

throw out and hopefully we'll see that in the trade deficit. but the part that is unknown is these conceptual matters data localization, forced data transfer what china says is not happening. so the language will have to be -- >> we promise to stop doing what we say we're not doing >> right it'll be in the future that none of this will happen, but i don't think you'll see language that says, china will stop demanding technology transfer because at this point there isn't an agreement that they're doing it. so those are the little things that will have to be fine tuned. but if there is an agreement to be had, if people really want an agreement, i think there's something to be done on big purchases, conceptual language for the future and then the enforcement mechanism, i believe, is what keeps the pressure on. and that could well be just keep the 10% trirs on until the

president believes that they've actually changed >> carlos, want to thank you for your time today. it's good to see you >> thank you always a pleasure. >> carlos gutierrez. all right. we're going to go to break, but before we do that, pretty important update on a lot of things >> what's that >> cheg. it's a porte switch a french word chicken and egg. >> there's a restaurant here we call the chegg >> that's what it's from chicken and egg. >> like -- right but like br ununch >> like food >> no, not like food like a podcast, ipod, broadcast, like a motel motor hotel. like a tragesty which a part trage tragedy. can you come up with any,

andrew >> coming up, futures higher after avoiding a government shutdown i'm going to come up with more all right? and then later, performance apparel company under armour -- it's much better than what you thought chegg was after your urban dictionary >> it's not what i thought it's what i looked up. >> reporting results a short time -- all right. we're moving higher. we're going to talk to an analyst about under armour tlstuned that means stay tuned. hey toothless.

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♪ [ ding ] show me fish on youtube. say it and see it with the x1voice remote. from netflix, prime video,youtube and even movie tickets. just say get "dragon tickets". coming up when we return, we're going to talk markets and your money and later, will a wealth tax actually work? that's a question we'll try to answer the numbers behind that debate this conversation is beiging on wall street and the political front. we'll talk about it at the top of the hour. kevin mccarthy will be here to discuss the tentative deal to avoid a shutdown plus a programming note. because ibm's ginni rometty will be on "squawk alley. that's coming up 11:30 a.m. eastern time mequawk" returns in just a a mont

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according to our next guest, that may be a bit too far too fast and the man behind that call is here also with us mike santoli. senior markets commentator here at cnbc. let's go to you first in terms of the call you made you wanted people to be in cash. you still think that's the right call based on how far the market has moved since then >> it's not surprising it's moved as far as it has we had the worst december since 1931 little surprise we had the best january since 1987 stocks have done what they do which is they overreact in both directions if we break down what's driven it, earnings season has been okay it's been a high water mark in our view but forward earnings, they're drifting down. yes, the fed are on hold for a moment but the reality is have they finished hiking? if we look at main street in the u.s., it's doing just fine probably the balance of risk is that the next fed move will still be to tighten further or

be some way off. >> you think that's happening in this calendar year >> i think it would be if we look at underlying data in the u.s. multiples will struggle to expand so far. chances are, you know, this could be a reasonable but not spectacular year for stocks. and if you're earning positive real rates on cash, it has a place in a portfolio >> what percentage of your portfolio -- and i know it depends on what your outlook is and how long you're in -- how long your time horizon is. but right now how much cash do you want to be sitting on? >> if we look at a modern to overweight, a couple percent above your benchmark on the basis that we will -- this is the point. it's not about evading it's about a late market cycle

>> you think we're going to test the lows we saw in december? >> that's a $64,000 question, isn't it let's break it apart if we test the 23050 low, we'll be in a pattern of lower lows. around the street, they won't like that. think we become data dependent we're relying on a european -- more expected resolution to china trade. and we also importantly relying on a recovery in corporate confidence which remains muted today. >> you don't believe we're going back to december >> i don't think the market is behaving it is going there any time quickly i think basically you have this textbook pattern it's rare to have a "v" bottom i think you would recharacterize it, at some point this will be a

scare or there should be a pullback that doesn't necessarily mean 3 2350 on the s&p. you know how much time we spent under 2500 four days. there's not that much activity tremendous volumes people did sell a lot. >> it seemed a lot longer. >> i think the market is still burning up the skepticism that built up if you look at the fund manager survey, cash among constitutional investors is overweighted more than it has been since 2009. maybe it's because you're getting a return on cash >> does that mean there's a snapback that could come as people start to feel like the water is safer to get into >> i don't know if it's a snapback or a continuation it's a reason we haven't pulled back >> but we could see continued gains. >> for awhile. i think that right now, valuation is between cheap and expensive. that doesn't give you an edge one way or the other maybe we don't have to retest the lows maybe we rebuilt a base.

it reminds me in some respects of 2016 in the sense of you got a december rate hike that was controversial. then the fed turned dovish then you had bond yields stay very low and the market just kind of recovered. it didn't get excited. talking about the first half of 2016 even though growth was not that great. so again, not a perfect analogy. but i think you burned up a lot of that skepticism why is it not right? >> anchoring this back to 2016 means what you're essentially doing is winding the clock back to an economic that still had slack in the system, where we hadn't seen the dose of stimulus that was surrounding tax cuts and the fiscal stimulus we got we're going to be on the backside of that global growth was just picking up we had mass ichina stimulus going through. so far the china stimulus we had has not even unwound the tightening given the nervousness around

trade, we've seen an increase. even if we allow for some continuation of good news, we still have to work through those inventory rates. so the risk is the economic data have to reflect that softness for a period of time this is not a period where we've got negative real rates which we had in 2016. >> at least not here >> i think 2019 will characterize a late cycle environment where the fed have paused not in order to stimulate and push forward assets, but partly because they have moderated. >> what do you think is in the market for this china trade talk what do you think the market has already baked into the cake? >> well, i think if anything, it's geting a little bit excited. do we want to see a deal absolutely will it unwind the tariffs that have been put in place or address the key questions around intellectual property rights cybersecurity, et cetera

maybe not. >> okay. john bilton, mike santoli, thank you both all right. how long were you at barons? >> 15 years. >> you're a word smith, right? >> used to be. >> you got any port montaeus for me >> no. i stick to words that exist. >> like brunch. >> no. i've got 20 wait for it to establish itself. >> i got another one. >> what? >> manzeer >> men's makeup i've heard recently >> mankup. >> mansplaining. >> manscaping. >> manspreading on the subway. the way they sit anyway, coming up, investors

have -- you know, 1931 and 1987, can you not -- i don't like either one of those years, really do you they both scare me, john they've been sweating it out when it comes to under armour stock. a reaction to the apparel maker's latest result is coming up as we head to break, take a look at u.s. equity futures they're up over 200. who says our bank isn't tech enough? everyone, look at your phones. the design thinking, the digital engineering, security, blockchain, and we will be first to market! yes. when we do we launch? unfortunately, in 2 or 3, hours. why the delay? cognizant is helping banks use digital technologies at scale to advance speed to market. onmillionth order.r. ♪ there goes our first big order.

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we're working to make things simple, easy and awesome. still to come this morning on "squawk box," the wealth tax causing a stir from wall street to washington. but would it actually work we've crunched some numbers and have the results and at the top of the hour, kevin mccarthy will join us to talk about the news of a tentative deal to keep the government open. also, the news makers don't stop there. former treasury secretary jack lew will be our special guest. much more "squawk box" when we come back after a quick break. so we're answering their questions. aflac is auto insurance, right? no. uh uh.

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swuz was swatch one >> swiss watch >> swiss watch >> i'm going to try to use it. but it doesn't roll off the tongue earnings movers could be ermovers i don't know let's get to the related ones here under armour up here both the class "a" and "c" shares up higher sales and profits there both top estimates thanks in part to better cost management and less discounting for key products up about 3%. then there are shares of molso coors which are lower on couple thousand shares. they reported mix results with a top line revenue miss due in part to weaker than expected sales volumes in the u.s it will also restate certain 2016 and 2017 financial results citing some accounting errors.

and then shire -- shares of shopi if rks y it signed up more customers but getting some of those gains back that we've seen. then we want to call your attention right now to what's happening with cosmetics maker coty up as one of the key units announced it would offer a tender offer to boost its already big stake. you can see they're up by 18.5% premarket. >> dom, thank you so much. shares took a tumble in december only to rebound again. brian nagel is from oppenheimer. shares are out with their earnings 9 cents versus the 4 cents the street was expecting what do you think of the numbers? >> good morning. i think it's mixed like you said, there's clearly

an earnings beat here. still some weak spots within the revenue line particularly north america >> where in particular >> well, north america i don't think we got much beyond that yet at this point some of that is probably self-inflicted this company has been in this two-year repositioning turnaround they pulled back on promotions they've streamlined their operations which is all good some of that weakness we saw here is self inflicted to me that's -- with a sector doing so well. we saw such strong results out of the likes of nike and lululemon that under armour is clearly suffering here >> the problem to begin with was they were in too many outlets, too many places they were being discounted ser eed essentially didn't differentiate between the levels of the brand? >> i think that's a huge piece of it. i think what you said was perfect. it's also a company that just grew too fast.

i think they wanted to remain though may pushed in certain categories >> how's the cleanup going if that's the old story of what happened how far are they on this turn around and what do you think happens next do they get back on even footing with this and start to pick up growth again >> that's the hope to answer your question, how does the turnaround go they've batoned down the hatches. i think they've done a good job. now it's all a matter of -- the business is operating better can they drive revenue growth? that's the big question right now. >> i had heard other analysts saying take a look at the gross margins.

is that a good number? is that where they should be sitting? >> that's a good number. that's reflective of them i think largely pulling back on price promotions probably to a certain extent them getting smarter with the merchandise as well. that is a healthy number. >> what do you need to see from this company to be a believer? >> revenue growth. >> what kind and where do they get it you're telling me north america? how do they cut back on the number of places they were distributing and if some of the distribution places have gone by the wayside, some of the bankruptcies we've seen before >> the way they do it and this is going to be a blase answer so that's important from a geographic standpoint. it's product innovation. that's where i worry a bit i've watches there's just some innovation out of those

companies. here under armour turning its business around. getting back its footing it's not doing that in a video camera consume it's doing that against the likes of strong companies that are in their own right >> you think -- i mean, under armour was invented on the idea of coming out with this new performance wear that people aren't seen before shirts that had stretch that wicked the sweat away from you what do they need to do to innovate on that level or is this a game you can't pull off? >> i think your last point is a good one under armour was a disrupter they caught -- i guess flat foot is probably a good term. under armour came along and shook them up. so it's hard to say what needs to happen now. they need to think of that next innovation but what concerns me is what's happening already within the space. even a lululemon this is one of my favorite

stocks here. and the innovation in their produc products >> you seem to be fatalistic they can do that >> it would. >> lululemon was left for dead three years ago. they thought the product was a complete mess, everything was a disaster >> they could. look they could but it's more difficult now because there's other competition out there that's already innovating they're not innovating into a lax space, they can't. and that's what they do. >> what do you think about kevin plank? people say bet on people he has shown himself to be a fighter. a guy who's willing to throw everything into it where do you see him at this point? >> well, urd armour is under

armour because of kevin plank. this is a bet on him and the team he's assembled. that's one where you look at a guy like that, you don't want to -- it's hard to make a bet against him because he's been so successful in the past >> where do you raut the company? >> so what we call a perform i've got outperforms like nike and lou lululemon coming up, will a wealth tax work that's the question of the morning. robert frank has a preview of what's to come >> elizabeth warren proposing the first-ever wealth tax is the magic bullet to help america but a look at europe is they rarely work and most countries are phasing them out coming up after the break. the future of technology investing lies beyond the tech sector. it's about technology transforming every sector. ♪ at pgim,

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welcome back to "squawk box. the idea of a wealth tax not new and several european countries have made the attempt. many have failed robert frank joins us with the challenges of making a wealth tax work robert >> it sounds good on paper, but in practice, it hasn't worked out that way senator elizabeth warren and lots of progressive economists call it a tax whose time has come a look at the wealth tax in europe suggests the time has passed wairn proposing a 2% tax on wealth over $50 million. and 3% on over $1 billion.

in 1990, 12 oecd countries had wealth taxes now it's down to four. only france, norway, sweden, and switzerland have them. now, there are three main reasons why they haven't worked out. that's according to a report last year from the oecd. first, the wealthy hide assets through offshoring and those secret storage warehouses for art and other valuables. second, non-financial assets are really hard to value especially private companies, real estate, or collectibles taxpayers often lowball those values and there's not enough man power to inspect every year. and the wealthy can move the rich often moved to neighboring countries that didn't have a wealth tax now, the bottom line, the oecd saying, quote, net wealth taxes have frequently failed to meet their redistributive goals and raised little revenue. the other problem with a u.s.

wealth tax is that we already have property taxes and an estate tax which are many would say already wealth taxes >> wait a minute now so people move with their wealth then they don't pay any taxes anymore. that sounds like a bad thing i really like that you looked into the actual practical application with this. with me it's just -- to me it looks so outlandishly ridiculous i can't even consider it a possibility because of private property and the way we do things for -- since we were -- i just -- but i see -- i'm glad you did that just to show so people tend to move. what about the other taxes you don't get any of those either >> joseph, there's an exit tax though >> i was just going to say >> was that your idea?

>> no. if you leave the u.s., there's an exit tax. if you want to give up your citizenship, you can do that too. >> correct it's an important point. there is a current exit tax. you have to pay a capital gain on everything you earned in the u.s. >> never mind. >> elizabeth warren increased that even more half of your wealth or something would be taxed if you try to move they've planned for that you can't move, that's the answer >> yeah, okay. it's -- i actually was going to -- do you feel that you're undertaxed >> do i feel that i'm undertaxed no, i don't feel that i'm undertaxed >> did you hear the no though? >> i'm not -- but look >> i just wonder because we have so many discussions about it >> by the way, i'm not an advocate for a wealth tax, per se >> i'm not saying that in all the fairness arguments. >> i do think there's something

deeply unfair when you see -- not to make it political -- but when you see the kushner family paying zero taxes in a given year, everybody else is made a fool of as a function of that. >> it's a loophole thing >> i think this conversation is much more about a sense of the system doesn't work. >> you don't necessarily think we need to make it more progressive for someone like you, for example you take all your deductions >> i take as many -- if there's a deduction available, i'm taking the deduction >> do you think we should tax philanthropic giving now do you think the government has a better use than a charity? >> i'll tell you what i think. i think that right now one of the things that's happened when it comes to power in society which is part of the conversation, if you are somebody of tremendous wealth, you gift your shares to a foundation or philanthropy i think we would be better off for you to sell the shares, pay

taxes on the gain, and gift it >> because you're worried about that person staying powerful i mean, don't they treasurally do that when they're dead? >> i think the government and the public doesn't get to benefit at all that's the question whether the philanthropic -- >> you can only do it if you're giving your money to philanthropy >> i would do that on a progressive basis if i was even thinking about it. meaning if you're going to give $10 million in a given year, maybe you have to sell it first. >> in future conversations, you feel you're fairly taxed you don't feel like you're -- are you undertaxed >> i pay probably 55%. >> they're talking about 70% >> i'm not advocating that >> talking about how great it was with 90% i see twitter people said the economy grew >> which is one of the great myths of all time. >> we got to bring in some guests >> take a guest. >> for more on taxing wealth,

let's welcome vanessa williamson and chris edwards. >> i think there are some interesting ideas being raised there. i think the question of fairness is a rushl one, right? we live in a time of extreme quality and power. in which citizens getto participate on something like an equal basis. it's hard to do that when some people can self-fund a presidential campaign and others can't. >> how about you, mr. cato what do you think? >> i think the idea rich people are undertaxed is ridiculous the top 1% pay 39% of all federal income taxes now that share has been increasing over time. in fact, it's double the share they paid back in the 1980s. so think about wealth. we want rich people to save. they don't stick their money in

their mattress what they do is there's a giant pool of savings that they go out and find venture capital on investment think about silicon valley it's one wave of innovation creates rich people. the rich people turn around. they reinvest in new growth companies. it's a machine that benefits all of us. the wealth of wealthy people is savings. that the whole economy needs in order to grow and to innovate. >> chris, can you explain to the audience why you believe -- not why you believe, but why it is just factually that the number that you just referenced in terms of the wealthy paying more and more of the taxes, why is that >> well, there's two reasons one, it is true that the share of income going to the top group has increased over time. but it's also true we have a progressive graduated tax code so if you look at average tax rates, the overall taxes you pay divided by your income, the top 1% in the united states has a

27% tax rate everyone else paid 11% the top group pays 27% everyone else, 11% so we're already nailing these folks at the top really heavily. let's just say i'm part of the 1% if i'm paying 55% and there are others that are part of t the 0.01%, does that make any sense to you >> it partly does. some people at the very, very top pay capital -- have a lot of other capital gains tax. if you look at irs data on the top 400, a lot of those people, it's one-time events they have a family business that appreciated over time. they sell it spike to the top of the income tax rolls and capital gains

taxes are a little lower than the ordinary income tax. so that is going on in the data. but that's reasonable. and that's fine. >> i will tell you one loophole i would go after is the tax exemption on municipal bonds i think that loophole is very distortion n distortionary. that is something that they could compromise on. >> vanessa, just kind of a liberal lion howard schultz happened to be a billionaire and he talks -- we haven't heard from him since ever since michael moore said he was going to start boycotting starbucks. i don't know, poor howard. now i think he makes a lot of sense. but he calls it revenge politics you know, just shouldn't we not

be bashing people that have become successful? he came from nothing to change the world and create something i think we all enjoy and created all this shareholder wealth. he gives health care and benefits to all of his employees. is he a bad guy? >> well, i don't think this is about whether someone's a bad person but howard schultz didn't come from something he came from public projects he benefitted from taxes when he was a kid. but it's not about the people. it's about the money when you have that much money, you automatically distort our democracy. it's not about whether you have good will or ill will or the policies you want to propose the point is he has a platform that's larger than other citizens that's not how democracy should work >> in ameritocracy, how do you -- what are you proposing we

do isn't that a consequence of having a system that allowed you to excel do we all want to meet at the bottom we all make $60 thour6$60,000 ad there are no billionaires. >> i think it's a mistake to think of success and billionaires it's not fair to talk about america as ameritocracy. a median white family has 86 times the wealth of a median black family you're going to tell me that can happen in ameritocracy, i'd like to hear you explain it the economy hasn't been fair for people in a really long time if ever. and i think we need to do more to make sure that the people at the very top can't distort our political process which guides our economy and make things even less fair in the future. >> what if in our efforts to somehow have the government

redistribute what you're talking about, what if that ends up hurting the people it's intended to help? what if -- gdp is at 3% now. what if we do redistribution and just the unintended consequences, slower growth, and the people you're intending to help don't get anywhere? >> i think there's a lot of evidence that there are government programs that work really well. social security vastly reduced poverty. old people used to be among the poorest americans. that's not the case anymore. because we had a program that worked we can build on those kinds of programs the idea we should give up hope. it's technically difficult to tax the rich you were right the implementation is a challenge. but the idea that americans should give up on challenges before starting when our democracy's at stake doesn't make sense >> it seems like so many good things flow from -- you wouldn't dispute the rise of the standard of living of everyone in this world has benefitted from capitalism and adam smith or

however you want to look at it chris, we got 30 seconds >> look. the people at the top end of the spectrum are generally the most productive people in the economy. you know, entrepreneurs that are creating all these new companies. there is not a fixed pie of wealth the people at the top end create new companies. they create thousands of jobs. there's no point penalizing them we already penalize them very hard we're not going to go back to high tax rates globalization makes that impossible >> want to thank you both. they're playing us out with the music, but we appreciate it. >> thank you >> thank you >> calm discussion anyway, thanks when we return, kevin mccarthy will join us to talk about the news of the morning. a tentative deal to avoid a government shutdown. and later, jack lew is our guest. "squawk box" will be right back. [leaf blower] you should be mad at leaf blowers. [beep] you should be mad your neighbor always wants to hang out. and you should be mad your smart fridge

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shutdown shut down negotiators in washington say they have a tentative deal to avoid a second government shutdown in two months nissan out with its first quarterly reports since carlos ghosn was arrested in japan.

we'll bring you a report and taxing wealth. two high powered guests on what the rich should pay in this country. kevin mccarthy and jack lew will join us as the final hour of "squawk box" begins right now. ♪ live from the most powerful city in the world, new york, this is "squawk box. good morning welcome back to "squawk box. i'm joe kernen along with becky quick and andrew ross sorkin the futures right now are indicated up 178 we've been up over 200 at one point. between 150 and 200 all morning long because it looks like the government's going to stay open at least at this point we're watching what's happened in china the futures on the nasdaq up 57.

s&p also higher. 2.68% on the 10-year under armour topping forecasts in the latest quarter. earning 9 cents a share above estimates of just 4 cents. revenue also beating forecasts with results helped by sales and discounts that improved the margins. that stock is up molson coors earnings beating estimates but revenue missing. molson also said it would restate its financials for the years 2016 and 2017. because of accounting errors related to its partnership in miller coors molson said the financial impact of the changes will not be material but said it did have material weakness and internal financial reporting controls in the end of 2018. as a result that stock is off this morning by 6.5% and cisco shares falling this morning after morgan stanley downgraded the equipment maker to equal weight from overweight. saying the continues strength

and security is already priced into the stock reflecting some of the big gains you've seen that stock is off by 1.2%. lawmakers in washington reaching a tentative deal to avoid another shutdown ylan mui joins us with more. >> they're calling it a deal in principle. of course they need to pass it and more importantly they need to get the president to sign it. now, the official text has not been released. here's what we know from two congressional sources. on the border wall, there's $1.375 billion for physical barriers including 55 miles of construction that could be fencing or steel slats. now, for immigration, the total number of detention beds will face down from roughly 49,000 currently to 40,520. there is no specific cap for undocumented immigrants detained in the u.s that's what dems had insisted on over the weekend they backed off of that. now, there are still six other unrelated spending bills that

has to be passed as part of this deal last night they were still hammering out the specifics. they're hoping for a formal rollout on wednesday but conservatives are already coming out against it. mark meadows said it just kicks the can down the road once again. and that backlash from conservatives could make it difficult for the president to sign this deal still both parties really do not want another shutdown. they want to talk about other issues like taxes. democrats are not the only ones to go after corporate buybacks in this most recent round of discussion so this a just another sign that who actually benefitted from the new tax law will continue to be a flash point through 2020 back over to you >> all right, ylan

thank you. let's bring in our guest house minority leader kevin mckm mccarthy so many things to talk about today. i guess we needs to keep -- uh-oh. immediately when cnbc comes on i think all those other networks should just have to, like, be quiet and not talk at all. i don't care if you're in a common space but they ought to have the respect to let us have an uninterrupted conversation. >> to let the minority leader. >> have the floor. anyway, what about this deal is the president going to sign it >> well, the deal is in principle. you've got to remember where nancy pelosi was she said no money for a wall that's not the case. the democrats have agreed to more than 55 miles of new barrier being built. and also, democrats changed course when they said there will be no detention beds they were actually going to put criminals releasing out into the country. they have backed away on that. now we're able to have those

detention beds again it's not the size number we would have liked, but the president still has a few more tools in his tool box. the critical point here is looking at the details, making sure that barrier is going to be built. that there's nothing keeping the ability to build that. that's what the president electric looking at. that's what i'll be looking at as well. >> have you gotten into the details of the green new deal, leader >> well, everybody's guaranteed a paycheck now you don't have to work anymore you just get a paycheck. energy costs are going to go up. >> that's after no more jobs that have anything to do -- you know, the great fracking revolution and the energy revolution is going to go away everything is going to cost a little bit more. did you see the germany piece? they've been gracious enough to show us what can go wrong even though their carbon emissions have stayed flat they are using they have to get power from wind

and solar and it's like 20% or 30% more expensive than natural gas right now. >> california has these mandates in our energy costs are 40% higher. but there's more than a million californians that hit that poverty level when they talk about energy because they're paying more than 10% of their entire income for energy costs that is what people need to understand what they talk about this new green deal. it takes away the economy. it takes away 10 million more jobs i'm one who believes and wants to have a clean environment. i also want to have a very strong economy and i think we can have both of those at the same time >> the journal -- the editorial board, the guys and gals at the journal think you should bring this up for a vote to see who's going to vote yes for all provisions of the green new deal so far just in terms of some of the candidates that have signed on, kamala harris, cory booker, elizabeth warren, and amy

klobuchar have all signed so far. >> i think these democrats who are running for president are just trying to follow one congress woman who got here with less than 17,000 votes in a primary and now has a lot of twitter followers that doesn't even produce a bill but produces some resolution on paper that they're going to agree without even knowing the details i think that's going to hurt them come next november. >> why are you trying to talk them out of it >> well, i don't want to punish america. what i'd rather have is a real discussion on legislation to make america stronger, make our economy stronger at the same time make our environment safer in the process. >> what should we do with -- sorry because i see my co-anchor can't stand this much longer but let's just talk about wealth tax, 70% what about some of those provisions is it a surprise that a majority of americans want to tax the wealthy? >> you know what's happening in the democratic party it's kind of unique. they're no longer calling themselves even a democrat

they call themselves a democrat socialist. that is weaving into almost every radical policy they have coming forward if you watch this new freshman class, it's more of a socialist class than anything else they even talk about what's happening in venezuela is not the socialist economy, it's the sanctions america put on venezuela. here we are trying to defend freedom and give people more opportunity, build an economy even stronger. what venezuela was before they put those socialist policies in. that's the debate in america come next november, it's going to be a debate about socialism or the free market >> leader, i wanted to talk to you about china and the trade deal but i just want to ask, one question on taxes. are there any loopholes right now and i'm thinking of just carried interest which to me is about as basic and simple and obvious as there are, that you would support closing when it comes to taxes right now >> look, we just did a tax bill that was not easy to do. it took more than 30 years

it's never 100% perfect. if you just look at the recent gallop poll, look at where the economy is right now and also think of this when you look at the latest gallup poll, they -- >> name one loophole you would like to close. there's not one? >> no. i would sit down and talk about any other ones out there but also you want to talk about one loophole, remember, we make policy in the world of politics. so i have to bring everything into it. did i get the tax bill i wanted to write at the end of the day that just kevin mccarthy wanted to write no i have to deal that's the way our government's designed and we're going to have compromise on both sides that's one element i'd look at yes, i would look at that. is there the ability to get it done i think it's a real challenge. it took us 30 years and we got a really good tax bill we just made law >> would you support marco

rubio's plan to effectively tax buybacks the same way that dividends are taxed as a proposal that he put out hours ago this morning >> you know what he just put something out hours ago, i haven't read through the plan yet i wouldn't support something without reading it one thing i would tell you, it took us 30 years to pass a tax bill that we were able to do that others were not in the past america is stronger because of it economy is lower america is in a stronger position financially because of that i would have this bill continuing to move forward i would look at other places we can clean up i'd look at other opportunities. yes, my mind is always open to anybody -- >> do you have a view about buybacks which arguably are more incentivized today under the tax code than dividends? >> look. i know rubio just did a bill i'll sit down and read the bill and come back and talk to you about any elements within that bill but the one thing i do know is we make policy in the world of politics you have to sit down and have agreement on all sides. >> separate question coming up on march 1st, we have

a week of discussions about what's going to happen in china. one of the key issues in the press that has changed is that some of the reporting about companies like huawei and others historically out of washington have been about security concerns national security concerns and concerns that these companies were effectively a national security threat. increasingly there has been reporting that actually that may not necessarily unto itself be the case but it's a view of the administration that competitively for the u.s. to succeed in 5g and other technologies that we want to effectively block their ability to do business do you believe that's the case >> no. i believe first of all it's security i also want america to be competitive. especially when it comes to ai and 5g those are elements we need to look from a government point of view had we able to create a structure to make the

competition. that we know we can win? many times our competition with china is not a level playing field. either they're stealing our technology or they have government sponsored based companies. and that gives them an advantage at certain times over what we're able to do so i think first and foremost what we're looking at is making sure that security of america intellectual properties and also our own secrets. >> leader mccarthy, when it comes to artificial intelligence, it's been a slightly different game there. some of that coming from the government when i talk to people in the industry about what's missing, they say they are concerned about government budgets for spending ining on some of these initiatives. is there a desire to make sure that there is government spending for research on things like this that are really being put into place to make sure we don't fall behind or we don't hold onto our developments of the past rather than kind of come up with the new things. >> i can only talk for the republican side and the answer

is yes you look at what we've been doing in the majority of making those investments. we believe long-term that makes america stronger that's a smart investment for america to go into what we've been able to do in nih and others, we've increased that area more than $3 billion almost each year we went in. ai going into science. ai going into health care as well being able to cure cancer ai is really a place that we need to have parameters around it's a place america would be stronger and solve more problems >> back to andrew's point on capital gains. i realize it's a negotiation that has to take place, but generally i think it's been the republicans that have kind of been seen as the party that is protecting something like that if you could get leadership from the other side to agree to get rid of some of those loopholes, would you sign on? >> i would sit down with anybody that wants to close loopholes. there were no more loopholes

closed inside a bill than the one we produced. it took us 30 years to get to the last tax bill we just did. so the concept we're going to sit down and write a new tax bill this year, i think it's difficult to make that happen. one thing i would like to celebrate is what this tax bill was able to do for america where the unemployment went. where the jobs numbers are continuing to grow we are stronger today than we've been in the last 50 years economically and i understand there are still elements of the tax bill that i would like to close, make those loopholes -- close them and make the tax bill stronger. but i understand how difficult it is to pass a tax bill we were able to do something that others could not do for three decades. >> right >> it's not as easy as just saying would i do this, would i do that. >> i hear you. is that -- i mean, as somebody who's an expert who's been doing this for a long time, is that looking at what we are hearing from rubio, schumer, sanders,

all these people no reason to think any of this is going to be put into law because it is so difficult to pass anything like this? >> you just mentioned three senators article one section seven said all tax reform starts in the house. so the senators can dream of what they want, but ways and means is where it really matters. being a member of the house, i think what we were able to accomplish inside that ways and means committee and it wasn't really getting it done in jus one certain term we built for years upon years to build up the argument. yes, we would have written something different if we could write it by ourself, but you have to pass at ways and means then you got to go to the senate the only way we're able to do that is because we didn't have to get 60 votes in the senate. and remember, in this tax bill that is so strong that made america stronger, not one democrat voted for it. so why won't you sit there and ask the democrat, what about the loopholes we closed? they didn't vote for one of those. what about the money we were able to give back to people? they didn't vote for any of

that so getting something new, you understand my frustration the difficulties of making that happen >> since we see you a lot but not enough to talk about all the things, so a lot of people think the state of the union was the begin og the campaign season i don't expect you to want to help the democrats come up with the right candidate, but objectively, i'm looking at it right now and i think it's very interested because i see a lot of the energy from the younger people are with some of the far left candidates and then i hear a lot more pragmatic moderate democrats talk about joe biden or someone -- i'm not sure who else would fit that bill. it just seems like there's -- they need some composite candidate. because i saw an article yesterday that said biden's not going to capture the energy of the young people he's going to be seen as, you know, he's 76, 77 years old. then i wonder about some of the

younger candidates about just how far left a lot of them seem to be at this point. and poor howard schultz. we dropped him like -- he got dropped like a hot potato. he's the one with the most reasonable ideas at this point who do you think would be a viable candidate against trump at this point? >> well, i don't know who's going to be viable >> who do you think? who's your preferred -- >> you're less than a year away from the iowa caucuses six months from now they're going to be on stage around june of this year competing if joe biden waits longer, he will not be a viable candidate and he has run for president before and those campaigns never took off very well. i don't know if that changes now because he was vp. >> who will capture the excitement you think kamala harris can do it i heard someone call her a moderate democrat and that went unchallenged would you view her as aed moderate democrat? >> no. i'm from california. i watched what she believes.

she's come from san francisco. you cannot be a moderate and be elected in that region and area of what her positions are. but that may be more in line with where the democrat party is if i look at all the rollouts, i think kamala harris has had the best rollout of any democrat when she first ran for senate, she didn't run a good campaign last cycle, bernie sanders had the grassroots behind him. but i think that's passed by elizabeth warren that everybody was afraid of that thought she would do so well from a democrat perspective, that she'd win, has had probably one of the worst rollouts possible. so could she get through this cycle and become stronger? i'm not sure beto o'rourke. he had an unbelievable run for the senate even though he lost could he get that same energy for running for president? the longer he waits, the more opportunity he will not be able to get there there's going to be a lot of people on the playing field. if we were at this place more than three years ago, i think the majority of republicans wouldn't think that -- could pick one person that was going to come out of that field or

think that donald trump would be the one to win the presidency. that's why these caucuses are so important. you've got to connect with the american public. you've got to go state by state. in new hampshire, you got to meet everybody three times before they'll vote for you. >> all right kevin mccarthy, thanks for your time today >> thanks for having me. when we come back, just about an hour until the opening bell on wall street. we will get you caught up with this morning's key moving stocks and later, we're joined by former treasury secretary jack lew to talk about the tentative deal to fund the government and how he thinks we should tax the wealthy in the united states u e tcngsqun yoarwahi "uawk box" on cnbc when you trade? i want free access to research. yep, td ameritrade's got that. free access to every platform. yeah, that too. i don't want any trade minimums. yeah, i totally agree, they don't have any of those. i want to know what i'm paying upfront. yes, absolutely. do you just say yes to everything? hm. well i say no to kale. mm. yeah, they say if you blanch it it's better, but that seems like a lot of work. no hidden fees. no platform fees. no trade minimums.

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welcome back to "squawk box" this morning i want to talk more about the markets this morning with the dow now set to open about 180 points higher. joining us right now is barbara reinhart head of asset allocation at voya we've had a couple of tough days now it looks like we might have a decent day what do you do >> well, this is certainly a relief to the market there was worry if they were going to shut down again it's not the only worry the market has though. there's still these significant upcoming deadline of march 1st

if the u.s. is going to implement tariffs against china. there's still the fact that the global economy is slowing, the u.s. is joining that slowdown as well >> we just had a guest on that is holding his his call from december represents more in cash because he thinks there's a decent possibility we test the lows all over again >> there is a minority group out there that thinks so however, the oversold conditions have been -- the second piece you wouldn't want to be sitting this time is also there has not been a tremendous amount of buying as a result of the 15% rally you've seen off of the december 24th lows in the s&p 500. so there's still a lot of cash on the sidelines a number of our sentiment surveys we look at tell us that. those are very oversold extreme conditions you had in december they are unlikely to materialize again.

>> so what are you doing >> we are still positioned in our portfolios to have a pro-risk bias. it is less than we've had in previous years we are barbelling our portfolios to the regions of the world that we had the most visibility on. >> in terms of china and overhang of the trade issue, i mean brexit is overhead. let's talk china specifically. what is your gamble? what do you think is baked in as we were talking about in the last hour? >> i think the administration certainly has seen the effects of a potential raising tariffs on china it would be far less benign than they thought it would have bee a year ago but this is likely an issue the markets are going to have to contend with not this year, not next year, but probably the next decade it's a matter of can we get to where we're not going to cross that big red line in implementing another round of tariffs right now. china wants to come to the table. they want to have a deal

again, a lot of people are starting to think about the 2020 elections. having a u.s. recession in front of the 2020 elections induced by putting tariffs on china would likely not be the best political move >> we are going to have to leave the conversation there it's a longer one. barbara reinhart of voya investment >> voya. coming up, "squawk" news maker former treasury secretary jack lew is going to join us on set to discuss taxes on the wealthy, a potential deal with china, and how the fed is navigating market volatility and attacks from president trump we'll see whether he's ready to sign onto the green new deal you're watching "squawk box" on cnbc making my dreams a reality takes more than just investment advice.

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when we come back, nissan slashing profits this morning.

we'll bring you highlights from the company's latest earnings report straight ahead as well as what's next for ousted chairman carlos ghosn held in a tokyo jail since november. what are ghosn's options in the japanese justice system. and how is his detention affecting jvp's image on the world stage? we're into dcugog isss that. stay tuned you're watching "squawk box" here on cnbc alpha seems more elusive today. is it because so many go after it the same way, chasing after short-term returns? instead if getting caught up with the crowd, the investment managers at pgim take a long term view. uncovering opportunities for alpha across public and private markets, while anticipating unforeseen risk, has powered our rise to a top ten global asset manager. partner with pgim. the global investment management businesses of prudential financial, inc.

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welcome back to "squawk box," everyone we are live from the nasdaq market site in times square. among the stories that investors will be talking about today, a takeover deal announced this hour in the mortgage finance industry ellie mae, a provider of mortgage finance technology agreed to bought by private equity firm thoma bravo. this is $4 billion that compared to the close of just $81.92 on monday. you can see that stock is indicated up by about 21%. online discussion forum reddit closing a new financing round that values the company at $3 billion. tencent holdings provider more than half of the funding the company's ceo told cnbc yesterday the new funding round would be used for ambitions. wel get a fresh read on the

job report of the morning. the jolts report is expected to show remaining near record levels japanese automaker nissan releasing quarterly results earlier this morning slashing its annual profit outlook on weaker global sales. phil lebeau joins us now with more phil, i don't know how the ghosn situation would play into this probably not much. they got their own problems with their models, i guess. right? >> they have issues in terms of really over production and now steep discount iing in several y markets including the united states that's when when you look -- their full-year profit forecast by about 15%, 16%. in terms of what's going to happen with sales this year, they continue to pull back in terms of expectations. here are the key markets and the revised guidance regulartive to

the previous guidance. you're looking about them taking maybe 300,000, 350,000 off annual sales as for carlos ghosn, as you mentioned before the break, he remains in detention he's in a jail in japan. he is expected to go on trial probably three or four months from now although i don't know if a definitive trial date has been made at this point in announcing the results today, nissan said it would take an $84 million charge for underreported compensation that the company has discovered or says it has discovered as it has looked into carlos ghosn's compensation between 2010 and 2018. as you look at shares of nissan over the last year, i'm not sure this was going to move a lot this is a company essentially in reset mode it also has issues in terms of

corporate governance not only in japan but worldwide. and the ceo of renault will be in japan in the next week or so with the ceo of nissan as they continue to hash out the future direction of this alliance between nissan, renault, and mitsubishi >> thank you very much as phil mentioned, this is the first earnings report since ghosn was arrested ghosn was detained in mid-november and is still being held without bail. joining us now to talk about the japanese justice system is mitok rich, tokyo bureau chief >> thanks for having me. >> as something sitting in the west, there have been a lot of us by this glimpse into the japanese justice system. have you been surprised by what you've seen?

it seems we have lost her audio. we'll give her a minute to catch up with this carlos ghosn has been sitting in jail in japanese since november. some of the things we've seen along the way have just highlighted the differences between the american justice system or western justice systems and that in japan. mitoko i think can hear us at this point i asked it's been a surprise to many of us watching here in the west to see this view of what's been happening inside japan's justice system were you surprised by anything you've seen to this point? >> well, absolutely. because i come from the west as you mentioned, carlos ghosn is now going on almost three months in detention. he's been indicted on three different counts, but he spent quite a lot of time in detention before he was even indicted. so that's different from what we see in the united states where there's a bail system, prosecutors can't hold suspects

for more than 48 hours without indicting them in japan you can hold them up to 23 days. you can rearrest the same suspect on different crimes to extend that detention. now he's indicted, he's applied for bail a couple of times and has been turned down which again coming from the perspective of the west is quite astonishing. when i was reporting on this story, i looked back on what happened to bernie madoff who is the most famous financial criminal in the world. he was out on bail the day he was arrested the idea this man has had to sit in detention for three months is shocking to people from the west >> what's the reaction that you've heard from other executives both in tokyo and then from around the world too >> well, i do think there's a cultural divide here in tokyo. i think that there is a recognition that this is sort of bruising the corporate image of japan because it's a democratic country, supposed to have modern corporate governance and i think that a lot of people

have been surprised at how mr. ghosn has been treated that being said, i think western executives are much more upset and up in arms in talking about this will perhaps stain the reputation of japan in terms of westerners wanting to work here. but i think there are japanese executives who also have been saying this is not how we want to run a modern country. >> you know, the confusing and intriguing part of all of this is trying to figure out what caused what. is this a situation where he really was compensated and this wasn't made good where you had him putting his personal loans onto the balance sheet of the company, or is this a situation where it was a reaction to his plans to integrate much more closely. what's your feeling after you reported on it so much >> right well, i mean, it's almost sort of a shakespearean story inside of nissan which we haven't gotten to the bottom of yet. but there does some to have been

a lot of power struggles and there had been some building resentment i think on two fronts, one was there was a lot of power that was concentrated on him. he was at one point chairman and executive of renault and mitsubishi he stepped down of nissan in 2017 but he still had a lot of power. the other area where at nissan there was concern was there seemed to be this fear that even though there was this solid alliance between renault and nissan and mitsubishi, the japanese side was resenting a little bit closer collaboration with the french side partly because they felt that they were the stronger brand they had stronger engineering and technology and felt they were having to unfairly having to share it with their french colleagues >> so what happens now phil was just saying the head of nissan is set to meet with the head of renault. >> right >> what happens now with this

alliance >> well, i think there is an effort i mean, in the past three months, i think that was a reck nation on both sides that relations have detearuated between nissan and renault at first they were shocked at the arrest of carlos ghosn so i think they're trying to learn more about it. and i think with the appointment of a new ceo at renault who can now talk to the current ceo of nissan, i think there's a hope of reviving relations and trying to calm the waters a little bit. >> of course mr. ghosn is in detention. and we're not quite sure when the trial will be. he is definitely going to be in jail for about another month and at that point, the court can either approve or release him. and of course his lawyers can also reapply for bail. >> if he does not receive bail at that point, the understanding is he could be in jail for the next six months or longer waiting for that to play out

>> well, the understanding is that if he court does not -- either if the court does not approve bail or he's not released, then he will, in fact, spend -- we don't know if it's six months or however long for the prosecutors to prepare for trial. >> what's been the most surprising thing you've uncovered? >> i think just the fact that the board apparently did not know up until the last minute where -- we're still trying to figure out exactly who knew what when that always seems to be the story behind the story in any of these scandals and it's been surprising to -- when it first broke that he genuinely didn't know it was coming down the pike that there seemed to have been some betrayals internally. there seemed to be different factions within the company. we're still trying to figure all that out >> thank you for your time motoko rich is the tokyo bureau chief of "the new york times." coming up, jack lew will

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i would sit down with anybody who wants to close more loopholes. there were no more loopholes closed inside a tax bill than the one we just produced the one thing you sit back and ask this question. it took us 30 years to get to the last tax bill we just did. the concept we're going to write a new tax bill this year, i think it's very difficult to make that happen >> that was house minority leader just moments ago, kevin mccarthy, speaking about the possibility or lack thereof of closing tax loopholes in this larger conversation about taxes that seems to have taken place our guest now is former treasury secretary jack lew i want to get your sense of the government shutdown and what you

think may or may not happen here it looks like we have a deal of some sort. >> the news this morning suggests that congress has a deal i certainly hope if congress has a deal, the president doesn't choose to shut the government down again it's never worked out well it's irresponsible and if congress has a deal and it's a fair deal, the president should sign it >> on the tax front, you know, we've been talking a lot about what feels like a lurch to the left by the democratic party whether it's elizabeth warren's broader wealth tax, whether it's aoc's tax, marco rubio commenting this morning on the other side of this on buybacks not so far away from where schumer and bernie sanders were a week ago on buybacks what do you think is happening here >> i think there is something happening here it's reflected in the broad, unhappiness with the tax bill that was enacted just under two years ago. it's not done great things for the economy. it hasn't unleashed big

investment it hasn't produced great jobs for people and it has produced things like buybacks now, it's not a big surprise to me i think i sat here in this show and predicted that that would be what happened if it cut the capital gains rate as much as it did. the problem in the country is we have growing income inequality we have a fear that opportunity in the future is not going to be there for people to get into and stay in the middle class and we have policies that aren't dealing with it. >> but just to go back on a point, you're saying you think it was unleashed by the taxes of last year. i look at this as something unleashed by the great recession of over a decade ago >> that's a fair point >> and housing -- median housing income dropping drastically. i look at this as more than that >> i agree with that, becky. the right government response would have been to do something, to address the underlying problems of inequality what we had was a policy that doubled down on inequality

>> you mean by the fed lowering rates and -- >> no. there's no question low rates led to higher asset values that created a lot of jobs >> square this one piece of it we are and president trump talked about it during the state of the union you look at the jobs numbers on a monthly basis and you have to be awed, frankly i think it's hard not to do. >> gdp 50% better than you were able to do i know i know >> all right so -- >> the question is -- is it a lag effect for class for clunkers you guys did this >> when you throw a huge amount of stimulus on a growing economy, it should be no surprise that you get some short-term bump in gdp >> you threw $800 billion at it and it did nothing >> we started a recover that

hasn't ended yet it's the longer recovery in history. >> you are really going to look at gdp you never had a year of 3% it is probably goingto be 3% you don't think any of this is from deregulation and tax reform do you think this is a delayed effect of your policies in the obama administration can you really say that to me? >> i do believe we left an economy that is strong the strength of that economy is something that could have been predicted. i think the risks in this economy for the moment are self-inflicted i mean, just listen to the things you're talking about. confidence in the economy because of a shutdown. confidence in the economy because of a war with china. >> you see a 16-year high with consumers on their feeling of the future you saw that yesterday, right? how positive they are about their economic future. >> did i mishear you this morning saying that the market is up because the government looks like it's not going to shut down? >> i know that but in the most recent polls, people are feeling very good

about their financial future right now. much better than in the obama administration >> what you're seeing in the united states and europe and a lot of the world is people worry about the future it's reflected in questioning institutions, questioning democratic processes, questioning free markets i believe in democracy and i believe in the free market. >> do you believe in the green new deal >> so i think the combination of things from the green new deal to the -- >> you would sign on for that? >> let me speak for myself, joe. >> okay. >> i think there's an important debate going on right now which in my view ought to be about how do we have a fair system how do we have a system that addresses the needs of the country? things like infrastructure, child care, and how do we do it in a way that's fiscally responsible? i don't know whether any one of these proposals will answer all of those questions i'm glad people are asking though >> mr. secretary -- >> you might be okay with -- you were treasury secretary. do you think that is a viable option for the u.s. economy? >> it is not a plan that i can speak to the merits of one way

or the other it's an idea >> really? >> it was issued this week as not a full plan. >> there are some ideas in there that -- >> do we have a problem in this country that we have a real issue with environmental problems yes. do we have a problem that the tax system is not fair yes. i want to look and see what the solution is. but i told you with the test i would use -- >> on buybacks there was a headline, we talked about with marco rubio, putting out a plan, effectively to tax buybacks the way dividends are taxed, the idea being that effectively his argument that buybacks are incentivized over dividends which arguably is true given the way the system works if i put you back in the chair of being the treasury secretary, is that something that you think would be a net benefit economically to the country? >> buybacks are not good or bad. they can be overdone and you can have policies that create

incentives to overdo them. right now we're in the situation where the policy environment is encouraging bad outcomes when i was secretary, we saw that with inversions i tried to deal with it on inversions i don't think the tax code, i don't think governments should tell businesses exactly how to do their business. >> the question is -- >> we shouldn't make it attractive to -- >> here is the great conundrum, today, it is not so clear to me if the money wasn't going back to a buyback that somehow we would automatically go to a capital expenditure or go into staffing you're not going to -- you're only hiring the next person when you think that there is going to be more demand than you currently can have only going to build the next factory when you think that whatever your current factory has is working flat out. and so the question is, what happens to that money? >> the gap between the capital gains rate and the earned income rate is what is at issue with the difference between dividends and buybacks i didn't think was a good idea

to go to 21% we went below the rate that was seen as the goal 25 it cost a boat load of money we don't have and now we're seeing things that come out of that differential that are bad practices we need to go back to the drawing board. it is rare i start out saying that marco rubio's idea is something i want to take a look at that ought to get people's attention just in and of itself. if you -- if you look at system, one problem we have is not just buybacks and the short-term, over the long-term the capital gains of very wealthy people are never taxed, never taxed, but half of the capital gains of states over $10 million are never taxed. that's not fair. >> how do you capture that money? >> look, when i was secretary, wi we proposed stepped up bases there are other ways to do it. the workability is an issue. i look at the proposals, can it

be done in a workable way? serious people should be looking at that. i'm glad they are. a lot of these areas. >> we have to go what would it take in terms of money for the irs to do any of this stuff we have all these conversations on what should happen. we have an irs that is so underfunded that it almost doesn't matter >> the probability of having the irs catch things is going down and down because we have a war on the irs it doesn't take huge amounts of money. it is hundreds of millions, not billions of dollars. >> thank you, sir. >> you really didn't answer about the green new deal, mr. secretary. and just saying that you're for a clean environment, but i'm not sure of the actual detail, i know you know some of the details of the green new deal. >> actually -- >> do you think that every single person should be guaranteed a family sustaining wage, medical leave, paid vacation, retirement security, and even if you're unwilling to work, you should get a -- >> i'm in the going to sign on

to anything until i know all the details. >> a lot have signed on. >> you asked me. do i think there are problems that we need to address? whether that's the -- >> punting again. >> i'm not punting >> i understand we want an environment, but we're talking about no air travel in ten years. what will happen to global trade? this is what your party has on a platform. >> i think there is a desire to describe what democrats are doing in a way that is not exactly accurate. >> a problem with the description, not the actual policy >> there are certain democrats creating strong men while people on the other side -- >> no doubt there are strong men out there -- >> these are real people kamala harris is not a straw man. elizabeth warren is not a straw woman. cory booker, amy klobuchar. >> what are the right tax policies what are the public investments we need to make and what is the fiscally sustainable

future that's what we ought to be having we didn't have that debate on the taxes. >> i'm trying to help your party. i am, at this point, mr. secretary. thank you. we got to get -- thanks for coming in, being on set with us. down to the new york stock exchange jim cramer joins us now. what is the government deal -- averting a shutdown, worth about 200, you think, jim? >> i care about china, joe i think that this was something that people were worried about it might be a shut down over the weekend, get a deal, good, move on my focus is on china until we get more earnings. and it is not as much on tax policy, i'm more concerned about spend policy i wish there was someone down there that cared more about spend policy you can raise the capital gains tax. you can tax the rich i get that you and i both know, it is the spend. the spend is insane. >> that's my problem, jim. i can actually see some -- i

like to do all the things to try to raise people up i'm in the sure that we know -- we tried i'm not sure we know how to do that one we to do it is faster economic growth. i'm pretty sure of that. i know the wage gains have been slow and hard to come by i think it is finally starting to happen. i think this is the way that this -- this is the one way we can do it. we're stuck with this. >> we have to grow the economy we have got to keep people to work and we got to get the health care costs under control and i think that no one is addressing the latter. that's what is just uncontrollable you can't do anything as long as that's out of control. and do you hear anyone talk about it anymore, other than drug prices, that's not the issue. we know it is -- there is a lot of structural problems in health care so grow the economy, and figure out health care and i think we get the win. >> okay, jim, thanks, see you in a few minutes. get more on your thinking on all of this. we'll be back in a moment. a wealth of oil.... and riches beyond your wildest dreams. there's a place where you can find all of this.

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welcome back a new report showing more young people using tobacco products. the cdc vital signs report showing nearly 5 million middle and high school students use the tobacco product last year compared to over 3 million in 2017 health officials say the biggest reason for the spike, other tobacco products held steady youth cigarette use is called an epidemic

we talked to scott gottlieb and others about this very issue. >> efforts to try and fight that and reverse it a quick look at the markets as we hand things off to "squawk on the street. dow futures indicated up by 181 points the s&p indicated up by 17 the nasdaq indicated up by 51. join us tomorrow, right now time for "squawk on the street. ♪ i just got played good tuesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. the dow looks to avoid a fifth day down today, something it has not suffered since june, getting help from reports that a tentative deal has been reached on border security opec production cuts reportedly sticking and powell speaks in the noon hour, eastern time road map begins with a deal reached tentatively. lawmakers compromised to avoid another shutdown