this is "squawk box. ♪ good morning, everybody, welcome to "squawk box" here on cnbc we're live in times square i'm becky quick along with willfred frost. joe and anthony are out today. you'll see the futures that things are in the green. the dow future is close to 70 points the nasdaq up by 27. of course all this comes after gains that we saw on friday as there are these hopes that there will be some sort of a deal that's put together between china and the united states when it comes to trade. these are talks that have been going on for a long time i asked you, mike, how come we're not up more if we think there's a deal being done. >> the potential deal we're now hearing about is in the zone of what the market has been expecting. it's a net positive if it gets done sooner than later and in this general form. i was joking how many times are we going to rally on similar headlines. that's really when the market is

up 19% in ten weeks or something like that already, already had a high for this rally, then it's hard to know exactly how much more of a spring-loaded move we have on these news. >> the real outperformer has been the nasdaq. it was up again last week for the week the nasdaq is now up for ten weeks in a row on a weekly basis. the longest winning streak we've seen for the nasdaq going back to 1999. in fact, the nasdaq is closing at its highest level since october 17th since last week let's look at what happened overnight in asia because marks did rally. shanghai composite up by 1.1%. nikkei up by 1%, too a story in the journal about how this has been a huge rally for stocks in china over the first couple months. this is the bigs rally we've seen there and stocks have been up very sharply. >> particularly february, up 13.5%.

the best outperformer on the trade news of late has been china. kind of played catch up for the first week because it was closed for the chinese new year holiday but massive underperformance last year, much cheaper valuations >> coming even as there's been some concerning headlines coming out of china today just about the target gdp they're looking at for 2019 being 6 to 6 1/2% which is a little lower. >> the market's computation says that's what we were discounting last year with this awful performance in china and china's stimulating. so there's a muscle memory here that says they're at least going to go for it again and try to get the economy sped up. >> let's look at what's happening the european markets that are open right now. you'll see that in europe this morning you have the ftse indicated trading up by half a percentage point same story for the cac in france dax is up just barely 0 .7% and stocks are lower in both italy

and in spain look at the treasury markets you'll see that right now for the u.s. ten year yielding 2.746% >> we did tick up as well last week didn't weigh on stocks so much >> exactly just lifting from low levels. >> tough story this morning, u.s. and china are close to a deal that would roll back tariffs on at least $200 billion in chinese goods in exchange for changes to china's economy and elimination of retaliatory tariffs on chinese goods it could be signed at the end of this month the report says a deal would include an $18 billion purchase of natural gas from houston-based energy company. >> there's so many things to go through. we'll get the chance to speak to kayla about this wall street goldman sachs has a note out today saying that what

they anticipate will be that the u.s. whether not lift all tariffs, at least not immediately until they see the china side rolling in some of those issues, too. already the top china trade negotiator is saying this is not going to happen unless the u.s. takes off all of these tariffs a lot of things that are there, not to mention the enforcement mechanisms put out there in place where the u.s. would like it to be if a u.s. company has a problem they go before a bilateral committee with officials from both sides. if they don't like it, the u.s. can put tariffs on and the chinese can't retaliate. >> big questions to iron out the difference is the sort of certainty and timing if we do have a summit at the end of the month to draw it all together is huge progress for the market but as we were discussing earlier, a lot of it already priced in. >> there are more details. 100 pages, 30 on intellectual

property the idea that you get specific deals, that's a weird thing in itself that you're giving a contract to a specific company. >> robert lighthizer testified that there is a slightly different tone for some of these headlines some of the optimism when president trump is talking with the chinese vice premier part of these negotiations versus the hard facts when pushed by the lead negotiator. who doesn't seem to suggest always that a deal is on the table with a specific gas company, for example that gap has to close as well in the sort of remaining couple months. >> mike, you made a good point this morning there are two people who decide this deal. >> that's it it's difficult to say well here is the process we know the probabilities of exactly these issues getting sorted out it is ultimately about the leaders of the two countries that's why the market iswillin to take these positive signs it's one other reason why the market looks like it's well

supported here or a catalyst for some earnings estimate it's not just about this massive uncertainty is lifted. we have been living with this f for a year if the u.s. sees the tariffs as a means of enforcement and chinese say, no, that's not going to get to a deal, i do think that's the formula for disappointment from the market's perspective. >> clearly as we discussed the last couple months china bounced more but nonetheless u.s. markets have obviously been strong in general of late. the question about the economy, though, the economy never really got hit too hard by this and some industrial companies have always bounced back as well there's always been talk and negative commentary from ceos. but earnings have ultimately still been strong. so again there's a question of how much of a bounce afterwards do we still get? >> probably dependent on very specific companies if you look at caterpillar or apple probably much more attuned. >> semiconductor has been very strong that's one of the more direct

areas that would be a benefit if there is some kind of a deal they're talking about some of the reports today and goldman saying this, too, they want to also address the trade deficit, u.s. semiconductors would be a logical place to source some of that. on the topic of china, huawei is report lid planning to sue the u.s. government for banning federal agencies from using its products the suit could come as early as this week. meantime, huawei cfo is suing the canadian government. she was arrested in canada back in december at the request of the u.s. she is charged with bank and wire fraud mange is due to appear later this week when a date will be set for her extradition hearing. some tesla news for you this morning as well. the electric car company will unveil its new model y on mar 14th according to a tweet by ceo

elon musk. he said that the model y would be about 10% bigger than the model 3, so it would cost about 10% more and have slightly less range for the same battery also president trump taking new aim at the fed over the weekend. listen to what he had to say while addressing the cpac conference. >> we have a gentleman that likes raising interest rates in the fed. we have a gentleman that loves quantitative tightening in the fed. we have a gentleman that likes a very strong dollar in the fed. can you imagine if we left interest rates where they were there's no inflation essentially. there's no inflation can you imagine if we left interest rates where they were if we didn't do quantitative tightening >> president trump also said that the u.s. economy is doing well steve leesman will join us in the next half hour to talk more about the president's comments, but if you're criticizing somebody who likes the strong u.s. dollar, i guess the

opposite take is you're a president who likes the weak u.s. dollar. which is kind of unnerving. >> once again, kind of setting a precedent because that's normally not the message you would expect. >> no. the audience did cheer for this. they did >> but it's more trying to frame an argument that the economy would be even stronger if not for these people working against him and given his audience, you can understand a slightly more exaggerated tone and delivery. either way, despite that caveat, very interesting to see him go so much after the fed in such a pointed way when they've done their pivot. what more can you expect >> i thought everybody was on the same page and back together. the answer is no, not the case no president has ever want aed a fed raising the rates on his watch. the president has said in the past that if we have a weak dollar it means more tourism and

he's not opposed to that it's a very unusual take generally you have the treasury secretary and the u.s. president who will always say they like a strong u.s. dollar. >> it was in this litany of look who is against me and look how well we're doing despite it. >> i thought they were on the same page again and had this peacemaking lunch and everything would be okay. >> face to face they probably are. we'll see. china's top political advisory body started its annual session yesterday in beijing over 2,000 political advisers gathered for the opening meeting held at the great hall of the people this session is scheduled to conclude on march 13th a live report later this hour on this. still to come on "squawk box," airlines flying high, up 13% so far this year we'll talk to the ceo of air asia about his company's performance and the announcement of a new investment fund here is a look at the biggest pre-market winners and losers in the dow. we're back in a couple ♪

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morning the airline aims to support startups with a presence in southeast asia. joining us with more on the news in the current climate for the industry tony fernando, ceo of the airasia. good morning. >> good morning. thanks for having me. >> i want to start with the news we had this morning on the u.s./china trade talks stepping back a bit where you sit running a pan asian, southeast asian business from kuala lumpur in southeast asia what's the view been is it an opportunity for some of the smaller asian nations? or is it a head wind what's the view been >> it's hard to say. it's neutral in that there are definitely opportunities for production to be moved down to our part of the world. also downside because china obviously is a big spender in our part of the world. but i think it's a good opportunity. i think huawei's crisis and i think southeast asian businesses are preparing. but i would say it's fairly neutral at the moment. >> in terms of the airline business in the region at the

moment, what are the latest trends have you seen any slow-down from the slow-down in growth from the trade? >> no. we saw a little bit of slow down from china for a couple weeks but it's come back very strongly we're in a nice part of the segment when things get tougher, people look at their wallets and come down to the low-cost markets. our loads are very strong for the first quarter and demand is holding up very well. >> talk us to about the new fund you're launching what are the growth areas in southeast asia >> when you look at this whole tech world, a lot of them spend huge amounts of money acquiring customers. what i'mtrying to do is move aasia away from being an airline into a travel technology company. we have some of the biggest platforms in airasia and our loyalty program, big loyalty so we're looking at companies that are use our data add value to our bottom line by doing partnerships and investing in

companies on top of helping us to make our customers happy through technology and reducing our cost using iot those three buckets. >> and one of the areas i noticed your focus on is payments and payment technology. >> yes. >> is that a particularly big opportunity in asia because the banking infrastructure was not as developed in the first place? >> yeah, spot on i think there's a huge opportunity. we see a lot of added costs for our travelers in terms of exchange rates and cost of payment. but on top of that we see the remittance business of which most of our customers use and lending business it's very hard to get working capital loans. we believe there's a huge opportunity for us with the data we have, we have such a high resolution on day tarks we'll be able to provide good rates it's really moving away from airline but build businesses that could rely on it not too dissimilar from amazon or any other company that has moved from selling books into using

their platform to deliver more value to its shareholders. >> the idea of creating a fund to back startups in this areas as opposed to partnering with existing big global companies in bookings or lee sure or payments that was an active decision. why that way >> i started off we had a huge joint venture with expedia which we recently sold at a huge profit but with the big companies, we're always going to be the junior partner in those relationships. we felt better to work with smaller startups that could use us more and value our data more than just taking the choice parts of our business. >> but also you can throw your weight around a little more and set the terms? >> well, maybe >>. >> partnership is equality. >> interested to hear you say about what the dna of a successful entrepreneur is in southeast asia versus in america where i know you spend a lot of time and europe. is there a difference? >> no, i don't think so fundamentally there's a difference

there's more drive because it's harder to be an spre p entrepreneur in our parts of the world. i came back from a speech in harvard and silicon valley, there's such deep capitol provided while small businessmen and entrepreneur man in southeast asia it's much harder to get it. the quality is very high the work ethose is very good and advantage for us to there's no real established capital flows. >> i want to go back to airasia. boeing hit an all time high the stock price last week on that day off the back of winning big order from british air ways after air bus cancelled it project. where do you stand in terms of preference between the two or any others >> air bus largest customer we bought over 600 aircraft boeing, the ceo is a very good friend of mine, kevin, sold me lots of engines.

they make great planes and constantly talking to us so never say never, but we have been predominantly air bus at this point. >> we'll leave it there. thanks for joining us. >> great to have you in airasia ceo tony fernandez. >> when we come back, auto maker volvo is looking to cut down on traffic accidents by capping the speed of its car that ought to make them big sellers. we have that story next. later, former new jersey governor chris christie will join us for the 7:00 hour. we'll talk china trade the north korea nuclear summit and the next presidential race "squawk box" will be back right after this quick break

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♪ welcome back news just out this morning, volvo cutting the top speed for all of its new models to 112 miles per hour, down from 130 per hour the move takes effect next month to curb fatalities and serious injury volvo ceo said the speed limitation won't be a cure-all but it's worth doing if it saves even one life. and volvo is looking to limit how fast cars can go in certain areas, for example, using software to limit a car's speed around schools and hospitals wow. >> i'm all in favor of other people driving those cars. >> yeah. >> you need to go more than 112? >> i definitely don't. this is my concern you'll get to autonomous driving

and all the rules will be put in place and there are, you know, never going to be any freedom from any of these things. >> very loose thing just guessing exactly what the top speed for a car is really. >> i will say i'm in favor of people driving that car in my neighborhood with my cars around. >> 112 through a neighborhood won't change anything. >> if they limit you to 25 in certain zones. that's probably a pretty good thing. there are way too many people who don't pay attention to those rules. >> it's a further step to control people's freedom to judge. >> if you use waze all the time, it knows exactly how fast you're driving at any time. i put waze on if i can't see the speedometer on, you can check all these things it's coming no matter which way you do it. progre progressive, look you can see how well i drive and i heard that people who agree to have those things put on don't drive

as well as they think they do. there are a lot of times they're not doing the things they're supposed to. people think, yeah, i'm a good driver and you're not when you have someone watching and clocking every single thing you do. >> all of us with your smart phones, google maps could tell the police every time you speed. >> we're moving towards that world. >> unless you're usain bolt would get pulled up even when he's just running. >> that's random and interesting. i like it. let's talk about a programming note, too. an all-new episode of "the profit" premieres tomorrow night on cnbc. here is a sneak peek. >> i want you to take something that you don't like, that you're not comfortable with and prove you can sell it. >> i can sell these off my face for 100 bucks right now. >> you can sell those off your face for $100? do you really think you can do that. >> let's go walk around. >> let's roll. let's go >> what's up with the lenses, are they polarized >> i'm not too sure. i think they are. >> i'm not sure. >> what's the metal made out of?

>>. >> i'm not sure. >> there's a guy who thinks he's a better salesman. find out if he closes the deal tomorrow night catch two new episodes of "the profit" tomorrow night right here on cnbc. still come to, new reports this morning say the u.s. and china are heading to a trade deal as we head to break, let's have a look at yesterday's or friday's s&p 500 winners and losers ♪ with the chase ink business unlimited card, i get unlimited 1.5% cash back. it's so simple, i don't even have to think about it.

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♪ >> announcer: welcome back you're watching "squawk box. live from the nasdaq market site in times square.

♪ good morning, everybody. welcome back to "squawk box. we've been watching the u.s. equity's future and they have been higher this morning after a strong market on friday. the dow futures are indicated up by 5 1/2 points and nasdaq up by 32 look at the treasury market. we've been watching the yield on the ten-year which right now is sitting at 2.746%. top story this morning, reports that the u.s. and china are nearing a trade deal that would eliminate tariffs on billions in dollars in goods eunice yoon joins us from beijing. eunice >> reporter: hey, willfred a source familiar with the deal told me to expect big purchase targets and also enforcement mechanism though exactly how enforceable that is for beijing is still up for discussion so "the wall street journal" fleshed this story out more saying that china would step up its u.s. purchases and drop restrictions on certain u.s. imports. the two sides were also reportedly working out a way that so that officials can

resolve disputes and that the u.s. could reimpose tariffs if it believed that china was breaching some of these terms. in return, the u.s. would lift most of the sanction but what doesn't appear to be in this deal is any significant movement on china's industrial policy which has been a big target of the trump administration also, how much the deal would really move the needle on changing the economic relationship between the two the trade deal would be formalized in a summit between president's trump and xi possibly around march 27th in mar-a-lago, but before then, president xi is going to have to deal with something else, a big event that's happening here in beijing called the national people's congress where the beijing leadership is expected to acknowledge that the economy is slowing down by lowering the growth target as of tomorrow for the year to 6 to 6.5%. investors are also expected the government to unveil its budget deficit and to expand it in

order to help stabilize growth here but one other important new development over the next couple of days that we're going to -- that any foreign investor would want to know about is a new foreign investment law that china is going to vote on on march 15th this will be the only major law to pass this year and it's really meant to even the playing field between foreign companies and domestic ones. it's a way for china also to address the trade war with the u.s. and from china's perspective, this is significant. they say this is going to end three jv laws. it will bar forced technology transfers, prevent the state from illegally setting market access and it will allow foreign firms to help set product standards, which has been something that foreign companies here have been really wanting to see. the catch, though, is that as with many rules in china, it really comes down to looking good on the books but exactly what will the implementation be.

will it be even? will itbe fair so that's one thing that people are really worriedabout. in this new law there is language in there that includes national security reviews. so, there's a lack of clarity about this as well so there's questions about exactly how this is all going to play out in real life. one of the best things that one business association official told me he could say about it is that it's not negative so not necessarily a ringing endorsement of this new trade -- of this new foreign investment law. >> eunice, should i read when you say that they're going to end three joint venture rules, meaning that companies from the united states or other foreign countries could go ahead and open a business without having a local chinese partner? >> reporter: well, so here's the catch. so this new foreign investment law would replace the current three jv laws. however, american companies as

well as other foreign ones are also regulated by a negative's list so there is -- there are certain restrictions in other sectors. so, for example, in one sector that if there's an american company that wants to invest in something that the chinese deem as sensitive, they would still be required to go into that sector if it's allowed with a joint venture. so there's still a lot of detail that needs to be worked out a lot of these regulations run in conflict with each other, so that's where the big questions lie. >> so we can call it the huawei rule use security clearances against our company, we'll use them against your's >> actually there is another note in that draft law that says that -- that does touch upon how -- that companies -- the way the companies are treated here also has to be reflected in the

way they're treated in other companies. so the business community here, the foreign business community said they wanted to get that part out because they believe that tit for tat treatment and reciprocity was just automatically assumed. >> eunice, great to see you. thank you very much. for more on the market reaction to the trade headlines, let's turn to managing director and co-head of asian economic research at hsbc and managing partner and portfolio. >> this is already in the price. we know that the deal is coming. we need to wait for the details. i think we've gotten a bit of a head of ourselves. one being that the global trade cycle is still very weak we have weak growth in europe. is this really going to have

trigger revival and trade? that's doubtful. removes a tail risk, but it's not necessarily the big catalyst for the growth spurt in itself and asia. >> why did chinese stocks rally so hard if everything was out there and known? >> well, the last six weeks that we firmed up the expectation of something coming through but now over the weekend we have extra headlines that is sort of filling in the blanks. i think the rally in itself is really pricing in a fairly positive deal. if we want to go further, we need to have extra catalysts. >> you've been positive since stocks really took a tumble in december but now you're looking at things. we have come a long way. >> we have rallied really hard here, not as much as china has i look at it as, a lot is baked in but if you look at the overall market, i still think the areas that we can still go forward if this deal is done properly and there are specifics

to help in the industrials, the cyclicals, the financials they have come back but not as much as the rest of the market. i think on a valuation basis that's where the opportunity will be because really if you look at it what are the parts of the economy that haven't really come ahead, fangs, tech, they have all rallied but let's look at specifics especially in sectors where there's going to be opportunity for investors. that's where we can put some money down. >> i mean, for a trade deal to be a catalyst you would think it would have to coincide with earns profit. >> true. and our belief is that a lot of companies were overly being conservative because you really couldn't tell to anybody what earnings going to be if you're an industrial company. your market is close you'll see opportunity there for some earnings revisions. again, this is based on what we think could be a positive outcome of these trade talks if the trade talks go back and forth, then you get that tail

risk again where people discount, wait a second, we are going to a slow down and could this be a recession. today if you look at the market and look at where the ten-year is slowly moving up, two-year is staying where it is, that's giving you a positive indication not saying this is the best thing going forward but these are good things to look at that the market is going in the right way. >> just real quickly, what do you think about the headlines from what president trump was saying yesterday at cpac concerning the fed and j. powell does that concern you at all is this entertaining at this point or is there any risk potential? >> i don't think there's any short term risk. the fed said we're going to look at the data but it's him being in front of fed again to say, look, if all this happens, with eget the right trade deal, things get better and you see some inflation, don't do anything he's trying to get ahead of it where as last time he felt he was behind it. >> what's your view on chinese economy at the moment and the key data points you've been watching. >> that's almost a bigger issue. it's no longer trade issue on

the domestic side. we'll see tomorrow the big speech to kick off the mpc and what will we see in terms of stimulus the expectations is tax cuts, probably more monetary easing. it's clear a lot more needs to happen we saw the run rate still be a bit weaker on domestic side as a bit of softness in the labor market we've seen softness in the housing market if you allow to that fester, it will trump any positive from the trade side it's really about domestic demand, not about trade at this point in the time. >> a couple people got more bullish on em as the fed pivoted and the outlook for the dollar perhaps slightly less strong does that tally with your view particularly with southeast asia >> yeah, it does we would argue it's not just the fed. you need the growth catalyst to come through and stronger trade cycle and china to reaccelerate. what's not yet clear is to what extent we're going to see china

reaccelerate very quickly and what extent we'll see trade revive it might take longer to come back. >> gentlemen, thank you both very much. good to see you. still to come on "squawk box," president trump criticizing the fed's policy saying higher rates and strong dollar hurting the economy we'll get the full story next. later the chief writer of the tax cuts and jobs act, congressman kevin brady joins us to talk about the impact of the salt deduction on families and also the election. right now as we head to break, take a look at currencies we're seeing the euro down about 0.3% the dollar otherwise flat against the n d e unyeanthpod. back in a couple

president trump lashing out at the federal reserve and fed chairman jerome powell over the weekend. senior economic's reporter steve leesman joins us here now with more on this story, steve. >> yeah, good fun. not really the president continues to bash his hand picked chairman jerome powell speaking at the conservative political action conference on saturday, president trump didn't mention powell by name but made clear just who he was talking about. >> we have a gentleman that likes raising interest rates in

the ed we have a gentleman that loves quantitative tightening in the fed. we have a gentleman that likes a very strong dollar in the fed. can you imagine if we left interest rates where they were there's no inflation essentially. there's no inflation can you imagine if we left interest rates where they were if we didn't do quantitative tightening >> it was a two-hour plus speech in which the president cursed and had harsh words for many of his critics by contrast criticism of the fed not as harsh as compared to other comments he made in the past setting up fed and powell to take blame should the economy falter the president's own policies help strengthen the dollar including those leading to better economic growth relative to others and trade policies that have hurt other economies which strengthen the dollar. meanwhile, here is what you need to know, four of the five fed

governors are trump nominees so it's just a bit weird to have the president talk about his fed chairman as some gentleman which is the gentleman he decided to put in charge of the fed all of those folks by the way have voted for all of the rate hikes and the quantitative tightening. >> i love turning on his head quantitative tightening. look, the other top contender for chair said he wouldn't raise rates as quickly but would do it by quantitative tiegghtening is what he said in the past. >> the idea that the federal reserve should be normalizing amid an economy that did 3% plus growth last year by the way there's 2% inflation. i can tell you the tale of the tape the fed forecast 2% inflation. it got 2% inflation. that's going back to the december statement of economic projections. the fed forecast 2 1/2% growth,

it got 3.1 for the year on year. okay the fed forecast employment at 4% came in right on target what did it do differently it did a quarter point extra hiking in that context seems not unreasonable to me. >> there was a debate six or seven months ago that we were saying because the fed is bashing -- because the president is bashing the fed, might that increase the fed's resolve not to pivot, to really prove that they are independent i think the president might be thinking, well, it worked last night. i might as well do this and maybe they'll pivot further. >> that's not going to happen, i don't think. unless the dramatic change in the economy. look, all i can say about this is i think the fed tried to make the best decision it possibly could. but december was probably a close call on that rate hike you could go either way. the result is that you made clear your independence from the

political body -- >> i'm glad they stopped, though i'm glad they pivoted when they did. we don't know what's happening in the economy i like them to watch and see what happens. >> i think it's right too. i think that quarter point -- look, i would personally like to see them get to 3. i want them to have a little more ammunition. i like to see the balance sheet continue to wind down, but i wouldn't do it at the cost. >> the balance sheet i would rather see wind down because i think there are fewer implications to main street when you wind down the balance street versus raising rates raising rates hits people hard and hits the housing sector. >> i will tell you, though, if we are going to be a 3% growth economy this year, it's going to be for fed hikes than last year. get used to it, mr. president. more shakeups on the way at time warner as the new bosses at at&t continue to make their mark looking to consolidate some of the newly acquired entertainment units. more on that next. quick check on what's been happening on the european

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welcome back shakeup at time warner a new "wall street journal" report says at&t plans to break down the corporate walls and fiefdoms that had been a long-time way of life. what could this mean for the corporate culture and a newly

formed warner media? joining us now craig moffett whether it's that article or others, there seems to be a theme which is all these individual entities have to work together do you think that could work is that a sensible move or is it going to cause a lot of disruption >> there's a glass half full and half empty view. the glass half full view is warner brothers never really tried to get that much between the business they let them run independently. so you have two issues you have first the excess cost associated with having all those individual silos so it's a juicy target for at&t to say we can reduce some cost but it's also as you -- as the industry changes, there's a good argument for saying we need centralization of the strategy so we can think about the value chain. the glass half empty view is you just bought a creative entity.

and it's emblematic or how hard it is to graft a creative culture on to a phone company. i'm a little bit more in the second camp. this is not good news. >> and if you are going to make big changes like this, is it better to rip the band-aid off and do it quickly? or would you have liked to keep the likes of mr. plepler on a bit longer to help the integration work more smoothly >> it's not just those you need to keep those individuals. although that's important. the rolodexs are important but it's also the signal it sends to the rest of the organization and the rest of the organization to be on board with we're all one team pulling in the same direction. there is -- at worst there is a fear that you turn the organization against you and people feel like i'm not on board with what our new

corporate figures are doing. >> you're worried about losing creative people like this. how and when will you see the signs as to which camp it really is >> it takes awhile, right? things are in the production pipeline for a long time before they come out. but through the grape vine, my rolodex you already hear about resumes going out. and that worries you right? you can't overstate how different the corporate cultures are. one of though lorts over the weekend talked about the jars impact of wait a second. i've got to run all the way up to john stankey for every expenditure? i thought it was interesting in one of the articles they talked about plepler planning a big wrap party for one of the shows. well, a wrap party now requires financial authorization and so

that kind of corporate bureaucracy may seem kind of familiar and logical for someone from the phone company background but it can be very abrasive to the new company. >> and it's happening at a time when facebook and amazon are creating these paradises >> and desperately seeking talent >> for at&t, what is the direction they're all pulling? is it everything's got to justify itself because of data usage or something >> they've made a big play for addressable advertising. they can overlay the information. they got act what people watch, what they search for on the web and that sort of thing that's real, but let's be honest advertising is 2% of revenues at at&t it is not going to be the engine that changes the trajectory of at&t it may help. but monetizing these assets irrespective of what you think the long-term grant strategy is has to require keeping the

people first >> we meant to talk about 5g, but we're out of time. >> that's a great topic for another time >> it is great conversation thank you for joining us still to come, our guest host for the next hour former governor chris christie. and later, recent reports indicate the u.s. and china could reach a trade agreement by the end of march or even sooner. what will that potential deal look like? a live report from washington straight ahead stay tuned "squawk box" back in a couple minutes. 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 advance diagnostics and prevent blindness in patients with diabetes. everything looks good.

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getting closer to a trade deal the reports high on a possible development that would roll back $200 billion in tariffs. we've got the details. our guest host this hour chris christie plus a special visit from kevin brady. at&t's media shakeup will it mean stepped up

competition for netflix? or did they already win the war? the second hour of "squawk box" begins right now ♪ live from the beating heart of business, new york, this is "squawk box. >> good morning, everybody welcome back to "squawk box" here on cnbc i'm becky quick with wilfred frost and mike santoli our guest host at this hour is former governor chris christie this is the first time people are doing taxes under this federal system they're indicated up by about 80 points s&p futures up by eight. governor, thank you for being here >> good to be back thank you. >> so many things to talk about including trade. >> absolutely. >> lots to talk about quickly. here's what's making headlines at this hour tesla has used a significant part of its cash to pay off

debt paid off a $922 million convertible bond obligation in cash late on friday. it was forced to use cash since the current stock price is well below the conversion price that was $360 the stock is up about a percent today. the gymboree brand will liv on children's place bought it at auction. eli lilly has introduced a generic version of insulin the price is 50% less than the brand name version this comes amid controversy on the high cost of prescription druggin drugs. rebates don't directly benefit all patients there are more reports that the u.s. and china are getting closer to a new trade deal

kayla tah shee joins us now with the latest >> good morning. the u.s. and china are in the stages of the trade deal that could be wide ranging. that could come as soon as the end of this month according to three sources familiar with the situation. they are now trading with spaces for the issues where agreement still needs to be reached between them but president trump according to these sources has communicated his desire for a deal by the end of the month and he's meeting with his trade team today to chart that path forward. with the impact of the abrupt end in focus, one senior administration official says the white house wants to pivot to a positive message on trade and get a deal but another says the stalemate em boldens president trump and sends a strong message to beijing. expected to pass new foreign investment laws as part of the deal required for a deal. that's what we're watching for

at this time as talks proceed, president trump tweeted on friday a request that china immediately remove all tariffs on u.s. agricultural products since the u.s. and the white house held off on raising its tariffs on march 1st. a senior administration official tells me the chinese haven't offered anything formal in response to that tweet although there is expected to be a de-escalation of tariffs if and when that deal is notched. >> all right kayla, thank you very much kayla tausche. let's welcome our guest host for the hour chris christie his new book is called "let me finish: trump, the kushners, bannba bannon, and new jersey." let's start with trade talks at this point trump is facing pressure from some people who have really backed him soundly in the past. china hawks who worry that

there's going to be too much given away i was reading there was one scholar who said this is a fraud because of how the process is taking place and steve bannon saying it's the insidious nature of this what do you think about this >> i think the right move is for him to get the best deal he thinks he can get at this time it's not going to end it it's not going to end the continued contentious relationship with china. it's just going to bring the temperature down, i suspect. i think that will satisfy the markets well enough. and the president will continue to be confrontational towards china. what he learned, i think, at the summit in vietnam was that, you know, the cross currents in all this are very important. he needs china to help him with north korea. and if he continues to have a complete stalemate with china on trade, china's not going to help him with north korea i think part of the

conversations going on in the background are, all right. we're going to take this next step on trade, improve things a bit. but we also need your help with north korea to move them along that's the bigger deal the president cares about. what happens with north korea. for a political perspective, north korea is going to be more important to the president politically than the china trade deal >> is he right to think that should he be prioritizing china more than north korea? >> nop i think that, you know, in the election context in 2020, as long as he doesn't have a complete blowup with china -- right? then the markets will crater into large degree and then it'll be economic problems but i think if he gets a trade deal that satisfies some of the people and continues to move it along and say we've got more to do and that helps to bring china along to help put pressure on north korea to show some type of concrete accomplishment with north korea even if it's not denuclearization but it's something that's

concrete and could be signed and proven, then i think he's got a twofer >> i was with steve schwarzman on friday. i was asking about what he sees. his point is that china was disappointed by those talks falling apart with the north koreans, too, just because he says china doesn't want a nuclear power on its doorstep either why would the chinese not be helping us at this point >> because they want a better deal are we shocked they're using leverage the chinese are leveraging this. this is one of the things where -- i talk in the book about some of the inexperienced people the president had around him in the beginning he doesn't have that problem now. when you have people like pompeo and kudlow and lighthizer and others although lighthizer has been there since the beginning, they understand these cross currents boldin understands these cross currents and that's what you have to play

with you have to play with how much do you need to give them on trade to get them really engaged on the north korean issue. because we know that china is the only thing that's keeping north korea afloat given how powerful the sanctions have been and how united the united states has led the rest of the world. >> on trade overall, if the china deal is closed off soon and were the shape we were just talking about -- >> you've got to say nafta it took me three minutes to know what you meant >> new nafta >> he's trying to help the president out calling it the usmca. >> can the critics hit him on that >> they will hit him but i don't think the american people will criticize. you also have some saying not good enough. but better than we were before and that's what he promised to

do then i think he's going to be able -- the next challenge as you know is going to be dealing with europe. because, you know, where brexit ends up and how all that plays out, if he gets nafta done, has a decent deal with china to improve upon, then his trade focus is going to be on europe >> you mentioned that he has people who are more experienced around him now i think the question is does he listen to them if he's telling them something he doesn't agree with, i think everybody figures whatever donald trump decides is going to happen doesn't matter what anybody else says i do think more than anybody else, he's the decider, right? >> he is the decider but that's no different than barack obama or george w. bush and george w. bush was the one who coined that phrase right? the president is always the decider. but i do think on trade, it's one of those area where he has more definite opinions than any

other area he's been talking about these things since the '80s. he's had some definite opinions. the people he has surrounded himself with have those thoughts -- >> not kudlow. i think there are two camps on trade. those saying make a deal the others saying frergt it. this is not tough enough >> but i think kudlow is kind of alone in terms of on the trade team when you've got folks like wilbur ross. >> pete navarro. >> right >> they've all been in one lane. the president's lane but i do think, again, the president's willing to make deals. right? so he didn't get everything he wanted out of the new nafta. he's not clearly going to get everything he wanted out of china. but he's going to be incrementally better that's very much like he operated in the city for many years. he got the deals he got. it wasn't always what he wanted even though he'll say that's exactly what he wanted that's part of the power of donald trump >> in that context, he hasn't for 20 and 30 years been talking about forced technology transfer

and intellectual property productions in china he's been talking about the trade deficit. saying they're getting our jobs, we're not. you could otherwise see a scenario in another presidency 2020 he could say 4% unemployment, stock market is up north korea and china are wars of a choice he decided to put in front of everybody and say judge me by these things >> yes one, because i think the trade deficit is the representative rhetoric for all the other problems we have with china as well and the president speaks in bold broad strokes. so he's not going to get into the nuance of that publicly. but i know he understands privately and what a problem that piece of it is. the other part of it for him is that -- if he's looking at 4% unemployment when he gets to 2020 and an economy going the way it's going you're not going to hear about anything other than that he's going to say it's because of what i did with china because of what i did with

nafta. because of what i did with taxes and on deregulation. i promised all those things. i delivered on all those things. that's why i'm the greatest president of the 21st century and beyond >> we'll talk a little bit later about the 2020 campaign and who he's going to be running against potentially governor hickenlooper announced this morning. but you're somebody who has been close to him, has an adviser in the past but also somebody who tends to pull no shots. so in this book, you say what you think. you said now he's going to say he got everything he wanted even hope he didn't get everything he wanted and that's part of the deal have you spoken with him since the book came out? >> yeah. >> what does he say? >> he says, you're nice to me. you know, listen i think what the president understands is in our relationship, i mean, we've been friends for 17 years we met when i first became u.s. attorney in 2002 so we started our relationship as peers then we wound up being

competitors. then i wound up being his first supporter. i'm not one of these people desperate for a job. i've turned down seven of them now. >> seven in the trump administration >> yeah. so i'm not desperate for a title. i'm not looking to run to washington, d.c. i am looking to make the country better and to help my friend sometimes that's telling him stuff he doesn't want to hear. sometimes he listens and takes it all in. other times he tells me, didn't i beat you it depends on the day, becky >> give us an example that triggered that response. >> didn't i beat you >> yeah. >> there are too many to go through. on the other side, when he fired jim comey, we talked extensivel about who should replace him i brought the name chris wray to him. i think he became really

supportive of him. the idea this president doesn't listen is part true but part myth he doesn't want to act like he's listening sometimes, but you can tell when he's listening and he does listen. he listens to people who he thinks has something worthwhile to say even if he does think it as he thinks with me, sometimes he doesn't think i have something worthwhile to say on a topic and he dismisses it. that's the abc's of it with him. >> given this relationship, why haven't you taken one of the jobs >> hasn't offered me anything i really want to do. offered me secretary of homeland security, special assistant to the president, ambassador to rome, ambassador to the vatican. nothing i'm interested in doing. i've had great titles. my obituary is squared away. i'm all right. i don't need to add another title. if there's something i really want to do and i think i bring real value to him and to the country, then i'll step up and do it. if i don't, i can help him from where i am

it's much better for my family if i stay where i am rather than let them stay in new jersey and move me to washington. >> all right we're going to have much more with the former governor of new jersey chris christie over the next hour. he's our guest host. as you can see, pulls no punches. still to come, the real life game of thrones at t@. should netflix investors be worried about more competition coming in the streaming wars and check out futures which are still higher on the u.s./china trade optimism. albeit only 90 points higher 'rba ia up mutes don't go anywhere.

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that protects what's important. it handles everything, and reaches everywhere. this is beyond wifi, this is xfi. simple. easy. awesome. xfinity, the future of awesome. welcome back to "squawk box. futures pointing up 80 points on the dow. it follows gains of about 1.2% in the shanghai. 2% in shenzhen europe is higher but only slightly this morning. tesla back in the news the electric car company will unveil its newest model y on march 14th he said it would be about 10% bigger than the model 3 so it'd cost about 10% more and have slightly less range for the same battery. the stock is up about 1% in the premarket. coming up, the streaming

wars how much does netflix need to worry about increased competition from at&t's big shakeup? and is netflix still a stock to own right now? that is next also later, we're going to talk taxes with house ways and means ranking member kevin brady also our guest host this hour former governor chris christie back in a moment each day our planet awakens with signs of opportunity. but with opportunity comes risk. and to manage this risk, the world turns to cme group. we help farmers lock in future prices, banks manage interest rate changes and airlines hedge fuel costs. all so they can manage their risks and move forward. it's simply a matter of following the signs. they all lead here.

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the streaming landscape has been getting more competitive with being who can catch up to netflix. now with at&t's structuring. is the race about to get more exciting we bring in mark mahaney from rbc capital. >> good morning. >> when we talk about this, at&t trying to rationalize its acquisition of time warner does it change the equation at all? we see them becoming more budget friendly in this area. zblit may change the equation. this is the year of ott. you've got apple, disney, and now at&t and maybe others that are going to try to launch streaming

services this year why? because they watched this netflix beast which has been one of the top five performers in the s&p 500 for the last five years, they've amass ed 430 million customers. other people want to attack that market whether there's a sustainable competitive advantage, it probably does. this is a scale business netflix is going to spend this year almost $14 billion in cash. very few companies can match that apple could. you know how much hbo spends on content? $4 billion a year. netflix is dramatically outspending them i think it's going to be hard to catch up to them there's a dramatic shift we're moving towards streaming tv. >> there's a number of subscr e subscribers at which scale works, it becomes profit leverage and everything else do we know that number >> no, not really. but it's discretionary on a company's part

i think that's a key point here. if they wanted to turn profitable, they had cash flow they'll do about the same level of burn this year. then the burn is going to start coming down. if they wanted to cut back on content, they could reach profitability more quickly ipg the market if they can sustain those is 30% to 40% top growth will be bei i think that's like three years away >> amazon, different calculus there. so what do you make of this declaration they want to get more in grocery? >> there's a trend going on in the internet we call it the physicalization of the internet. the move by amazon to get into physical storers they've got concepts that aren't in new york yet but they will be

soon of the amazon go stores. you scan, you pick, you walk out. no cash, no cashiers next time you're in the store and after you picked out what you want and you're waiting in line to check out, that's going to be your a-ha moment we did a report on it. i think this is -- i think what amazon has done is solved the time problem >> i have to scan it or i know what in the card i've never made it one of those lines without having to ask for a cash year to help me because there's a problem with the scans. there's something that's not right. i thought this was going to be one of the ones that i walk out and it's in my cart. >> grocery is going to be tougher. anything with a bar code on it >> if you're buying $300 of groceries and try to do it yourself, it is no fun task. >> remember, these are cameras that are tracking you. you're not skaping out anything. the cameras check what you take off of the shelves and what you walk out with. >> and they never mess it up if

i put it back in the wrong place. >> it will track it. one problem is if you're getting into groceries, you don't bar code asparagus >> how do you know how much i picked up? >> the cameras and technology figuring out weight, that will be tougher >> i was excited when they bought whole feeoods i've tried that service and it kind of stinks right now it's the guy next door runs up there, puts it in the carts. it's kind of similar but not exactly the same and it's never something i can use. >> maybe there's a little bit of humility on their part >> you have not figured out how to figure out what you have in stock and how to get it here >> there's that challenge. 90% of sales still occur in

physical retail. amazon realizes if they want to get a lot bigger, they need a physical footprint and with these amazon go stores, they're trying to see if they can do something that saves money. the physicalization of the internet this is a big bet they're making they've been pretty good in the past >> they're going to also -- this is going to be driven by this push for minimum wage. traditional grocery stores are going to move twafrds this now they're not going to be able to give cashiers $14 an hour. from a tax perspective, it's going to be smarter for them to do that over the long haul so we're going to have to get used to doing that no matter what it's coming. >> i hate it

>> and you can thank bill de blasio and others for that >> seems like the hard part both for consumers and amazon but we'll see if it pays off thanks for being here, mark mahaney. coming up here on "squawk box," much more with our guest host chris christie. his state felt the impact of the 2017 tax cut plan. we'll talk also to the chief tax writer of the plan, congressman kevin brady. our special guest in a few minutes. as we head to break, let's take a look at equity futures up 90 points on the dow.

♪ welcome back still to come on "squawk box" this morning, one of the key players who worked on the tax overhaul plan of 2017. representative kevin brady will join us right here on set. as people are filing their taxes for the first time since all these laws changed then we'll have the report on the latest trade developments as they drive towards a deal with

meeting expected later this month. and the race is on to go public. lyft has the early lead in its ipo plans. what will this mean for the much larger rival ur.be all that and much more when "squawk box" comes right back. you're right sir... everything. well not everything, i mean you're still blatantly sucking up to me gary. ahhh... stop it. servicenow. works for you.

welcome back when congress overhauled the tax code in 2017, they allowed a package of popular tax breaks known as extenders to expire ever since the individuals and businesses who rely on them have been putting pressure on congress to bring them back. just recently there's been some bipartisan movement on the issue. ylan mui joins us with more on that >> hi, wilfred one of the goals of tax reform was to get rid of some of the carveouts in the tax code. now some lawmakers are having second thoughts. some have expired. they are targeted at special interests like benefits for racehorse owners and for nascar. but they also include for biodiesels and for energy efficient homes for households, deductions for mortgage premiums. that has expired

republican chuck grassley and democrat ron wyden are pushing to bring back the breaks through the end of this year wyden said, quote, it's past time to kick the addiction to short-term tax poltss. but until congress can break this cycle for good, taxpayers deserve certainty about what they will owe. these tax breaks have earned the name extenders because they keep getting extended even though everyone acknowledges this a bad form we will see if history repeats itself again this year and if they do get extended this is a prime example of why it is so hard for washington to try to clean up the tax code back over to you >> thank you very much let's bring in our next guest. kevin brady served as the chief tax creator it's great to see you. thank you for being here i was doing my taxes this weekend and this is the first time most of us are doing -- anybody is doing taxes under the new laws there are a lot of things that have changed particularly if you live in one of the salt states

what do you think? how are things going overall with the tax income coming in? >> we threw a lot of changes at everyone whether you're a business or individual so this first year, you know, there is going to be a lot of that confusion here. but i think in the long run, you've got about 93% of americans who are going to be using filing on the shortest tax form we have and in high tax states and those who are higher income that have been caught up in the amt before, that's gone for most families so 4.5 million families won't be doing a second run at their taxes which we think is helpful as well. >> you do have in the salt states, a big issue of -- you're right. they're high-tech states these are taxes you used to be able to write off. real estate taxes in particular. they're in in new jersey, new york, connecticut. and there have been some studies that show it's impacted property value in those states. >> it may have

these are fantastic states, by the way. but the taxes are brutally high. and they're far above what other states are taxing. and as a result, new study, i think new york has lost about $100 billion in revenue and wealth because of the high taxes over the last 20 years makes it very tough for families and especially millennials to be able to live in these states sop i think at the end of the day, i think these states are going to have to tackle their tax codes to stay competitive. i know governor christie, i think you threatened a veto every week on a tax increase in new jersey i think it was just relentless on you to continue to do that. but under the new tax code, the curtain has been pulled back now businesses and families know exactly how they're being taxed. states won't be able to compete until they make changes. >> governor, what would you be doing if you were there in new jersey >> same thing when i was there put a property tax cap on new

jersey it's one of those few things that actually works. you know, now it's been nine years in a row where property taxes have not gone up more than 2% a year in new jersey in any particular year over the last nine when i became governor, they had gone up 70% in ten years. >> but a situation like this, even limiting increases is probably not going to deal with the changes that have now been dropped on the state >> i have a successor who's going to announce his budget tomorrow and will announce more tax increases and is tone deaf of what's happening at the federal level. i advocated exactly what the congressman did in this bill to get rid of salt. it's the only way to force the other states to get with it in terms of stopping to increasing taxes at an unsustainable rate it wasn't very popular for me to advocate for that in my state, but the fact of the matter is we were holding the -- taxes level

where i was, even dropping them. dropped the sales tax and a couple other things that helped working class folks. these states will have to come to grips with this otherwise what they're going to do is people who are mobile who are usually the folks who make the most money will leave and go other places that's why you see new york losing so much money and new jersey, by the way, projected 7.5% tax growth this year you know what they're getting? 1.25%. >> you haven't seen state dos that to this point it's only been a year and three months >> in every one of those states that we're talking about, new york, new jersey, connecticut, illinois, california, you have liberal progressive governors saying nothing wrong with higher taxes. but here's the thing in new jersey they raised taxes last year in order to try to get more growth in the budget. they got -- they projected 7.5%. they're getting 1.25% growth they're going to come real to the fact that it's not the way

to grow jobs >> they increased the state revenues about 8% higher and a lot of he medium and lower tax states are sharing that windfall with taxpayers these are great economic engines. their revenues are going up, just not as much as expected and the challenge is for 20 years people have been moving, walking. now the millennials are starting to leave new york, new jersey, california, illinois at the greatest numbers it's just not livable for them so change is coming to keep these states competitive >> you used to talk about tax cut 2.0. that's before the democrats took control of the house what do you think now when you start hearing the tax plans that are being talked about by a lot of people who are running for president or people new to congress when you come in >> yeah. look 2.0 is about changes in the culture in washington. we don't wait 30 years we make it better every year making the individual and the

small business cuts permanent. doing more on retirement savings than more on innovation. we've seen a surge of new business start-ups that's really encouraging. i think the permanence is off the table right now. with the others, not so much i think there's some bipartisan support for helping more businesses offer retirement savings plans. letting people or encouraging them to save more. earlier in life, i think we'll do more on innovation. part of 2.0 i think will make it to the president's desk. on the other hand, i haven't seen a tax policy proposal that makes sense on the democrat side it's like picking a cartoon villain, whoever it is and writing a tax policy plan to it. that's not how we're going to get more growth. the real question here, if i were running for president on economics, there'd be two issues no that we have a new tax code, we need trade and more workers this is what i would do in that

area i think workforce is a great governor pushing down on the growth in the united states. >> these plans being discussed right now are by democrats who don't control the presidency do you think any of these things get done potentially >> no. >> or just take a completely democrat house, democrat senate, and president? >> it's how far left can they go in this presidential campaign. you'll see more of that. but at the end of the day, trade and more workforce is what can drive this economy >> you were during the whole tax cut debate, you were among those advocating for perhaps some revenue offset, other provisions out there that would make it completely, you know, just kind of a lower revenue strategy. now, people said growth is going to make up the difference. doesn't seem to be happening in the current deficit. is that okay you're starting to see people on both sides of the aisle saying the deficit is not crowding anything else out. >> we made a modest investment

individual and payroll tax revenue is up significantly in washington corporate taxes is not but this is, i think, a very small investment overall to leapfrog us back into the competitiveness on the world stage. secondly to bring those dollars back home. i still think the best is yet to come on tax reform because so much of what we redesign is for the long-term. to change the location decisions for -- where do i put that manufacturing plant? secondly, the full unlimited expensing didn't just drive what people here buy more, what we said was invest in the productivity of your workers the other point i'll finish here is i was in dallas the end of the week, the number of projects in development that is on -- come off the shelf is now in development, i think, will take several years to manifest itself but i still think this is the best is yet to come.

>> i think it was sold by its advocates as a small investment. it's the biggest tax cut in history. even if it wasn't. >> adding $2 trillion in the national debt in one year which is what president obama did. we needed a different tax code. >> if you don't think that location decisions are made by taxes and congressman is talking about in terms of foreign money and foreign money coming back to the shores, look at what happened with amazon hq2 the only reason they came to norm and it was viable was because of the huge tax incentives given by the state of new york and they left when those tax incentives were put in jeopardy. they may have come to new jersey because we offered even more in tax incent is. but then they put phil murphy in as governor who immediately started talking about raising taxes and calling into question the idea of tax incentives

i heard somebody say now they left new york, will they come to new jersey not with this governor >> just wanted to ask about the wealthy issue. are there any subsectors you heard that you agree with? or do you disagree with all of the progressive -- >> in general you is disagree. we have a very progressive tax code it's only become under the new tax laws slightly more progressive. the wealthiest used to shoulder about 9% of the tax burden now will shoulder about 20%. so we certainly did not -- i think this focus on stock

buybacks is a mistake. what's wrong with a company bringing dollars back from overseas and investing it in the u.s. including in themselves and their shareholders at the end of the day, one that's good for the economy. those of us that invest in these companies can use for sales or new investments. and so i -- look that's a wrong headed approach >> let me ask you quickly. i've never seen a major piece of legislation put into play that didn't have unintended consequences what's one of the biggest you've seen after seeing this put into place? >> on the tax code >> yeah. >> you know, i think -- i've been stun ned at how americans have become disconnected to their paycheck it was really tough to get people to compare last year's taxes to this year's taxes even to be able to look at their monthly paycheck because we don't see them as we used to do >> as in direct deposit? >> yeah.

absolutely in town hall meetings, it really was tough getting people to be able to compare. it's not as easy as it used to be >> and that's related to people not getting a refund >> yeah. most families live paycheck to paycheck so you wanted that money last year not delayed a year so that's what it was designed to do. but i think it was hard. people probably didn't notice it was there. >> congressman brady, we want to thank you for your time. appreciate you being here. >> thank you >> kevin brady when we return, we wrap up our hour with former new jersey governor chris christie. from the field for the bid in 2020 to amazon's decisions to stop plans for a headquarters. as we head to a break, check out futures this morning we are headed for a positive open s&p up nine. dow looking at about 85 point gain and the nasdaq also positive by about 35 at this hour. voya helps them to and through retirement... dealing with today's expenses ...while helping plan,

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are you pullin' my leg? nope. you sure you're not pullin' my leg? i think it's your dog. oh it's him. good call. get the data options you need and still save hundreds of dollars. do you guys sell, other dogs? now that's simple, easy, awesome. customize each line by paying for data by the gig or get unlimited. get $250 back when you pre-order a new samsung galaxy. click, call, or visit a store today. welcome back let's get back to our guest host chris christie, former new jersey governor. i wanted to talk a little bit about how the 2020 outlook is shaping up and if it does end up that the democratic candidate is a left-leaning progressive candidate, is that really a gift to the president i ask because i wonder if 2016 the electoral map would have been a lot different if there had been a bernie sanders versus trump race

>> my guess is it wouldn't have been but it depends who it is excuse me. these things are a binary choice right? so, right now the president's approval ratings have gone up of late despite all the background noise you're hearing i saw 46% approval rating this weekend. it depends who it is fact is in 2016 the greatest gift that hillary clinton got was that -- she just could not close the deal with the american people will it be elizabeth warren? people would dance in the streets after the contrast of them if there's someone more charismatic of elizabeth warren, i don't think people are sitting around in wisconsin or michigan or pennsylvania or ohio, the key states saying what we need is a harvard professor to be president. >> so there have been a couple

of schools of thought. one is they should focus on arizona or georgia you're saying forget it. go back to the states they lost in the last election >> yes listen you know, arizona in an off-year election, it's becoming more purple than it was pure red. i still think at the end of the day the president will do very well for all the advertisers on georgia, the republicans won everything in georgia. despite all the advertising around stacy and all the rest of it, she still lost and still lost by, you know, a decent amount. this is where i think biden is the most interesting character if he can stay on the rails. because he does have an appeal to white working class voters. right? the i'm from scranton guy, michigan, ohio, pennsylvania, wisconsin. those are the four states to really watch out for and florida because florida is always on the edge >> if targeting those types of voters becomes a key issue,

going to one of the moments we had with kevin brady moments ago, does the president end up em abrasioning some form of wealth tax some kind of raise in taxes in that area so it offsets the debate or not? >> i don't think so. i think he thinks that any type of increased attacks in that way could do some harm to the economy. what he cares much more about is to see continued job growth. continued wage growth. which you're going to hear him talk about a lot more in growth in wages that we're seeing and contrasting that that's what he's going to be pushing. and i think he fears any increase in taxes even a wealth tax or whatever they want to call it, i think he thinks that would be a bad psychic move for the markets. and he's very attune to the markets. >> governor hickenlooper just jumped into the race this morning. former governor of colorado. had to deal with pot being legalized while he was there pot now being considered to be legalized in places like new york and new jersey. is this an election factor

where would you come down on any of this stuff? >> i'm totally against it. it's a gateway drug. we are in the midst of an opioid crisis i'm chairman ofthe president's commission on drug abuse in the opioid crisis. there's no doubt that marijuana for young people is a gateway drug and in colorado, the colorado education association has said the biggest challenge of public education right now is legalized marijuana because of edibles and all the rest that are finding their way miraculously into the hands of kids the same way that people used to get somebody to buy them beer when they're 16 or 17 years old they're doing the same with the edibles. i don't think it's an election issue across the country people go why not, who cares but it's not going to motivate people to get out to the polls going, i'm voting for elizabeth wav warren or cory booker because they're for legalized pot. that's not driving a national debate >> very quickly back to amazon hq2 which you mentioned, salt

desuctions to be removed, should they still offer to companies? >> that's the way states compete with each other now. i will tell you in new jersey, we got 110% return on the incentives we gave and we force every ceo under penalty of percentage to certify the jobs they create before they get the tax credits. so there's a lot of demagoguery by the wleft in nurgeds, in eight years we created 443,000 jobs in the state that in the decade before i became governor, had zero job growth >> thank you for joining us, governor chris christie. former governor of new jersey. >> good luck with the book >> thank you when we come back, the u.s. and china inching closer to a trade deal dan kildee will join us to talk about the developments and lyft is coming down the road with its ipo plans

what will it mean for its rival uber and potential investors that is next here on "squawk box.

let's make a deal. the u.s. and china reportedly closing in on a trade agreement and maybe the end of tariffs

trump takes aim at the fed >> we have a gentleman that likes a very strong dollar in the fed. >> why the central bank is once again on the president's bad side and the great tax refund scare of 2019. >> it's bigger than you expected smaller? >> we explain just how important refunds are to the american consumer >> it's the gift that keeps on giving the whole year. >> 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, everybody welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with wilfred frost and mike santoli joe and andrew are off today our guest host this hour is

barry knapp. >> thanks for having me. >> good to see you let's look at the futures right now. there are green arrows across the board. dow futures indicated up by about 79 points. and the nasdaq indicated up by about 34 points. we've also been keeping track of what's been happening in the treasury market. and the 10-year yield at this point looks like it is indicated at 2.751%. a few stocks on the move this morning tesla is planning to unveil its model y suv on march 14th. elon musk tweeted it will cost about 10% more than the model 3 and have slightly less range last week they announced the $35,000 version of its model 3 sedan and said all sales will shift online at&t planning a revamp of cnn's digital operation. that's according to people familiar with the situation. john stankey reportedly feels

the unit is not reaching its potential. >> earlier we told you that children's place has bought the rights to the gymboree brand name it turns out the bankruptcy and resulting liquidation sales hurt fourth quarter sales for children's place company also had an outlook well below estimates. and shares of office depot are jumping. announcing a strategic collaboration with alibaba aimed at services small and medium sized businesses companies say it will involve a co-branded website, enhance customer support, and faster fulfillment. china and the united states getting closer to a sweeping trade deal which would see tariffs lowered or eliminated on products from both countries kayla tausche joins us with more on what we're hearing around the edges on this. >> good morning. as we heard from governor christie earlier on "squawk box," it would take the temperature down, but it would not end the situation. the u.s. and china are in the

final stages of talks that would end in a wide ranging deal the two sides are now trading deal text with spaces for issues where agreement still needs to be reached president trump according to these people has communicated his desire for a deal by the end of the month and is meeting with the team today to chart a path forward. and promises to open markets and dial back certain subsidies and an agreement by both sides to keep talking the question is where china stands the national people's congress is expected to pass new foreign investment law as part of this forthcoming deal and a signoff from president xi and his bureau is required but the u.s. wants to be able to put tariffs back on if it's not working and that is not sitting well in beijing. the deal would see them on the imports at least and china would end its retaliation and cut on goods like cars and poly silicon

but he wants those changes to be added immediately. he wants those tariffs immediately removed as a sign of good faith i'm told china in response to that tweet hasn't offered anything formal. so we wait and see what that trade meeting today at the white house actually produces. meantime, the white house has been calling industry groups to shore up support across businesses for this forthcoming deal although those conversations, i'm told, lack certain levels of details. ambassador lighthizer is going to meet with autounions. we'll see how people come down on this. >> their expectation was that you would see some of the tariffs, the u.s. tariffs continue to stay in place until you see some of the moves actually taking place in china however, i also heard that the top negotiator from china saying

all tariffs would have to go away to make this happen how do you read the back and forth on that? >> i think it's exactly that i think the u.s. would be willing to roll back the tariffs on it. currently it's what happens to the tranche of tariffs some members of the administration want to leave that in place as a signal of what the u.s. could continue to do if china doesn't deliver on its end of the bargain then there is the element that the u.s. through this mechanism will have the right to unilaterally respond with new tariffs if it feels that china is not delivering. thap is something that china does not like. it wanted this to be over. and certainly they're trying to keep tools in their pocket with the expectation that past is prologue here and history may repeat itself. >> does the president want this to be over more than ambassador lighthizer does? >> yes

i think that is definitely the case i spoke to a couple of officials over the weekend and one of the dynamics that i was exploring was the stalemate in vietnam what that does for these trade talks, one thought it emboldens the position that the president would rather have no deal than a bad deal but then i heard from another official who said, no, the president now wants a win. now he is more adamant than ever as this china situation needs to resolve itself in a matter of weeks. that being said, he has listened to ambassador lighthizer on this in the past. and ambassador lighthizer has been holding a firm line with these concessions. >> kayla, thank you. for more on the china trade talks,let's welcome dan kildee

thank you for be with us i know you had been in favor of the president taking on china with some of these issues. what do you think about what you're hearing about this potential plan right now >> well, i am concerned that the president is overly interested in planning the signing ceremony and less on the substance. i've met with mr. lighthizer in the last few weeks and i'm sure he doesn't publicly indicate on the position he takes and what the president would like to do it's clear to me in listening to the president's rhetoric and having a more serious conversation with mr. lighthizer, that he would be looking for a deal that deals with these substantive structural problems in the chinese economy in a more robust way. dealing with state ownership in a more robust way. dealing with the intellectual

property issue that i'm not sure would be in this agreement i asked mr. lighthizer in our hearings if the provisions were going to be as robust as those he laid out for the committee as far back as 2010 it was clear from his answer they would not be. i think the president is too anxious to sign a deal his failure in hanoi does create a context where he's looking to put that signature on something. and i'm afraid it will fail to deal with the bigger structural problems we face >> chris christie was with us earlier this morning and he brought up a point i hadn't really considered. just that china may be using north korea as leverage in the trade talks. you think it's important to go ahead and make sure china's on board? does that take priority above some of the trade issues in your perspective or not >> obviously they're all important. i think dealing with the threat that north korea presents is something that ought to be on

the agenda any time we talk to china who has significant influence over north korea i'm not sure how much of that is included i think the president has not handled the north korean situation the way he should. he thinks he can go in there with a box of chocolates and pat an the back and win this tyrant over it's not going to happen that way. it would be a mistake to miss the opportunity while the door's opened to deal with the big you are structural problems in dealing with china an not look at just either the pressure they might put on korea might be willing to take what looks like a short-term win to keep the economy hot to have some transactional arrangement with china in exchange for not getting the structural changes really the rest of the world

>> china is going to be putting forth tomorrow, i believe, one of its big political conventions. it's going to put forth new rules that will replace the venture rules now. those are the issues that force the u.s. and others to have a local partner when they do these things it would open up a lot of the issues that would deal with the forced technology transfer it's not part of the trade talks, per se. and what i've heard from the details coming from this but maybe this is a back door way of dealing with these things maybe the promise of a carrot down the road if we make progress we may not get exactly what we want, but we could maneuver what you're talking about >> the action is it could be more cosmetic than anything. when they're arcing that it ought not be a condition of the agreement and then at the same time arguing that the u.s. not -- ought not be able to snap

back tariffs in response so their non-adherence to any of the promises they make it does beg the question as to whether or not they're serious about this if they were serious about it and were willing to make permanent structural changes, then they wouldn't fear having snapback provisions for these tariffs. >> although, you know, the entire enforcement setup the way it's been discuss where had we would have officials from the united states and china sitting on a committee where you hear these things and if we don't like the answer that we get, we can put the tariffs back on and they can't retaliate it just seems stupid to me if we put the tariffs on them, they just retaliate anyway it seems like an unenforceable enforcement. >> they have a lot of tools they're willing to use over the years. currency, right now is the time to make a strong deal on currency while, you know, our dollar is strong and theirs is not as strong. it's the time when they're not really manipulating their currency because they don't have

to so i do worry they will willingly sign anything knowing they have lots of ways to violate it. >> congressman kildee, thank you. complicated stuff. we appreciate your time. hope to see you again. congressman kildee is the chief deputy whip and is on the house ways and means committee as well thank you. still to come this morning, lyft is set to go public after getting details last week. we'll talk what investors might think about the numbers and the valuation. back in a couple see that's funny, i thought you traded options. i'm not really a wall street guy. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated.

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i think it's your dog. oh it's him. good call. get the data options you need and still save hundreds of dollars. do you guys sell, other dogs? now that's simple, easy, awesome. customize each line by paying for data by the gig or get unlimited. get $250 back when you pre-order a new samsung galaxy. click, call, or visit a store today. welcome back to "squawk box. futures still headed for mod ens gains adding to friday's strength s&p indicated up nine. and the nasdaq up about 39 at this hour. the board of newmont mining is looking at a stakeover from barrick gold the proposed deal is not in the best interest of shareholders, they say ride sharing company lyft taking another step toward going public giving investors a look

under the hood at its finances for what they mean for uber and the ride sharing market, we're joined by axios editor deon rabouin. good morning to you. thanks for joining us. >> thanks for having me. >> growing very fast on the top line but at a slow pace. and the loss is widening what does that mean for the prospect of getting this ipo away people will be able to look past that >> look. you've got a lot of funds already invested in lyft you've got folks like your investment group they're already main investors i think the key here is do these big funds want to stay in lyft and continue to hold on in terms of being buy and hold investors? i think that's going to be the biggest key here whether or not those companies want to continue to hold on. you've also got them giving a bunch of shares away to their drivers. how does that play out and where do those shares go that's the biggest question

right now. >> also this share structure, again, which is sort of the norm for these big tech companies, but a couple of years have passed since the last couple there's been corporate governance questions do you think investors mind about that or once again the founders keep control of the voting rights? >> i think we've kind of entered a period where investors don't mind a lot there was a lot of things to put past informs ers right now they'll say, okay. this company is growing. i don't want to miss out i don't want to miss the boat. i can look past your dual share classes. i just want to get on the growth train. this thing is going and leaving the station. i don't want to miss out >> and it doesn't seem as if this is an overheated ipo market by any stretch with lyft and uber coming, i wonder if it's going to act as a bit of a test for those burning capital for the foreseeable future yeah, it's an amazing model in terms of the business and

getting consumers interested, but they haven't been able to figure out the economics of it >> facebook was the first model to come out. the thought was grow, baby, grow they were profitable and now you're looking at the next phase which are losing hundreds of millions i think this is probably the biggest losses for becoming to market like this i think the reaction is going to be interesting to watch. like i said, i don't see why investors would want to miss the boat here. it's all about fomo. it's all about wanting to get on they were profitable, now they're not. investors are still getting paid with tesla stocks. again, don't miss the boat is the thought process. >> i mean, i would view it a little bit differently having met with this investors many times over my career if you think about what's going on in the auto industry more broadly, we've gone from

combustion engines to electronic vehicles and ride sharing. these are themes that people would expect to carry on for decades. how do you get exposure to that thesis it's expensive right now so you're going to buy companies that are losing money. but i would expect that the capital groups that have these long-term time horizons are going to be willing to have some sort of exposure into these themes and the only way to do it is through these types of companies. to your point. one of the biggest cases is the concept of autonomous driving in the future >> it's really interesting we go into the next contraction and come out of it generally those cause disruption to get people to change their behavior people might just not be two cars or three cars like in my driveway >> it's important to say these

autonomous vehicles are years and years away this is way down the road. i think investors like you said have to take a long-term thesis. i think that's part of the long-term bull case. >> it's also interesting for a lyft or an uber who has to tell a story. especially when drivers, their core constituency arguably and they're kind of this transitional phase >> you know, hold onto that stock, baby. >> what's your take for where it might end up >> right now there are calls for $20 billion to $25 billion i see no reason they couldn't raise that we're in this fomo moment here where it doesn't matter if you're losing money. it doesn't matter if you've got a case for making money in the future lyft has even said to investors, we don't really have a plan in the future to make money consistently on a regular babsb. but we'll figure that out.

as long as investors are hungry and they want the next big hot thing, they're going to buy in >> i guess the $20 billion to $25 billion market cap isn't that steep it's just the fact that the loss is widening. >> and same kind of investors. at some point, it trades to that on a min ma'am revenue >> still depends on whether you're amazon in 1999 or 2011. right? >> fascinating discussion. thanks so much for joining us. thank you very much. when we come back, it took a series of unprecedented and some say historic events for markets to recover from the wreckage of the financial crisis could the comeback be unhistoric our guest host mike -- no. mike santoli who's here anchoring today will explain when "squawk box" returns. sfx: [phone ringing]

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welcome back to "squawk box. futures pointing higher at this hour up about 100 points gaining a little bit in the last 10, 15 minutes. we've been up 80 for most of the morning. mike santoli has been with us all morning he's got a new column up on cnbc.com this morning. it's about the tenth anniversary of the 2009 market bottom. and what should we think looking

back we've come a long way. >> come a very long way. what was fascinating and in fact what i decided to focus on was -- so the tenth anniversary technically is next saturday, march 9th, march 6th was the intraday low the annualized gain in the s&p 500 since the point since march 9th is about 17.8% annualized. >> wow >> that's wa dividends i said how does this compare to other periods? exactly ten years after the 1987 crash, it was between 17% and 18% annualized after the 1982 market bottom, it was between 17% and 18%. this is kind of dumb luck they all end up there's a certain r-- >> if you miss the upside.

if you miss the up days, you can't recover from that either >> what is interesting is if you look at those moments ten years after a majormarket low like a really major market low. '87 was a different thing. but it wasn't the end. >> right >> it was not early, but it wasn't the end and forward returns were lower but still positive barry, what's your take on this? >> i think that's spot on. those are the moments in time where you need to hold your head i'll never forget working as a young lad in 1987 and take k some 55 buy orders and 1 sell the day after the crash in '87 i had a note that came out this weekend, echoes of '87 and now '88. and my entire thesis is there was a whole bunch of similarities between last year and 1987

we had a new fed chair tightening policy, administration railing against an asian trading partner we had a new tax bill that caused a slowdown. >> this doesn't make me want to be a buyer here. >> no. but what it did was when i wrote about this a year ago, '87 was just a disturbance in the force. ta it was a drawdown. at '88 the market spent the year recovering you know, that's my thesis for this year. and i think it's a strong -- >> is that it for october too? >> no, no. i wrote this is a year ago >> we're through it. >> i originally wrote about this in january of last year. and said, you know, our setup with these conditions to have a crash. and the crash that took place in december, 21% is a median decline with a recession we're not going to have a recession.

i strongly believe that. the gdp numbers last week just blew a hole in the entire keynesian argument that this was a demand sugar high. because the numbers are off the charts in research and development, software, all the areas boosting productivity. this business cycle's got time to run >> you talked about the overall increase in the decade what about the change in valuatio valuations, multiples. >> you're not at the very top right now. bull markets are tended to end 20 times trailing earnings or something like that. now, the beginning of 2018, you actually were getting closer to that but it was pricing in this big step functioning >> there wasn't leverage in the system and this business cycle and expansion went on. it is similar. one other thing to put this in

context, too, is we didn't go anywhere from the 2000 peak through, you know, almost 15 years. we didn't make any headway got to be careful with averages. >> barry knapp is our guest host we'll have more from him later when we come back, the year might have started out with the tax refund scare of 2019 steve liesman joins us right after this break with more on this story steve, what do you have? >> we've been crunching the irs data and the refunds seem to be in the mail, becky and that's a good thing because we have some amazing data on just how important the tax refund is to the average american family. can you say christmas in ckn st ltl ba iju aite bit. issues facing our world,ritl what do you see? we see a billion more people breathing free. we see access to fresh food being the global norm, not the exception.

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welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. here are the stories investors are going to be talking about

this morning eli lilly is introducing a generic version of its insulin this comes after criticism of rising drug prices the cost of insulin for treating type 1 diabetes doubled over the last five years. shares up by $1 today. two private companies are joining forces instant brands is merging with correll brands which is the maker of brands like pyrex and check out shares of davita and fresenius following a reuters report that the government is considering a payment for kidney diseases that would favor in-home dial sis davita down and the other down by 20%

many americans could see their tax returns shrink, it was feared at the beginning of the year 2340u we're learning how important refunds are to the americans. >> the tax care has turned into a dud at least for now fears that tax refunds were running behind last year and taxpayers failed to hold enough taxes and the economy would go down because of it, those fears looking misplaced. tax refunds according to data from the internal revenue service is running just a bit below the last year with 150 million returns received compared to 2018 let's see. number of returns down about 5%. refund amount total down 3.6%. but the average refund running up 1.3%. these numbers were much worse. could end up worse or better, but for awhile it was substantially below last year.

a new study shows there's a good reason to worry when refunds run low. a detailed study of just how important the tax refund is to the average american household and you may not believe it here are some of the astonishing facts. 4/5 of families receive refunds. 29% of le fund is the biggest payday of the year. >> many it's the biggest financial event of their year. >> the average refund equals six weeks of salary. right? now, you're going to like this one. spending for the average family receiving a refund jumps 74% in the week after the refund is received so if you want to know when christmas really arrives for a lot of american families, think

february, not december >> monthly payments are so off if that many people get refunds. >> hold onto that thought. because we have an important guest coming up and that's my number one question. is all of this shows among other things very bad tax planning on the part of the american families >> yeah. okay so -- >> free loans to the american government from the american family >> joining us more to talk about this study is diana farrow she was previously an economist in the obama administration and head of the mckinsey global institute. just taking a look at that, it's stunning to think american families, this is for so many of them their biggest paycheck or windfall they see all year economically and steve's right. what concerns me about that is this is money that they are loaning to the government that they don't have themselves over the course of the year it's not a great way to be managing your money.

>> that's exactly right. >> it's tax time and if you think about it, some half a trillion dollars are coming in and out of financial accounts at this time. you know, rough numbers of the economy is $20 trillion. that's 2.5% of gdp out of national accounts through refunds and tax payments steve put up some of these statistics to put a fine tone on it, 78% of households will receive a tax refund and the average is six weeks of take-home pay that is a major financial event for 29% of people it is the most important cash flow event. for 50% of people, that is more than all their cash balances in banks. so this is a big event it's important to realize that for many people this is not done by design. so 90% of their income is coming from their take home 10% of their income is coming in the form of refunds. that's a zero interest loan to the government

and the effect of this big cash flow event at this point in time is in effect a reset and a rebalance of family spending we see that spending increases sharply immediately after. we have a 74% increase in spending and that spending is higher over the course of the next six months so 7% overall. it's also a rebalancing. because people spend their tax refund differently than they spend their general day-to-day spending and so we see much more emphasis on durables. they're paying down credit card debt they are just taking out more cash instead of buying services, nondurables and food so to the extent that families are planning this and by design making these choices, we might not worry because we know many of them are just defaulting into the regular withholdings or getting advice that may or may

not be fully suited to their financial situation. >> diana -- >> these are those not in their power. >> i want to first thank you guys for making this information available. i know jpmorgan, jamie dimon is big behind this. you know you get a call from me every couple months asking for it to be released every month. >> nice to be back, steve, thank you. >> every month i want you to release this because it's sometimes better than the lousy retail sales data we get from census that said, i want to ask you about the amount of refunds this year they're running 5% below is that a meaningful number? you were in the administration you watched it i know your data deals with the '15-'17 data are we pretty much on pace so there probably won't be a big meaningful impact on the consumer this year >> well, let's talk about a couple things about it one of the things that makes tax refunds so interesting for

economic research is that there's a long period of time over which people get tax refunds. so they start getting tax refunds in february, but many won't get their tax refunds until april. that's a function when they file taxes. we know there are different people who file taxes earlier than people who file taxes late. by and large, the people who are owed more of the tax refund file taxes early. that's the picture we see so far. i don't think we can fully answer your question until we see the full cycle of tax refunds which won't end until april or so. so that's the first point. i think the sec point is that, you know, so much of what we're observing is not necessarily the level of tax, but when the tax gets paid. so the extent to which the withholdings were down which we know they were means more people are likely to get a loer refund. that doesn't mean they're less income, it just means they had more over the course of the year and we know they spend their tax

refund differently than they spend their regular income, they map be in for a surprise in terms of that refrigerator they might have bought. but in fact have already spent the money and they're getting a lower refund i think those are the two things to watch >> one more thing i think is interesting about this is people don't change their behavior. they know the tax refund is coming and they don't spend more and they don't change their income afterwards. it's like, it's coming, i'm just going to let it come i guess the best way to put it is a forced savings. >> what's the answer because i do remember doing this when i was younger too you know, what's the answer to get people to have a forced savings account or something >> i think for a lot of people it is a forced saving account. the response is yes, but that's a saving at 0% if you were taking the exact same amount and putting it into a higher interest rate device, you would be gaining more from your savings for other people, it's a concern that they may face a penalty or a fee if they run out of cash

when they feel like they may have have to have a tax payment. it's a little bit of a risk averse thing but it is also the fact that for a long time withholdings were very conservative. unless people were opting into a different withholding rate, they would be withholding more than they need to do. a lot of preparers will do that also they will advise people to withhold more than necessary so all of those things i think contribute to it but i think there's a really important education to be had about households taking the reins of these decisions and not having the government policy drive the cash flow as much. >> i want to make one observation which is i don't know how much i would over-withhold in order to avoid having to write a check to the government in april. so i think there's some amount -- >> it's a risk analysis. >> i just cannot stand that idea that i have to write a check and i will do -- >> we hear that in surveys

>> i will do dumb financial things in the year in order to avoid that >> it's risk analysis. what if i don't have the money because i've spent it? >> that's the concern. and the other place we see where people are not always acting rationally is that right after the tax refund, part of what they will do is pay down credit card debt. that means they were incurring debt even though in theory they had access to income that they were overwithholding so we think there's an opportunity to say better not be paying credit card debt. that has a high interest rate associated with it usually if you're going to just wait until tax time to repay that expensive debt so there is more attention that families could pay to this dynamic in light of the new tax law to make sure they're optimizing their cash flow that they're getting the benefit of their income when they want it and spending it on the things they want and need now, in previous research, you might remember we looked at this through the lens of health care spend. we were concerned that what we saw is right after tax refund

just like so many other categories, health care spend spikes 60% in that first week relative to a baseline. and when we looked at it closely -- >> okay. miss farrell -- >> -- care that people needed to get. >> i actually -- you just hit on a topic related to the question i wanted to ask. which is number one, has this changed over time? has this gone up there's this entire mystery about why q1 gdp has been decidedly weak that, you know, the bea has been trying to deal with. one of the potential answers was that because deductibles have gone up so much on health care plans, you are getting this big spend on health care in the fourth quarter and then a slowdown in the first quarter because you had to meet the deductible so what you might be observing is a little bit coincident to that other trend but the real question is has this gone up over time and how

big a deal is it does it potentially explain this, you know, real mystery in gdp data where it's weak in the first quarter? have you thought about that? >> well, i'll tell you our data for now includes 2015, 2016, and 2017 that's the window we have. the same families that got refunds one year are likely to get refunds next year. there's stability on that ground i do agree that the work that we've done on out of pocket health care spend, so how much people are paying out of pocket for their health care is typically large amounts. but that fit under the deductible and so people will work to manage that. and if they feel that they're going to run out of time before or they need to front load the deductible, we're pretty sure they're playing that game to some extent. >> we have to go i do have one question

but i was wound fendering if yod any mobility if they're moving up the ladder in income. and if this is any of that in here >> let me say really quickly we are most -- >> real fast go o ahead >> we were most surprised to learn the tax refund is the mechanism people step up year to year people think of it as a year-end pay increase but what we find, it's really this tax refund where they reset and rebalance their spending and that's the biggest takeaway. >> thank you for your time diana farrell, steve, thank you. coming up, a look at three of the year's biggest market surprisers paul hickey will join us here on set with sckantos d sectors to watch. stay tuned you're watching "squawk box.

let's have a look in dow still there. 103 points higher. s&p up ten nasdaq up 39 president trump taking new aim at the fed over the weekend. here's what he said while addressing the conference. >> we have a gentleman that likes raising interest rates in the fed. we have a gentleman that loves quantitative tightening in the fed. we have a gentleman that likes a very strong dollar in the fed.

can you imagine if we left interest rates where they were there's no inflation, essentially. there's no inflation could you imagine if we left interest rate where is they were if we didn't do quantitative tightening >> spite the fedcriticism, trump did say the economy -- the economy for the united states is doing well >> all right, after a brutal december, the s&p is off to its best start of the year since 1991 this one of several surprising developments in 2019 with us to talk about what feels -- what he feels have been some of the other surprises this year, paul hickey. good to see you. >> good to be here. >> these are surprises that you called at the beginning of the year they played out. >> no, some are things we, you know, individual stocks, sectors, markets just some surprising to everybody. the first, you start from micro go to macro. netflix got killed in the fourth quarter. in our survey work and what we're talking about is we got

very interested in, because all the factors, first mover advantage, aggregator, all the other media companies are trying to replicate what netflix does and the netflix hinformation tht they have about customers is amazing, they can raise monthly to $15 a month and people wouldn't bat an eye at it. sure enough, just sort of dumb luck three weeks later they raised their subscription prices, but i think going forward, it had a big gain here, leveling off a little bit here longer near term, netflix is a stock that gets knocked because it is not cheap, but it wasn't cheap at 40. that argument hasn't worked at all. and i think it is the first mover advantage and who knows where the whole media and television viewing is going to go netflix has a foot hold there and it has a lead among everybody. >> still does see some skepticism in general, reflectively on the stock. >> yeah. >> semis. >> semis, if i told you that a

group, 40% of the companies that would report earnings in q4 earnings season would have lowered guidance, what would you say the group would -- down 15%, down 10% semis are up 15% since earnings season began and what is really important about the semis is it is the leadership group it started faltering at the end of the first half of last year and was underperforming and it bottomed versus the s&p 500. i think that's an important sector to watch. we published our pros and cons report last week and one thing is listening to the trend of the market, rallying on bad news is one thing, and the semis broke a trend line last week, long-term trend line from the highs last june that's something i think if you want to look broader for the market, keep watching semis here. >> we're talking about this huge move in the chinese market >> yes, so i think china, trade is one factor, we also have technicals and we also have chinese government easing like crazy.

and just what the intro we were talking about, trump not wanting the dollar is too strong, if we go in, we're having a weaker dollar environment, that's going to benefit the china and emerging markets in general. we're more of the positive view towards emerging markets it has been a lost decade for emerging markets we had one person in december ask us if it is even worthwhile to call it an asset class anymore because it has been so horrible brazil, 2007, taiwan stock exchange at levels it was at in the mid-'90s there is a sentiment valuation and at multiyear lows for the sector, relative to the u.s. market and weaker dollar environment or just a flat dollar environment i think will have a potential for outperformance. >> all right three trends you think will continue for a while. >> yeah. i think they continue on throughout this year at least. >> paul hickey from bespoke, thanks.

let's get down to the new york stock exchange and check in with jim cramer. jim, we have been talking about this potential china trade deal this morning markets are indicated up with the dow up by 100 points what do you think? >> i think a lot of people are already conditioned to think you have to sell on this news. i think that's a mistake a lot of what paul was saying tells me that you can't give up on the stocks just because we get a deal a lot of companies have been brought back to almost where they were october 2nd, october 1st before powell unloaded and pence unloaded in terms of china. i say let them run we have been up ten straight weeks in the nasdaq and that's a lot to ask employment on friday there say lot of good. those who want to sell into the news, you're going to end up trying to -- you're going to buy them higher. >> what about what the president said yesterday in regards to jay powell and the fed quantitative tightening was the phrase. >> very funny. >> ahead of the whole game >> i think it is interesting is chief economic adviser told us

that king dollar is the greatest thing in the world so i would love to see a meeting -- be a fly on the wall for the meeting between larry kudlow and the president, listen, strong dollar, i base my theory it is good, but the president is having some fun obviously the chairman is not tightening and it is kind of a strawman, you know if you want to fact check it. >> it is good. i like that analysis of it that was mike santoli's analysis of the whole thing too. >> the president is fun. the president is having some fun. i guess powell is bad. i think that powell did make some mistakes, president called him out correctly, should be applauded for that, i believe, but he should move on. funnier stuff, there is funnier stuff than that. >> jim, what else are you watching today >> how about brexit? that's funny brexit, hey, wolf, do you think brexit is funny? >> not funny, no we'll see how it shakes out. >> you and me think it is important.

does the president think it is funny? >> i see >> i think he probably enjoys the chaos. >> right that's my point. >> as a small minor point, a chance he gets a trade deal out of it, i guess but i guess everyone is skeptical that can happen anytime soon, but a freer uk could lead to something. i don't know i'm not sure what his views are, jim. >> well, i just think that, you don't want to get too much in the weeds there. right now. >> you're rightment point made, jim. it is good to see you. >> you want to stay at 80,000 feet with the president. >> right that's not necessarily -- >> yeah, mars. too granular, it doesn't work. >> jim, thank you. we will see you in a few minutes coming up. jim will be with us in 3 1/2 minutes. breaking news on a story we talked about this morning, at&t announcing that it will restructure warner media robert greenblatt joins, that's

where he went, okay, after leaving comcast, nbc universal jeff zucker will add oversight to live sports as chairman of both news and sports all right. let's get a final check on the markets this morning we have been watching to see what happens with the dow. you're going to see right now it is indicated up by 100 points. we'll talk more about this in a ment who says our bank isn't tech enough?

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all right, make sure you join us tomorrow mike, wolf, thank you for your time right now time for "squawk on the street." good morning and welcome to "squawk on the street. i'm david faber with jim cramer. we are live from the new york stock exchange carl is on assignment this morning. let's give you a look at futures as we get ready to start the trading week a half hour from now. you can see generally going to be a higher open judging from europe at this point also things have been moving in largely positive territory let's get to our road map this morning. it does start with trade optimism as you saw